UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934
(Amendment
No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check
the appropriate box:
| ☒ |
Preliminary
Proxy Statement |
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| ☐ |
Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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| ☐ |
Definitive
Proxy Statement |
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| ☐ |
Definitive
Additional Materials |
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| ☐ |
Soliciting
Material Pursuant to Section 240.14a-12 |
NETCAPITAL
INC.
(Name
of Registrant As Specified In Its Charter)
Payment
of Filing Fee (Check all boxes that apply):
| ☒ |
No
fee required. |
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| ☐ |
Fee
paid previously with preliminary materials. |
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| ☐ |
Fee
computed on table in exhibit required by Item 25(b) of Schedule 14A (17 CFR 240.14a-101) per Item 1 of this Schedule and Exchange
Act Rules 14c-5(g) and 0-11. |
NETCAPITAL
INC.
1
Lincoln Street,
Boston,
MA 02111
NOTICE
OF SPECIAL MEETING OF SHAREHOLDERS
TO
BE HELD FEBRUARY 23, 2024
TO
OUR SHAREHOLDERS:
You
are cordially invited to attend the Special Meeting of Shareholders (the “Special Meeting”) of Netcapital Inc., a Utah corporation
(together with its subsidiaries, the “Company,” “Netcapital,” “we,” “us” or “our”),
which will be held on February 23, 2024, at 10:30 am ET. The Special Meeting will be a virtual meeting to be held as a listen-only conference
call by calling 877-407-3088 (Toll Free). There will not be a physical meeting location. If you encounter any technical difficulties
with the virtual meeting platform on the meeting day, please call 877-804-2062 (toll free) or email proxy@equitystock.com. The
meeting will be held for the following purposes:
| 1. |
To
approve the issuance of common stock purchase warrants and placement agent warrants issued in connection with the Company’s
December 2023 public offering, including shares of common stock issuable upon exercise of such common stock purchase warrants and
placement agent warrants, in accordance with Nasdaq Listing Rule 5635(d) (the “Warrant Shareholder Approval Proposal”); |
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| 2. |
To
authorize the adjournment of the Special Meeting if necessary or appropriate, including to
solicit additional proxies in the event that there are not sufficient votes at the time of
the Special Meeting or adjournment or postponement thereof to approve any of the foregoing
proposals (the “Adjournment Proposal”) and
|
| 3. |
Other
Proposals – to consider and transact such other business as may properly come before the Special Meeting or any adjournment
or postponement thereof. |
A
copy of the Annual Report of the Company’s operations during the fiscal year ended April 30, 2023 is available on request or at
www.sec.gov.
The
Company’s board of directors has fixed the close of business on December 26, 2023 as the record date for the determination of shareholders
entitled to receive notice of and to vote at the Special Meeting of Shareholders and any adjournment or postponement thereof.
Strategic Shareholder Advisor and Proxy Solicitation
Agent
200 Broadacres Drive
Bloomfield, NJ 07003
North American Toll Free Phone:
1-833-795-8488
Email: NCPL@allianceadvisors.com
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By
Order of the Board of Directors |
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|
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/s/
Martin Kay |
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Name:
Martin Kay |
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Title:
Chief Executive Officer |
| January
[*], 2024 |
|
| Boston,
Massachusetts |
|
YOUR
VOTE IS IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED, PLEASE COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY WITHOUT DELAY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
IF YOU ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH TO DO SO EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY.
PROXY
STATEMENT
SPECIAL
MEETING OF SHAREHOLDERS
TO
BE HELD ON FEBRUARY 23, 2024
GENERAL
INFORMATION ABOUT THE PROXY STATEMENT AND SPECIAL MEETING
General
Netcapital
Inc. (the “Company,” “Netcapital,” “we,” “us,” or “our”), a Utah corporation
is providing this proxy statement in connection with the solicitation by the Company’s board of directors (the “Board”)
of proxies to be voted at the special meeting (“Special Meeting”) of shareholders to be held virtually at 10:30 am ET on
February 23, 2024 as a listen-only conference call by calling 877-407-3088 (Toll Free). There will not be a physical meeting location.
If you encounter any technical difficulties with the virtual meeting platform on the meeting day, please call 877-804-2062 (toll free)
or email proxy@equitystock.com.
On
or about January 9, 2024, we will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to our
shareholders of record on December 26, 2023 (the “Record Date”) (other than those who previously requested electronic or
paper delivery of proxy materials), directing shareholders to a website where they can access our proxy materials, including this proxy
statement and the 2023 Annual Report, and view instructions on how to vote. If you would prefer to receive a paper copy of our proxy
materials, please follow the instructions included in the Notice. If you have previously elected to receive our proxy materials electronically,
you will continue to receive access to those materials via e-mail unless you elect otherwise.
The
Special Meeting will be held for the purpose of considering and voting upon the following proposals:
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1. |
a
proposal to approve the issuance of common stock purchase warrants and placement agent warrants issued in connection with the Company’s
December 2023 public offering, including shares of common stock issuable upon exercise of such common stock purchase warrants and
placement agent warrants, in accordance with Nasdaq Listing Rule 5635(d) (the “Warrant Shareholder Approval Proposal”); |
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2. |
a
proposal to authorize the adjournment of the Special Meeting if necessary or appropriate, including to solicit additional proxies
in the event that there are not sufficient votes at the time of the Special Meeting or adjournment or postponement thereof to approve
any of the foregoing proposals (the “Adjournment Proposal”); and |
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3. |
such
other business as may properly come before the Special Meeting or any adjournment or postponement thereof. |
These
proposals are more fully described in the accompanying proxy statement, which you should read carefully.
If
you are a shareholder of record, you may attend the Special Meeting in the following ways:
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● |
Access
an audio-only conference call by calling 877-407-3088 (Toll Free) or +1 877-407-3088 (International); |
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Instructions
on how to attend and participate in the virtual Special Meeting, including how to demonstrate proof of stock ownership, are also
available as follows: |
Shareholders
of Record
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● |
Shareholders
of record as of the Record Date can attend the special meeting by accessing the live audio conference call at +1-877-407-3088 and
presenting the unique 12-digit control number on the proxy card. |
Beneficial
Owners
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● |
If
you were a beneficial owner of record as of the Record Date (i.e., you held your shares in an account at a brokerage firm, bank or
other similar agent), you will need to obtain a legal proxy from your broker, bank or other agent. Once you have received a legal
proxy from your broker, bank or other agent, it should be emailed to our transfer agent, Equity Stock Transfer, at proxy@equitystock.com
and should be labeled “Legal Proxy” in the subject line. Please include proof from your broker, bank or other agent of
your legal proxy (e.g., a forwarded email from your broker, bank or other agent with your legal proxy attached, or an image of your
valid proxy attached to your email). Requests for registration must be received by Equity Stock Transfer no later than 5:00 p.m.
Eastern Time, on February 21, 2024. You will then receive a confirmation of your registration, with a control number, by email from
Equity Stock Transfer. At the time of the meeting, access the live audio conference call at +1-877-407-3088 and present your unique
12-digit control number. |
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● |
Shareholders
may submit live questions on the conference line while attending the virtual Special Meeting. |
If
you are a shareholder of record, you may vote your shares in the following ways:
Whether
you plan to attend the Special Meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive
through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed
via Internet. You may specify whether your shares should be voted for or “withheld” for each nominee for director, and whether
your shares should be voted for, against or abstain with respect to each of the other proposals. Except as set forth below, if you properly
submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board’s recommendations
as noted below. The Board has appointed Martin Kay, to serve as the proxy for the Special Meeting. Voting by proxy will not affect your
right to attend the Special Meeting. If your shares are registered directly in your name through our stock transfer agent, Equity Stock
Transfer, or you have stock certificates, you may vote:
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1. |
By
Internet. The website address for Internet voting is www.netcapital.vote. Please click “Vote Your Proxy” and enter your
control number. |
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2. |
By
Email. Mark, date, sign and email the Proxy Card to proxy@equitystock.com, ATTN: Shareholder Services. |
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3. |
By
mail. Mark, date, sign and mail promptly the Proxy Card, to Equity Stock Transfer at 237 W 37th St. Suite 602 New York,
NY 10018, ATTN: Shareholder Services. |
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4. |
By
Fax. Mark, date, sign and fax the Proxy Card to 646-201-9006, ATTN: Shareholder Services. |
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5. |
At
the Special Meeting. If you are a shareholder of record, you can participate and vote your shares in the Special Meeting by visiting
www.netcapital.vote and then clicking “Vote Your Proxy”. You may then enter the control number included on your Proxy
Card and view the proposals and cast your vote. |
If
you hold your shares in “street name,” your bank, broker or other nominee should provide to you a request for voting instructions
along with the Company’s proxy solicitation materials. By completing the voting instruction card, you may direct your nominee how
to vote your shares. Alternatively, if you want to vote your shares during the Special Meeting, you must contact your nominee directly
in order to obtain a proxy issued to you by your nominee holder. Note that a broker letter that identifies you as a shareholder is not
the same as a nominee-issued proxy. If you fail to present a nominee-issued proxy to proxy@equitystock.com by 5:00 p.m. Eastern Time
on February 21, 2024, you will not be able to vote your nominee held shares during the Special Meeting.
