Company: BTBT
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110383
Chunk: 62

Company: Bit Digital, Inc
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 1
Chunk 62
---
 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.

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.

At
September 30, 2025, the Company performed a qualitative assessment to identify if events or circumstances indicate that the investment
is impaired or that an observable price change has occurred. We considered available information about Canopy’s operations and
industry conditions. No events or circumstances were identified that would indicate the investment is impaired or that an observable
price change occurred. As of September 30, 2025, the investment continues to be reported at its original cost of $1,000,000. For the
three and nine months ended September 30, 2025, the Company did not record upward adjustments or downward adjustments on the investment.

(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 S