Item 1.01 Entry into a Material Definitive Agreement.
Private Placement
On November 1, 2019, NeuroOne Medical Technologies
Corporation (the “Company”) entered into a Subscription Agreement (the “Subscription Agreement”)
with certain accredited investors (the “Subscribers”), pursuant to which the Company, in a private placement
(the “Private Placement”), agreed to issue and sell to the Subscribers 13% convertible promissory notes
(each, a “Note” and collectively, the “Notes”) and warrants (each, a “Warrant”
and collectively, the “Warrants”) to purchase shares of the Company’s common stock, par value $0.001
per share (“Common Stock”).
The initial closing of the Private
Placement was consummated on November 1, 2019, and, on that date, the Company issued Notes in an aggregate principal amount
of $1,253,000 to the Subscribers. The Company may conduct any number of additional closings so long as the aggregate amount
of gross proceeds does not exceed $3,000,000 or a higher amount determined by the Board of Directors.
Notes
The Notes bear interest at a fixed rate
of 13% per annum and require the Company to repay the principal and accrued and unpaid interest thereon on May 1, 2020 (the
“Maturity Date”). If the Company raises more than $3,000,000 in an equity financing before the
Maturity Date (the “Qualified Financing”), each Subscriber shall have the option to convert the
outstanding principal and accrued and unpaid interest of such Subscriber’s Note (the “Outstanding
Balance”) into the securities issued by the Company in such Qualified Financing in an amount equal to (i) the
Outstanding Balance divided by (ii) the lower of 0.6 multiplied by (A) the actual per share price of securities issued by the
Company in the Qualified Financing and (B) the ten day volume weighted average closing price of the Common Stock prior to the
first closing of a Qualified Financing. If a change of control transaction occurs prior to the earlier of a Qualified
Financing or the Maturity Date, the Notes would become payable on demand as of the closing date of such transaction. Change
of control means a merger or consolidation with another entity in which the Company’s stockholders do not own more than 50% of the
outstanding voting power of the surviving entity or the disposition of all or substantially all of the Company’s assets.
Warrants
Each Warrant grants the holder the option to
purchase the number of shares of Common Stock equal to (i) 0.5 multiplied by (ii) the principal amount of such Subscriber’s
Notes divided by 1.87, with an exercise price per share equal to $1.87. The Warrants are immediately exercisable and expire on
November 1, 2022. The exercise price is subject to adjustment in the event of any stock dividends or splits, reverse stock split,
recapitalization, reorganization or similar transaction, as described therein.
Subscription Agreement
The Company has granted the Subscribers indemnification
rights with respect to its representations, warranties, covenants and agreements under the Subscription Agreement.
The foregoing summary descriptions of the Subscription
Agreement, the Notes and the Warrants do not purport to be complete and are qualified in their entirety by reference to the forms
of the Note, the Warrant and the Subscription Agreement, which are attached as Exhibits 4.1, 4.2 and 10.1 hereto, respectively,
and incorporated herein by reference.
The representations, warranties and covenants
contained in the Subscription Agreement, the Notes and the Warrants were made solely for the benefit of the parties to the Subscription
Agreement, the Notes and the Warrants and may be subject to limitations agreed upon by the contracting parties. Accordingly, the
Subscription Agreement, the Notes and the Warrants are incorporated herein by reference only to provide investors with information
regarding the terms of such documents and not to provide investors with any other factual information regarding the Company or
its business, and should be read in conjunction with the disclosures in the Company’s periodic reports and other filings
with the Securities and Exchange Commission.
In connection with the Private Placement, Paulson Investment
Company (the “Broker”) will receive a cash commission equal to 12% of the gross proceeds from the sale
of the Notes, and 10-year warrants to purchase an amount of Common Stock equal to 15% of the total amount of shares of Common Stock
into which the Notes are convertible, at an exercise price equal to the offering price of the Company’s securities in the
next Qualified Financing.