QUESTIONS
AND ANSWERS ABOUT THE SPECIAL MEETING
These
Questions and Answers are only summaries of the matters they discuss. They do not contain all of the information that may be important
to you. You should read carefully the entire document, including any annexes to this proxy statement.
| Q: |
Why
are we holding a special meeting? |
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|
| A: |
On
December 27, 2023, we completed a public offering (the “Offering”) of (i) 4,800,000
shares (the “Common Shares”) of our common stock, par value $0.001 per share,
(the “Common Stock”); (ii) 11,200,000 prefunded common stock purchase warrants
(the “Prefunded Warrants”) to purchase 11,200,000 shares of Common Stock (the
“Prefunded Warrant Shares”); (iii) 16,000,000 series A-1 common stock purchase
warrants (the “Series A-1 Common Warrants”) to purchase 16,000,000 shares of
Common Stock (the “Series A-1 Common Warrant Shares”) and (iv) 16,000,000 series
A-2 common stock purchase warrants (the “Series A-2 Common Warrants,” together
with the Series A-1 Warrants, the “Common Warrants”) to purchase 16,000,000 shares
of our Common Stock (the “Series A-2 Common Warrant Shares”).
H.C.
Wainwright & Co., LLC acted as placement agent in connection with the Offering (the “Placement Agent”). We also issued
warrants to designees of the Placement Agent (the “Placement Agent Warrants”) to purchase up to 1,200,000 shares of Common
Stock (the “Placement Agent Warrant Shares”).
In
connection with the Offering, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with
certain institutional investors on December 21, 2023, which Purchase Agreements require that we call and hold a meeting of our shareholders
for the purpose of procuring approval for the Warrant Shareholder Approval Proposal in accordance with Nasdaq Listing Rules. |
| Q: |
Why
did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials? |
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|
| A: |
In
accordance with the rules adopted by the U.S. Securities and Exchange Commission (“SEC”), we may furnish proxy materials,
including this proxy statement and our 2023 Annual Report, to our shareholders by providing access to such documents on the Internet
instead of mailing printed copies. Most shareholders will not receive printed copies of the proxy materials unless they request them.
Instead, the Notice, which we will begin mailing to our shareholders on or about January 9, 2024, will instruct you as to how you
may access and review all of the proxy materials over the Internet. The Notice also instructs you as to how you may submit your proxy
on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for
requesting such materials in the Notice. |
| Q: |
Who
is entitled to vote? |
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|
| A: |
Only
shareholders of record as of the close of business on the Record Date will be entitled to notice of, and to vote at, the Special
Meeting. A list of shareholders eligible to vote at the Special Meeting is available for inspection at any time up to the Special
Meeting. If you would like to inspect the list, please call our Corporate Secretary at (781) 925-1700 to arrange a visit to our offices. |
| Q: |
How
many shares of common stock can vote? |
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|
| A: |
There
were 9,459,132 shares of common stock issued and outstanding as of the close of business on the Record Date. Each shareholder entitled
to vote at the Special Meeting may cast one vote for each share of common stock owned by him, her or it which has voting power upon
each matter considered at the Special Meeting. |
| Q: |
What
may I vote on? |
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|
| A: |
You
may vote on the following matters: |
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1. |
To
approve the Warrant Shareholder Approval Proposal; |
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2. |
To
approve the Adjournment Proposal; and |
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|
|
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3. |
any
other business that may properly come before the Special Meeting and any adjournment or postponement thereof. |
| Q: |
Will
any other business be presented for action by shareholders at the Special Meeting? |
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|
| A: |
The
Board knows of no other matters that will be presented for consideration at the Special Meeting. If any other matters are properly
brought before the Special Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in
accordance with their best judgment. |
| Q: |
How
does the Board recommend that I vote on each of the proposals? |
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|
| A: |
Our
Board recommends a vote “FOR” the Warrant Shareholder Approval Proposal (Proposal No. 1) and “FOR”
the Adjournment Proposal (Proposal No. 2). |
| Q: |
How
do I vote my shares? |
| |
|
| A: |
Whether
you plan to attend the Special Meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive
through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed
via Internet. You may specify whether your shares should be voted “FOR”, “AGAINST” or “ABSTAIN”
for the (i) Warrant Shareholder Approval Proposal (Proposal No. 1) and (ii) Adjournment Proposal (Proposal No. 2). Except as set
forth below, if you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance
with the Board’s recommendations as noted below. The Board has appointed Martin Kay, to serve as the proxy for the Special
Meeting. Voting by proxy will not affect your right to attend the Special Meeting. If your shares are registered directly in your
name through our stock transfer agent, Equity Stock Transfer, or you have stock certificates, you may vote: |
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1. |
By
Internet. The website address for Internet voting is www.netcapital.vote. Please click “Vote Your Proxy” and enter your
control number. |
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2. |
By
Email. Mark, date, sign and email the Proxy Card to proxy@equitystock.com, ATTN: Shareholder Services. |
| |
3. |
By
mail. Mark, date, sign and mail promptly the Proxy Card, to Equity Stock Transfer at 237 W 37th St. Suite 602 New York, NY 10018
ATTN: Shareholder Services. |
| |
4. |
By
Fax. Mark, date, sign and fax the Proxy Card to 646-201-9006, ATTN: Shareholder Services. |
| |
5. |
At
the Special Meeting. If you are a shareholder of record, you can participate and vote your shares in the Special Meeting by visiting
www.netcapital.vote and then clicking “Vote Your Proxy”. You may then enter the control number included on your Proxy
Card and view the proposals and cast your vote. |
If
you hold your shares in “street name,” your bank, broker or other nominee should provide to you a request for voting instructions
along with the Company’s proxy solicitation materials. By completing the voting instruction card, you may direct your nominee how
to vote your shares. Alternatively, if you want to vote your shares during the Special Meeting, you must contact your nominee directly
in order to obtain a proxy issued to you by your nominee holder. Note that a broker letter that identifies you as a shareholder is not
the same as a nominee-issued proxy. If you fail to present a nominee-issued proxy to proxy@equitystock.com by 5:00 p.m. Eastern Time
on February 21, 2024, you will not be able to vote your nominee held shares during the Special Meeting.
| Q: |
What
is a proxy? |
| |
|
| A: |
A
proxy is a person you appoint to vote on your behalf. By using any of the methods discussed above, you will be appointing as your
proxy Martin Kay, our Chief Executive Officer. He may act on your behalf, and will have the authority to appoint a substitute to
act as proxy. Whether or not you expect to virtually attend the Special Meeting, we request that you please use the means available
to you to vote by proxy so as to ensure that your shares of common stock may be voted. |
| Q: |
How
Will my Shares be Voted if I Give No Specific Instruction? |
| |
|
| A: |
We
must vote your shares as you have instructed. If there is a matter on which a shareholder
of record has given no specific instruction but has authorized us generally to vote the shares,
they will be voted “FOR” the Warrant Shareholder Approval Proposal (Proposal
No. 1) and “FOR” the Adjournment Proposal (Proposal No. 2).
This
authorization would exist, for example, if a shareholder of record merely signs, dates and returns the proxy card but does not indicate
how its shares are to be voted on one or more proposals. If other matters properly come before the Special Meeting and you do not
provide specific voting instructions, your shares will be voted at the discretion of the proxies. |
| Q: |
Will
my shares be voted if I do not return my proxy?
|
| A: |
If
your shares are registered directly in your name, your shares may not be voted if you do
not vote by returning your proxy by mail, over the phone or over the Internet before the
Annual Meeting or in person at the Annual Meeting.
