Company: BTBT
Filing Date: 2025-03-14
Form Type: 10-K
Source: 0001013762-25-000307
Chunk: 1406

Company: Bit Digital, Inc
Filing Date: 2025-03-14
Form: 10-K
Item: Item 3
Chunk 1406
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 by a discount to the price per share of Canopy’s common stock. In a dissolution event, such as
a bankruptcy, the Company is entitled to receive the cash-out amount. If the SAFE is outstanding on the three-year anniversary of the
Effective Date, then the SAFE will expire and the Company will be entitled to receive the cash-out amount. In the event of a qualifying
equity financing, the number of shares of preferred stock received by the Company would be determined by dividing the SAFE investment
amount by a discounted price per share of the preferred stock issued in the respective equity financing. The Company recorded an investment
of $1 million as an investment in the SAFE on the Consolidated Balance Sheets. Additionally, per the terms of the SAFE arrangement, the
Company may be obligated to invest up to an additional $2 million into the SAFE arrangement if Canopy satisfies certain milestones prior
to the expiration of the SAFE, or if an equity financing event occurs.

F-31

The Company accounted for this investment under
ASC 320, Investments - Debt Securities and elected the fair value option for the SAFE investment pursuant to ASC 825, Financial
Instruments, which requires financial instruments to be remeasured to fair value each reporting period, with changes in fair value
recorded in the consolidated statements of operations. The fair value estimate includes significant inputs not observable in the market,
which represents a Level 3 measurement within the fair value hierarchy. The decision to elect the fair value option is determined on an
instrument-by-instrument basis on the date the instrument is initially recognized, is applied to the entire instrument, and is irrevocable
once elected. For instruments measured at fair value, embedded conversion or other features are not required to be separated from the
host instrument. Issuance costs related to convertible securities carried at fair value are not deferred and are recognized as incurred
on the Consolidated Statements of Operations. For the year ended December 31, 2024, the Company did not record upward adjustments or downward
adjustments on the investments.

(g) Investment in AI Innovation Fund I (“AI
fund”)

On July 15, 2024, the Company entered into a subscription
agreement with Pleasanton Ventures Innovation Master Fund SPC Limited for investment of $15.9 million in its AI Innovation Fund I. The
investment includes a direct investment into private equity and fund of fund opportunities within the AI industry.

As a practical expedient, the Company uses Net
Asset Value (“NAV”) or