8-K: C2 Blockchain Secures $100K Via Convertible Note

C2 Blockchain, Inc. has issued a $120,000 convertible promissory note to Labrys Fund II, L.P., raising $100,000 in gross proceeds.

Summary

• C2 Blockchain, Inc. entered into a material definitive agreement on April 23, 2026, issuing a convertible promissory note for $120,000 to Labrys Fund II, L.P.
• The company received $100,000 in gross proceeds from this note issuance, which includes a $20,000 original issue discount.
• The note bears a 10% interest charge ($12,000) and matures in 12 months, with amortization payments starting October 23, 2026.
• The holder can convert the note into common stock at 75% of the lowest closing bid price during the 10 trading days prior to conversion, subject to a 4.99% beneficial ownership limitation.
• The company is required to reserve a significant number of shares for potential conversion.
• Additional unregistered sales of equity securities occurred on April 28, 2026 ($30,000) and April 30, 2026 ($8,000), totaling $38,000.
• These sales were made under Section 4(a)(2) and Regulation D exemptions, with investors represented as accredited.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a neutral to slightly negative filing due to the dilutive nature of the convertible note with a significant discount and the covenants that restrict company actions.

Positives

• Secured $100,000 in immediate funding through the convertible note.
• The note provides a 12-month maturity, offering a defined repayment or conversion timeline.
• The company also raised an additional $38,000 through unregistered sales of equity to accredited investors.

Negatives

• The convertible note includes a significant original issue discount of $20,000 on a $120,000 principal amount.
• The conversion price is set at a discount (75% of the lowest closing bid price), indicating potential future dilution.
• The note is unsecured, increasing risk for the lender.
• The company faces covenants restricting certain corporate actions without the holder's consent.
• Events of default can lead to acceleration of the debt and a 150% penalty on the outstanding balance.

Risks

• Potential for significant dilution of existing shareholders due to the discounted conversion price of the convertible note.
• The company may face financial distress if it cannot meet amortization payments, leading to default and accelerated debt repayment at a penalty.
• Restrictions on asset sales, dividends, and financings without the holder's consent could limit operational flexibility.
• The company's common stock could be delisted or suspended, triggering default provisions.
• Failure to comply with Exchange Act reporting requirements is an event of default.

Future Outlook

The company has secured immediate funding through a convertible note and additional equity sales. The terms of the note, including its conversion price and potential for dilution, will be a key factor in future financial performance and shareholder value. Amortization payments are scheduled to begin in October 2026.

Industry Context

StockSavvy.ai notes that the issuance of convertible notes with significant discounts is a common, albeit dilutive, financing strategy for early-stage or growth-oriented companies in the blockchain sector seeking capital without immediate equity dilution. However, the terms here suggest a challenging market environment or a specific need for rapid funding.

Stakeholder Impact

• Shareholders: Potential for significant dilution due to the discounted conversion price of the convertible note.
• Creditors: The note is unsecured, and default can lead to accelerated repayment with a 150% penalty.
• Management: Subject to covenants that may require holder consent for certain business decisions.

Next Steps

• Monitor amortization payments starting October 23, 2026.
• Observe potential conversion of the note into common stock.
• Track the company's compliance with covenants and reporting requirements.
• Evaluate the impact of potential share dilution on existing shareholders.

Key Dates

Recommendation

The company has secured necessary funding, but the terms of the convertible note, particularly the discount and potential for dilution, warrant caution. Investors should hold and monitor future performance and the impact of the note's conversion before considering further action.

Keywords

convertible promissory note, C2 Blockchain, Labrys Fund II, SEC filing, Form 8-K, financing, equity issuance, accredited investor