ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On September 22, 2017, for the benefit of existing Eco Science Solutions, Inc. ("ESSI") shareholders, and to allow for successful future capital raising, ESSI amended both the Stock Purchase Agreement and the Employment/Consultant Agreements entered into with the founders of Ga Du Corporation on June 21, 2017.
The Amendment to the Stock Purchase Agreement eliminates the clause (paragraph 2.6) allowing for the issuance of 15,000,000 additional shares upon the acquisition of a banking interest; the Amendment to the Employment/Consultant Agreements eliminated the clause (paragraph 3(b) (Employment Agreement) and paragraph 6 (Consultant Agreement)) allowing the Ga Du employees/consultants options to purchase shares of ESSI Common Shares, under those employment/consultant agreements.
Additionally, on September 22, 2017, and in order to avoid diluting the holdings of existing ESSI Shareholders, Jeffery and Don Taylor, CEO and CFO of ESSI, agreed to return 8,000,000 Shares each of ESSI's Common Stock of their own to the Company for cancellation, effective September 22, 2017.
Further, on September 22, 2017, Ga Du Corporation entered into an Assignment Agreement with G&L Enterprises, wherein G&L Enterprises assigned, to Ga Du Corporation, all of its rights, interest in, and obligations under a License and Master Marketing Agreement (LMMA) it entered into with Alliance Financial Network, Inc. ("AFN", "Alliance") on September 6, 2017. The basic terms of that Agreement are as follows:
Alliance provides certain financial and marketing services to businesses and individuals, including the Cannabis Industry, on a programmatic or membership basis (the "Financial Program"), of which Alliance derives fees and income from enrolling companies in the Financial Program and providing a range of services, with respect to which AFN and Ga Du may derive fees and income, for such clients (the "Members") according to the AFN pricing schedule (the "Fees").
Alliance Financial Network is registered with FinCEN (MSB Registration Number: 31000094744769) as a financial services institution, compliant with the AML/BSA guidelines of FinCEN, and is regulated by the IRS. Operating a mobile application known as eXPO™ electronic eXchange Portal, Alliance provides financial and marketing services to businesses and individuals, which are challenged in the traditional banking systems, and generally are those that require more intensive compliance then banks are willing, or able to perform. One such industry is the cannabis industry; Alliance is configured to establish Membership relationships businesses in this industry following a full compliance audit on the business.
Ga Du has agreed to issue, or cause to be issued, two hundred thousand (200,000) shares of Eco Science Solutions Inc. ("ESSI") common stock to Alliance. Alliance acknowledges that: (i) the shares are unregistered; (ii) the shares, when issued, will have restrictive language such that they may not be deposited for trading until they are registered, or, upon meeting certain criteria, they are exempt from registration; and (iii) the trading of ESSI shares on the public exchanges was suspended, and although the suspension has been lifted, a Form 15c2-11 with current information must be filed with the Financial Industry Regulatory Authority (FINRA) prior to the caveat emptor status being lifted.
Ga Du shall have the exclusive right to undertake marketing responsibilities of Alliance's Financial Services to businesses in the Cannabis industry, initially in Michigan, Oregon and Washington, with plans to extend throughout the United States, provided that it shall not extend to any states where Cannabis sales have not been legalized by that state's laws.
Ga Du shall be credited with all Cannabis related members and revenues that use Alliance's financial and marketing services, regardless of the source of revenue, or the party that enrolled the customer that generated the revenues, that are generated within any territory in which Ga Du has commenced business.
Alliance will provide all software platform(s) necessary to deliver the Financial Services, assure compliance with appropriate Federal Requirements and international money laundering restrictions, administer all compliance, enrollment, and collection of fees from the Members contracting with Alliance, provide any and all necessary marketing or other materials describing Alliance's services and program, will forward any required Sales Commissions to the appropriate recipients, and assure adequate customer service at all times.
Alliance will be responsible for the functional operation of any software utilized in providing its services and for the administration and handling of monies and/or any credits relating thereto and, in the event of any claim, cause of action or lawsuit (together the "Claims") for failure to properly administer such responsibilities, Alliance shall have the sole obligation to defend such Claim(s) and shall fully indemnify, defend and hold harmless Ga Du from and against such Claims.
Alliance will maintain accounting and data concerning the income from the Cannabis Industry and will generate a monthly income statement as to each of the following revenue streams: (i) membership fees; (ii) cash depository fees; (iii) merchant processing and credit card fees; (iv) transfer fees; and (v) advertising fees.
Alliance and Ga Du will split compensation derived from income generated from enrollees of Ga Du as follows: (a) for income from point of sale payments to merchants, after deducting any Sales Commissions and cost basis (interchange and bank fees), Alliance will receive forty percent (40%), and Ga Du shall receive sixty percent (60%); (b) for income from cash depository business deriving from the Cannabis industry, Alliance will receive sixty five percent (65%), and Ga Du will receive thirty five percent (35%); (c) for income derived from membership fees from the Cannabis industry, Alliance and Ga Du will split the revenue 40/60 as in (a) above; (d) for income generated from transfer fees, Alliance and Ga Du will split the revenue on a 50/50 basis; and (e) for any other income derived from providing services to the Cannabis industry, Alliance and Ga Du will split the income on an equal fifty/fifty basis, except that income derived from advertising fees paid by advertisers utilizing Alliance's kiosks will be split eighty-five percent (85%) to Alliance and fifteen percent (15%) to Ga Du.
Additionally, the terms of the License and Master Marketing Agreement G&L entered into with Alliance included a $100,000 Convertible Promissory Note ("Note") payable to G&L, based upon money G&L loaned to Alliance; the sole member of G&L Enterprises, L. John Lewis, is one of the founding members of Ga Du Corporation.
On September 22, 2017, G&L Enterprises assigned the $100,000 Convertible Promissory Note to Ga Du Corporation it entered into with Alliance Financial Network, Inc. on July 6, 2017. The terms of the Note are for one year with 12% interest, and following the above-referenced assignment, payable to the Ga Du Corporation. Furthermore, the Note can, at Ga Du's option, be converted upon maturity into 1.12% of the equity of Alliance.
DESCRIPTION OF ALLIANCE FINANCIAL NETWORK, INC.
Alliance Financial Network is a
Federally compliant financial system registered with FinCEN (
MSB Registration Number: 31000094744769)
allowing licensed cannabis businesses an automated tax payment system and Internet banking services including wire transfers, ACH, electronic checks, armored pickup of cash, and bill pay, payroll services, and inventory control "seed to "CPA". For the Company's Enterprise Customers, through
Alliance Financial Network,
ESSI's Herbo offering is now able to bundle a greater portfolio of business services such as business accounting, business insurance, director insurance, employee payroll, inventory system, and credit/debit card management. Additionally, the
Alliance Financial Network
automated tax payment system can calculate and deliver state tax payments within 48hrs after the funds are made available in a taxpayer's account. This fast tax collection benefits dealings with the state the business operates in and helps the business remain compliant. The
Alliance Financial Network
solution is a federally registered solution ready to be used in all states, and uses an in-depth anti-laundering and "Know Your Customer" process, ensuring compliance with the Cole memo and all federal and state regulations. In addition to tax collection, this system can send reports to regulators which gives another level of visibility into the financial dealings of licensees. Further bundled into this software solution is the "seed to CPA" accounting system, which provides a frugal and efficient way for businesses to report and manage their finances. In terms of tax collection, account services, and business features, this software is unparalleled at providing fast, compliant, and traceable cash management solutions.