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Convertible notes
 6 Months Ended
Jun. 30, 2025
Convertible notes  
Convertible Notes

Note 10. Convertible notes

 

Conversion of convertible notes in connection with the Business Combination

 

Convertible notes payable is comprised of the following as of December 31, 2024:

 

Borrower No.

 

 

Amount

 

 

Interest Rate

 

 

Conversion Cap

 

 

Closing Date

 

Maturity Date

 

December 31, 2024

 

 

1

 

 

$250,000

 

 

 

0.44%

 

$3,000,000

 

 

2/7/2022

 

2/7/2027

 

$250,000

 

 

2

 

 

 

62,500

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

62,500

 

 

3

 

 

 

62,500

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

62,500

 

 

4

 

 

 

35,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

35,000

 

 

5

 

 

 

90,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

90,000

 

 

6

 

 

 

50,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

50,000

 

 

7

 

 

 

50,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

50,000

 

 

8

 

 

 

10,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

10,000

 

 

9

 

 

 

50,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

50,000

 

 

10

 

 

 

30,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

30,000

 

 

11

 

 

 

100,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

100,000

 

 

12

 

 

 

50,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

50,000

 

 

13

 

 

 

20,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

20,000

 

 

14

 

 

 

20,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

20,000

 

 

15

 

 

 

20,000

 

 

 

0.44%

 

 

3,000,000

 

 

3/3/2022

 

3/3/2027

 

 

20,000

 

 

16

 

 

 

18,176

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

18,176

 

 

17

 

 

 

53,015

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

53,015

 

 

18

 

 

 

53,015

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

53,015

 

 

19

 

 

 

27,265

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

27,265

 

 

20

 

 

 

98,529

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

98,529

 

 

21

 

 

 

50,000

 

 

 

0.44%

 

 

3,000,000

 

 

4/7/2022

 

4/7/2027

 

 

50,000

 

 

22

 

 

 

200,000

 

 

 

0.44%

 

 

5,000,000

 

 

12/6/2023

 

12/6/2028

 

 

200,000

 

 

23

 

 

 

50,000

 

 

 

0.44%

 

 

5,000,000

 

 

3/15/2024

 

3/15/2029

 

 

50,000

 

 

24

 

 

 

50,000

 

 

 

0.44%

 

 

5,000,000

 

 

3/15/2024

 

3/15/2029

 

 

50,000

 

 

25

 

 

 

87,500

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

87,500

 

 

26

 

 

 

62,500

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

62,500

 

 

27

 

 

 

100,000

 

 

 

0.44%

 

 

3,000,000

 

 

2/7/2022

 

2/7/2027

 

 

100,000

 

Totals

 

 

$1,750,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$1,750,000

 

 

Upon the closing of the business combination, the above notes $1,750,000 and accrued interest payable $19,072 were converted to 4,433,122 Class B Common Shares.

2025 Convertible Notes

 

On May 30, 2025, the Company entered into a Securities Purchase Agreement for up to an aggregate of $500 million in newly issued Notes. The Purchase Agreement provided for an initial closing of $11 million of Notes. The Company has agreed, subject to certain exceptions contained in the Purchase Agreement, to use 80% of the net proceeds from the notes to purchase certain cryptocurrency as set forth in the Purchase Agreement.

 

The Notes are convertible into Class B common stock of the Company at the option of the holder at an initial conversion price equal to 200% of the closing price of the Common Stock on the trading day immediately prior to the closing date, subject to adjustment as provided for in the Notes. Interest is payable under the Notes at a rate of 7% per annum and is payable, quarterly, at the option of the Company in cash, through the issuance of additional Notes or, under certain situations, through the issuance of shares of Class B common stock. The Notes rank senior to all outstanding and future indebtedness of the Company and its subsidiaries (subject to certain exceptions contained in the notes) and will be secured by a first priority perfected security interest in all of the existing and future assets of the Company and its direct and indirect subsidiaries, including all of the capital stock of each of the subsidiaries and the cryptocurrency purchased with the proceeds of the Notes. The Notes are due on the two-year anniversary of the date of issuance unless earlier converted or repaid.

 

Description of Notes:

 

Issue Date

June 6, 2025

Face Value

$11,000,000

Maturity

June 6, 2027

Coupon

7.0% per annum, quarterly, PIK-eligible

Conversion Price

Initially $7.36 subject to adjustments

Floor Price

$0.74 per share

Redemption

120% upon Issuer’s Call, 0% on Maturity

Use of Proceeds

80% for SOL investment; 20% for operations

 

The Company elected the fair value option for the Notes. The fair value of the Notes are remeasured at each balance sheet date and any changes are recorded in the consolidated statements of operations. For the three and six months ended June 30, 2025, the Company recorded a change in the fair value of the Notes in the amount of a loss of $260,630. For the three and six months ended June 30, 2025, interest expense related to the Notes is 50,630.