Item 1.01. Entry into
a Material Definitive Agreement.
On September 20, 2019, Pareteum
Corporation (the “Company”) entered into a Securities Purchase Agreement (the “Securities Purchase
Agreement”) with institutional and accredited investors, pursuant to which the Company agreed to sell a total of (i)
approximately 18,852,273 common stock units, consisting of one share of common stock together with one Series A Purchase
Warrant to purchase one share of common stock and one Series B Purchase Warrant to purchase one-half share of common stock
and (ii) 3,875,000 pre-funded units, consisting of one pre-funded warrant to purchase one share of common stock together with
one Series A Purchase Warrant to purchase one share of common stock and one Series B Purchase Warrant to purchase one-half
share of common stock. The transaction to be effected pursuant to the Securities Purchase Agreement is referred to herein as
the “Offering.”
The shares of common stock and accompanying
purchase warrants were sold together at a combined public offering price of $1.76 per unit, and the pre-funded warrants and accompanying
purchase warrants were sold at a public offering price of $1.75 per unit with an exercise price of $0.01 per unit. The pre-funded
warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full.
The Series A Purchase Warrants are exercisable six months after issuance, have an exercise price of $2.25 per share, and are exercisable
for 5 years. The Series B Purchase Warrants are exercisable six months after issuance, have an exercise price of $1.84 per share,
and are exercisable for eighteen months. The pre-funded units are being offered to purchasers whose purchase of common units
in the Offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially
owning more than 4.99% (or, at the election of the purchaser, 9.99%) of the Company’s outstanding common stock immediately
following the consummation of the Offering. The shares of common stock, or Pre-funded Warrants in the case of Pre-funded Units,
and the Warrants are being offered together, but the securities comprising the Common Units and the Pre-funded Units
will be issued separately and will be immediately separable upon issuance.
The Offering is expected to close on
or about September 24, 2019, subject to the satisfaction of customary closing conditions. The gross proceeds to the Company from
the offering, before deducting the placement agent and other estimated fees and expenses, are approximately $40 million. The Company
intends to use approximately $30 million of the net proceeds to eliminate certain outstanding indebtedness. The balance will be
used for working capital and general corporate purposes. The Offering is being made pursuant to the Company’s existing shelf
registration statement on Form S-3 (File No. 333-227912), which was declared effective by the Securities
and Exchange Commission (the “Commission”) on December 18, 2018.
The representations, warranties and
covenants contained in the Securities Purchase Agreement were made solely for the benefit of the parties to the Securities Purchase
Agreement. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between
the parties to the Securities Purchase Agreement and not as statements of fact, and (ii) may apply standards of materiality
in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly,
the Securities Purchase Agreement is filed with this report only to provide investors with information regarding the terms of transaction,
and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company.
Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Securities
Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.
Dawson James Securities, Inc.
(“Dawson James”) acted as the placement agent for the Offering pursuant to a Placement Agency Agreement, dated
September 20, 2019 (the “Placement Agency Agreement”). Under the Placement Agency Agreement, Dawson James agreed
to use commercially reasonable “best efforts” to arrange for the sale of the units and the Company agreed to pay
the placement agent a cash fee equal to 5% of the gross proceeds of the Offering and to issue to Dawson James or its
designees five year warrants to purchase up to 909,091 shares of common stock at $3.00 per share (the “Placement Agent
Warrants”). The Placement Agency Agreement contains customary representations, warranties and indemnification by the
Company and provides for the reimbursement of up to $50,000 in expenses incurred by the placement agent in connection with
the Offering.
The foregoing descriptions of the Placement
Agency Agreement, the Pre-funded Warrants, the Warrants, the Placement Agent Warrants and the Securities Purchase Agreement
do not purport to be complete and are qualified in its entirety by reference to the full text of the Placement Agency Agreement
and the forms of the Pre-funded Warrant, Warrant, Placement Agent Warrant and the Securities Purchase Agreement, which
are filed as Exhibits 1.1, 4.1, 4.2, 4.3 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated
by reference herein.