8-K: Limitless X Secures $601K in High-Cost Debt, Expands Fitness Footprint

Limitless X Holdings Inc. announced multiple high-cost convertible debt financings totaling $601,000 in net proceeds and a new 5-year lease for a Manny Pacquiao-branded performance center.

Summary

• Limitless X Holdings Inc. (the "Company") entered into a 5-year retail lease agreement for a 3,815 square foot space in Los Angeles, California, to establish the 'Limitless Manny Pacquiao Impact Performance & Training Center'.
• The lease, effective October 15, 2025, has a rent commencement date of February 1, 2026, with initial monthly base rent of $14,306.25, escalating annually.
• The Company's subsidiary, Limitless Entertainment, Inc., is obligated to open the facility for business within 90 days of the delivery date.
• A security deposit of $97,282.50 and prepaid rent of $18,121.25 were paid for the lease, and a tenant improvement allowance of $38,150.00 was granted.
• The Company and its CEO, Jas Mathur, personally guaranteed the lease obligations.
• The Company entered into a Securities Purchase Agreement with CFI Capital LLC on November 3, 2025, for a 6% convertible redeemable note with a $150,000 principal amount, an original issue discount of $15,000, and $5,000 withheld for legal fees, resulting in $130,000 net proceeds.
• The CFI Capital note matures on November 3, 2026, with interest payable in common stock, and is convertible at 65% of the lowest trading price over the prior 20 trading days after 6 months.
• On November 5, 2025, the Company secured a promissory note from Labrys Fund II, L.P. for a $275,000 principal amount, including a $25,000 original issue discount and $5,000 legal fee holdback, yielding $245,000 net proceeds.
• The Labrys Fund note carries a one-time 8% interest charge ($22,000), matures on November 5, 2026, and includes 6,750 commitment shares of common stock issued at closing.
• The Labrys Fund note requires monthly amortization payments of $29,700 starting February 5, 2026, and is convertible at 85% of the lowest closing bid price during the 15 trading days preceding conversion, with conversion rights triggered by default or missed amortization.
• A Securities Purchase Agreement with GS Capital Partners, LLC on November 10, 2025, involved a convertible note with a $140,000 principal amount, a $14,000 original issue discount, and $4,000 legal fee deduction, providing $122,000 net proceeds.
• The GS Capital Partners note includes a one-time 12% guaranteed interest, matures on November 10, 2026, and requires six monthly principal payments of $26,133.33 starting 181 days after issuance, with conversion rights only upon an Event of Default at 65% of the lowest trading price over 15 days.
• On November 11, 2025, the Company entered into a Securities Purchase Agreement with Auctus Fund, LLC for a promissory note with a $110,000 principal amount and a one-time 12% interest charge, with $4,000 withheld for legal fees and $5,000 for due diligence, resulting in $101,000 net proceeds.
• The Auctus Fund note matures on November 11, 2026, requires monthly amortization payments of $12,000 starting December 11, 2025, and is convertible at 60% of the lowest traded price during the 15 trading days prior to conversion, with conversion rights beginning after 6 months or immediately upon default.
• Two common stock purchase warrants were issued to Auctus Fund: a First Warrant for 78,571 shares and a Second Warrant for 78,572 shares, both at an initial exercise price of $1.40 per share, with the Second Warrant exercisable only upon an Event of Default.
• All convertible notes include beneficial ownership limitations (typically 4.99%), share reserve requirements, and most-favored-nation clauses for more favorable terms granted to other investors.
• Events of Default across the notes include failure to pay, failure to issue conversion shares, breach of covenants, bankruptcy, delisting, suspension of trading, failure to maintain market capitalization (for Auctus), and public information failures.

Sentiment

Score: 2

Explanation: The sentiment is highly negative due to the extremely unfavorable and dilutive terms of the multiple debt financings, which suggest significant financial distress and a high risk of substantial shareholder value erosion. While the new lease indicates business expansion, the cost of capital is prohibitive.

