C2 Blockchain Secures $201K in Highly Dilutive, Secured Debt and Equity
Summary
C2 Blockchain entered into two new highly dilutive financing agreements, raising $201,000 immediately with potential for more, featuring deep discounts, warrants, and a senior secured note on company assets.
Key Events
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Auctus Fund Convertible Note
The company issued a promissory note to Auctus Fund, LLC for a principal amount of $130,000, receiving net proceeds of $108,000. The note is convertible into common stock at 60% of the lowest traded price over 15 days, and includes 5,200,000 warrants exercisable at $0.05 per share.
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Leonite Fund Senior Secured Convertible Note
C2 Blockchain entered into a senior secured convertible promissory note agreement with Leonite Fund I, LP for up to $1,200,000 in principal, with an initial funding of $100,000 (net $93,000). The note is secured by a first-priority interest in substantially all company assets, convertible at an initial price of $0.05 per share, and includes 1,000,000 commitment shares and 2,000,000 warrants exercisable at $0.10 per share.
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Highly Dilutive Terms
Both financing agreements feature conversion prices significantly below the current market price and include substantial warrant coverage and commitment shares, indicating a high degree of dilution for existing shareholders.
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Secured Debt Indicates Distress
The Leonite note's senior secured status on nearly all company assets highlights the company's urgent need for capital and places other creditors and equity holders in a subordinate position.
Analysis
C2 Blockchain has secured two new financing agreements totaling $201,000 in immediate net proceeds, with potential for up to $1.1 million more. These agreements involve highly dilutive convertible notes, warrants, and commitment shares, issued at deep discounts to the current stock price. The Leonite note is particularly concerning as it is senior secured by substantially all of the company's assets, indicating significant financial distress and placing existing equity holders at increased risk. This follows a recent 10-Q filing that highlighted extreme financial deterioration and reliance on dilutive financing, confirming the company's ongoing struggle for capital under unfavorable terms.
At the time of this filing, CBLO was trading at $0.06 on OTC in the Crypto Assets sector, with a market capitalization of approximately $14.4M. The 52-week trading range was $0.02 to $0.30. This filing was assessed with negative market sentiment and an importance score of 9 out of 10.