Convertible Note Payable |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Note Payable [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Note Payable | 14. Convertible Note Payable
In connection with the acquisition of NDAG (see Note 3), Rumble Freedom First Holding Designated Activity Company, a newly formed Irish private limited company and indirect wholly-owned subsidiary of the Company issued a euro-denominated note payable to Tether. The principal amount on the note is €317,533,401.
The note matures on June 18, 2031. The note bears interest at EURIBOR plus 3.0%, payable quarterly on each March 31, June 30, September 30, and December 31. The Company may prepay the note, in whole or in part, at any time without penalty. If the note is not repaid when due, additional default interest of 4.0% above the base interest rate will accrue on the overdue amount.
Up to 5 business days before June 18, 2027 (the “Exchange Option Date”), Tether may deliver a notice of exercise to the Company to exchange the entire outstanding principal and accrued interest of the note into shares of the Company’s Class A Common Stock (or pre-funded warrants) on the Exchange Option Date, after which such option will expire if not exercised. The number of shares issuable upon conversion is determined by dividing the outstanding note amount by the greater of the 10-day volume-weighted average trading price of the Company’s Class A Common Stock and $7.88 per share, subject to customary anti-dilution adjustments. The conversion price is translated into euros using the European Central Bank exchange rate on the conversion date. As a result, the number of shares into which the note may be converted is variable. As of June 30, 2026, the estimated number of shares the note can be converted into is 45,913,395.
The Company determined that the conversion option is an embedded derivative that is required to be separated from the debt host. The derivative is measured at fair value at issuance and remeasured at fair value at each reporting date, with changes recognized in changes in fair value of derivative on the condensed consolidated interim statements of operations. The debt host is accounted for at amortized cost using the effective interest method. The effective interest rate on the debt host was estimated to be approximately 5.92%.
The fair value of note payable is estimated using the binomial lattice methodology based on a modified Cox-Ross-Rubenstein approach that incorporates the following inputs as of June 17, 2026:
The following table presents the fair value of the convertible notes payable as of June 17, 2026:
The following table presents a reconciliation of the Company’s convertible notes payable:
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