SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): January 8, 2009
ETHOS
ENVIRONMENTAL, INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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000-30237
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88-0467241
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(State
or other jurisdiction
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(Commission
File Number)
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(IRS
Employer
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of
Incorporation)
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Identification
Number)
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6800
Gateway Park Drive
San
Diego, CA 92154
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(Address
of principal executive offices)
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619-575-6800
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(Registrant’s
Telephone Number)
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(Former
name or former address, if changed since last report)
Copy of
all Communications to:
Luis
Carrillo
Carrillo
Huettel, LLP
501 W.
Broadway, Suite 800
San
Diego, CA 92101
phone:
619.399.3090
fax:
619.330.1888
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 (see General Instruction A.2. below):
Item 1.01 Entry into a Material Definitive
Agreement.
MKM Opportunity Master Fund,
Limited
On
January 9, 2009, Ethos Environmental, Inc. (the “Company” or “Ethos”) entered
into a Settlement Agreement and General Release (the “MKM Settlement Agreement”)
with MKM Opportunity Master Fund, Limited, a Cayman Islands corporation (the
“MKM”) and non-affiliated investor, pursuant to which the Company and MKM
amended the terms and conditions relating to a series of transactions by and
between the Company and MKM, as set forth herein. In August 2008, Ethos issued a
Convertible Promissory Note to MKM for the principal amount of $300,000. At that
same time, in August 2008, Ethos issued a Common Stock Purchase Warrant to MKM
for 1,000,000 shares of Ethos common stock (the “August Warrant”). Subsequently,
in October 2008, Ethos issued a Common Stock Purchase Warrant to MKM for 500,000
shares of Ethos common stock (the “October Warrant”). The Note, August Warrant
and October Warrant shall collectively be referred to as the “Prior Agreements.”
The parties have resolved to terminate the Prior Agreements and enter into a new
Common Stock Purchase Warrant and a new Convertible Promissory Note pursuant to
terms and conditions herein as fully set forth in the MKM Settlement
Agreement.
Pursuant
to the terms of the MKM Settlement Agreement, MKM has provided additional
financing to the Company in the amount of $250,000 and, in exchange, the Company
has agreed to: (i) issue to MKM five hundred thousand (500,000) shares of the
Company’s common stock (the “Settlement Shares”); (ii) pay five thousand dollars
($5,000) to MKM for legal fees incurred as part of the MKM Settlement Agreement
(the “Legal Fees”); (iii) issue to MKM a five year Common Stock Purchase Warrant
to purchase up to one million five hundred thousand (1,500,000) shares of
Company common stock at $.25 per share (the “MKM Warrant”); and, (iv) issue a
replacement Convertible Promissory Note (the “MKM Note”) in the principal amount
of $550,000 bearing simple interest at a rate of ten percent (10%) per annum,
which becomes due and payable on September 30, 2009. The MKM Note also contains
customary events of default.
The
respective descriptions of: (i) MKM Settlement Agreement; (ii) the MKM Note;
and, (iii) the MKM Warrant are brief summaries only and are qualified in their
entirety by their respective terms set forth in each document, forms of which
are filed as exhibits to this Current Report on Form 8-K (the “Current
Report”).
Private
Placement
The
Company is in the process of completing a non-brokered private placement,
subject to market and other conditions, of $1,000,000 of 12% Convertible
Debentures (the “Private Placement”). The Private Placement consists of 20 Units
(each a “Unit”) offered at $50,000 per Unit, with each Unit being comprised of a
12% Convertible Debenture (the “2009 Note”), a Common Stock Purchase Warrant
(the “2009 Warrant”) for the purchase of 100,000 shares of the Company’s Common
Stock at $0.25 per share and 33,000 shares of the Company’s Common Stock as
incentive shares for the purchase of each Unit. The Private Placement agreements
contain standard representations, and warranties and affirmative and negative
covenants, and are described in greater detail below.
The 2009
Note carries 12% interest and a 24 month maturity date and the entire principal
amount of the 2009 Note, including any accrued interest, may be converted into
shares of the Company’s common stock by election of the Holder at any time at a
rate of $0.25 per share. Additionally, the Company may convert the entire
principal amount of the 2009 Note, including accrued interest, into shares of
the Company’s common stock if the closing price of the Company’s stock as
reported on the Over the Counter Markets is $0.50 or more for 15 consecutive
trading days with such conversion at a rate of $0.25 per share as well. The 2009
Note also contains customary events of default. The 2009 Warrant is
exercisable for an aggregate of 100,000 shares of Common Stock at an exercise
price of $0.25 per share for three (3) years from date of issue.
