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Subsequent Events
3 Months Ended
Mar. 31, 2025
Subsequent Events [Abstract]  
Subsequent Events

Note 11 – Subsequent Events 

 

The Company evaluates events that have occurred after the balance sheet date but before the consolidated financial statements are issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the consolidated financial statements other than disclosed.

 

ATM Financing

 

During the period from April 1, 2025 to May 13, 2025, the Company sold a total of 888,510 shares of Common Stock under the ATM Agreement for aggregate total gross proceeds of approximately $1,440,000 at an average selling price of $1.62 per share, resulting in net proceeds of approximately $1,390,000 after deducting commissions and other transaction costs.

 

AAVE Loan Payable

 

Beginning on April 23, 2025, the Company borrowed $320,000 USDT from AAVE, a decentralized finance lending protocol. The loan: (i) is collateralized by 446 Ethereum (ETH) with an approximate value of $780,000 based on an ETH price of approximately $1,750 (subject to market volatility), and (ii) has no fixed maturity date but is subject to liquidations or partial liquidations if the health factor (“HF”) falls below one. The Company faces potential liquidation risk if the value of ETH decreases significantly relative to the loan amount. The HF is calculated by taking the total value of the ETH collateral, multiplying it by its liquidation threshold (approximately 80% for ETH), and then dividing that result by the total value of the borrowed USDT, the HF of the Company’s loan was approximately two upon initiation.

 

The interest rate on the loan is variable and determined by AAVE’s smart contract based on market conditions, with rates published at aave.com. The interest rate at the time of the loans origination was approximately 3.9% per annum, subject to variation in accordance with AAVE’s protocol. The proceeds from the loan were used to acquire additional ETH. The Company’s Board of Directors authorized management to borrow up to $500,000 in USDT utilizing AAVE with a loan to value of no more than 40% at the time of borrowing.

 

Convertible Notes Payable

 

On May 13, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) with three accredited investors (the “Investors”), pursuant to which the Company issued 5% Original Issue Discount Senior Secured Convertible Notes (the “Notes”) in the aggregate principal amount of $7,810,526 for a purchase price of $7,420,000. In connection with the issuance of the Notes, the Company also agreed to issue to the Investors 1,901,916 five-year warrants to purchase shares of the Company’s common stock at an exercise price of $2.75 per share.

 

The Notes: (i) are convertible into shares of the Company’s common stock at a conversion price of $5.85 per share, (ii) mature 24 months from the closing date, (iii) accrue an interest rate of 6% per annum, which may be paid on a quarterly basis in cash or freely tradable shares, (iv) contain a 4.99% beneficial ownership conversion blocker, and (v) are secured by all of the Company’s assets as collateral, except for Ethereum deposited as collateral for USDT borrowings on AAVE and certain other exclusions.

 

Mr. Charles Allen, the Company’s Chairman of the Board and Chief Executive Officer, invested $95,000 in the Offering. Additionally, a trust of which Mr. Allen is a beneficiary but is not the settlor or trustee invested $200,000 in the Offering. An independent committee of the Company’s Board of Directors approved Mr. Allen’s investment in the Offering.

 

H.C. Wainwright & Co., LLC acted as the Company’s exclusive placement agent in connection with the Offering.