Item
1.01 Entry Into A Material Definitive Agreement.
On
June 24, 2016, 2050 Motors Inc. (the “Company”) entered into an Equity Purchase Agreement (the “Agreement”)
with Southridge Partners II LP (the “Investor”), pursuant to which the Company has the right to sell up to $10,000,000
of the Company’s common stock, subject to conditions the Company must satisfy as set forth in the Agreement, including the
effectiveness of a registration statement on Form S-1 with the Securities and Exchange Commission (the “SEC”). Following
effectiveness of our registration statement with the SEC, we can deliver a put under the Agreement by selling shares of our common
stock to Southridge and Southridge will be obligated to purchase the shares.
We
do not have the right to commence any sales to the Investor under the Agreement until the SEC has declared effective the registration
statement. Thereafter, we may, from time to time and at our sole discretion, direct the Investor to purchase shares of our common
stock. The purchase price per share will be equal to 88% of the lowest closing price of the common stock for the ten trading days
immediately following the date in which we deposit the shares to be purchased by the Investor into its brokerage account. In consideration
for entering into the Agreement, we issued to the Investor a Promissory Note in the principal amount of $75,000, which is payable
with interest at 10% on June 24, 2017.
For
each share of common stock purchased under the Agreement, the Investor will pay 88% of the lowest closing bid price on the Company’s
principal market for the shares of common stock at such time as quoted by Bloomberg Finance L.P. for any of the 10 trading days
immediately following the Company’s delivery of the shares of the Company’s common stock to the Investor’s brokerage
account pursuant to the Company’s corresponding put notice to the Investor. In no event, however, shall the number of shares
of common stock issuable to the Investor pursuant to a put notice cause the aggregate number of shares of common stock beneficially
owned by the Investor and its affiliates to exceed 9.99% of the Company’s outstanding common stock at the time.
The
shares of common stock to be issued to the Investor under the Agreement will be issued pursuant to an exemption from registration
under the Securities Act of 1933, as amended (the “ Securities Act “), pursuant to Section 4(a)(2) thereof and Rule
506 of Regulation D promulgated thereunder. The Investor represented to the Company that it is a “sophisticated investor”
as defined in Rule 506(b)(2)(ii) under the Securities Act and an “accredited investor” as defined in Rule 501(a) under
the Securities Act.
As
a condition precedent to the Company’s right to deliver a put notice, the shares of common stock offered and sold under
the Agreement must be registered for resale. The Company has entered into a registration rights agreement (the “Registration
Rights Agreement”) with the Investor, pursuant to which the Company has an obligation to file a registration statement with
the SEC covering the resale by the Investor of any shares to be issued to the Investor under the Agreement.
The
Company’s right to deliver a put notice and the obligations of the Investor with respect to a put is subject to the Company’s
satisfaction of a number of conditions, including, but not limited to:
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That
the Company’s common stock is trading on its principal market;
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The
Company shall not have been notified of any pending or threatened proceedings or other action to suspend the trading of the
Company’s common stock;
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That
a registration statement relating to the resale of the shares sold to the Investor is effective.
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Unless
earlier terminated in accordance with its terms, the Agreement shall terminate on the earlier of: (i) twenty four months from
the date of an effective registration statement; or (ii) the date on which the Investor shall have purchased an aggregate of $10,000,000
of the Company’s common stock pursuant to the Agreement.
The
preceding description of the Agreement and Registration Rights Agreement does not purport to be complete and is qualified in its
entirety by reference to the Agreement, which is filed as Exhibit 10.1 to this report and incorporated herein by reference, and
the Registration Rights Agreement, which is filed as Exhibit 10.2 to this report and the Promissory Note which is filed as exhibit
10.3 to this report, all of such Exhibits are incorporated herein by reference.