SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 26, 2020
|(Exact name of registrant as specified in its charter)|
or other jurisdiction of
W. Magnolia Blvd.
Burbank, CA 91505
|(Address of principal executive offices)|
Registrant’s telephone number, including area code (800) 813-1360
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:
|[ ]||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|[ ]||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|[ ]||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|[ ]||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
|Item 1.01.||Entry into a Material Definitive Agreement.|
Hanson Faso Brokerage Agreement
On March 26, 2020, Quanta, Inc. (the “Company”) signed a brokerage agreement (the “Brokerage Agreement”) with Hanson Faso Sales & Marketing, Inc. (the “Broker”). The Broker will be the exclusive distributor of the Company’s products in Illinois, Indiana, Iowa, Kentucky, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Western Pennsylvania and Wisconsin. Broker will be paid a commission on the net amount of the invoices rendered in the mid-single digits, subject to a minimum monthly commission of $2,000. The agreement has a one year term.
The Brokerage Agreement contains other customary representations, warranties and covenants. The above description does not purport to be complete and is qualified in its entirety by reference to the Brokerage Agreement filed as Exhibit 10.16 to this Current Report on Form 8-K and incorporated herein by reference.
Oscaleta Partners Equity Purchase Agreement
On April 9, 2020, the Company entered into an equity purchase agreement (the “EPA”) with Oscaleta Partners LLC, a Connecticut limited liability company (“Oscaleta”) and a related registration rights agreement (“Registration Rights Agreement”). Pursuant to the terms of the EPA, the Company has the right (“Put Right”), but not the obligation, to sell shares of its common stock, par value $0.001 per share (the “Common Stock”) to Oscaleta on the terms specified in the EPA in private transactions.
Equity Purchase Agreement
The Company has the right to exercise its Put Right under the EPA for a period that expires two (2) years after the effective date of the registration statement as described below, subject to a limit of $10 million in the aggregate and the Company’s right with respect to each exercise of its Put Right is subject to certain conditions precedent, including, but not limited to, the following:
|●||The Company must have registered the shares that will be sold to Oscaleta under the Securities Act of 1933, as amended (the “Securities Act”);|
|●||Such registration statement remains effective and does not have any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;|
|●||There has not been a material adverse effect to the Company;|
|●||The amount of the shares of Common Stock to be sold will not cause Oscaleta to then be a beneficial owner under the Securities Act of more than 9.99% of the issued and outstanding shares of the Common Stock; and|
|●||The representations and warranties of the Company are and will continue to be accurate in all material respects.|
The price that the Company may specify in any exercise of a Put Right (a “Draw-Down”) will be determined by calculating a 15% discount to the lowest closing price over a 10 trading day valuation period following delivery of a notice for such Draw-Down by the Company to Oscaleta. There are no trading volume requirements in connection with any Draw-Down other than the limitation on the beneficial ownership of the Company’s Common Stock by Oscaleta. Under certain conditions regarding the market and the shares then held by Oscaleta, this limitation can significantly reduce the amount of cash that is available to the Company under the EPA.
Registration Rights Agreement
Also on April 9, 2020, the Company entered into a Registration Rights Agreement with Oscaleta. Pursuant to the terms of the Registration Rights Agreement, the Company is obligated to file, within 150 days, a registration statement with the Securities and Exchange Commission (“SEC”) covering any shares that may be issued under the EPA. In addition, the Company is obligated to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 5 business days after the notification from the SEC that the registration statement may be declared effective.
Issuance of Promissory Note
On April 9, 2020, the Company also issued a promissory note in the amount of $40,000 to Oscaleta as a commitment fee (the “Note”). The promissory note matures on October 31, 2020 and bears interest at a rate of 10% per annum, payable on maturity.
The EPA, Registration Rights Agreement and Note have other customary representations, warranties and covenants. The above description of the agreements and the contemplated transactions does not purport to be complete and is qualified in its entirety by reference to the full text of the documents filed as Exhibits 10.13, 10.14 and 10.15 to this Current Report on Form 8-K and incorporated herein by reference.
|Item 2.03||Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.|
The disclosure in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item. The Note represents indebtedness of the Company.
|Item 3.02||Unregistered Sales of Equity Securities.|
The disclosure in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item. The Company has not yet issued any Put Shares pursuant to the EPA, but may in subsequent private transactions.
On April 3, 2020, we issued 241,198 shares of our common stock with a fair value of approximately $28,000 to various employees in a private transaction as compensation for services.
|Item 9.01.||Financial Statements and Exhibits.|
|10.13||Equity Purchase Agreement, dated as of April 9, 2020, by and between Quanta, Inc. and Oscaleta Partners LLC (incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on April 10, 2020)|
|10.14||Registration Rights Agreement, dated as of April 9, 2020, by and between Quanta, Inc. and Oscaleta Partners LLC (incorporated by reference to Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on April 10, 2020)|
|10.15||Promissory Note, dated as of April 9, 2020, issued by Quanta, Inc. in favor of Oscaleta Partners LLC (incorporated by reference to Exhibit 10.15 to the Registrant’s Registration Statement on Form S-1 filed with the Commission on April 10, 2020)|
|10.16*||Brokerage Agreement, dated as of March 26, 2020, by and between Quanta, Inc. and Hanson Faso Sales & Marketing, Inc.|
* Certain confidential information contained in this agreement has been omitted because it is not material and would be competitively harmful if publicly disclosed.