The
common stock being sold through this Private Placement has not and will not be
registered under the Securities Act of 1933, as amended, and may not be offered
or sold in the United States absent registration or an applicable exemption from
the registration requirement under the Securities Act. This Current Report is
neither an offer to sell nor a solicitation of an offer to buy any of these
securities.
The
description of the Private Placement documents are brief summaries only and are
qualified in their entirety by their respective terms set forth in each
document, forms of which are filed as exhibits to this Current
Report.
On
January 9, 2009, pursuant to the Company’s Private Placement, the Company sold
two Units to GreenBridge Capital Partners, IV, LLC, (“GBCP”) for an aggregate
amount of $100,000. The managing member of GBCP is Corey P.
Schlossmann, our CEO.
On
January 9, 2009, pursuant to the Company’s Private Placement, the Company sold
one Unit to Dr. Luis Carrillo in the amount of $50,000.
Dick F.
Chase
On
January 8, 2009, the Company entered into a Settlement Agreement and Mutual
General Release (the “Chase Settlement Agreement”) with Dick F. Chase, an
individual (“Mr. Chase”) a non-affiliated investor pursuant to which the Company
and Mr. Chase amended the terms and conditions relating to a Promissory Note
issued by the Company on March 31, 2008 (the “2008 Note”). On March
31, 2008, the Company issued the 2008 Note to Chase in the principal amount of
$300,000 bearing interest at 12% per annum, payable monthly in arrears. The 2008
Note was to be due in full on March 31, 2009. The Company and Mr. Chase have now
amended the 2008 Note in order to convert $50,000 of the principal amount due
under the 2008 Note into one Unit under the Private Placement. Additionally, the
Company will issue a new note in the principal amount of $250,000 bearing
interest at 12% per annum, due in full on or before December 31, 2009 (the
“Chase Note”) which provides that Mr. Chase shall have the right to convert any
amounts due under the Chase Note into additional Units as set forth
therein.
The
respective descriptions of (i) Chase Settlement Agreement (ii) the Chase Note;
and (iii) the Private Placement documents are brief summaries only and are
qualified in their entirety by their respective terms set forth in each
document, forms of which are filed as exhibits to this Current
Report.
Item
2.03 Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant.
The
information set forth above in Item 1.01 of this Current Report on Form 8-K is
incorporated herein by this reference.
Item 3.02 Unregistered Sales of Equity
Securities.
The
Securities issued pursuant to the MKM Settlement Agreement, the Chase Settlement
Agreement and the Private Placement have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold in the United States absent the registration or an applicable
exemption from the registration requirements of the Securities Act. The
transactions contemplated by the MKM Settlement Agreement, the Chase Settlement
Agreement and the Private Placement are exempt from the registration
requirements of the Securities Act, pursuant to Section 4(2) and/or Regulation D
thereunder. In each of MKM Settlement Agreement, the Chase Settlement
Agreement and the Private Placement, the investing party made representations to
the Company regarding their respective suitability to invest, including, without
limitation, that each investor qualifies as an “accredited investor” as that
term is defined under Rule 501(a) of the Securities Act. The Company did not
engage in general solicitation in connection with the sale of the
Securities.
This
Current Report shall not constitute an offer to sell, the solicitation of an
offer to buy, nor shall there be any sale of these securities in any state in
which such offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such state.
The
information set forth in Item 1.01 of this Current Report is incorporated by
reference into this Item 3.02.
Item 9.01 Financial Statements and
Exhibits.
(a) Not
applicable
(b) Not
applicable
(c) Not
applicable
(d) Exhibits.
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Exhibit
No.
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Description
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10.1
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Settlement
Agreement and Mutual General Release (MKM Settlement
Agreement)
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10.2
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Convertible
Promissory Note (MKM Note)
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10.3
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Common
Stock Purchase Warrant (MKM Warrant)
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10.4
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Settlement
Agreement and Mutual General Release (Chase Settlement
Agreement)
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10.5
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Convertible
Promissory Note (Chase Note)
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10.6
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Private
Placement Securities Purchase Agreement
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10.7
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Private
Placement Convertible Promissory Note
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10.8
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Private
Placement Common Stock Purchase Warrant
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10.9
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Private
Placement Security
Agreement
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
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Date:
January 13, 2009
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Ethos
Environmental, Inc.
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By: /s/ Corey P. Schlossmann
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Corey
P. Schlossmann, |
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President
& CEO |
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