If
your shares are held in “street name,” your brokerage firm, bank or other nominee may, under certain circumstances, vote
your shares if you do not timely return your voting instructions. Brokers, banks or other nominees can vote their customers’
unvoted shares on discretionary matters but cannot vote such shares on non-discretionary matters. If you do not timely return voting
instructions to your brokerage firm, bank or other nominee to vote your shares, your brokerage firm, bank or other nominee may, on
discretionary matters, either vote your shares or leave your shares unvoted.
Proposal
No. 1, regarding the Warrant Shareholder Approval Proposal, is a non-discretionary matter and a broker will not be permitted
to exercise its discretion to vote uninstructed shares on the proposal; we encourage you to timely provide voting instructions to
your brokerage firm, bank or other nominee. This ensures that your shares will be voted at the Special Meeting according to your
instructions. You should receive directions from your brokerage firm, bank or other nominee about how to submit your voting instructions
to them.
Proposal
No. 2, regarding the Adjournment Proposal, is a discretionary matter and a broker will be permitted to exercise its discretion
to vote uninstructed shares on the proposal; however, we encourage you to timely provide voting instructions to your brokerage firm,
bank or other nominee. This ensures that your shares will be voted at the Special Meeting according to your instructions. You should
receive directions from your brokerage firm, bank or other nominee about how to submit your voting instructions to them. |
| Q: |
What
if I want to change my vote or revoke my proxy? |
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|
| A: |
If
your shares are registered directly in your name, you may revoke your proxy and change your vote at any time before the Special Meeting.
To do so, you must do one of the following: |
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1. |
Vote
over the Internet as instructed above. Only your latest Internet vote is counted. You may not revoke or change your vote over the
Internet after 7:00 p.m. Eastern Time on February 22, 2024. |
| |
2. |
Sign
a new proxy and submit it by mail to Equity Stock Transfer at 237 W 37th St. Suite 602 New York, NY 10018 ATTN: Shareholder Services,
who must receive the proxy card no later than February 22, 2024. Only your latest dated proxy will be counted. |
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3. |
Virtually
attend the Special Meeting and vote electronically at the meeting. Virtually attending the Special Meeting alone will not revoke
your Internet vote or proxy submitted by mail, as the case may be. |
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4. |
Give
our Corporate Secretary written notice before or at the Special Meeting that you want to revoke your proxy. |
If
your shares are held in “street name,” you may submit new voting instructions with a later date by contacting your bank,
brokerage firm, or other nominee. You may also vote electronically at the Special Meeting, which will have the effect of revoking any
previously submitted voting instructions, if you obtain a broker’s legal proxy as described in the answer to the question “How
do I vote my shares?” above.
| Q: |
What
is a quorum? |
| |
|
| A: |
The
holders of more than 50% of the 9,459,132 shares of common stock outstanding as of the Record Date, either present or represented
by proxy, constitute a quorum. A quorum is necessary in order to conduct the Special Meeting. If you choose to have your shares represented
by proxy at the Special Meeting, you will be considered part of the quorum. Broker non-votes and abstentions will be counted as present
for the purpose of establishing a quorum. If a quorum is not present by attendance at the Special Meeting or represented by proxy,
the shareholders present by attendance at the meeting or by proxy may adjourn the Special Meeting until a quorum is present. |
| Q: |
What
is a Broker Non-Vote? |
| |
|
| A: |
A
“broker non-vote” occurs when shares held by a broker in “street name”
for a beneficial owner are not voted with respect to a proposal because (1) the broker has
not received voting instructions from the shareholder who beneficially owns the shares and
(2) the broker lacks the authority to vote the shares at their discretion. Broker non-votes
will not be included in the tabulation of the voting results of any of the “non-discretionary”
proposals and, therefore, will have no effect on such proposals.
Our
common stock is listed on the Nasdaq Capital Market. However, under current New York Stock Exchange (“NYSE”) rules and
interpretations that govern broker non-votes:
(i)
Proposal No. 1 for the Warrant Shareholder Approval Proposal is considered a non-discretionary matter and a broker will not be permitted
to exercise its discretion to vote uninstructed shares of the proposal;
(ii)
Proposal No. 2 for the Adjournment Proposal is considered a discretionary matter, and a broker will be permitted to exercise its
discretion to vote uninstructed shares of the proposal; |
| Q: |
What
vote is required to approve each matter and how are votes counted?
|
| A: |
The
table below summarizes the proposal that will be voted on, the vote required to approve the proposal and how votes are counted: |
| Proposal |
|
Votes
Required |
|
Voting
Options |
|
Impact
of
“Abstain” Votes |
|
Broker
Discretionary Voting
Allowed |
Proposal
No. 1:
Warrant
Shareholder Approval Proposal |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Special Meeting by the holders entitled to vote thereon |
|
“FOR”
“AGAINST” “ABSTAIN” |
|
(1) |
|
No(2) |
| |
|
|
|
|
|
|
|
|
Proposal
No. 2:
Adjournment
Proposal |
|
The
affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions)
at the Special Meeting by the holders entitled to vote thereon. |
|
“FOR”
“AGAINST”
“ABSTAIN” |
|
(1) |
|
Yes(3) |
| |
(1) |
A
vote marked as an “Abstention” is not considered a vote cast and will, therefore, not affect the outcome of this proposal. |
| |
|
|
| |
(2) |
As
this proposal is not considered a discretionary matter, brokers lack authority to exercise their discretion to vote uninstructed
shares on this proposal. |
| |
|
|
| |
(3) |
As
this proposal is considered a discretionary matter, brokers are permitted to exercise their discretion to vote uninstructed shares
on this proposal. |
| Q: |
Do
the directors and officers of the Company have an interest in the outcome of the matters to be voted on? |
| |
|
| A: |
Directors
and executive officers, who, as of the Record Date, had beneficial ownership (or had the right to acquire beneficial ownership within
sixty days following the Record Date) of approximately 23.2% of our outstanding common stock and are expected to vote in favor of
Warrant Shareholder Approval Proposal and the Abstention Proposal. |
| Q: |
Who
will count the votes? |
| |
|
| A: |
A
representative of Equity Stock Transfer, will serve as our inspector of elections and will count the votes cast by proxy and the
votes cast in person at the Special Meeting. |
| Q: |
How
do I attend the Special Meeting? |
| |
|
| A: |
Shareholders
of Record: Shareholders of record as of the Record Date can attend the special meeting
by accessing the live audio conference call at +1-877-407-3088 and presenting the unique
12-digit control number on the proxy card.
Beneficial
Owners: If you were a beneficial owner of record as of the Record Date (i.e., you held your shares in an account at a brokerage
firm, bank or other similar agent), you will need to obtain a legal proxy from your broker, bank or other agent. Once you have received
a legal proxy from your broker, bank or other agent, it should be emailed to our transfer agent, Equity Stock Transfer, at proxy@equitystock.com
and should be labeled “Legal Proxy” in the subject line. Please include proof from your broker, bank or other agent of
your legal proxy (e.g., a forwarded email from your broker, bank or other agent with your legal proxy attached, or an image of your
valid proxy attached to your email). Requests for registration must be received by Equity Stock Transfer no later than 5:00 p.m.
Eastern Time, on February 21, 2024. You will then receive a confirmation of your registration, with a control number, by email from
Equity Stock Transfer. At the time of the meeting, access the live audio conference call at +1-877-407-3088 and present your unique
12-digit control number. |
| Q: |
Why
a virtual meeting? |
| |
|
| A: |
We
are pleased to offer our shareholders a completely virtual Special Meeting, which provides
worldwide access, improved communication and cost savings for our shareholders and the Company.
|
| Q: |
What
if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual audio conference
line? |
| |
|
| A: |
We
will have technicians ready to assist you with any technical difficulties you may have in accessing the virtual Special Meeting.
If you encounter any difficulties, please call: 877-804-2062 (Toll Free) or email proxy@equitystock.com. |
| Q: |
Are
there any expenses associated with collecting the shareholder votes? |
| |
|
| A: |
All
of the expenses involved in preparing, assembling and mailing these proxy materials and all costs of soliciting proxies will be paid
by us. In addition to the solicitation by mail, proxies may be solicited by our officers and other employees by telephone or in person.
