YellowDog

Idea

Preemption details

The company has raised a total of £60,000 from existing shareholders and new investors. This campaign gives Seedrs investors the ability to take their pre-emption rights in the round.

Please note that the pre-money valuation includes conversion of the company's existing convertible loans (more details below) and a 20% option pool post-money.

As this is a pre-emption campaign limited information is provided and, while the target is set at the maximum the company is looking to raise, we will release funds even if the company raises less. More information can be found by reviewing the business's post investment page. This information has not been reviewed or approved by Seedrs.

Conversion of existing convertible loans

The company has the following convertible loans in place, which will convert on completion of this round:

- £500,000 convertible loan note from January 2020 with an interest rate of 1% per month and discount of 50%. Both principal loan and accrued interest will convert at a 50% discount.

- £500,000 Future Fund convertible loan note from June 2020, with an interest rate of 12% per annum and discount of 50%. The principal loan will convert at a 50% discount but the accrued interest will convert at the price of this round, i.e. £1.

- £1,000,000 convertible loan note from October 2020 with an interest of 1% per month and discount of 50%. Both principal loan and interest will convert at a 50% discount. Seedrs investors were offered the opportunity to participate in this convertible loan round earlier this year, and those who did will be issued shares on conversion.

The three convertible loans total £2,000,000 with accrued interest of £200,614 up to the estimated conversion date of 18 June 2021.

New convertible loan

Together with this equity round, the Company is also raising £1m by way of a convertible loan note from Creditforce Limited.

Creditforce has subscribed for convertible loan notes of £500,000, and have the right to subscribe for four further tranches of loan notes of £125,000 each before 30 May 2022.

The key terms of the loan notes are as follows:
- 1% interest rate
- Conversion price of £1
- Maturity Date of 11 June 2023
- Redeemable upon on a winding up event or at the option of Creditforce on (i) material breach by the Company of the convertible loan agreement, (ii) the Maturity Date.
- Automatic conversion into shares on an equity financing raising at least £4m.
- Creditforce may opt to convert the loan into equity on (i) an equity financing raising less than £4m, (ii) an exit event or (iii) the Maturity Date.

If converted, this new convertible loan will dilute existing shareholders.

Runway

The initial £500,000 convertible loan note investment from Creditforce has provided the company with runway for the next four months.

The £60k investment from this round is expected to give the company runway until the end of October 2021.

Share classes

The company has 2 classes of shares, Ordinary Shares and Ordinary A Shares.

Ordinary A Shares carry a 1x non-participating preference. On an exit or liquidation event, if pro rata distribution amongst all shareholders would result in the Ordinary A shareholders receiving less than their original price paid per share, the proceeds will first be distributed to the Ordinary A shareholders until they receive their original price paid per share, before the balance is distributed to the ordinary shareholders.

To date, only the Company's institutional investor, Bloc Ventures, have held Ordinary A Shares. All other shareholders, including Seedrs, have held Ordinary Shares which are EIS-eligible.

Conversion of the convertible loans mentioned above will result in convertible investors holding Ordinary A Shares and direct investors in this round may be issued Ordinary A shares.

Seedrs investors investing in this round will be issued Ordinary shares which are eligible for EIS relief.