Positives

• Secured a new 5-year lease for a 'Limitless Manny Pacquiao Impact Performance & Training Center' in Los Angeles, indicating business expansion and potential for brand leverage.
• Successfully raised a total of $601,000 in net proceeds across four separate financing agreements, providing capital for business development and general working capital.
• The lease agreement includes a tenant improvement allowance of $38,150.00, which can offset initial build-out costs for the new facility.

Negatives

• The financing terms are highly dilutive, with conversion prices set at significant discounts (65%, 85%, 60% of lowest trading prices) to the market, and even lower upon default (45%).
• Substantial original issue discounts (OID) and legal/due diligence fees were deducted from the principal amounts, reducing the net cash received by the Company (e.g., $15,000 OID and $5,000 legal fees on a $150,000 note from CFI Capital).
• High interest rates are associated with the notes, including a one-time 8% charge for Labrys Fund and 12% for GS Capital Partners and Auctus Fund, with default interest rates as high as 24% per annum.
• Immediate and structured amortization payments are required for the Labrys Fund and Auctus Fund notes, placing ongoing cash flow demands on the Company.
• Restrictive covenants include prohibitions on insider debt repayment, variable rate transactions, and subsequent securities sales for a period (Auctus Fund), limiting financial flexibility.
• Cross-default clauses mean a default on one note can trigger defaults on others, accelerating repayment obligations.
• The Company is required to maintain a minimum market capitalization of $5 million (Auctus Fund note), failure of which constitutes an Event of Default.
• The Second Warrant issued to Auctus Fund is only exercisable upon an Event of Default, incentivizing the investor to monitor for and potentially benefit from a default scenario.

Risks

• Significant shareholder dilution due to highly discounted conversion prices of the convertible notes and warrants.
• Inability to meet scheduled amortization payments on the Labrys Fund and Auctus Fund notes, leading to immediate default and accelerated repayment obligations.
• High default interest rates (up to 24% per annum) and increased default conversion discounts (e.g., 45% for CFI Capital note) would severely penalize the Company upon default.
• Failure to maintain a market capitalization of at least $5 million (Auctus Fund note) could trigger an Event of Default.
• Prohibitions on certain financing activities, such as variable rate transactions and merchant cash advances, may limit future capital-raising options.
• The 'most favored nation' clauses in the financing agreements mean that if the Company offers more favorable terms to future investors, these terms must also be extended to the current noteholders, potentially increasing future costs.
• The requirement to apply up to 50% of cash proceeds from any source (including financings, asset sales, customer payments) to repay the Labrys Fund and Auctus Fund notes could hinder reinvestment and growth.
• Risk of delisting or suspension of trading of common stock, which constitutes an Event of Default under multiple notes.
• Failure to comply with SEC reporting requirements or public information obligations could trigger penalties and Events of Default.
• The personal guarantee by CEO Jas Mathur for the lease agreement exposes him to personal liability.
• The Company's financial statements are prepared assuming it will continue as a going concern, which implies potential liquidity concerns.

Future Outlook

The Company plans to use the proceeds from the financings for business development and general working capital, indicating an intent to expand operations, particularly with the establishment of the new Limitless Manny Pacquiao Impact Performance & Training Center. However, the highly restrictive nature of the debt terms suggests a challenging path to achieving these growth objectives without significant dilution or financial strain.

Management Comments

• Jaspreet Mathur, CEO, signed the 8-K report and is a personal guarantor for the lease agreement.

Industry Context

The opening of a new performance and training center, especially one associated with a prominent figure like Manny Pacquiao, suggests an expansion into the fitness and wellness industry, potentially leveraging celebrity endorsement for brand visibility. However, the reliance on highly dilutive convertible debt financing, characterized by deep discounts and stringent covenants, is common among early-stage or financially distressed companies in various sectors, including those seeking rapid expansion without strong underlying cash flows or access to traditional, less expensive capital.

