8-K: Two Hands Corporation Secures $82,000 in Convertible Note Financing

Two Hands Corporation entered into a securities purchase agreement for a $94,300 convertible promissory note, receiving net funding of $75,000 after fees and expenses.

Summary

• Two Hands Corporation entered into a securities purchase agreement with 1800 Diagonal Lending LLC on April 28, 2025.
• The agreement involves the sale of a convertible promissory note with a principal amount of $94,300 to 1800 Diagonal for a purchase price of $82,000.
• After deducting legal expenses and a due diligence fee, Two Hands Corporation received net funding of $75,000.
• The note matures on February 1, 2026, and accrues interest at 10% per annum.
• 180 days after the issue date, the note is convertible into shares of Two Hands Corporation's common stock at 75% of the lowest closing bid price during the 10 trading days prior to conversion.
• The holder cannot convert the note if it would result in beneficial ownership exceeding 4.99% of the company's outstanding common stock.
• The holder can deduct $1,500 from each conversion to cover deposit fees.
• The note can be prepaid at 115% during the first 90 days, 120% during days 91-150, and 125% during days 151-180 following the issue date.
• The company grants 1800 Diagonal a right of first refusal for financings up to $1,000,000 during the 12 months following the closing date.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the company secures funding, the terms of the convertible note (high interest rate, potential dilution) present risks.

Positives

• Two Hands Corporation secures immediate funding of $75,000.
• The agreement includes a right of first refusal for the investor, potentially leading to further investment.
• Prepayment options provide flexibility for Two Hands Corporation to manage its debt.

Negatives

• The conversion feature could lead to dilution of existing shareholders' equity.
• The interest rate of 10% increases the company's financial obligations.
• The investor's right of first refusal could limit the company's options for future financing.

Risks

• The conversion of the note could significantly dilute existing shareholders' equity.
• Failure to meet obligations under the note could trigger default provisions, potentially leading to accelerated repayment or other penalties.
• The company's ability to secure future financing may be restricted by the investor's right of first refusal.
• The company's stock price could be negatively impacted if the market perceives the financing terms as unfavorable.

Future Outlook

The company has access to additional tranches of financing of up to $840,000.00 during the next twelve (12) months subject to further agreement by and between the Company and the Buyer.

Industry Context

Microcap companies often use convertible notes as a means of securing short-term financing, especially when traditional funding sources are limited. The terms of these notes can be highly variable and often include features designed to attract investors willing to take on higher risk.

Comparison to Industry Standards

• The 10% interest rate is relatively high, reflecting the higher risk associated with investing in microcap companies.
• The conversion discount of 25% is a common feature in convertible notes, providing the investor with potential upside if the company's stock price increases.
• The right of first refusal is a negotiated term that gives the investor an advantage in future financing rounds.

Stakeholder Impact

• Shareholders may experience dilution if the convertible note is converted into common stock.
• Employees may benefit from the increased working capital, potentially leading to job security and growth opportunities.
• Customers and suppliers may see improved stability and reliability from Two Hands Corporation due to the increased financial resources.
• Creditors may be impacted by the new debt obligation, potentially affecting the company's creditworthiness.

Next Steps

• Two Hands Corporation will use the proceeds for general working capital purposes.
• 1800 Diagonal Lending LLC will monitor the company's performance and may exercise its conversion rights in the future.
• Two Hands Corporation must comply with the terms of the agreement, including reporting requirements and the right of first refusal.

Key Dates

Keywords

convertible note, financing, securities purchase agreement, common stock, 1800 Diagonal Lending LLC, Two Hands Corporation, funding