Note 4 – SAFE Agreements

During the year ended December 31, 2018, the Company entered into SAFE agreements (Simple Agreement for Future Equity) with investors through a Regulation Crowdfunding campaign in exchange for cash investments totaling $628,558. Upon an initial public offering of the Company’s common shares or a change of control, the amount invested under the SAFE agreements automatically converted into the Company’s common shares. The number of shares the SAFE agreement investors received was based on a 16% discount to the pricing in the triggering equity financing. The SAFE agreements had no interest rate or maturity date and the SAFE investors had no voting right prior to conversion.

In accordance with the SAFE agreements, 50% of the funds raised, net of all fees associated with the use of a campaign platform were held in an escrow account to be released to the Company upon successfully acquiring the patent rights from HPI and upon the Company’s spending on Phase 2 clinical trials of an amount equal to at least half of the escrow funds prior to December 28, 2019.

The SAFE agreements were recorded as a liability of $763,249 as of December 31, 2018. On November 13, 2019, upon the closing of the IPO, the amount invested under the SAFE agreements automatically converted into 191,151 common shares, and the $269,399 of funds held in escrow were released to the Company.