Carbon Sciences, Inc. (Form: 8-K, Received: 09/08/2017 12:21:03)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 1, 2017

CARBON SCIENCES, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation)

000-54817

20-5451302

(Commission File Number)

(I.R.S. Employer Identification No.)

5511C Ekwill Street, Santa Barbara, California

93111

(Address of principal executive offices)

(Zip Code)

(805) 456-7000

(Registrant’s telephone number, including area code)

____________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR240.14d-2(b))

o Soliciting material pursuant to Rule 14a-12 under Exchange Act (17 CFR240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR240.13e-4(c))

SECTION 1. REGISTRANT’S BUSINESS AND OPERATIONS

Item 1.01 Entry into a Material Definitive Agreement.

On September 1, 2017, Carbon Sciences, Inc., a Nevada corporation (the “Company”), entered into a term sheet (“Term Sheet”) with Glanz, Inc. dba Corner Media, a Delaware corporation (“Glanz”) pursuant to which Glanz agreed to sell all of its assets to a newly formed wholly owned subsidiary of the Company (“Newco”) in consideration for 50,000 shares of a new series of convertible preferred stock to be authorized by the Company’s board of directors (the “Shares”). Each Share will be convertible into 2,500 shares of the Company’s common stock. The Shares will not be entitled to dividends or have voting rights, but will have a liquidation preference in the event of a liquidation or similar event. The Shares will also be subject to a two year lock-up during which period the Shares may not be sold or converted into shares of the Company’s common stock.

Upon the closing of the transaction (the “Closing”), Newco will assume approximately $500,000 of liabilities, including $10,000 of accrued compensation owed to Joseph Kunigonis, the president of Glanz, $300,000 of principal due to Orchestra Financial LLC pursuant to a revolving line of credit, and approximately $190,000 of accounts payable. Joseph Kunigonis and Thomas Farasy, the chief operating officer of Glanz, will enter into employment relationships with the Company and receive stock options upon the Closing. After the Closing, the Company will engage and pay for an independent audit firm to audit Glanz’s books and records for the last two years. The Closing is subject to the Company’s satisfactory due diligence and review of Glanz’s financial books and records.

Glanz is a location-based digital media company in the out-of-home (“OOH”) sector. Founded in 2011, Glanz partners with real estate owners of premier, high pedestrian traffic venues, which helps to free advertisers from the constraints of traditional out-of-home (“OOH”) media, enabling them to reach the right consumers, at the right time, in the right place.

This brief description of the Term Sheet is only a summary of the material terms and is qualified in its entirety by reference to the full text of the Term Sheet as attached to this Current Report on Form 8-K as Exhibit 10.1.

SECTION 5. CORPORATE GOVERNANCE AND MANAGEMENT

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

In anticipation of the Closing, the Company’s board of directors and majority shareholder are expected to authorize an amendment to the Company’s articles of incorporation in order to change the name of the Company to Digital Locations, Inc. The Company will file a Schedule 14C Information Statement immediately thereafter. The board of directors believes that the name Digital Locations, Inc. more accurately reflects the direction in which the Company’s business is growing.

SECTION 9. FINANCIAL STATEMENTS, PRO FORMA FINANCIALS & EXHIBITS

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Term Sheet with Glanz, Inc. dba Corner Media, a Delaware corporation.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CARBON SCIENCES, INC.

(Registrant)

Date: September 8, 2017 By: /s/ William E. Beifuss, Jr.

William E. Beifuss, Jr., President

EXHIBIT 10.1

Term Sheet

Glanz, Inc. (DBA Corner Media)

September 1, 2017

Summary of the Transaction

Carbon Sciences, Inc . (“Carbon Sciences” or “we”) intends to build a substantial digital locations company through the strategic acquisition of solutions providers and related assets. This term sheet describes a proposed transaction whereby Glanz, Inc . (DBA Corner Media), a Delaware c-corporation (“Glanz” or “You”) will sell all its assets to a newly formed corporation owned by Carbon Sciences (‘Newco”) and Newco will assume certain liabilities and continue as the successor to Glanz. After the sale, Glanz will be the holder of the Consideration paid in this transaction.

Goal of the Transaction

By combining our respective businesses and efforts to grow organically and through additional acquisitions, we believe that we can build a dominant digital locations business that creates significant shareholder value. We believe that by doing so, you, as well as our existing shareholders, will realize greater economic value than if we continue on independent paths.

Consideration

At the Closing, Carbon Sciences will pay you the Total Purchase Price in the form of the following:

A. Convertible Preferred Stock with the right to convert the Preferred Stock into Common Stock.(“Preferred Stock”)

Holders of Preferred Stock receive preferential treatment over common stock holders in the event of liquidation or other forms of distribution.

·

50,000 shares of Preferred Stock convertible into 125,000,000 shares of Carbon Sciences Common Stock “Common Stock”)

·

Preferred Stock does not pay a dividend

·

Preferred Stock does not have voting rights

B. Assumption of liabilities in the total amount of $500,000.

Stock Restrictions

For a period of two years after closing, you may not sell or distribute any of your Preferred Stock and/or covert any of your Preferred Stock into shares of Common Stock.

After the 2-year lock-up period expires, you may convert any or all of your Preferred Stock into shares of Common Stock and sell your shares of Common Stock in the public market.

However, by agreement with Carbon Sciences, you will, at all times, be subject to the restrictions, conditions and requirements applicable to an affiliate of Carbon Sciences, as currently described in Rule 144 of the Securities Act of 1933, as amended, even if you or your assignees and successors are not affiliates of Carbon Sciences.

