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Item
1.01
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Entry
into a Material Definitive Agreement
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On
June 5, 2019, Darkstar Ventures, Inc. (the "Company") entered into a Securities Purchase Agreement (“SPA”)
with YAII PN, Ltd. (the “Investor”), pursuant to which the Investor will provide the Company with a convertible loan
in the aggregate amount of $1,100,000 in three tranches, and the Company will issue convertible debentures and a warrant to the
Investor. The first tranche of the loan in the amount of $200,000 will be provided upon signature of the SPA. The second tranche
in the amount of $300,000 will be provided upon the Company's filing of a Registration Statement on Form S-4 in connection with
its merger with Samsara Luggage, Inc. (See the Company’s 8-K filed on May 10, 2019). The third tranche in the amount of
$600,000 will be provided upon consummation of the Company's merger with Samsara and the fulfillment of all conditions required
for the merger. The funds are expected to be used to finance the Company’s activities through its merger with Samsara and
to finance Samsara’s working capital needs until the merger.
Each
tranche of the loan will bear interest at an annual rate of ten percent (10%) and will be repayable after two years. Each tranche
of the loan will be convertible after six months into shares of the Company’s common stock at a conversion price equal to
$0.003 per share.
As
part of the transaction, the Company will issue to the Investor a warrant to purchase 91,666,666 shares of common stock, at an
exercise price equal to $0.003. The term of the warrant is five years from the issue date. The warrant may be exercised by cash
payment or through cashless exercise by the surrender of warrant shares having a value equal to the exercise price of the portion
of the warrant being exercised.
The
SPA and the convertible debentures contain events of default, including, among other things, failure to repay the loan amount
by the maturity date, and bankruptcy and insolvency events, that could result in the acceleration of the Investor’s right
to convert the loan amount into shares of common stock.
A
copy of the SPA, the form of the convertible debentures, and the warrant are attached hereto as Exhibit 10.1, Exhibit 10.2, and
Exhibit 10.3, respectively, and are incorporated herein by reference. The foregoing descriptions of the terms and conditions of
the SPA, the convertible debentures, and the warrant are qualified in their entirety by reference to the full text of the SPA
the convertible debentures, and the warrant.
The
Company will be issuing the convertible debentures and the warrant under the exemptions from registration provided by Section
4(a)(2) of the Securities Act of 1933. We expect that any issuance of shares of common stock pursuant to the terms of the convertible
debentures and the warrant will be exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as
amended (the “Securities Act”), and regulations promulgated thereunder. None of these transactions involved any underwriters,
underwriting discounts or commissions, or any public offering, and the Investor had adequate access, through their relationships
with us, to information about us.
The
shares of common stock to be issued in the event of conversion of the loan and upon exercise of the warrant will not be registered
under the Securities Act, or any state securities laws, and may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of the Securities Act.