Issuer

Founders and Key Officers

Maryam Sadeghi (CEO and Co-Founder), Majid Razmara (CTO and Co-Founder), Scott Farquhar (Director), Hamed Shahbazi (Director), and Daniel Petre (Director).

Securities to be Issued

Offering Size

Up to USD 4 million; Finhaven Private Markets investors have access to USD 2 million at this time.

Investor

Each investor in the Financing (“Investor”) shall receive a SAFE, which shall represent that Investor’s respective portion of the Total Purchase Amount (for each Investor, their “Purchase Amount”).

Tax Credits

British Columbia resident Investors “SBVCA Investors” may be eligible for a 30% investment tax credit in respect of their participation in this Financing, provided that such Investor meets the applicable eligibility criteria, and subject to the maximum credit applicable under the Small Business Venture Capital Act (the “SBVC ACT”).

Please note that certain restrictions apply in respect of future transfers of equity securities issued to Investors for which tax credits are issued, in order to maintain the Investor’s entitlement to the 30% investment tax credit. Investors should contact the BC Investment Capital Branch or consult with its own professional advisors to learn more about the restrictions on future transfers.

It is a requirement under the investment tax credit program that the SAFEs for which tax credits are issued must be “at risk”, meaning that under all Events, as described above, the SAFE converts into shares of the Company. Accordingly, the SAFEs issued in the Financing will include a waiver, applicable to all SBVCA Investors, of the right to receive any cash payment in connection with any of the Events.

Conversion Conditions

1) Future Equity Financing – The SAFE entitles the holder thereof to receive such applicable number and class of shares (“Equity Securities”) issued by the Company on the closing of its next equity financing of not less than $4,000,000 (“Equity Financing”), at a price per share equal to the lesser of: (a) a 30% discount to the issue price of the Equity Securities; and (b) $25,000,000 (the “Valuation Cap”) divided by the Company Capitalization. For purposes herein, “Company Capitalization” means the sum, as of immediately prior to the Equity Financing or Maturity Date (as defined below), as applicable, of: (1) all shares of the Company (on an as-converted basis) issued and outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) all SAFEs issued under this Financing and all other SAFEs outstanding, and (B) any convertible promissory notes and/or debentures; and (2) all shares reserved and available for future grant under any equity incentive or similar plan of the Company, but excluding any equity incentive or similar plan to be created or increased in connection with the Equity Financing.

2) Liquidity Event – If there is a change of control of the Company or the Company’s initial public offering of common shares in its capital (a “Liquidity Event”), the Investor will automatically receive from the Company a number of Common shares in the capital of the Company equal to its Purchase Amount divided by the price per share equal to the quotient obtained by dividing the Valuation Cap by the Liquidity Capitalization as of immediately prior to the Liquidity Event. For purposes herein, “Liquidity Capitalization” means the sum, as of immediately prior to the Liquidity Event or Dissolution Event, of: (1) all shares of the Company (on an as-converted basis) issued and outstanding, assuming exercise or conversion of all outstanding vested and unvested options, warrants and other convertible securities, but excluding (A) all SAFEs issued under this Financing and all other SAFEs outstanding, (B) any convertible promissory notes and/or debentures, and (C) all shares reserved and available for future grant under any equity incentive or similar plan of the Company.

3) Dissolution Event – If there is a (i) voluntary termination of operations; (ii) a general assignment for the benefit of the Company’s creditors; or (iii) any other liquidation, dissolution or winding up of the Company (excluding a Liquidity Event), whether voluntary or involuntary (a “Dissolution Event”), the Investor will, at its option, either (i) receive a cash payment equal to the Purchase Amount (subject to the following paragraph and the liquidation priority set forth in Section 1(e) in the SAFE Agreement) (the “Cash-Out Amount”); or (ii) if the Investor fails to select the cash option within the time period specified by the Company, receive from the Company that number of Common Shares that is equal to the quotient obtained by dividing the Purchase Amount by the Liquidity Price, and such Common Shares will be issued to the Investor immediately prior to the consummation of the Dissolution Event or such earlier time as determined by the Company.

4) Maturity Date Conversion – If an Equity Financing, Liquidity Event or Dissolution Event have not occurred by the 24-month anniversary of the initial Closing Date (as defined below) (the “Maturity Date”), then on the Maturity Date the Company shall automatically issue to the Investor such number of the Company’s then-highest ranking shares as is equal to its Purchase Amount divided by the price per share equal to the quotient obtained by dividing $20,000,000 by the Company Capitalization as of immediately prior to the Maturity Date. Until the SAFE has been converted in accordance with an Equity Financing, a Liquidity Event, a Dissolution Event, or the Maturity Date, the holder of the SAFE shall not be treated as a shareholder of the Company. SAFEs do not bear interest.

Capital Structure

Pro Rata Right

Each Investor will have a right to purchase their pro rata share of the Equity Securities issued in the Equity Financing, which pro rata share will be calculated as the ratio of: (a) the number of Equity Securities issuable to such Investor upon conversion of their SAFE in the Equity Financing to (b) the sum of (i) the Company Capitalization and (ii) the aggregate number of Equity Securities issuable to all Investors upon conversion of all SAFEs in the Equity Financing. The Pro Rata Right shall automatically terminate upon the earlier of (A) the initial closing of the Equity Financing; (B) immediately prior to the closing of a Liquidity Event; or (C) immediately prior to the Dissolution Event.

Use of Proceeds

Sales expansion and growth with a focus on the US market. Leadership team expansion. DermEngine diagnostic AI clinical trials, regulatory approvals, and commercialization.

Risks

Private placement securities carry risk and, if you invest, you will be asked to confirm that you understand you could lose all your money. If you need to redeem your investment before its term expires, you may incur additional costs and you may not be able to redeem at all. There is no secondary market where you can sell these securities.