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 hereunto duly authorized.
|Date: April 10, 2020||/s/ Eric Rice|
|Chief Executive Officer|
[***] Certain information in this document has been excluded pursuant to Regulation S-K, Item 601(b)(10). Such excluded information is not material and would likely cause competitive harm to the registrant if publicly disclosed.
This Agreement effective March 26, 2020, between Quanta, Inc., whose primary address is located at 3606 W Magnolia Blvd, Burbank CA 91505, and is known as the Company and HANSON FASO SALES & MARKETING, INC. whose address is 1919 S. Highland Ave. Suite 204C Lombard, IL 60148, known as the Broker, in accordance with and subject to the following:
|1.||The territory in which the Broker is to work is as follows: Illinois, Indiana, Iowa, Kentucky, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Western Pennsylvania, and Wisconsin. Classes of trade to be represented are specialty, grocery, natural, mass merchants, gift packing, national drug chains, non-traditional trade, and food service. This territory is exclusive unless otherwise stated in writing, herein. The Broker shall be credited with all orders accepted by the Company from this territory, as long as this Agreement remains in force.|
|2.||The products which the Broker is authorized to sell, and the prices and terms, are as shown on the addenda to this Agreement, or as specified in subsequent price books, bulletins, and other authorized documents.|
|3.||Said Broker further agrees to abide and comply with all sales policies and operating regulations of the Company, as issued from time to time, and will not obligate or contract on behalf of the Company without first having received authority to do so from an Executive of the Company.|
|4.||Commissions due to the Broker shall be payable before the 15th day of the month following shipment by the Company and such commissions shall be calculated at the rate of [***]. We will require a minimum monthly income guarantee of $2,000 per month, should your monthly commission due be calculated at less than $2,000 in any given month. This guaranteed payment will be due by the 15th of each month and is not refundable against future commissions. This guarantee should be balanced against your current month’s commission due as it is not due in addition to your monthly commission payment. Therefore, in a month where commissions due exceed the guarantee, the normal commission payment will satisfy this minimum.|
|5.||The Broker will not bill the Company for commissions. Commission payments must be accompanied by a full, written document supporting the payment. This commission statement must include a listing of each purchase order number and amount with the coinciding invoice number and amount including full documentation of any deductions taken. If an ACH payment is made, the commission statement, including the above details, must be received within 48 hours of payment receipt. The Company will pay the Broker on partial payments prior to deduction dispute resolution. If a deduction is reversed and repayment is collected within a year, the Company will pay the Broker their normal commission rate on the recovered funds.|
|6.||All orders must be sent to the Broker. In the case of EDI transmission the Company agrees to allow the Broker to be carbon copied on all transmissions. For orders sent directly to the Company, the Company agrees to send the Broker order copies within 48 hours of receipt of the order.|
|7.||Deductions from invoices for marketing expenses such as show fees, table tops, ads, demos, samples, signage, and catalog fees may not be charged against Broker commissions. In addition, deductions arising from fines imposed on the Company due to improper policy adherence by the Company, including but not limited to, late deliveries, use of wrong carrier or incomplete shipments, may not be deducted from Broker commissions. If a credit memorandum is issued to cancel an invoice on which commission has been paid, such “over commission” may be deducted from subsequent commissions due the Broker, if that amount is sufficient; otherwise, commission paid on such return-for-credit orders shall be refunded to the Company by the Broker within thirty days of written notice. Deductions for spoils must be at the same rate as the commission rate. In the case of a multiple warehouse customer where splits are involved, that deduction must be deducted against the warehouse that shipped the goods and generated the deduction.|
|8.||The Company reserves the right at all times to reject any and all orders because of unsatisfactory credit rating of the purchaser. On sales of unrated new accounts, the Broker may be required to furnish local credit information and submit full information with orders. The Broker will also assist in the collection of past due accounts owing the Company by customers located in said Brokers’ territory.|
|9.||When an order originates in one Broker’s territory for shipment into another Broker’s territory, or in any case when the commission is divided between two or more of the Company’s Brokers, the commission shall be divided per an agreement, with no part of the commission being retained by the company. No splits will be in effect unless agreed to by Hanson Faso in writing.|
|10.||This Agreement shall continue in full force and effect for one year from the date of its execution, but this Agreement may be terminated by either party for any reason during this period upon 60 days written notice (by mail or email). If not so terminated by either party, one to the other, this Agreement shall automatically renew itself from year to year, but will then only be cancelable either for show of cause, by mutual consent, or by written notice by one party to the other with 60 days written notice (by mail or email).|
|11.||During the term of this Agreement, and for a period of one (1) year immediately thereafter, You agree not to solicit any employee or independent contractor of the Company on behalf of any other business enterprise, nor shall you induce any employee or independent contractor associated with the Company to terminate or breach an employment, contractual or other relationship with the Company.|
|12.||The Broker shall be paid commissions on all orders from his territory accepted by the Company prior to the effective termination date of this Agreement, even though such orders may be shipped or paid for after the effective termination date.|
|13.||In the event of a principal being a defendant in a legal suit concerning product being harmful to a complainant, the broker will be immune from any liability whether in direct legal action of a joint action.|
|14.||This agreement shall be construed in accordance with and governed by the laws of the State of Illinois.|
|By||/s/ Eric Rice||Date||03/26/2020|
|Printed Name||Eric Rice||Title||CEO|
|Hanson Faso Sales and Marketing, Inc.|
|By:||/s/ Stewart H. Reich||Date||03/30/2020|
|Signature & Title|
|Printed Name||Stewart H. Reich||Title||President|