Such persons will receive no compensation for their services other than their regular salaries. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the
shares held of record by such persons, and we may reimburse such persons for reasonable out of pocket expenses incurred by them in
forwarding solicitation materials. If you have any questions or require any assistance with completing your proxy, please contact
Equity Stock Transfer by telephone at 877-804-2062 (Toll Free) or email proxy@equitystock.com. . In addition, we have retained
Alliance Advisors as our strategic shareholder advisor and proxy solicitation agent in connection with the solicitation of proxies
for the Special Meeting at an approximate cost of $15,000, plus reimbursement of expenses. If you have any questions or
require any assistance with completing your proxy, please contact Alliance Advisors by telephone (toll-free within North America)
at 1-833-795-8488 or by email at NCPL@allianceadvisors.com. |
| Q: |
Do
I have Dissenters’ Rights of Appraisal? |
| |
|
| A: |
Our
shareholders do not have appraisal rights under Utah law or under our governing documents with respect to the matters to be voted
upon at the Special Meeting. |
| Q: |
Where
can I find the voting results? |
| |
|
| A: |
Voting
results will be reported in a Current Report on Form 8-K, which we will file with the SEC within four business days following the
Special Meeting. |
| Q: |
How
do I obtain an Annual Report on Form 10-K |
| |
|
| A: |
If
you would like a copy of our Annual Report on Form 10-K for the fiscal year ended April 30,
2023 that we filed with the SEC, we will send you one without charge. Please write to:
NETCAPITAL
INC.
1
Lincoln Street,
Boston,
MA 02111
Attn:
Corporate Secretary
All
of our SEC filings are also available free of charge under the heading “SEC Filings” in the “Investors” section
of our website at www.netcapitalinc.com. |
PROPOSAL
NO. 1
WARRANT
SHAREHOLDER APPROVAL PROPOSAL
Overview
We
are asking shareholders to approve the issuance of the Common Warrants (as defined below), the Placement Agent Warrants (as defined below)
and the shares of common stock issuable upon the exercise of the Common Warrants and the Placement Agent Warrants that were issued in
connection with our public offering that closed on December 27, 2023 (the “Offering”) as contemplated by Nasdaq
Listing Rule 5635(d).
Background
Information
On
December 27, 2023, the Company completed a public offering (the “Offering”) of (i) 4,800,000 shares (the “Common Shares”)
of common stock, par value $0.001 per share, of the Company (the “Common Stock”); (ii) 11,200,000 prefunded common stock
purchase warrants (the “Prefunded Warrants”) to purchase 11,200,000 shares of Common Stock (the “Prefunded Warrant
Shares”); (iii) 16,000,000 series A-1 common stock purchase warrants (the “Series A-1 Common Warrants”) to purchase
16,000,000 shares of Common Stock (the “Series A-1 Common Warrant Shares”) and (iv) 16,000,000 series A-2 common stock purchase
warrants (the “Series A-2 Common Warrants,” together with the Series A-1 Warrants, the “Common Warrants”) to
purchase 16,000,000 shares of Common Stock (the “Series A-2 Common Warrant Shares”) .
H.C.
Wainwright & Co., LLC acted as placement agent in connection with the Offering. The Company also issued warrants to designees of
the Placement Agent (the “Placement Agent Warrants”) to purchase up to 1,200,000 shares of Common Stock (the “Placement
Agent Warrant Shares”).
In
connection with the Offering, the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with certain
institutional investors on December 21, 2023, which Purchase Agreements require that we call and hold a meeting of our shareholders
for the purpose of procuring approval for the Warrant Shareholder Approval Proposal pursuant to Nasdaq Listing Rule 5635(d).
Our
stock is traded on the Nasdaq Capital Market under the symbol “NCPL.” Nasdaq Listing Rule 5635(d) provides that shareholder
approval is required prior to the issuance of securities in a transaction, other than a public offering, involving the sale, issuance
or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock), which equals 20%
or more of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than the lower of: (i)
the closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of the common stock for
the five trading days immediately preceding the signing of the binding agreement for the transaction. In determining whether an offering
qualifies as a public offering, Nasdaq considers all relevant factors, including the extent of any discount to market price. In determining
discount, Nasdaq generally attributes a value of $0.125 for each warrant offered with a share of common stock, which value is generally
deemed to be a discount. In order to ensure that the Offering qualified as a public offering under Rule 5635 due to the value attributable
to the Common Warrants, the Common Warrants and the Placement Agent Warrants provide that they may not be exercised, and therefore have
no value, until shareholder approval of their exercise is obtained. See “— Reasons for Warrant Shareholder Approval
Proposal” below.
The
following is a summary of the material features of the Common Warrants. This summary is qualified in its entirety by the full text of
the Form of Common Warrant, a copy of which is attached to this Proxy Statement as Appendix A.
Common
Warrants
Duration
and Exercise Price. The Common Warrants will be issued in certificated form only. Each Common Warrant offered hereby will have an
exercise price of $0.25 per share. The Common Warrants will be exercisable beginning on the effective date of the Warrant Shareholder
Approval Proposal (the “Initial Exercise Date”). The Series A-1 Warrants will expire on the 5-year anniversary of the Initial
Exercise Date. The Series A-2 Warrants will expire on the 18-month anniversary of the Initial Exercise Date. The exercise price and number
of shares of common stock issuable upon exercise of the Common Warrants is subject to appropriate adjustment in the event of stock dividends,
stock splits, reorganizations or similar events affecting our common stock and the exercise price.
Exercisability.
The Common Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the case of
a cashless exercise as discussed below). A holder (together with its affiliates) may not exercise any portion of such holder’s
Common Warrants to the extent that the holder would own more than 4.99% (or at the election of the holder prior to the issuance of any
warrants, 9.99%) of the outstanding common stock immediately after exercise, except that upon at least 61 days’ prior notice from
the holder to us, the holder may increase the amount of ownership of outstanding stock after exercising the holder’s Common Warrants
up to 9.99% of the number of shares of our common stock outstanding immediately after giving effect to the exercise, as such percentage
ownership is determined in accordance with the terms of the Common Warrants. The ownership limit may be decreased upon notice from the
holder to us.
Cashless
Exercise. If, at the time a holder exercises its warrants, a registration statement registering the issuance of the shares of common
stock underlying the Common Warrants under the Securities Act of 1933, as amended (the “Securities Act”) is not then effective
or available for the issuance of such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such
exercise in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in
part) the net number of shares of common stock determined according to a formula set forth in the Common Warrant.
Fundamental
Transactions. In the event of a fundamental transaction, as described in the Common Warrants and generally including any reorganization,
recapitalization or reclassification of our shares of common stock, the sale, transfer or other disposition of all or substantially all
of our properties or assets, our consolidation or merger with or into another person, the acquisition of 50% or more of the voting power
represented by our outstanding shares of capital stock, any person or group becoming the beneficial owner of 50% or more of the voting
power represented by our outstanding shares of capital stock, any merger with or into another entity or a tender offer or exchange offer
approved by 50% or more of the voting power represented by our outstanding shares of capital, then upon any subsequent exercise of a
warrant, the holder will have the right to receive as alternative consideration, for each share of our common stock that would have been
issuable upon such exercise immediately prior to the occurrence of such fundamental transaction, the number of shares of common stock
of the successor or acquiring corporation or of our company, if it is the surviving corporation, and any additional consideration receivable
upon or as a result of such transaction by a holder of the number of shares of our common stock for which the Common Warrant is exercisable
immediately prior to such event. Notwithstanding the foregoing, in the event of a fundamental transaction, the holders of the Common
Warrants have the right to require us or a successor entity to redeem the Common Warrants for cash in the amount of the Black-Scholes
Value (as defined in each Common Warrant) of the unexercised portion of the Common Warrants concurrently with or within 30 days following
the consummation of a fundamental transaction.
However,
in the event of a fundamental transaction which is not in our control, including a fundamental transaction not approved by our board
of directors, the holders of the Common Warrants will only be entitled to receive from us or our successor entity, as of the date of
consummation of such fundamental transaction the same type or form of consideration (and in the same proportion), at the Black Scholes
Value of the unexercised portion of the Common Warrants that is being offered and paid to the holders of our common stock in connection
with the fundamental transaction, whether that consideration is in the form of cash, stock or any combination of cash and stock, or whether
the holders of our common stock are given the choice to receive alternative forms of consideration in connection with the fundamental
transaction. If holders of our common stock are not offered or paid any consideration in the fundamental transaction, holders of common
stock will be deemed to have received common stock of our successor entity.
Transferability.
