FIRST HARVEST CORP. (OTCMKTS:HVST) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Financing with EMA Financial, LLC
On April 10, 2017, First Harvest Corp. (the Company) entered into
a Securities Purchase Agreement (SPA) with EMA Financial, LLC
(EMA), wherein the Company issued a convertible promissory note
(the EMA Note) and warrants to purchase 62,500 shares of the
Companys common stock (Common Stock) at an exercise price of
$2.00 per share (Warrants). The closing occurred on April 10,
2017 (the Closing Date), and the Company received $160,250 after
paying EMAs legal, administrative and due diligence fees.
The EMA Note bears interest at 12% per annum. All outstanding
principal and accrued interest on the EMA Note is due and payable
on the maturity date, which is April 10, 2018 (the Note Maturity
Date). EMA may extend the Note Maturity Date by providing the
Company with written notice at least 5 days before the Note
Maturity Date. However, EMA may only extend the Note Maturity
Date for up to an additional one-year period. Any amount of
principal or interest that is due under the EMA Note, which is
not paid by the Note Maturity Date, will bear interest at the
rate of 24% per annum until it is paid.
The EMA Note is convertible by EMA into shares of Common Stock at
any time on or after 180 days following April 10, 2017 (the Issue
Date) at the applicable conversion price. The conversion price
will be the lower of (i) the closing sale price of the Common
Stock on the Principal Market on the trading day immediately
preceding the Closing Date and (ii) 60% of the lowest sale price
for the Common Stock on the Principal Market during the 25
consecutive trading days immediately preceding the date of
conversion (the Conversion Date). If the Company fails to
register the shares of Common Stock underlying the EMA Note
within 180 days of the Issue Date, the conversion price will be
permanently reduced to: (i) the closing sale price of the Common
Stock on the Principal Market on the trading day immediately
preceding the Closing Date and (ii) 40% of the lowest sale price
for the Common Stock on the Principal Market during the 25
consecutive trading days immediately preceding the Conversion
Date.
EMA does not have the right to convert the Note into Common Stock
if such conversion would result in EMAs beneficial ownership
exceeding 4.9% of our outstanding Common Stock at that time. At
any time during the period beginning on the Issue Date and ending
on the date which is six (6) months following the Issue Date
(Prepayment Termination Date), the Company shall have the right,
exercisable on not less than five trading days prior written
notice to EMA, to prepay the outstanding balance on the EMA Note
(principal and accrued interest) (the Prepayment Amount), in
full, at a price of either 135% of the Prepayment Amount if such
payment is made between the 91st and 180th
day following the Issue Date or at a price of 125% of the
Prepayment Amount if such payment is made within 90 days of the
Issue Date.
All amounts due under the EMA Note become immediately due and
payable by us upon the occurrence of an event of default,
including but not limited to (i) our sale of all or substantially
all of our assets, (ii) our failure to pay the amounts due at
maturity, (iii) our failure to issue shares of Common Stock upon
any conversion of the Note, (iv) our breach of the covenants,
representations or warranties under the Note, (v) our appointment
of a trustee, (vi) a judgment against us in excess of $50,000
(subject to a 20 day cure period), (vii) our liquidation, (viii)
the filing of a bankruptcy petition by us or against us, (ix) our
failure to remain current in our reporting obligations under the
Securities Exchange Act of 1934, (x) the delisting of our Common
Stock from the OTCQB or equivalent exchange, (xi) a restatement
of our financial statements for any period from two years prior
to the Note Issuance Date until the Note has been paid in full,
or (xi) our effectuation of a reverse stock split without 10 days
prior written notice to EMA. We are required to pay the Default
Sum, which is defined in the EMA Note, depending on the event of
default that has occurred.
The Company agreed to reserve an initial 1,600,000 shares of
Common Stock for conversions under the EMA Note (the Initial
Reserve), and also agreed to adjust the Initial Reserve to ensure
that it always equals at least ten times the total number of
Common Stock that is actually issuable if the entire Note is
converted.
