ZEDCRIT — Capital Deployment & Tranche Structure Document

📌 Document Purpose

This document outlines the capital deployment mechanism for Zedcrit’s $500,000 pre-seed round. It serves as an operational appendix to the Term Sheet, providing clarity on:

1. How funds are released
2. What each tranche finances
3. How milestones are measured
4. What happens if milestones are missed

This document is 100% aligned with: - Term Sheet (Version 2.0) - 5-Year Financial Projections - Use of Funds Allocation - Hardware Procurement Plan - Customer Acquisition Strategy (CAC) - Realistic Retention Metrics

📊 Executive Summary — The Structure at a Glance

🔵 Tranche 1 — The Foundation ($200,000)

1.1 Purpose

Validate the product in the market with the first 20 units and demonstrate that the system works reliably in live trading conditions.

1.2 Use of Funds

1.3 Milestone for Tranche 2 Release

All conditions must be met for Tranche 2 to be released:

1.4 Timeline (Estimated)

🟢 Tranche 2 — Market Validation ($150,000)

2.1 Purpose

Acquire 30 additional customers, validate the real CAC, and demonstrate product-market fit with measurable traction.

2.2 Use of Funds

2.3 Milestone for Tranche 3 Release

All conditions must be met for Tranche 3 to be released:

2.4 Timeline (Estimated)

🟡 Tranche 3 — The Scale ($150,000)

3.1 Purpose

Complete Year 1 with 85 units, reach $10K+ MRR, validate the full unit economics, and prepare Year 2 for break-even profitability.

3.2 Use of Funds

3.3 Final Milestone (Year 1 Completion)

All conditions must be met to complete the investment cycle:

3.4 Timeline (Estimated)

🔄 Capital Flow Diagram

🎯 Milestone Verification Protocol

How Milestones Are Verified

Documentation Required for Each Milestone

⚠️ What Happens If Milestones Are Missed

Scenario 1: Minor Delay (1-2 months)

Scenario 2: Moderate Delay (3-6 months)

Scenario 3: Significant Delay (>6 months)

Scenario 4: Complete Failure to Achieve Milestone

📋 Tranche Summary Table

🔵 Investor Safeguards

1x Liquidation Preference

Investors receive their $500,000 back FIRST (1×) before any common stockholders in a liquidation event.

Anti-Dilution Protection

Broad-Based Weighted Average protection against down-rounds.

Board Observation Rights

Lead Investor receives a Board seat; all investors receive Board observer rights.

Information Rights

Monthly financials + key metrics; quarterly management reports.

Protective Provisions

66% SAFE holder approval required for: - Changes to the Certificate of Incorporation - Authorization of new equity series - Mergers, sales, or liquidation - Borrowing exceeding $100,000 (outside ordinary course)

Milestone-Based Deployment

Capital is only deployed when specific, measurable milestones are achieved.

🟢 Founder Safeguards

Operational Control

Founders retain full operational control day-to-day. Investor veto only over major structural decisions.

Vesting Protection

Single-trigger acceleration on Change of Control (50% of unvested shares vest immediately).

Board Balance

2 founder seats + 1 investor seat ensures founders maintain control.

No Forced Sale

Investors cannot force a sale of the company without founder consent.

Milestone Flexibility

In case of missed milestones, Board (including founders) reviews and adjusts the plan.

📝 Execution Checklist — Next Steps

📎 Appendix A — Key Assumptions

📎 Appendix B — Sample Milestone Tracking Dashboard

📎 Appendix C — Sample Reporting Template (Monthly)

ZEDCRIT — MONTHLY PROGRESS REPORT
Month: [Month X, Year]
Prepared For: Board of Directors
Prepared By: Adrian Danet (CEO)

1. EXECUTIVE SUMMARY
- Key Achievements
- Challenges
- Outlook

2. OPERATIONAL METRICS
- Units Shipped (Cumulative): [X]
- Active Clients: [X]
- Retention Rate (30 days): [X]%
- Retention Rate (60+ days): [X]%
- Engagement (weekly active): [X]%
- MRR: $[X]
- ARR (Run Rate): $[X]
- CAC (Last 30 Days): $[X]
- LTV (Blended): $[X]
- LTV/CAC: [X]:1
- NPS: [X]

3. FINANCIAL METRICS
- Revenue (Month): $[X]
- Revenue (Cumulative YTD): $[X]
- EBITDA (Month): $[X]
- Cash Burn (Month): $[X]
- Cash Balance: $[X]
- Runway (Months): [X]

4. R&D PROGRESS
- Features Delivered
- Features in Progress
- Issues/Bugs

5. MARKETING & COMMUNITY
- New Customers (Month): [X]
- Total Community Members: [X]
- Marketing Spend (Month): $[X]
- ROI on Marketing: [X]x

6. MILESTONE TRACKING
- Milestone 1 (T1→T2): [Status]
- Milestone 2 (T2→T3): [Status]
- Milestone 3 (Final): [Status]

7. RISK UPDATE
- Key Risks Identified
- Mitigation Actions

8. UPCOMING MONTH
- Goals
- Priorities

✅ Document Sign-off

This document is approved by:

Adrian Danet — CEO, Zedcrit Inc. Date: ___________________

Alina Danet — CFO, Zedcrit Inc. Date: ___________________

Adrian-Ilie Oprișor — CTO, Zedcrit Inc. Date: ___________________

FOR THE INVESTORS:

Lead Investor Date: ___________________

This document is confidential and intended solely for the individual or entity to whom it is addressed. Any unauthorized review, use, disclosure, or distribution is prohibited. This document does not constitute legal advice.