DEF 14C: TEN Holdings Secures $20M Equity Line and Settles $4.91M Debt Through Share Issuances

TEN Holdings, Inc. has obtained majority stockholder approval for significant share issuances to settle approximately $4.91 million in outstanding payables and secure up to $20.0 million in future equity funding.

Summary

• TEN Holdings, Inc. (the Company) received written consent from its majority stockholder, V-Cube, Inc. (holding approximately 64.9% of voting power), to approve two significant share issuance transactions.
• The first transaction involves settling approximately $4.91 million in outstanding payables owed by the Company to designated creditors, which Sunpeak Holdings Corporation (SHC) agreed to purchase and exchange for Company common stock (Settlement Shares).
• As part of the SHC settlement, the Company also issued 175,000 freely trading common shares to SHC as a settlement fee.
• To date, the Company has issued 5,385,000 shares to SHC, settling approximately $2,143,034.59 of the total $4.91 million in payables.
• The second transaction is a Purchase Agreement with Lincoln Park Capital Fund, LLC, granting the Company the right, but not the obligation, to sell up to $20.0 million in common stock at its sole discretion over a 24-month period.
• In connection with the Purchase Agreement, the Company issued 882,145 common shares to Lincoln Park as a commitment fee.
• These share issuances required stockholder approval under Nasdaq Rule 5635(d) because they could result in the issuance of 20% or more of the Company's common stock at a price below the minimum threshold.
• The corporate actions are expected to become effective on or about August 12, 2025, approximately 20 days after the Information Statement was mailed.

Sentiment

Score: 4

Explanation: The document outlines necessary steps to settle debt and secure future funding, which are positive for financial stability. However, the significant dilution for existing shareholders and the potential for future sales at a discount are notable negatives, leading to a neutral-to-slightly-negative sentiment.

Positives

• The Company is settling approximately $4.91 million in outstanding payables, which helps reduce existing liabilities and improve its financial position.
• Securing access to up to $20.0 million in potential equity funding over a 24-month period provides the Company with significant capital flexibility for future operations.
• The Settlement Agreement terms, including the share issuances, were approved by a Circuit Court, confirming the fairness of the terms and conditions.
• Lincoln Park is obligated to purchase shares when directed by the Company, providing a committed funding source, subject to certain conditions and limitations.
• The Company retains control over the timing and amount of any sales of common stock to Lincoln Park and can terminate the Purchase Agreement at any time after the Commencement Date without cost or penalty.
• Lincoln Park has agreed not to engage in short selling or hedging with respect to the Company's common stock during the term of the Purchase Agreement.

Negatives

• The issuance of shares under both the Settlement Agreement and the Purchase Agreement will have a dilutive effect on the Company's existing stockholders, including their ownership percentage and voting power.
• The purchase price per share for Regular Purchases by Lincoln Park will be 97% of the lower of two market-based prices, which could result in sales at a discount to prevailing market prices.
• The Settlement Agreement includes default conditions if the Company's market price decreases to or drops below $0.25 per share or if the thirty-day average trading volume falls below 100,000 shares per day.
• The Company has agreed, with limited exceptions, not to effect any issuance of, or enter into any agreement for, shares of common stock or common stock equivalents in any equity line of credit, at-the-market offering, or other similar continuous offering for a period of 24 months.

Risks

• The Company faces a risk of default under the Settlement Agreement if its common stock market price decreases to or drops below $0.25 per share.
• A default condition under the Settlement Agreement will be triggered if the thirty-day average trading volume of the Company's common stock decreases to or drops below 100,000 shares per day.
• Future issuances of common stock under the Purchase Agreement will lead to further dilution of existing stockholders' ownership and voting power.
• The Company is relying on equity issuances to settle existing debt and raise future capital, which can be highly dilutive and subject to market conditions.

Future Outlook

The Company intends to utilize the Purchase Agreement with Lincoln Park to obtain proceeds from selling up to $20.0 million in shares of common stock at its sole discretion over a 24-month period. This process will commence once a registration statement covering the resale of shares by Lincoln Park is declared effective by the U.S. Securities and Exchange Commission.

Management Comments

• The Board believes it is in the best interests of the Company to settle certain outstanding obligations totaling approximately $4.91 million under the Settlement Agreement.
• The Board believes it is in the best interests of the Company to obtain proceeds from selling up to $20.0 million in shares of common stock at the Company’s sole discretion under the Purchase Agreement.
• The Company will control the timing and amount of any sales of common stock to Lincoln Park pursuant to the Purchase Agreement.

Industry Context

NA

Corporate Governance

Legal Proceedings

• The Circuit Court of the Twelfth Judicial Circuit in and for Manatee County, Florida, Civil Division, approved the Settlement Agreement and the issuance of Settlement Shares and Settlement Fee Shares on April 30, 2025 (Case No. 2025 CA 000858), confirming the fairness of the terms.

Related Party Transactions

• The majority stockholder, V-Cube, Inc., which holds approximately 64.9% of the Company's voting power and whose CEO, Naoaki Mashita, is also a Director of TEN Holdings, provided written consent for the Corporate Issuances.

Stakeholder Impact

• **Shareholders**: Existing shareholders will experience significant dilution of their ownership percentage and voting power due to the issuance of new shares for debt settlement and future capital raising.
• **Creditors (SHC)**: SHC, as a purchaser of the Company's outstanding payables, will receive common stock in settlement, converting a portion of the Company's debt into equity.
• **Investors (Lincoln Park)**: Lincoln Park will become a significant investor, providing capital to the Company in exchange for common stock, subject to specific purchase terms and limitations.

Next Steps

• The corporate actions approved by written consent are expected to become effective on or about August 12, 2025.
• The Company will continue to issue shares to SHC to complete the settlement of the remaining portion of the approximately $4.91 million in outstanding payables.
• The Company will work towards having a registration statement declared effective by the SEC to commence sales of common stock to Lincoln Park under the Purchase Agreement.
• The Company may direct Lincoln Park to purchase additional amounts of common stock as regular, accelerated, or additional accelerated purchases, subject to the terms of the Purchase Agreement.
• The remaining 40% of CEO Randolph Wilson Jones III's stock options will begin vesting in October 2025, with monthly installments continuing until October 2027.

Key Dates

Recommendation

Keywords

TEN Holdings, SEC filing, DEF 14C, stock issuance, debt settlement, equity financing, capital raise, Lincoln Park Capital, Sunpeak Holdings, Nasdaq Rule 5635(d), dilution, common stock, written consent, corporate governance, financial reporting