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NetClass Technology Inc (NASDAQ:NTCL) disclosed Friday that it entered into a securities purchase agreement with an accredited investor for a $2.2 million convertible promissory note and the sale of 1,069,500 Class A ordinary shares at $0.00025 per share. The purchase price for the note is $2 million. The transaction is expected to close Monday.
According to a statement based on a SEC filing, the note carries a 9% annual interest rate and matures 12 months from the delivery of the purchase price. The note features an original issue discount of $180,000 and includes a $20,000 payment by the company to the buyer for transaction-related expenses. Both amounts are included in the principal balance.
The note is convertible into Class A ordinary shares at a price equal to 88% of the lowest daily volume-weighted average price (VWAP) over the 10 trading days before conversion, but not below $0.7106 per share. The investor may convert the note beginning the earlier of six months from the purchase price date or the effective date of a registration statement, until the note is paid in full. NetClass Technology may prepay the note at 120% of the outstanding balance with ten trading days’ prior notice.
If certain trigger events occur, the buyer may increase the outstanding balance by 15% for each event, up to a maximum additional cash payment of $175,000.
The company has agreed to file a registration statement within 45 days following closing to register the resale of the shares. If the registration statement is not declared effective within 90 days of closing, the note’s outstanding balance will increase by 1% on the 90th day and by an additional 1% for each subsequent 30-day period, up to six months from closing.
Univest Securities, LLC acted as placement agent and will receive an 8% cash fee, a 1% non-accountable expense fee, and $30,000 in accountable expenses. The placement agent may also receive compensation for future financings involving investors it introduced within six months after closing.
All information is based on a press release statement and the company’s SEC filing.
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