MAY 2025 CONVERTIBLE NOTE

6 Months Ended

Jun. 30, 2025

MAY 2025 CONVERTIBLE NOTE

NOTE 10 – MAY 2025 CONVERTIBLE NOTE

On May 13, 2025, the Company closed on a private offering pursuant to a Securities Purchase Agreement (the “Agreement”) with an accredited investor (the “Investor”), pursuant to which the Investor purchased a Senior Secured Convertible Note (the “May 2025 Convertible Note”) in the original principal amount of $3,333,333 including an original issue discount (“OID”) of $333,333. Interest accrues at a rate of 10% per annum. The Company also entered into a Security Agreement giving the Investor a senior secured position against the Company’s assets.

The consideration to the Borrower for the May 2025 Convertible Note is up to three million Dollars ($3,000,000) (the “Consideration”) to be paid in one or more tranches (each, a “Tranche”). The first five (5) Tranches (the “Initial Tranches”) shall consist of a payment by Holder to Borrower of one hundred ten thousand Dollars, with the first Initial Tranche advanced on the Issue Date. Following the funding of the Initial Tranches, and subject to the conditions set forth herein, the Holder shall continue to advance Tranches to the Borrower in minimum amounts of one hundred thousand Dollars ($100,000) per Tranche on a monthly basis, subject to certain conditions set forth in the May 2025 Convertible Note. Eighty percent of each tranche’s proceeds must be used to purchase specific crypto assets, with the remainder for working capital. The maturity date (“Maturity Date”) shall be the earlier of May 13, 2026 or the date in which the Company completes a Registered Public Offerring of the shares of the Company.

The May 2025 Convertible Note is convertible into shares of the Company’s common stock at a Conversion Price equal to the lower of (i) $0.001 or (ii) lowest daily VWAP on the Trading Day immediately prior to the date that any Tranche is advanced.

As of June 30, 2025, the Company has issued an aggregate principal of $333,333 of May 2025 Convertible Notes and received $275,000 in cash proceeds.

Additionally, for each dollar of principal issued under the May 2025 Convertible Note the Company shall issue the Investor a warrant to purchase 1,000 shares of the Company’s common stock at an exercise price of $0.001 per share for a period of 5 years (the “Warrants”).

Due to certain embedded contingent redemption features within the May 2025 Convertible Note, the Company elected to account for the May 2025 Convertible Note and all the embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of other income (loss) in the consolidated statements of operations. As a result of electing the fair value option, $25,000 of direct costs and fees related to the issuance of the May 2025 Convertible Note were expensed immediately. As the fair value of the liabilities required to be subsequently measured at fair value exceeded the net proceeds received, the Company recognized the excess of the fair value over the net proceeds received as a loss upon issuance of notes and warrants of $756,621 which is included in other income (expense) in the condensed consolidated statement of operations.

For the three and six months ended June 30, 2025, the Company recorded a gain of $31,824 related to the change in fair value of the May 2025 Convertible Note which was recognized in other income (expense) in the consolidated statements of operations.

Interest expense on the May 2025 Convertible Note totaled $3,365 for the three and six months ended June 30, 2025, and is included within change in fair value of the convertible notes in the consolidated statement of operations.

The following table presents the change in the balances of the May 2025 Convertible Note for the periods identified:

SCHEDULE OF CONVERTIBLE NOTE


Balance, January 1, 2025	$	-
Note issuances		333,333
Change in fair value		(31,824	)
Balance, June 30, 2025	$	301,509
Plus: accrued interest		3,772
Balance, June 30, 2025 – Convertible Notes FVO	$	305,281

In July of 2025 the Company issued an aggregate principal of $122,222 of May 2025 Convertible Notes and received $100,000 in cash proceeds, net of an original issue discount of $12,222 and $10,000 withheld by the Investor for legal fees. (Note 18 – Subsequent Events)

Vocodia Holdings Corp 10-Q