Company: CBLO
Filing Date: 2025-11-19
Form Type: 10-Q
Source: 0001882781-25-000042
Chunk: 9

Company: C2 Blockchain, Inc.
Filing Date: 2025-11-19
Form: 10-Q
Item: Item 1
Chunk 9
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ized to interest expense over the respective term of the note.

In
connection with the Coventry Note the Company issued 5,000,000 shares of its restricted common stock Coventry as commitment stock (the
“Commitment Stock”). If the Company repays all of its obligations in full and in accordance with the terms of the Coventry
Note, and is never in default during the term of the Coventry Note, then Coventry shall, within ten calendar days thereafter, return
the 5,000,000 of the Commitment Stock shares to the Company’s treasury for cancellation. As a result of the cancellation terms,
the Company has not allocated any proceeds to the relative fair value of the commitment shares as they have not been earned as of September
30, 2025.

On
July 22, 2025, the Company entered into a share purchase agreement with third party Quick Capital LLC (“Quick Capital”) in
which the Company issued a $55,556 promissory note to Quick Capital (the “QC Note”) which matures in nine months. The QC
Note includes $6,667 of guaranteed interest and was issued with an original issue discount of $5,556 and $3,000 allocated to legal documentation
fees, resulting in net proceeds to the Company of $47,000. The combined $62,222 total owed to Quick Capital is convertible into shares
of the Company’s common stock at a fixed conversion price of $.01 per share or, at the discretion of Quick Capital, at a variable
conversion price of 65% of the lowest trading price for the twenty trading days previous to the conversion date. In connection with the
Purchase Agreement, the Company also issued to Quick Capital a warrant resulting in the issuance of 2,777,778 warrant shares at an exercise
price of $.02 per share with a 5-year term. The warrants had a relative fair value of $43,044 which was recorded as a discount on the
note.

The
Company has deemed that this convertible loan requires adjustments to bifurcate the conversion option from the host instrument and account
for it as a free-standing derivative financial instrument under ASC 815, Derivatives and Hedging Activities. The fair value
of the derivative on the date of issuance was recorded as a debt discount up to the face value of the note with the excess being charged
directly to interest expense. The aggregate debt discount of $62,222 is being amortized to interest expense over the respective term