Company: SCTH
Filing Date: 2025-11-20
Form Type: 10-Q
Source: 0001017386-25-000148
Chunk: 19

Company: Securetech Innovations, Inc.
Filing Date: 2025-11-20
Form: 10-Q
Item: Part I, Item 8
Chunk 19
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 and maturing on September 18, 2026. The note is convertible into shares of the Company’s common stock, beginning six months after the issuance date. The conversion price is variable and is set at a significant discount to the market price, equal to 60% of the Company’s lowest trading price during the 15 trading days preceding the conversion date. The variable conversion feature, which results in a variable number of shares upon settlement, represents an embedded derivative that is not clearly and closely related to the host debt instrument. In accordance with ASC 815, Derivatives and Hedging, this embedded derivative was required to be bifurcated and accounted for separately at fair value.
 
The total gross proceeds from the note were $150,000. However, the Company received net cash proceeds of $119,200, after deductions of $5,000 legal fee of the buyer, $10,800 of the placement agent commission, and $13,500 of original issue discount. 
The Company allocated the net proceeds between the host convertible note and the embedded derivative liability based on their relative fair values. The fair value of the embedded derivative was estimated at $84,326 based on management’s estimates and assumptions. The remaining proceeds of $34,874 were allocated to the host convertible note and are being accreted to the face value of $150,000 using the effective interest method over the note's term.
 
As of September 30, 2025, the carrying amount of the convertible note is $38,955, and the derivative liability is $84,326.
 
Repayment Contingency
 
If the Company elects to repay the convertible note in cash prior to the date the conversion feature becomes exercisable (six months after the issuance date), the embedded derivative would expire unexercised. In such an event, the derivative liability would be derecognized, and the note would be settled at its principal amount plus any accrued interest through the repayment date. No further remeasurement or fair value adjustments would be required after settlement.

NOTE 15 – CONTINGENCY/LEGAL
 
As of September 30, 2025, no director, executive officer, or promoter has been involved in legal proceedings requiring disclosure under Item 103 of Regulation S‑K during the past ten years. From time to time, the Company may be subject to routine litigation incidental to its business. The Company is not a party to any pending legal proceedings that, individually or in the aggregate, are expected to have