Item
1.01. Entry into a Material Definitive Agreement
Securities
Purchase and Financing Agreement
On
January 26, 2021, Quantum Materials Corp. (the “Company”) and Pasaca Capital Inc. (“Pasaca”) entered into
a Securities Purchase and Financing Agreement (the “Purchase Agreement”). Pursuant to the terms of the Purchase Agreement,
at the first closing, Pasaca will convert three previously issued promissory notes made by the Company payable to Pasaca and loan
to the Company an additional $1,500,000 pursuant to a certain Secured Convertible Promissory Note (the “Convertible Note”)
made by the Company payable to Pasaca in the principal amount of $4,500,000 (the “Senior Note”). The Senior Note is
convertible into 154,228,625 shares of the Company’s common stock (the “Note Shares”). At the second closing,
Pasaca will purchase common stock of the Company (“Common Stock”) in an amount such that, after such purchase and
the conversion of the Senior Note into the Note Shares, Pasaca will own fifty-one percent (51.0%) of the fully diluted common
stock of the Company. The purchase price for the Common Stock to be sold in the second closing is $10,500,000. Pasaca will also
have the right to appoint three members to the Company’s Board of Directors. Both the first and second closing are subject
to numerous contingencies, as set forth in the Purchase Agreement.
The
foregoing description of the Purchase Agreement and the Convertible Note do not purport to be complete and are qualified in their
entirety by the provisions of the Purchase Agreement and the Convertible Note, which are attached hereto as Exhibit 10.1 and Exhibit
10.2, respectively.
Registration
Rights Agreement
On
January 26, 2021, the Company and Pasaca entered into a Registration Rights Agreement (the “Registration Rights Agreement”).
Pursuant to the terms of the Registration Rights Agreement, holders of twenty percent of the total shares of Note Shares and Common
Stock issued pursuant to the Purchase Agreement (the “Registrable Shares”) shall have the right to require the Company
to register at least thirty percent of such shares for sale on Form S-1 of Form S-3 under the Securities Act of 1933, as amended
(the “33 Act”). In addition, holders of ten percent of the Registrable Securities shall have the right to require
the Company to register such shares for sale on Form S-3 under the 33 Act. The Registration Rights Agreement also provides for
piggy-back registration rights. Pursuant to the Registration Rights Agreement, should the Company determine to issue new equity
securities of the Company, or securities convertible into equity securities of the Company, it must offer such new securities
to Pasaca and/or its assigns.
The
foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by
the provisions of the Registration Rights Agreement, which is attached hereto as Exhibit 10.3.
Distribution
Agreement
On
January 26, 2021, the Company and Pasaca entered into a Distribution Agreement (the “Distribution Agreement”). Pursuant
to the terms of the Distribution Agreement, the Company appointed Pasaca to act as an independent distributor to resell and distribute
the Company’s Quantum Dots and QMC HealthID products. Under the Distribution Agreement, Pasaca guaranteed that the Company
would receive cumulative gross royalties and/or gross sales, licensing or other revenues under the Distribution Agreement of no
less than $15,000,000, over the period including 2020 and continuing until twelve months after the Company has completed development
of a functioning product integrating the QMC HealthID IP and Innova Medical Group’s products. Pasaca has the right to extend
the revenue period by up to twenty-four months upon payment of advance royalties.
The
foregoing description of the Distribution Agreement does not purport to be complete and is qualified in its entirety by the provisions
of the Distribution Agreement, which is attached hereto as Exhibit 10.4.