Subject to applicable laws, a warrant may be transferred at the option of the holder upon surrender of the Common Warrant to us together
with the appropriate instruments of transfer.
Fractional
Shares. No fractional shares of common stock will be issued upon the exercise of the Common Warrants. Rather, the number of shares
of common stock to be issued will, at our election, either be rounded up to the next whole share or we will pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by the exercise price.
Trading
Market. There is no established trading market for the Common Warrants, and we do not expect such a market to develop. We do not
intend to apply to list the Common Warrants on any securities exchange or other nationally recognized trading system. Without an active
trading market, the liquidity of the Common Warrants will be extremely limited.
No
Rights as a Shareholder. Except as otherwise provided in the Common Warrants or by virtue of the holder’s ownership of shares
of our common stock, such holder of Common Warrants does not have the rights or privileges of a holder of our common stock, including
any voting rights, until such holder exercises such holder’s Common Warrants. The warrants will provide that the holders of the
warrants have the right to participate in distributions or dividends paid on our shares of common stock.
Amendments.
The Common Warrants may be modified or amended with the written consent of the holder of such Common Warrant and us.
The
following is a summary of the material features of the Placement Agent Warrants. This summary is qualified in its entirety by the full
text of the Form of Placement Agent Warrant, a copy of which is attached to this Proxy Statement as Appendix B.
Placement
Agent Warrants
The
Placement Agent Warrants will be exercisable beginning on the effective date of the Warrant Shareholder Approval Proposal. The Placement
Agent Warrants will have substantially the same terms as the Common Warrants described above, except that the Placement Agent Warrants
have an exercise price of $0.3125 per share (representing 125% of the offering price per share and accompanying Common Warrants) and
a termination date that is five years from the commencement of the sales pursuant to the Offering.
Description
of Common Stock
The
holders of shares of our Common Stock are entitled to one vote per share. In addition, the holders of our common stock will be entitled
to receive ratably such dividends, if any, as may be declared by our Board out of legally available funds; however, the current policy
of our Board is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our
Common Stock will be entitled to share ratably in all assets that are legally available for distribution. The holders of our common stock
will have no preemptive rights.
Anti-Takeover
Effects of Utah Law and Our Articles of Incorporation and Bylaws
The
provisions of Utah law, our articles of incorporation and our bylaws may have the effect of delaying, deferring or discouraging another
person from acquiring control of our Company. These provisions, which are summarized below, may have the effect of discouraging takeover
bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our Board. We believe
that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited acquirer outweigh the
disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an improvement of their
terms.
Articles
of Incorporation and Bylaw Provisions
Our
articles of incorporation and our bylaws include several provisions that could deter hostile takeovers or delay or prevent changes in
control of our management team, including the following:
| |
● |
Board
of directors’ vacancies. Our articles of incorporation and bylaws provide that newly created directorships resulting from an
increase in the number of directors and vacancies occurring in the board for any reason except the removal of directors without cause
may be filled by a vote of the majority of directors then in office, although less than a quorum exists. Vacancies occurring by reason
of the removal of directors without cause shall be filled by vote of the shareholders. A director elected to fill a vacancy caused
by resignation, death or removal shall be elected to hold office for the unexpired term of his predecessor. In addition, the number
of directors constituting our Board is permitted to be set only by a resolution adopted by our Board. These provisions prevent a
shareholder from increasing the size of our Board and then gaining control of our Board by filling the resulting vacancies with its
own nominees. This makes it more difficult to change the composition of our Board but promotes continuity of management. |
| |
|
|
| |
● |
Special
meeting of shareholders. Our bylaws provide that special meetings of our shareholders may be called only by our president or
any two directors, thus prohibiting a shareholder from calling a special meeting. These provisions might delay the ability of our
shareholders to force consideration of a proposal or for shareholders controlling a majority of our capital stock to take any action,
including the removal of directors. |
| |
|
|
| |
● |
No
cumulative voting. The Utah Business Corporation Act provides that shareholders are not entitled to the right to cumulate votes
in the election of directors unless a corporation’s articles of incorporation provide otherwise. Our articles of incorporation
do not provide for cumulative voting. |
Reasons
for Warrant Shareholder Approval Proposal
As
stated above, our stock is traded on the Nasdaq Capital Market under the symbol “NCPL.” Nasdaq Listing Rule 5635(d) provides
that shareholder approval is required prior to the issuance of securities in a transaction, other than a public offering, involving the
sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock),
which equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance, at a price less than
the lower of: (i) the closing price immediately preceding the signing of the binding agreement, or (ii) the average closing price of
the common stock for the five trading days immediately preceding the signing of the binding agreement for the transaction (the “Minimum
Price”).
We
structured our Offering as a public offering. However, in determining whether an offering qualifies as a public offering, Nasdaq considers
all relevant factors, including the extent of any discount to market price. Issuance of deeply discounted securities in a transaction
(including a registered underwritten or best-efforts offering with a placement agent) may result in such issuance not qualifying as a
public offering for purposes of determining whether shareholder approval is required. Nasdaq guidance dictates that a discount to the
Minimum Price in excess of 50% typically precludes a determination that such transaction is a public offering.
In
determining discount, Nasdaq generally attributes a value of $0.125 for each warrant offered with a share of common stock, which value
is generally deemed to be a discount. Thus, in order to ensure that the Offering qualified as a public offering under Rule 5635 due to
the value attributable to the Common Warrants, the Common Warrants and the Placement Agent Warrants provide that they may not be exercised,
and therefore have no value, until shareholder approval of their exercise is obtained.
As
noted above, the issuance of up to 16,000,000 shares of Common Stock upon exercise of the Series A-1 Common Warrants, the issuance of
up to 16,000,000 shares of Common Stock upon exercise of the Series A-2 Common Warrants, and the issuance of 1,200,000 shares of Common
Stock upon exercise of the Placement Agent Warrants (or the issuance 33,200,000 shares of Common Stock in the aggregate upon full
exercise of the Series A-1 Common Warrants, the Series A-2 Common Warrants and the Placement Agent Warrants) are subject to the Warrant
Shareholder Approval Proposal.
Potential
Consequences if Proposal No. 1 is Not Approved
The
Board is not seeking the approval of our shareholders to authorize our entry into or consummation of the transactions contemplated by
the Purchase Agreements, as the Offering has already been completed and the Common Warrants and Placement Agent Warrants have already
been issued.
The
failure of our shareholders to approve this Proposal No. 1 will mean that: (i) we cannot permit the exercise of the Common Warrants and
the Placement Agent Warrants and (ii) may incur substantial additional costs and expenses.
Each
Common Warrant has an initial exercise price of $0.25 per share. Accordingly, we would realize an aggregate of up to approximately $8.0
million in gross proceeds if all the Common Warrants were exercised based on such value. In addition, each Placement Agent Warrant has
an initial exercise price of $0.3125 per share. Accordingly, we would receive an aggregate of up to approximately $375,000 in gross proceeds
if all the Placement Agent Warrants were exercised based on such value. If the Common Warrants and the Placement Agent Warrants cannot
be exercised, we will not receive any such proceeds, which could adversely impact our ability to fund our operations.
In
addition, in connection with the Offering and the issuance of Common Warrants, we agreed to seek shareholder approval every 90 days until
our shareholders approve the issuance of the shares underlying the Common Warrants. We are required to seek such approval until such
time as none of the Common Warrants are outstanding which could result in us seeking such approval every 90 days for five years. The
costs and expenses associated with seeking such approval could materially adversely impact our ability to execute our current business
plan and fund our operations.
Potential
Adverse Effects of the Approval of Proposal No. 1
If
this Proposal No. 1 is approved, existing shareholders will suffer dilution in their ownership interests in the future upon the issuance
of shares of common stock upon exercise of the Common Warrants and the Placement Agent Warrants. Assuming the full exercise of the Common
Warrants and the Placement Agent Warrants, an aggregate of 33,200,000 additional shares of common stock will be outstanding, and the
ownership interest of our existing shareholders would be correspondingly reduced. In addition, the sale into the public market of these
shares also could materially and adversely affect the market price of our common stock.
No
Appraisal Rights
No
appraisal rights are available under the Utah Revised Business Corporations Act or under our Articles of Incorporation, or our Bylaws,
as amended, with respect to the Proposal No. 1.
Interests
of Officers and Directors in this Proposal
Our
officers and directors do not have any substantial interest, direct or indirect, in in this proposal.