We believe that the Glanz business requires significant management efforts and resources to become a going concern.

Therefore, we contemplate that you will be long-term holders of your Carbon Sciences stock and that you are committed to achieving our mutual goal of building long-term shareholder value.

Assumption of Liabilities

Newco to assume and pay certain liabilities in the total amount of $500,000, including:

·

Accrued compensation in the amount of $10,000 owed to Joe Kunigonis

·

$300,000 of the principal amount of the Orchestra Financial LLC revolving LOC. (The balance of the principal and accrued interest to be converted into Glanz common stock.)

·

$190,000 of accounts payable.

Employment Relationships

Employment relationships, compensation and stock options for Joseph B. Kunigonis and Thomas M. Farasy, to be determined prior to Closing.

Financial Performance

You have represented to Carbon Sciences that Glanz’s minimum financial performance, on a proforma basis, is or will be as follows:

·

2015 Revenue = $_____ (non-GAAP) / Net Income = $______

·

2016 Revenue = $_____ / Net Income = at least $_____

·

2017 Revenue (forecast) = approximately $_____ / Net Income (Loss) (forecast) = approximately of $______

Closing

Steps to Closing

Closing is subject to Carbon Sciences’ satisfactory due diligence and review of Glanz’s financial books and records.

·

Draft the asset purchase agreement and other closing documents.

·

Carbon Sciences to provide Glanz with a detailed due diligence checklist describing the scope and requirements of the due diligence process.

·

Carbon Sciences to provide Glanz with a current capitalization table.

·

Carbon Sciences continues due diligence process.

·

Upon completion of Carbon Sciences’ satisfactory due diligence, we close the transaction.

·

Closing includes the execution of the asset purchase agreement and other closing documents, issuance of the Convertible Preferred Stock and execution of the Employment Agreements and stock options.

·

Public disclosure of the transaction.

Post-Closing

After closing, Carbon Sciences will engage and pay for an independent audit firm to audit Glanz’s books and records for the last two tax years.

Glanz will provide access to its books and records on reasonable advance notice from the Carbon Sciences officers, auditors and attorneys upon request. Glanz to acknowledge and agree to comply with all legal, tax, regulatory and audit requests in a timely manner.

Any comments on tax matters herein will not be deemed as tax advice and you are advised to seek independent tax counsel on any and all matters.

The terms and conditions set forth herein represent an agreement in principle and any binding agreement among the parties described herein is subject to the review and execution of definitive documents that are mutually acceptable.

Agreed and accepted as of September 1, 2017 :

Glanz, Inc.

/s/ Imre Eszenyi

By: Imre Eszenyi, Chairman of the Board

Carbon Sciences, Inc.

/s/ Gerard Hug

By: Gerard Hug, CEO

000-54817		20-5451302
(Commission File Number)		(I.R.S. Employer Identification No.)

5511C Ekwill Street, Santa Barbara, California		93111
(Address of principal executive offices)		(Zip Code)

	CARBON SCIENCES, INC.
	(Registrant)

Date: September 8, 2017	By:	/s/ William E. Beifuss, Jr.
		William E. Beifuss, Jr., President

Consideration
At the Closing, Carbon Sciences will pay you the Total Purchase Price in the form of the following:

A. Convertible Preferred Stock with the right to convert the Preferred Stock into Common Stock.(“Preferred Stock”)			Holders of Preferred Stock receive preferential treatment over common stock holders in the event of liquidation or other forms of distribution.

	·	50,000 shares of Preferred Stock convertible into 125,000,000 shares of Carbon Sciences Common Stock “Common Stock”)
	·	Preferred Stock does not pay a dividend
	·	Preferred Stock does not have voting rights

B. Assumption of liabilities in the total amount of $500,000.

Assumption of Liabilities

Newco to assume and pay certain liabilities in the total amount of $500,000, including:

	·	Accrued compensation in the amount of $10,000 owed to Joe Kunigonis
	·	$300,000 of the principal amount of the Orchestra Financial LLC revolving LOC. (The balance of the principal and accrued interest to be converted into Glanz common stock.)
	·	$190,000 of accounts payable.

Employment Relationships
Employment relationships, compensation and stock options for Joseph B. Kunigonis and Thomas M. Farasy, to be determined prior to Closing.

Financial Performance

You have represented to Carbon Sciences that Glanz’s minimum financial performance, on a proforma basis, is or will be as follows:

	·	2015 Revenue = $_____ (non-GAAP) / Net Income = $______
	·	2016 Revenue = $_____ / Net Income = at least $_____
	·	2017 Revenue (forecast) = approximately $_____ / Net Income (Loss) (forecast) = approximately of $______

Closing		Steps to Closing
Closing is subject to Carbon Sciences’ satisfactory due diligence and review of Glanz’s financial books and records.	·	Draft the asset purchase agreement and other closing documents.
	·	Carbon Sciences to provide Glanz with a detailed due diligence checklist describing the scope and requirements of the due diligence process.
	·	Carbon Sciences to provide Glanz with a current capitalization table.
	·	Carbon Sciences continues due diligence process.
	·	Upon completion of Carbon Sciences’ satisfactory due diligence, we close the transaction.
	·	Closing includes the execution of the asset purchase agreement and other closing documents, issuance of the Convertible Preferred Stock and execution of the Employment Agreements and stock options.
	·	Public disclosure of the transaction.