Item
1.01. Entry into a Material Definitive Agreement.
On
March 16, 2022 (the “Closing Date”), Waterside Capital Corporation (the “Company”) entered into
three Stock Purchase Agreements containing substantively similar terms and conditions (each an “SPA” and collectively,
the “SPAs”), each of which SPA has three associated Common Stock Purchase Warrants (“Warrant #1”,
“Warrant #2”, and “Warrant #3”; collectively, the “Warrants”). The counterparties
to the SPAs, and recipients of the preferred shares issuable thereunder and the Warrants, are accredited investors (each a “Buyer”
and collectively, the “Buyers”).
Pursuant
to each SPA, the Company issued and sold to the respective Buyer shares of Series A Convertible Preferred Stock, par value $0.0001 per
share (“Series A Stock”), in the amounts specified in the table below. Pursuant to each SPA, the Company also
issued three Warrants to each Buyer. At Closing, in consideration for shares of Series A Stock and the three Warrants, each Buyer
agreed to pay $50,000 multiplied by the number of shares of Series A Stock purchased by the Buyer, for an aggregate purchase price
of $1,100,000. In the aggregate, the Company has received $600,000 from the Buyers as of March 22, 2022. The Company expects to receive
the remaining $500,000 this week. The Company intends to use the proceeds for investment in the creation of cryptocurrency and/or token
liquidity pools (LP’s) and decentralized blockchain technologies (Web3), with primary emphasis on non-fungible token (NFT) brands
and projects that utilize the Ethereum blockchain.
Series
A Stock is a class of preferred stock in the Company that was created when a Certificate of Designation was filed by the Company with
the Nevada Secretary of State on March 11, 2022. Each share of Series A Stock is convertible into 100,000 shares of the Company common
stock, par value $0.0001 (“Common Stock”). The Certificate of Designation provides for 100 authorized shares of Series
A Stock, $50,000 stated value per share, no voting rights, and no dividend or distribution rights. The description of the Series A Stock
contained in this Item 1.01 is qualified in its entirety by reference to the Series A Stock Certificate of Designation, which was filed
with the SEC on March 15, 2022 as Exhibit 3.1 to the Company’s Current Report on Form 8-K, and is hereby incorporated by reference.
Warrant
#1, Warrant #2 and Warrant #3 are immediately exercisable upon issuance on March 16, 2022, and remain exercisable for a period of five
years. The Warrants are exercisable, in whole or in part, for the number of shares of Common Stock specified in the table below.
The exercise prices per share of Common Stock for Warrant #1, Warrant #2, and Warrant #3 are fixed at $1.30, $1.50 and $1.75, respectively.
The
table below sets forth the Series A Stock shares purchased, the aggregate purchase price, and Warrant share conversion amounts issued:
| Buyer | |
Shares of Series A Stock Purchased | | |
Aggregate Purchase Price ($50,000 per share of Series A Stock) | | |
Warrant #1 Common Stock Shares Issuable ($1.30/share) | | |
Warrant #2 Common Stock Shares Issuable ($1.50/share) | | |
Warrant #3 Common Stock Shares Issuable ($1.75/share) | |
Buyer #1 | |
| 10 | | |
$ | 500,000 | | |
| 1,000,000 | | |
| 1,000,000 | | |
| 1,000,000 | |
Buyer #2 | |
| 10 | | |
$ | 500,000 | | |
| 1,000,000 | | |
| 1,000,000 | | |
| 1,000,000 | |
Buyer #3 | |
| 2 | | |
$ | 100,000 | | |
| 200,000 | | |
| 200,000 | | |
| 200,000 | |
Each
SPA contains customary
representations and warranties for the Company and the Buyers. Each Buyer further represents that he is an accredited investor, as the
term is defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and acknowledges that
the securities received pursuant to the SPA are not registered under the Securities Act. Each SPA contains cross-indemnification
for certain losses relating to the SPA, as specified therein. The governing law for each SPA is Nevada. For resolving any disputes,
the exclusive jurisdiction is Georgia and venue is Forsyth County, Georgia. The Company and Buyers have waived any rights to a jury trial.
Potential remedies include specific performance, in addition to any other remedy at law or in equity.
Each
Warrant may be exercised in whole or in part, subject to a beneficial ownership limitation per Buyer of 9.99% of the number of Common
Stock shares outstanding. The Common Stock issued upon exercise of the Warrants will be adjusted for any stock dividends, splits, combinations,
or reclassifications of the underlying Common Stock. Upon the occurrence of a fundamental transaction (as defined in the Warrants), which
includes any merger or consolidation, the Warrants will be treated as exercised immediately prior thereto at an appropriately adjusted
exercise price. The Warrants may be transferred, subject to compliance with applicable securities laws and delivery of an opinion of
counsel satisfactory to the Company opining that the Warrants may be transferred without registration under the Securities Act.
Any such transferred Warrants will bear a restrictive legend stating that the securities have not been registered under the Securities
Act. The governing law for the Warrants is Nevada. The Warrants contain a broad limitation of liability, including, but not limited to,
any asserted liability of the Buyer to exercise the Warrants. Potential remedies available to the parties include specific performance
to rights under the Warrants, in addition to any other remedy at law or in equity.
The
foregoing descriptions of the SPAs and Warrants are qualified in their entirety by reference to the full SPAs and Warrants
attached hereto as Exhibits 10.1 through 10.12, which are hereby incorporated by reference into this Item 1.01.