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On
July 15, 2022 the convertible notes were exchanged for a Simple Agreement for Future Equity
(“SAFE”). Prior to the exchange, the Conversion Price for each Note was the lower of (i) 75%
of the price paid in the Next Equity Financing, or the price obtained by dividing a $3,000,000
valuation cap by the fully diluted number of shares. The number of Conversion Shares to be
issued on conversion was the quotient obtained by dividing the outstanding principal and
unpaid accrued interest on a Note to be converted on the date of conversion by the Conversion
Price (the “Total Number of Shares”), The Total Number of Shares consisted of
Preferred Stock and Common Stock as follows: (i) That number of shares of Preferred Stock
obtained by dividing (a) the principal amount of each Note and all accrued and unpaid interest
thereunder by (b) the price per share paid by other purchasers of Preferred Stock in the
Next Equity Financing (such number of shares, the “Number of Preferred Stock”)
and (ii) that number of shares of Common Stock equal to the Total Number of Shares minus
the Number of Preferred Stock.
On
July 15, 2022, the Company and NeuCourt, Inc. entered into an Exchange Agreement by which the $25,000
and $47,839
principal amounts of the NeuCourt November 22, 2017 and October 31, 2018 convertible notes and accrued unpaid interest in the
amounts of $3,518
and $9,673,
respectively, were exchanged for a Simple Agreement for Future Equity (“SAFE”), a security providing for conversion of
the SAFE into shares of NeuCourt common or preferred stock (“Capital Stock”) at some future date. As of July 15, 2022,
the Company received SAFEs in the aggregate face amount of $86,030
(the “Purchase Amount”).
The
valuation cap of the SAFE is $3,000,000 (“Valuation Cap”), and the discount rate is 75% (“Discount Rate”).
If,
prior to termination, conversion, or expiration of the SAFE, NeuCourt sells a series of preferred stock (“Equity Preferred
Stock”) to investors in an equity financing raising not less than $500,000, Mentor’s SAFE shall be converted into shares
equal to the Purchase Amount divided by the lessor of (x) the price per share of the Equity Preferred Stock multiplied by the Discount
Rate and (y) the price per share equal to the Valuation Cap divided by the number of outstanding shares of NeuCourt on a fully diluted,
as-converted basis (“Conversion Shares”). The Conversion Shares shall consist of (a) the number of shares of Equity Preferred
Stock equal to the Purchase Amount divided by the price per share of the Equity Preferred Stock (“Preferred Stock”) and
(b) the number of shares of common stock equal to the Conversion Shares minus the Preferred Stock.
The
SAFE will expire and terminate upon i) conversion or ii) repayment. The SAFE may be repaid by NeuCourt upon sixty (60) days prior
notice (“Repayment Notice”) to the Company unless the Company elects during that period to convert the SAFE.
If
NeuCourt does not close an equity financing round raising $500,000 or more prior to expiration or termination of the SAFE, the Company
may elect to convert the SAFE into the number of shares of a to-be-created series of preferred stock equal to the (x) Purchase Amount
divided by (y) the Valuation Cap divided by the number of outstanding shares of NeuCourt on a fully diluted, as-converted basis (“Default
Conversion”). Additionally, if NeuCourt experiences a change of control, initial public offering, ceases operations, or enters
into a general assignment for the benefit of its creditors, prior to conversion, termination, or expiration of the SAFE, the Company
will receive the greater of (a) a cash payment equal to the Purchase Amount and (b) the value of the shares issuable on Default Conversion.
On
July 22, 2022, the Company sold $989
of the SAFE Purchase Amount to a third party. On August 1, 2022, the Company sold an additional $1,285
of the SAFE Purchase Amount to a third party, thereby reducing the aggregate outstanding SAFE Purchase Amount to $83,756.
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