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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.

Banoffee has done a good job of supporting his argument.

My opinion is based on the wording set forth in 1.01. Entry into a Material Definitive Agreement Securities Purchase and Financing Agreement where there appears to be a distinction of what happens in first closing and what happens in the second closing.

Banoffee could be right, but if one applies logic, it would not be logical for a company to give up control of it's company for a minority shareholder (154,228,625 shareholder) where it would be logical to give up control when that party takes over 51% of the company.

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4. Covenants.
(m) Directors. (i) On the initial Closing Date, the Company shall expand the Board of Directors of the Company to five (5) directors. Concurrently therewith, the Investors will nominate three (3) persons to be appointed to and serve on the Board of Directors. Upon such nomination, the incumbent members of the Board of Directors (w ho shall remain on the Board of Directors) shall appoint each such nominee to fill each of three newly created vacancies, and, if there shall be any other vacancies, the Board of Directors shall appoint up to two (2) persons to serve as directors for the two remaining seats (the “Incumbent Directors”).