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EMAs rights under the EMA Note will generally remain protected,
and our obligations under the Note will be assumed by any
successor or acquiring entity if applicable, if we effectuate a
merger, consolidation, exchange of shares, recapitalization,
reorganization, or other comparable event in which our
outstanding Common Stock changes into a different amount or
class, or if we sell or transfer all or substantially all of our
assets (each a Material Event). We agreed to give at least 15
days prior written notice to EMA before a special meeting of our
shareholders regarding a Material Event, or if no meeting is
applicable, our closing of the Material Event.
In the event that we issue securities, or rights to purchase
securities, on a pro rata basis to our Common Stock shareholders
(the Purchase Rights), we agreed to calculate EMAs pro rata
portion under the Purchase Rights as if EMA had fully converted
the EMA Note immediately before we offered the Purchase Rights.
The Warrants are immediately exercisable. The Warrants are also
exercisable on a cashless basis in the event that the shares of
Common Stock underlying the Warrants are not registered for
resale with the Securities and Exchange Commission (the SEC) on
an effective registration statement. The exercise price of the
Warrants is subject to adjustment for stock dividends and splits,
and also subject to dilution protection in the event that the
Company issues shares of Common Stock or securities convertible
into Common Stock at an effective price per share that is less
than the original exercise price of the Warrants.
to the SPA, in the event that at any time on or prior to the date
which is six months following the Closing Date, the Company
desires to borrow funds, raise additional capital and/or issue
additional promissory notes, whether convertible into shares of
securities of the Company or otherwise (a Prospective Financing),
EMA shall have the right of first refusal to participate in the
Prospective Financing, and the Company shall provide written
notice containing the terms of such Prospective Financing to the
Purchaser prior to effectuating any such transaction, provided
that this right shall not apply to any transaction in which the
Company receives more than $250,000 of net proceeds in a single
transaction.
The descriptions above of the EMA Note, the SPA and the Warrants
do not purport to be complete and are qualified in their entirety
by reference to the full text of the EMA Note, SPA and Warrants,
which are attached as Exhibits 10.2, 10.1 and 4.1 respectively to
this Current Report on Form 8-K, and are incorporated herein by
reference.
Financing with Auctus Fund, LLC
On April 7, 2017 the Company issued a convertible promissory note
in the original principal amount of $175,000 (the Auctus Note) to
Auctus Fund, LLC, a Delaware limited liability company (Auctus),
to which Auctus funded $160,250 to the Company after the
deduction of $14,750 of diligence and legal fees. The Company
issued the Auctus Note to a securities purchase agreement, dated
as of April 7, 2017 (the Auctus SPA), entered into by the Company
and Auctus. to the SPA, the Company also issued warrants to
Auctus purchase 62,500 shares of Common Stock at an exercise
price of $2.00 per share (Auctus Warrants). The funding closed on
April 11, 2017 (the Auctus Closing Date).
The Auctus Note bears interest at the rate of 12% per annum and
matures on April 7, 2018 (the Maturity Date). Any amount of
principal or interest on the Auctus Note which is not paid when
due shall bear interest at the rate of twenty-four percent (24%)
per annum from the due date thereof until the same is paid (the
Default Interest). The Company has the right to prepay the Auctus
Note with a premium of up to 135% of all amounts owed to Actus,
depending upon when the prepayment is effectuated. The Auctus
Note may not be prepaid after the 180th day after the
issue date.
All principal and accrued interest on the Auctus Note is
convertible into shares of the Companys common stock at the
election of Auctus at any time at a conversion price equal to the
lesser of (i) a 60% discount to the lesser of the lowest traded
price and closing bid price of the Common Stock during the 25
trading days prior to April 7, 2017 and (ii) the Variable
Conversion Price (which is defined as 60% of the lesser of the
lowest traded price and closing bid price of the common stock
during the 25 trading day period prior to conversion). If, at any
time when the Auctus Note is issued and outstanding, the Company
issues or sells, or is deemed to have issued or sold shares of
common stock, except for shares of Common Stock issued directly
to vendors or suppliers of the Company in satisfaction of amounts
owed to such vendors or suppliers (provided, however, that such
vendors or suppliers shall not have an arrangement to transfer,
sell or assign such shares of Common Stock prior to the issuance
of such shares), for no consideration or for a consideration per
share (before deduction of reasonable expenses or commissions or
underwriting discounts or allowances in connection therewith)
less than the conversion price of the Auctus Note that is then in
effect on the date of such issuance of such shares of Common
Stock (a Auctus Dilutive Issuance), then immediately upon the
Auctus Dilutive Issuance, the conversion price of the Auctus Note
will be reduced to the amount of the consideration per share
received by the Company in such Auctus Dilutive Issuance.