Required
Vote of Shareholders
The
affirmative vote of a majority of the votes cast at the Special Meeting is required to approve Proposal No. 1.
Board
Recommendation
The
Board unanimously recommends a vote “FOR” Proposal No. 1.
PROPOSAL
NO. 2
ADJOURNMENT
PROPOSAL
At
the Special Meeting, we may ask our shareholders to vote on a proposal to adjourn the Special Meeting if necessary or appropriate in
the sole discretion of our Board, including to solicit additional proxies in the event that there are not sufficient votes at
the time of the Annual Meeting or any adjournment or postponement of the Special Meeting to approve any of the other proposals.
If
at the Special Meeting the number of shares authorized to vote present or represented by proxy and voting in favor of a proposal is insufficient
to approve such proposal, then our Board may hold a vote on each proposal that has garnered sufficient votes, if any, and then move to
adjourn the Special Meeting as to the remaining proposals in order to solicit additional proxies in favor of those remaining proposals.
Alternatively,
even if there are sufficient shares authorized to vote present or represented by proxy voting in favor of all of the proposals, our Board
may hold a vote on the adjournment proposal if, in its sole discretion, it determines that it is necessary or appropriate for any reason
to adjourn the Special Meeting to a later date and time. In that event, the Company will ask its shareholders to vote only upon the adjournment
proposal and not any other proposal.
Any
adjournment may be made without notice (if the adjournment is not for more than thirty days and a new record date is not fixed for the
adjourned meeting), other than by an announcement made at the Special Meeting of the time, date and place of the adjourned meeting.
Any
adjournment of the Special Meeting will allow our shareholders who have already sent in their proxies to revoke them at any time prior
to their use at the Special Meeting as adjourned.
If
we adjourn the Special Meeting to a later date, we will transact the same business and, unless we must fix a new record date, only the
shareholders who were eligible to vote at the original meeting will be permitted to vote at the adjourned meeting.
Required
Vote of Stockholders
The
affirmative vote of a majority of the votes cast at the Special Meeting is required to approve Proposal No. 2.
Board
Recommendation
The
Board unanimously recommends a vote “FOR” Proposal No. 2.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information with respect to the beneficial ownership of shares of our Common Stock as of December 26, 2023
by:
| ● |
each
person whom we know beneficially owns more than 5% of any class of equity security; |
| |
|
| ● |
each
of our directors individually; |
| |
|
| ● |
each
of our named executive officers individually; and |
| |
|
| ● |
all
of our current directors and executive officers as a group. |
We
have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of
securities to persons who possess sole or shared voting or investment power with respect to such securities. In addition, pursuant to
such rules, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable
or exercisable within 60 days of December 26, 2023. We did not deem such shares outstanding, however, for the purpose of computing the
percentage ownership of any other person. Except as indicated by the footnotes below, we believe, based on the information furnished
to us, that the beneficial owners named in the table below have sole voting and investment power with respect to all shares of our common
stock that they beneficially own, subject to applicable community property laws. The inclusion in the table below of any shares deemed
beneficially owned does not constitute an admission of beneficial ownership of those shares.
| Name and Address of Beneficial Owner(1) | |
Number of Shares | | |
Percent of Common Stock | |
| 5% or Greater Shareholders: | |
| | | |
| | |
| Netcapital DE LLC(2) | |
| 1,711,261 | | |
| 18.1 | % |
| Bard Associates, Inc.(3) | |
| 1,494,835 | | |
| 15.4 | % |
| Officers and Directors: | |
| | | |
| | |
| Jason Frishman(4) | |
| 1,775,428 | | |
| 18.6 | % |
| Martin Kay(5) | |
| 270,833 | | |
| 2.8 | % |
| Cecilia Lenk(6) | |
| 34,818 | | |
| ** | % |
| Coreen Kraysler(7) | |
| 86,667 | | |
| ** | % |
| Avi Liss(8) | |
| 17,667 | | |
| ** | % |
| Steven Geary(8) | |
| 16,967 | | |
| ** | % |
| Arnold Scott(9) | |
| 90,307 | | |
| ** | % |
| All Named Executive Officers and Directors as a Group (7 persons) | |
| 2,292,686 | | |
| 23.2 | % |
*
Based on 9,459,132 shares outstanding as of December 26, 2023.
**
Less than 1%
| (1) |
Unless
otherwise noted, the business address of each member of our Board is c/o Netcapital Inc. 1 Lincoln Street, Boston Massachusetts 02111. |
| (2) |
The
natural person with investment control over the securities held by Netcapital DE LLC is Jason Frishman. Netcapital Systems LLC has
agreed to vote its shares of common stock to support the resolutions of the Board of Netcapital Inc. on any matters that are brought
to a shareholder vote. |
| (3) |
Based
solely on a Schedule 13D/A filed with the SEC on May 26, 2023, Bard Associates Inc. is an investment manager and beneficially owns
1,494,835 shares of our common stock (including 233,525 shares of common stock under presently exercisable warrants), including sole
voting power over 73,000 shares, sole dispositive power over 73,000 shares, shared dispositive power over 1,421,835 shares; and Timothy
Johnson has sole dispositive power over 101,000 shares. The address for Bard Associates Inc. and Timothy Johnson is 135 South LaSalle
Street, Suite 3700, Chicago, IL 60603. |
| (4) |
Includes
(i) 64,167 shares of common stock subject to stock options that are presently exercisable or exercisable within 60 days after December
26, 2023, and (ii) 1,711,261 shares of common stock held by Netcapital Systems LLC, an entity that Jason Frishman is the President
of and in such capacity has the right to vote and dispose of the securities held by such entity. |
| (5) |
Includes
270,833 shares of common stock subject to stock options that are presently exercisable or exercisable within 60 days after December
26, 2023. |
| (6) |
Includes
9,167 shares of common stock subject to stock options that are presently exercisable or exercisable within 60 days after December
26, 2023. |
| (7) |
Includes
64,167 shares of common stock subject to stock options that are presently exercisable or exercisable within 60 days after December
26, 2023. |
| (8) |
Includes
6,667 shares of common stock subject to stock options that are presently exercisable or exercisable within 60 days after December
26, 2023. |
| (9) |
Includes
4,167 shares of common stock subject to stock options that are presently exercisable or exercisable within 60 days of December 26,
2023. |
SHAREHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS FOR 2024 ANNUAL MEETING OF
SHAREHOLDERS
Shareholders
who intend to have a proposal considered for inclusion in our proxy materials for presentation at our 2024 annual meeting of shareholders
(the “2024 Annual Meeting”) must submit the proposal to us at our corporate headquarters no later than June 7, 2024, which
proposal must be made in accordance with the provisions of Rule 14a-8 of the Exchange Act. In the event the date of the 2024 Annual Meeting
has been changed by more than 30 days from the date of the 2023 Annual Meeting, shareholders who intend to have a proposal considered
for inclusion in our proxy materials for presentation at our 2024 Annual Meeting must submit the proposal to us at our corporate headquarters
no later than a reasonable time before we begin to print and send our proxy materials for our 2024 Annual Meeting.
Shareholders
who intend to present a proposal at our 2024 Annual Meeting without inclusion of the proposal in our proxy materials are required to
provide notice of such proposal to our Corporate Secretary so that such notice is received by our Corporate Secretary at our principal
executive offices on or after January 5, 2024 but no later than February 6, 2024; provided, however, in the event that the 2024 Annual
Meeting occurs on a date that is not within 25 days before or after the anniversary date of the 2023 Annual Meeting, notice of such proposal
must be received by our Corporate Secretary no later than the close of business on the 10th day following the day on which
such notice of the date of the 2024 Annual Meeting is mailed or public disclosure of the date of the 2024 Annual Meeting is made, whichever
first occurs. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does
not comply with these and other applicable requirements.
OTHER
MATTERS
The
Board knows of no other business, which will be presented to the Special Meeting. If any other business is properly brought before the
Special Meeting, proxies in the enclosed form will be voted in accordance with the judgment of the persons voting the proxies.
If
you do not plan to attend the Special Meeting, in order that your shares may be represented and in order to assure the required quorum,
please sign, date and return your proxy promptly. In the event you are able to attend the Special Meeting virtually, at your request,
we will cancel your previously submitted proxy.
ADDITIONAL
INFORMATION
HOUSEHOLDING
The
SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements
and other Special Meeting materials with respect to two or more stockholders sharing the same address by delivering a proxy statement
or other Special Meeting materials addressed to those stockholders. This process, which is commonly referred to as householding, potentially
provides extra convenience for stockholders and cost savings for companies. Stockholders who participate in householding will continue
to be able to access and receive separate proxy cards.
