FORUM MARKETS Inc Debt Disclosure

NOTE 9 - DEBT

 

The following tables summarize the activity of loans payable (in thousands):

 

		Year Ended December 31, 2025
		Principal balance at December 31, 2024				Principal additions				Principal repayments in cash				Other				Principal balance at December 31, 2025
First Insurance - 20241		$	1			$	-			$	-			$	(1	)		$	-
First Insurance - 20252			-				614				(363	)			-				251
Equities First Loan			-				25,950				-				-				25,950
Aave Loan			-				31,513				-				-				31,513
Total loans payable and collateralized loans		$	1			$	58,077			$	(363	)		$	(1	)		$	57,714
Less: Less: loans payable and collateralized loans – current portion			1																31,764
Loans and collateralized loans payable – noncurrent portion		$	-															$	25,950

 

(1)	Represents insurance financing note payable funded in June 2024 which matured in April 2025 and bore interest at 9.30%

 

(2)	Represents insurance financing note payable funded in June 2025 which matures in April2026 and bears interest at 8.99%

 

The following table summarizes the activity of loans payable (in thousands):

 

		Year Ended December 31, 2024
		Principal balance at December 31, 2023				Principal additions				Principal repayments in cash				Other				Principal balance at December 31, 2024
First Insurance – 2023		$	785			$	-			$	(523	)		$	(262	)		$	-
First Insurance - 2024			-				778				(777	)			-				1
Total loans payable		$	785			$	778			$	(1,300	)		$	(262	)		$	1
Less: loans payable – current portion			785																1
Loans payable – noncurrent portion		$	-															$	-

Convertible Debt

 

During the year ended December 31, 2025, the Company completed multiple senior secured convertible debt financings. The Company elected to account for these convertible notes at fair value, with changes in fair value recognized in earnings. All convertible notes were fully redeemed prior to December 31, 2025, and no amounts were outstanding as of year-end.

 

On August 8, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with investment funds managed by an institutional investor (the “Investor”), under which the Company agreed to sell and issue to the Investor senior secured convertible notes (the “August 2025 Convertible Notes”) in an aggregate principal amount of $156.3 million (the “Principal Amount”) in exchange for cash equal to 96.0% of the Principal Amount (the “Debt Financing”).

 

On September 22, 2025, the Company entered into an Amendment and Waiver Agreement with the Investor (the “Amendment Agreement”), which amended the original financing agreement and provided for the issuance of an additional series of new senior secured convertible notes with an aggregate principal amount of $360.0 million (the “New Principal Amount”) (the “September 2025 Convertible Notes”, and together with the August 2025 Convertible Notes, the “Convertible Notes”). The September 2025 Convertible Notes were issued on September 23, 2025 for cash proceeds equal to 97.25% of the New Principal Amount (the “New Debt Financing”).

 

The Convertible Notes bore stated interest at rates ranging from 0.0% to 4.0% per annum, depending on the series of notes and the period outstanding. In connection with the September 2025 amendment, the stated interest rate on the Convertible Notes was reduced to 2.0%. The Company elected the fair value option under ASC 825 to account for the Convertible Notes, which is explained further below.

 

Clear Street LLC (“Clear Street”) provided placement agent services in connection with the Debt Financing and the New Debt Financing. In connection with these services, the Company paid cash placement agent fees, including a fee equal to 4% of the aggregate gross proceeds raised in the Debt Financing and a fee equal to 1% of the aggregate gross proceeds raised in the New Debt Financing, and reimbursed certain reasonable and documented legal and other out-of-pocket expenses. In aggregate, the Company incurred professional fees and expenses of $8.6 million in connection with the Convertible Notes, which are included in “General and administrative” expenses in the Consolidated Statements of Operations and Comprehensive Loss.

 

On December 9, 2025, the Company entered into a Note Mandatory Redemption Agreement with the investor pursuant to which the Company agreed to redeem all outstanding Convertible Notes for an amount equal to 117% of the outstanding principal amount, plus accrued and unpaid interest and other amounts due under the governing documents. On December 30, 2025, the Company redeemed all Convertible Notes and the related agreements were terminated.

 

Registration Rights Agreement

 

On the August 2025 Note Funding Date, the Company entered into a Registration Rights Agreement (the “RRA”) with the Investor pursuant to which, among other things, and subject to certain limitations set forth therein, the Investor has customary demand registration rights and the Company was obligated to prepare and file a registration statement registering the offer and sale of all of the Investor’s common stock, which registration statements have been timely filed and declared effective to date.