Comparison to Industry Standards

• The conversion prices for the notes (e.g., 65%, 85%, 60% of lowest trading prices, and 45% upon default) are significantly below typical industry standards for non-distressed companies, often indicating a high-risk profile or a company in a precarious financial position. Such deep discounts are usually reserved for highly speculative investments or companies with limited alternative financing options.
• The inclusion of substantial original issue discounts and direct deductions for legal and due diligence fees from the principal amount is a red flag, as it reduces the effective capital received by the company and increases the true cost of borrowing, which is worse than standard financing practices.
• The immediate and structured amortization payments, particularly for the Labrys Fund and Auctus Fund notes, are more aggressive than typical convertible debt structures, which often allow for interest-only periods or conversion prior to principal repayment. This puts immediate and continuous pressure on the company's cash flow.
• The 'most favored nation' clauses, while common in some private placements, are particularly impactful here given the multiple concurrent financings, potentially forcing the Company to extend the most aggressive terms to all noteholders, further exacerbating dilution.
• The requirement to maintain a minimum market capitalization (Auctus Fund note) is an unusual and highly restrictive covenant for a public company, as market cap is subject to external factors beyond management's direct control, making it a significant default trigger.
• The Second Warrant being exercisable only upon an Event of Default is a highly punitive term, effectively giving the investor a 'bonus' in the event of the company's financial distress, which is not standard in healthy financing arrangements.

Corporate Governance

Related Party Transactions

• Jas Mathur, CEO of Limitless X Holdings Inc., is a personal guarantor for the Retail Lease Agreement with RWBP Highland, L.P.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk due to the highly discounted conversion prices of the notes and warrants. The 'most favored nation' clauses could exacerbate this by extending aggressive terms to all noteholders. The market capitalization covenant (Auctus) adds a risk of default if the stock price declines.
• **Company (Management/Employees)**: The new performance center could boost brand visibility and operational scope. However, the stringent debt covenants, immediate amortization payments, and high default penalties place immense pressure on management to generate cash flow and maintain stock price, potentially impacting employee morale and retention if financial performance falters.
• **Creditors (Noteholders)**: Benefit from highly favorable terms, including deep conversion discounts, high interest rates, and strong default protections (e.g., 150% default amount, immediate conversion rights upon default, warrants exercisable only on default). The 'repayment from proceeds' clauses provide a mechanism for early repayment from various company cash inflows.
• **Customers**: The opening of the Limitless Manny Pacquiao Impact Performance & Training Center offers new fitness and training services, potentially enhancing customer offerings and brand appeal.
• **Suppliers**: No direct impact mentioned, but the Company's financial health and liquidity challenges could indirectly affect its ability to pay suppliers in a timely manner if cash flow becomes constrained.

Next Steps

• Limitless Entertainment, Inc. must open the Limitless Manny Pacquiao Impact Performance & Training Center for business within 90 days after the delivery date.
• The Company must make monthly amortization payments on the Labrys Fund note starting February 5, 2026, and on the Auctus Fund note starting December 11, 2025.
• The Company must purchase Director & Officer (D&O) insurance within 60 calendar days of the closing of the Auctus Fund transaction.
• The Company must maintain its corporate existence and listing on OTC Markets or a national exchange.
• The Company must comply with all reporting requirements of the 1934 Act and maintain adequate share reserves for conversions.

Key Dates

Recommendation

The Company has engaged in multiple highly dilutive and expensive financing agreements, characterized by significant original issue discounts, high interest rates, and conversion prices set at deep discounts to market trading prices. These terms are indicative of a company facing severe financial distress and limited access to conventional capital. The numerous restrictive covenants, immediate amortization schedules, and punitive default clauses (including warrants exercisable only upon default and substantial default penalties) create an extremely high-risk profile. The potential for massive shareholder dilution is imminent and ongoing, likely leading to significant erosion of existing equity value. While the new lease for a performance center suggests business expansion, the financing structure undermines any potential operational positives. For a seasoned investor, these factors collectively signal a precarious financial position and a strong likelihood of further value destruction, making the stock a strong sell.

Keywords

Convertible Note, Warrants, Debt Financing, Dilution, Lease Agreement, SEC Filing, 8-K, Capital Raise, Financial Distress, Corporate Governance, Risk Factors, Amortization, Default, OTC Markets, Fitness Center