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The Company will not conduct any equity financing (including debt
with an equity component) (Future Offerings) during the period
ending twelve (12) months following the Auctus Closing Date,
unless it shall have first delivered to Auctus, at least seventy
two (72) hours prior to the closing of such Future Offering,
written notice describing the proposed Future Offering, including
the terms and conditions thereof, and providing Auctus an option
during the seventy two (72) hour period following delivery of
such notice to purchase the securities being offered in the
Future Offering on the same terms as contemplated by such Future
Offering.
The Auctus Warrants are immediately exercisable. The Auctus
Warrants are also exercisable on a cashless basis in the event
that the shares of Common Stock underlying the Auctus Warrants
are not registered for resale with SEC on an effective
registration statement. The exercise price of the Auctus Warrants
is subject to adjustment for stock dividends and splits, and also
subject to dilution protection in the event that the Company
issues shares of Common Stock or securities convertible into
Common Stock at an effective price per share that is less than
the original exercise price of the Auctus Warrants.
The foregoing description of the Auctus SPA, the Auctus Note and
the Auctus Warrants do not purport to be complete and are
qualified in their entirety by reference to the full text of the
Auctus SPA, the Auctus Note and the Auctus Warrant, which are
attached as Exhibits 10.3, 10.4 and 4.2 respectively to this
Current Report on Form 8-K, and are incorporated herein by
reference.
Item 2.03 Creation of a Direct Financial
Obligation
The information provided in Item 1.01 is incorporated by
reference in this Item 2.03.
Item 3.02 Unregistered Sales of Equity
Securities
The sales of securities to EMA and Auctus are exempt from
registration for the issuances and grant described above to
Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities
Act of 1933, as amended (the Securities Act).
Item 9.01 Financials Statements and Exhibits.
| Description | |
| 4.1 | Warrant issued to EMA Financial, LLC, dated April 10,2017 |
| 4.2 | Warrant issued to Auctus Fund, LLC Stock, dated April 7,2017 |
| 10.1 |
Securities Purchase Agreement between First Harvest Corp. and EMA Financial, LLC dated April 10, 2017 |
| 10.2 |
12% Convertible Note between First Harvest Corp. and EMA Financial, LLC dated April 10, 2017 |
| 10.3 |
Securities Purchase Agreement between First Harvest Corp. |
| 10.4 |
12% Convertible Note between First Harvest Corp. and Auctus Fund, LLC dated April 7, 2017 |
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About FIRST HARVEST CORP. (OTCMKTS:HVST)
First Harvest Corp., formerly American Riding Tours, Inc. is a shell company. It focuses on offering on-road tours. Its tourist destination features Mt. Charleston, Lake Mead National Recreation Area, Red Rock Canyon, Valley of Fire and the Grand Canyon. For riders looking for short overnights, the Company focuses on offering multiday trips to the Grand Canyon and roads of Southern California. It also focuses on providing custom tours built from the ground up going to geological areas of the Southwest. It focuses on providing participants with a Bluetooth headset to use during the tour in order to communicate with their guide, as well as maps and detailed information on the areas being visited. The Company focuses on operating Mt. Charleston and Spring Mountains tour, which includes the Spring Mountain Recreational Area, highlighted by the Mt. Charleston peak and local wildlife. The Company’s Valley of Fire, Lake Mead and Hoover Dam tour includes an escorted tour of the Hoover dam. FIRST HARVEST CORP. (OTCMKTS:HVST) Recent Trading Information
FIRST HARVEST CORP. (OTCMKTS:HVST) closed its last trading session down -1.30 at 2.00 with shares trading hands.