If
you share an address with another stockholder and have received multiple copies of our proxy materials, you may write or call us at the
address or phone number below to request delivery of a single copy of the notice and, if applicable, other proxy materials in the future.
We undertake to deliver promptly upon written or oral request a separate copy of the proxy materials, as requested, to a stockholder
at a shared address to which a single copy of the proxy materials was delivered. If you hold stock as a record stockholder and prefer
to receive separate copies of our proxy materials either now or in the future, please contact us at 1 Lincoln Street, Boston, MA 02111,
Attn: Secretary, or by phone at (781) 925-1700. If your stock is held through a brokerage firm or bank and you prefer to receive separate
copies of our proxy materials either now or in the future, please contact your brokerage firm or bank.
ANNUAL
REPORT
Additional
copies of our Annual Report on Form 10-K for the fiscal year ended April 30, 2023 may be obtained without charge by writing to the Company
at 1 Lincoln Street, Boston, MA 02111, Attn: Secretary, or by phone at (781) 925-1700.
| |
By
Order of the Board of Directors |
| |
By: |
/s/
Martin Kay |
| |
Name: |
Martin
Kay |
| |
Title: |
Chief
Executive Officer |
| |
Date: |
January
[*], 2023 |
Appendix
A
SERIES
[A-1] [A-2] COMMON STOCK PURCHASE WARRANT
NETCAPITAL
INC.
| Warrant
Shares: _______ |
Issue
Date: December ___, 2023 |
THIS
SERIES [A-1] [A-2] COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________
or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the Shareholder Approval Date (the “Initial Exercise Date”) and on
or prior to 5:00 p.m. (New York City time) on the date that is the _____1 anniversary of the Initial Exercise Date, provided
that, if such date is not a Trading Day, the date that is the immediately following Trading Day (the “Termination Date”)
(the “Termination Date”), but not thereafter, to subscribe for and purchase from Netcapital Inc., a Utah corporation
(the “Company”), up to ______ shares (as subject to adjustment hereunder, the “Warrant Shares”)
of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined
in Section 2(b).
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
1
Series A-1 Warrants: insert “five (5) year”; Series A-2 Warrants: insert “eighteen (18) months”
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Purchase
Agreement” means the securities purchase agreement, dated as of December 21, 2023, by and between the Company and each of the
purchasers signatory thereto.
“Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-275210).
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any
successor entity) from the shareholders of the Company with respect to issuance of all of the Warrants and the Warrant Shares upon the
exercise thereof.
“Shareholder
Approval Date” means the date on which Shareholder Approval is received and deemed effective under Utah law.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York
Stock Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Equity Stock Transfer LLC, the current transfer agent of the Company, with a mailing address of 237 W 37th Street,
Suite 602, New York, NY 10018, and any successor transfer agent of the Company.
“VWAP”
means, for any date, the price determined by the first
of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith by the holders
of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
“Warrants”
means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the Registration Statement.
Section
2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF
copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank
unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original
Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation as soon as reasonably practicable following
the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated
on the face hereof.
b)
Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $0.25, subject to adjustment hereunder
(the “Exercise Price”).
c)
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in
whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| |
(A)
= |
as
applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of
Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed
and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined
in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder,
either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of
the Common Stock on the principal Trading Market as reported by Bloomberg L.P. (“Bloomberg”) as of the time of
the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading
hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of
“regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable
Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered
pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day; |
| |
(B)
= |
the
Exercise Price of this Warrant, as adjusted hereunder; and |
| |
|
|
| |
(X)
= |
the
number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such
exercise were by means of a cash exercise rather than a cashless exercise. |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not
to take any position contrary to this Section 2(c).
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by the Holder or (B) the Warrant is being exercised via cashless exercise, and otherwise by physical delivery of
a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by
the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading
Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement
Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).
Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of
the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares,
provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share
Delivery Date. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the
Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third (3rd) Trading Day after the Warrant Share Delivery Date)
for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m.
(New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement,
the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise
Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares
of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares
of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d)
of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99%) of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder,
upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day
after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable
to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary),
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of the assets of the Company in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to
sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock
or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon
any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable
upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to
any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the
date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder
an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date
of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such
holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following
such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant
based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of
consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable contemplated Fundamental
Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility, (2) the 100 day volatility
or (3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the highest VWAP during the period beginning on the
Trading Day immediately preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation
of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section
3(d) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental
Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer
of immediately available funds (or such other consideration) within the later of (i) five Business Days of the Holder’s election
and (ii) the date of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction
in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the
Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by
a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number
of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under
this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this
Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the
Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally
with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall
assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect
as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the
avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d) regardless of (i) whether the
Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction
occurs prior to the Initial Exercise Date.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
g)
Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board
of directors of the Company.
Section
4. Transfer of Warrant.
a)
Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant
and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be
required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is exercisable commencing on the Initial Exercise Date, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 1 Lincoln Street, Boston, MA 02111, Attention: Coreen Kraysler, Chief Financial Officer,
email address: coreen.kraysler@netcapital.com, or such other email address or address as the Company may specify for such purposes
by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be
in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder
at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered
via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading
Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and
the Holder.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
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NETCAPITAL INC. |
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NOTICE
OF EXERCISE
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
☐
in lawful money of the United States; or
☐
if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity: ________________________________________________________________________
Signature
of Authorized Signatory of Investing Entity: _________________________________________________
Name
of Authorized Signatory: ___________________________________________________________________
Title
of Authorized Signatory: ____________________________________________________________________
Date:
________________________________________________________________________________________
EXHIBIT
B
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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Appendix
B
PLACEMENT
AGENT COMMON STOCK PURCHASE WARRANT
NETCAPITAL
INC.
| Warrant Shares: ____________ |
Issue Date: December 27, 2023 |
THIS
PLACEMENT AGENT COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, ___________ or its
assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter
set forth, at any time on or after the Shareholder Approval Date (the “Initial Exercise Date”) and on or prior to
5:00 p.m. (New York City time) on December 21, 2028 (the “Termination Date”) (the “Termination Date”),
but not thereafter, to subscribe for and purchase from Netcapital Inc., a Utah corporation (the “Company”), up to
_______ shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one
share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b). This Warrant is issued pursuant
to that certain Engagement Agreement, by and between the Company and H.C. Wainwright & Co., LLC, dated as of October 12, 2023, as
amended on December 15, 2023.
Section
1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1:
“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control
with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid
Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock
is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date)
on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price
of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then
listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar
organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported,
or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good
faith by the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.
“Board
of Directors” means the board of directors of the Company.
“Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such
securities may hereafter be reclassified or changed.
“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Purchase
Agreement” means the securities purchase agreement, dated as of December 21, 2023, by and between the Company and each of the
purchasers signatory thereto.
“Registration
Statement” means the Company’s registration statement on Form S-1 (File No. 333-275210).
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Shareholder
Approval” means such approval as may be required by the applicable rules and regulations of the Nasdaq Stock Market (or any
successor entity) from the shareholders of the Company with respect to issuance of all of the Warrants and the Warrant Shares upon the
exercise thereof.
“Shareholder
Approval Date” means the date on which Shareholder Approval is received and deemed effective under Utah law.
“Subsidiary”
means any subsidiary of the Company and shall, where applicable, also include any direct or indirect subsidiary of the Company formed
or acquired after the date hereof.
“Trading
Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading
Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York
Stock Exchange (or any successors to any of the foregoing).
“Transfer
Agent” means Equity Stock Transfer LLC, the current transfer agent of the Company, with a mailing address of 237 W 37th Street,
Suite 602, New York, NY 10018, and any successor transfer agent of the Company.
“VWAP”
means, for any date, the price determined by the first
of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted
average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share
of Common Stock as determined by an independent appraiser selected in good faith by the holders
of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.
“Warrants”
means this Warrant and other Common Stock purchase warrants issued by the Company pursuant to the Registration Statement.
Section
2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time
or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed PDF
copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined
in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the
Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank
unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. No ink-original
Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of
Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this
Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised
in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation as soon as reasonably practicable following
the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases
of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant
Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection
to any Notice of Exercise within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of this
Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated
on the face hereof.
b)
Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $0.3125, subject to adjustment
hereunder (the “Exercise Price”).
c)
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus
contained therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may also be exercised, in
whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
| |
(A)= |
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section
2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior
to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities
laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of
the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P.
