Key Takeaways
- • C2 Blockchain secured $1.33 million in convertible note agreements across two separate financing transactions in late May 2026, generating net proceeds of approximately $201,000 at initial closing.
- • The first agreement with Auctus Fund, LLC involved a $130,000 principal convertible note (sold at $117,000 with 12% one-time interest charge) convertible at 60% of the lowest traded price over 15 trading days prior to conversion, plus warrant coverage for 5.2 million shares at $0.05 per share.
- • The second and larger agreement with Leonite Fund I, LP structured a senior secured convertible note with up to $1.2 million principal (including $200,000 original issue discount), secured by first-priority interest in substantially all company assets, convertible at an initial $0.05 per share with 10% annual interest.
- • Leonite's agreement includes 1 million restricted common shares as commitment shares and warrants to purchase 2 million additional shares at $0.10 per share, reflecting significant dilution potential for existing shareholders.
- • Combined original issue discounts, warrant coverage, and conversion terms indicate aggressive pricing typical of distressed or high-risk early-stage financings, with total potential share issuance substantially exceeding the capital raised.
Summary
C2 Blockchain, Inc. (OTC: C2BL) announced the completion of two convertible note financing agreements totaling $1.33 million in principal value, filed with the Securities and Exchange Commission on May 22 and May 28, 2026. The transactions reflect two distinct capital-raising strategies targeting institutional investors willing to assume significant equity dilution and conversion risk.
The first transaction, executed with Auctus Fund, LLC on May 22, involved a $130,000 principal convertible note sold at a discounted price of $117,000, generating an original issue discount of $13,000. The note carries a 12% one-time interest charge of $15,600 assessed on issuance. After deducting $4,000 in legal fees and $5,000 in due diligence costs, C2 Blockchain received net proceeds of $108,000. The note matures May 22, 2027, and converts into common stock at a price equal to 60% of the lowest traded price during the 15 trading days preceding conversion. The agreement includes warrant coverage for 5.2 million shares exercisable at $0.05 per share, substantially amplifying potential equity dilution.
The second and substantially larger transaction with Leonite Fund I, LP, executed May 28, established a senior secured convertible promissory note with aggregate principal of up to $1.2 million, inclusive of a $200,000 original issue discount. The note provides for phased funding up to $1 million and carries a 10% annual interest rate. At initial closing, Leonite Fund funded $100,000, with $7,000 retained for legal fees, delivering net proceeds of $93,000 to C2 Blockchain. This note is secured by a first-priority security interest in substantially all company assets—a material creditor priority claim—and converts into common stock at an initial conversion price of $0.05 per share. The financing package includes 1 million restricted common shares issued as commitment shares and warrants to purchase up to 2 million additional shares at $0.10 per share.
Combined net proceeds from both agreements total approximately $201,000 at initial closing, while aggregate potential dilution from conversion rights and warrant exercises exceeds 8.2 million shares. The high prevalence of original issue discounts, significant one-time interest charges, and substantial warrant coverage indicates a distressed or high-risk capital structure typical of early-stage or financially constrained blockchain enterprises. The senior secured status of the Leonite agreement signals elevated creditor priority claims against company assets, a structural consideration material to existing equity holders and lenders.
The first transaction, executed with Auctus Fund, LLC on May 22, involved a $130,000 principal convertible note sold at a discounted price of $117,000, generating an original issue discount of $13,000. The note carries a 12% one-time interest charge of $15,600 assessed on issuance. After deducting $4,000 in legal fees and $5,000 in due diligence costs, C2 Blockchain received net proceeds of $108,000. The note matures May 22, 2027, and converts into common stock at a price equal to 60% of the lowest traded price during the 15 trading days preceding conversion. The agreement includes warrant coverage for 5.2 million shares exercisable at $0.05 per share, substantially amplifying potential equity dilution.
The second and substantially larger transaction with Leonite Fund I, LP, executed May 28, established a senior secured convertible promissory note with aggregate principal of up to $1.2 million, inclusive of a $200,000 original issue discount. The note provides for phased funding up to $1 million and carries a 10% annual interest rate. At initial closing, Leonite Fund funded $100,000, with $7,000 retained for legal fees, delivering net proceeds of $93,000 to C2 Blockchain. This note is secured by a first-priority security interest in substantially all company assets—a material creditor priority claim—and converts into common stock at an initial conversion price of $0.05 per share. The financing package includes 1 million restricted common shares issued as commitment shares and warrants to purchase up to 2 million additional shares at $0.10 per share.
Combined net proceeds from both agreements total approximately $201,000 at initial closing, while aggregate potential dilution from conversion rights and warrant exercises exceeds 8.2 million shares. The high prevalence of original issue discounts, significant one-time interest charges, and substantial warrant coverage indicates a distressed or high-risk capital structure typical of early-stage or financially constrained blockchain enterprises. The senior secured status of the Leonite agreement signals elevated creditor priority claims against company assets, a structural consideration material to existing equity holders and lenders.
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