Item 3.02 Unregistered Sales of Equity
Securities
On September 10, 2018,
Avant Diagnostics, Inc. (the “Company”) entered into securities purchase agreements (collectively, the “Series
A Purchase Agreement”) with accredited investors (the “Investors”), pursuant to which the Company sold an aggregate
of one hundred thousand (100,000) shares of its series A convertible preferred stock (the “Series A Preferred Stock”)
for aggregate gross proceeds of $100,000. The terms of the Series A Preferred Stock were included in Items 3.02, 3.03 and Item
5.03 of the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on May 25, 2018
and are incorporated herein by reference.
For a period of one
year from the date of final closing of the offering, Investors holding at least a majority of the Series A Preferred Stock outstanding
from time to time shall have the right to cause the Company to sell for cash to such Investors on a
pro rata
basis up to
an aggregate of $1,000,000 of common stock in one or more transactions at a 10% discount to the average closing price of the common
stock (as reported for consolidated transactions with respect to securities listed on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, then in the over-the-counter market, as reported on any tier maintained by the OTC Markets Group,
Inc.) for the thirty (30) consecutive trading days immediately prior to (and including) the Friday preceding the date of such purchase
or purchases.
Until the
Company’s 2019 annual meeting of stockholders, all holders of Series A Preferred Stock, jointly and severally, shall have
the exclusive right, voting separately as a class, to elect up to six (6) directors (each director, an
“Investor Director”). An Investor Director so elected shall serve for a term of one year and until his successor
is elected and qualified. An Investor Director may, during his or her term of office, be removed at any time, with or without
cause, by and only by the affirmative vote, at a special meeting of holders of Series A Preferred Stock called for such
purpose. Any vacancy created by such removal may also be filled at such meeting or by such consent for the remainder of such
initial one year term. In addition, until the Company’s 2019 annual meeting of
stockholders, Infusion 51a, LP (“Infusion”) shall have the right to elect up to three (3) directors (each
director, an “Infusion Director”). An Infusion Director so initially elected shall serve for a term of one year
and until his successor is elected and qualified. Any vacancy in the position of an Infusion Director may be filled only by
the affirmative vote of Infusion. An Infusion Director may, during his or her term of office, be removed at any time, with or
without cause. Any vacancy created by such removal may also be filled by Infusion for the remainder of such initial one year
term.
As soon as practicable
after the final closing of the offering, the Company shall use commercially reasonable efforts to take all necessary actions and
to obtain such approvals of the Company’s stockholders as may be required to, among other things, undertake a reverse stock
split at such ratio where the number of shares of Common Stock outstanding after consummation of such reverse stock split shall
be approximately 15,000,000 shares (the “Reverse Split”) before the exchange of the Series A Preferred Stock into shares
of common stock (the “Stockholder Approval”). Until the consummation of the Reverse Split, the Investors appointed
AVDX Investors Group LLC (the “Investor Representative”) as its attorney-in-fact for the purpose of carrying out the
Stockholder Approval.
Until the consummation
of the Reverse Split, upon any issuance by the Company of common stock or Common Stock Equivalents (as defined in the Certificate
of Designations) for cash consideration, indebtedness or a combination of units thereof (a “Subsequent Financing”),
each Qualifying Purchaser (as defined below) shall have the right to participate in up to an amount of the Subsequent Financing
equal to 50% of the Subsequent Financing on the same terms, conditions and price provided for in the Subsequent Financing. For
purposes herein, “Qualifying Purchaser” means an Investor with a subscription amount of at least $150,000.
Beginning on the six
month anniversary of the final closing of the offering, on or prior to the sixtieth (60th) calendar day after the date of receipt
of written demand from Investors holding at least 51% of Registrable Securities (as defined in the Series A Purchase Agreement),
the Company shall prepare and file with the SEC a registration statement covering the resale of all of the Registrable Securities
that are not then registered on an effective registration statement.
In connection with
sale of the Series A Preferred Stock, we agreed to pay the Placement Agent, (i) a cash commission of 8% of the gross proceeds raised
from the investors of such securities, and to issue to the Placement Agent warrants to purchase a number of shares of common stock
equal to 4% of the gross proceeds divided by the respective offering price, with a term of seven years from the date of issuance.
The Series A Preferred
Stock sold was not registered under the Securities Act or the securities laws of any state, and were offered and sold in reliance
on the exemption from registration afforded by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder
and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.
The Investors are each an “accredited investor” as such term is defined in Regulation D promulgated
under the Securities Act. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy,
nor shall such securities be offered or sold in the United States absent registration or an applicable exemption from the registration
requirements and certificates evidencing such shares contain a legend stating the same.