(“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including
until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii)
the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of
Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such
Trading Day; |
| |
(B)
= |
the Exercise Price of this Warrant, as adjusted hereunder;
and |
| |
(X)
= |
the number of Warrant Shares that would be issuable upon
exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a
cashless exercise. |
If
Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the
Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The Company agrees not
to take any position contrary to this Section 2(c).
d)
Mechanics of Exercise.
i.
Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by
the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository
Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant
in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale
of the Warrant Shares by the Holder or (B) the Warrant is being exercised via cashless exercise, and otherwise by physical delivery of
a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant
Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by
the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading
Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement
Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”).
Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of
the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares,
provided that payment of the aggregate Exercise Price (other than in the case of a cashless exercise) is received by the Warrant Share
Delivery Date. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the
Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000
of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise),
$10 per Trading Day (increasing to $20 per Trading Day on the third (3rd) Trading Day after the Warrant Share Delivery Date)
for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.
The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding
and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery
of the Notice of Exercise. Notwithstanding the foregoing, with respect to any Notice(s) of Exercise delivered on or prior to 12:00 p.m.
(New York City time) on the Initial Exercise Date, which may be delivered at any time after the time of execution of the Purchase Agreement,
the Company agrees to deliver the Warrant Shares subject to such notice(s) by 4:00 p.m. (New York City time) on the Initial Exercise
Date and the Initial Exercise Date shall be the Warrant Share Delivery Date for purposes hereunder, provided that payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) is received by such Warrant Share Delivery Date.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of
a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions
of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x)
the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds
(y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection
with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise
was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock
that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the
Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares
of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares
of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise
of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole share.
vi.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax
or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company,
and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided,
however, that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company
shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company
(or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vii.
Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.
e)
Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its
Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d)
of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable
shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution
Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed
with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of
a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion
or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates or Attribution Parties since the date
as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number
of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any increase in the Beneficial Ownership
Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct
this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein
contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained
in this paragraph shall apply to a successor holder of this Warrant.
Section
3. Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares
of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the
Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which
the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event
and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of
shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants,
issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had
held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise
hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the
extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance
for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise, other than cash (including, without limitation, any distribution of stock or other securities, property or options by way
of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the
date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided,
however, that to the extent that the Holder’s right to participate in any such Distribution would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company (or any Subsidiary),
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of the assets of the Company in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer
or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to
sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the
outstanding Common Stock or 50% or more of the voting power of the common equity of the Company, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property,
or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other
business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common Stock
or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then, upon
any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable
upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to
any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this
Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the
date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder
an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date
of the consummation of such Fundamental Transaction; provided, however, that, if the Fundamental Transaction is not within the Company’s
control, including not approved by the Company’s Board of Directors, the Holder shall only be entitled to receive from the Company
or any Successor Entity the same type or form of consideration (and in the same proportion), at the Black Scholes Value of the unexercised
portion of this Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental
Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock
are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction; provided,
further, that if holders of Common Stock of the Company are not offered or paid any consideration in such Fundamental Transaction, such
holders of Common Stock will be deemed to have received common stock of the Successor Entity (which Entity may be the Company following
such Fundamental Transaction) in such Fundamental Transaction. “Black Scholes Value” means the value of this Warrant
based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day of
consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding
to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable contemplated Fundamental
Transaction and the Termination Date, (B) an expected volatility equal to the greater of (1) the 30 day volatility, (2) the 100 day volatility
or (3) the 365 day volatility, each of clauses (1)-(3) as obtained from the HVT function on Bloomberg (determined utilizing a 365 day
annualization factor) as of the Trading Day immediately following the public announcement of the applicable contemplated Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the highest VWAP during the period beginning on the
Trading Day immediately preceding the public announcement of the applicable contemplated Fundamental Transaction (or the consummation
of the applicable Fundamental Transaction, if earlier) and ending on the Trading Day of the Holder’s request pursuant to this Section
3(d) and (D) a remaining option time equal to the time between the date of the public announcement of the applicable contemplated Fundamental
Transaction and the Termination Date and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer
of immediately available funds (or such other consideration) within the later of (i) five Business Days of the Holder’s election
and (ii) the date of consummation of the Fundamental Transaction. The Company shall cause any successor entity in a Fundamental Transaction
in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the
Company under this Warrant in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance
reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and
shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by
a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares
of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and
with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number
of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder.
Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall be added to the term “Company” under
this Warrant (so that from and after the occurrence or consummation of such Fundamental Transaction, each and every provision of this
Warrant and the other Transaction Documents referring to the “Company” shall refer instead to each of the Company and the
Successor Entity or Successor Entities, jointly and severally), and the Successor Entity or Successor Entities, jointly and severally
with the Company, may exercise every right and power of the Company prior thereto and the Successor Entity or Successor Entities shall
assume all of the obligations of the Company prior thereto under this Warrant and the other Transaction Documents with the same effect
as if the Company and such Successor Entity or Successor Entities, jointly and severally, had been named as the Company herein. For the
avoidance of doubt, the Holder shall be entitled to the benefits of the provisions of this Section 3(d) regardless of (i) whether the
Company has sufficient authorized shares of Common Stock for the issuance of Warrant Shares and/or (ii) whether a Fundamental Transaction
occurs prior to the Initial Exercise Date.
e)
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date
shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company
shall promptly deliver to the Holder by email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which the Company (or any of its Subsidiaries) is a party, any
sale or transfer of all or substantially all of its assets, or any compulsory share exchange whereby the Common Stock is converted into
other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding
up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by email to the Holder at its last email
address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected
that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to
be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such
notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
g)
Voluntary Adjustment By Company. Subject to the rules and regulations of the Trading Market, the Company may at any time during
the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the board
of directors of the Company.
Section
4. Transfer of Warrant.
a)
Transferability. This Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient
to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not
so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required
to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form to the
Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.
b)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of
the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by
the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Issue Date of this Warrant
and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
c)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the
“Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder,
and for all other purposes, absent actual notice to the contrary.
Section
5. Miscellaneous.
a)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights,
dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly
set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant
to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, in no event shall the Company be
required to net cash settle an exercise of this Warrant.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares,
and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the
Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required
or granted herein shall not be a Trading Day, then, such action may be taken or such right may be exercised on the next succeeding Trading
Day.
d)
Authorized Shares.
The
Company covenants that, during the period the Warrant is exercisable commencing on the Initial Exercise Date, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise
of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common
Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance
herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
e)
Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts
of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions
contemplated by this Warrant (whether brought against a party hereto or their respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient
venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of this Warrant,
the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, and
the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without
limitation, any Notice of Exercise, shall be in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight
courier service, addressed to the Company, at 1 Lincoln Street, Boston, MA 02111, Attention: Coreen Kraysler, Chief Financial Officer,
email address: coreen.kraysler@netcapital.com, or such other email address or address as the Company may specify for such purposes
by notice to the Holders. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be
in writing and delivered personally, by e-mail, or sent by a nationally recognized overnight courier service addressed to each Holder
at the e-mail address or address of such Holder appearing on the books of the Company. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of (i) the time of transmission, if such notice or communication is delivered
via e-mail at the e-mail address set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading
Day after the time of transmission, if such notice or communication is delivered via e-mail at the e-mail address set forth in this Section
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom
such notice is required to be given. To the extent that any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant
to a Current Report on Form 8-K.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant
to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of
the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company
or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will
be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall
inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and
the Holder.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining
provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed
a part of this Warrant.
********************
(Signature
Page Follows)
IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above
indicated.
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NETCAPITAL
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NOTICE
OF EXERCISE
To:
NETCAPITAL INC.
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2)
Payment shall take the form of (check applicable box):
☐
in lawful money of the United States; or
☐
if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection
2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure
set forth in subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name
of Investing Entity: _______________________________________________________________________
Signature
of Authorized Signatory of Investing Entity: _________________________________________________
Name
of Authorized Signatory: ___________________________________________________________________
Title
of Authorized Signatory: ____________________________________________________________________
Date:
_______________________________________________________________________________________
EXHIBIT
B
ASSIGNMENT
FORM
(To
assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to purchase
shares.)
FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
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