Brain Scientific Inc. announced that it has entered into a security purchase agreement for the issuance of senior secured convertible debentures with thirteen accredited investors for total gross proceeds of $5,110,000 on June 13, 2022. The senior secured convertible debentures will bear interest rate of 10% per annum and are mandatorily convertible into the securities sold by the company in a qualified financing at the lower of $0.25 per share or a 30% discount to the price of securities sold in such qualified financing. The convertible debentures have a term of twelve months, expiring June 13, 2023.

The convertible debentures have been issued at original discount of 10%. The company will provide option to the holders to redeem the debentures into common shares of the company and to redeem up to 45% of the principal amount of the debenture. The company has also issued 18,896,495 warrants in the transaction to purchase common stock of the company.

The warrants have a term of four years after issuance and will be exercisable at an exercise price of $0.25. All the securities issued under the transaction will subject to lock-up period of six months. The company issued the securities pursuant to exemption provided under Section 4(a)(2) and Regulation D.