8-K: Two Hands Corp Secures $125K Via Convertible Note

Two Hands Corporation has entered into a securities purchase agreement to sell a convertible promissory note for $132,000, resulting in net funding of $125,000.

Summary

• Two Hands Corporation entered into a securities purchase agreement (SPA) on July 6, 2026, with Vanquish Funding Group LLC.
• The company sold a convertible promissory note with a principal amount of $151,800 for a purchase price of $132,000.
• The transaction closed on July 8, 2026, with Vanquish's legal expenses of $2,500 and a $4,500 due diligence fee deducted from the purchase price.
• The company received net funding of $125,000.
• The note matures on July 6, 2027, and accrues 10% annual interest.
• The note is convertible into common stock at 75% of the lowest closing bid price 10 days prior to conversion, with a beneficial ownership cap of 4.99%.
• The holder can deduct $1,500 from each conversion for deposit fees.
• The note can be prepaid at 125% within 180 days of issuance.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a neutral to slightly negative development due to the dilutive nature of the convertible note and the significant discount, although it does provide necessary capital.

Positives

• Secured $125,000 in net funding.
• The convertible note provides flexibility for future conversion into equity.
• The company has a right of first refusal for future financings up to $1,000,000 over the next 12 months.

Negatives

• The convertible note carries a significant discount (effectively 25% of face value plus fees) for the initial funding.
• The conversion price is set at a discount to market, potentially dilutive to existing shareholders.
• The note accrues 10% annual interest, increasing the company's debt burden.
• The company may have to prepay the note at a premium (125%) if it chooses to do so within 180 days.

Risks

• Potential for significant dilution to existing shareholders upon conversion of the note.
• The conversion price is tied to a discount of the lowest closing bid price, which could be volatile.
• The company's ability to manage its debt obligations, including the interest on the note.
• The 4.99% beneficial ownership cap on conversion could lead to multiple conversions and administrative complexity.
• The right of first refusal for Vanquish Funding Group LLC could limit future financing options.

Future Outlook

The company has secured immediate funding through a convertible note. The terms of the note, including its conversion price and maturity date, will influence future equity structure and financial obligations. The company also has a right of first refusal for future financings up to $1,000,000.

Industry Context

StockSavvy.ai notes that the use of convertible notes is a common, albeit often dilutive, method for early-stage or financially constrained companies to raise capital. The terms, particularly the discount and interest rate, reflect the perceived risk by the investor and the company's current market position.

Stakeholder Impact

• Shareholders: Potential for dilution upon conversion of the note, especially if conversion occurs at a low stock price.
• Creditors: The company's debt obligations increase with the 10% annual interest on the note.
• Management: The company secured necessary funding, allowing for continued operations and strategic initiatives.

Next Steps

• The note is convertible 180 days after issuance, which is approximately January 2, 2027.
• The company may need to manage its cash flow to service the 10% annual interest.
• The company has a right of first refusal for future financings up to $1,000,000 over the next 12 months.

Key Dates

Recommendation

The company has secured essential funding, which is a positive. However, the dilutive nature of the convertible note, with its significant discount and interest, warrants a cautious 'hold' recommendation until the company demonstrates improved financial performance and a clearer path to profitability without excessive dilution.

Keywords

convertible note, securities purchase agreement, funding, Vanquish Funding Group, Two Hands Corporation, debt financing, equity dilution, SEC filing