 

The Registration Rights Agreement remains in effect for so long as the shares of common stock underlying the Convertible Notes are registrable securities. The Registration Rights Agreement did include a registration payment arrangement that would have required the Company to make payments to the Investor in the event the Company fails to file or maintain an effective registration statement.

 

The Registration Rights Agreement does not provide for any liquidated damages, cash settlement alternatives, or other registration payment penalties. Accordingly, no liability was recorded as of December 31, 2025, and no gains or losses related to the Registration Rights Agreement were recognized in the Consolidated Statements of Operations and Comprehensive Loss.

Fair Value Election and Measurement

 

The Company made an accounting election to account for the Convertible Notes at fair value with changes in fair value recognized in earnings. The Company elected the fair value option to simplify its accounting and reporting related to the Convertible Notes due to the variable conversion pricing mechanism embedded in the Convertible Notes. As the Company has elected to account for the Convertible Notes under the fair value option, separate evaluation of embedded features or derivatives for bifurcation is not required.

 

Subsequent to initial recognition, the Convertible Notes are remeasured at fair value at each reporting date, with changes in fair value recognized in earnings. Debt issuance costs associated with the Convertible Notes are expensed as incurred and are not deferred or amortized.

 

The August 2025 Convertible Notes had a fair value at issuance of $150.0 million, and the September 2025 Convertible Notes had a fair value at issuance of $348.0 million . The Company also recognized $1.9 million in gain related to the difference in pre and post amendment Convertible Note fair value upon issuance of the September 2025 Convertible Notes.

 

The Company evaluated whether changes in the fair value of the Convertible Notes during the period and cumulatively were attributable to changes in instrument specific credit risk and determined that no portion of such changes was attributable to instrument specific credit risk.

 

The Company estimated the fair value of the convertible debt using a Monte Carlo Simulation in a risk-neutral framework and the following inputs: estimated volatility of 65%, risk-free rate of 3.67-3.61%, dividend yield of 0%, a probability of shareholder conversion approval of 65% and a discount for lack of marketability of 24%-32%.

 

Interest expense related to the Convertible Notes is presented separately from changes in fair value and is recognized consistently in accordance with the Company’s accounting policy election.

 

In December 2025, the Company repaid the Convertible Notes principal of $516.1 million, total interest of $1.9 million, and a redemption premium of $87.7 million, for aggregate cash paid of $0.6 million.

 

During the year ended December 31, 2025, the Company recognized a loss of $103.9 million related to the changes in fair value of the Convertible Notes, which is presented in “Change in fair value of convertible debt” in the Consolidated Statements of Operations and Comprehensive Loss, which includes the redemption premium of $87.7 million.

 

Interest Expense

 

For the year ended December 31, 2025, the Company recognized interest expense of $1.9 million associated with the Convertible Notes, which is included in “Interest expense” on the Consolidated Statements of Operations and Comprehensive Loss. Total contractual interest expense recognized during the period consisted of $3.3 million.

 

 Collateralized Loan

 

On September 8, 2025, the Company entered into a collateralized loan arrangement with Cumberland DRW LLC (“Cumberland”). Under the agreement, the Company transferred 11,673 ETH as collateral and received $50.0 million in cash. The Company was obligated to repay $51.3 million on December 8, 2025 and, upon repayment, receive back the 11,673 ETH initially posted as collateral. The arrangement exposed the Company to digital asset price risk and counterparty credit risk and required the Company to post additional collateral if the price of ETH declined by 20% or more. The agreement also included early termination provisions.

The Company accounted for the arrangement as a single collateralized loan in accordance with ASC 815, Derivatives and Hedging (“ASC 815”), and the AICPA Digital Assets Practice Aid. At inception, the Company recognized a loan liability of $50.0 million, which accreted interest to the contractual repayment amount. The ETH transferred as collateral was derecognized, and the Company recognized a receivable representing its contractual right to receive ETH upon repayment. A realized gain of $2.6 million as recorded at inception, representing the difference between the carrying amount of the derecognized ETH and the initial cost of the related ETH.

 

During the fourth quarter of 2025, the Company repaid and fully extinguished the collateralized loan. Upon settlement, the related receivable was derecognized, and the remaining ETH collateral was returned to the Company and recorded at fair value. The Company recognized the remaining interest accretion in earnings upon extinguishment. Prior to settlement, the Company recognized unrealized gains and losses of $2.1 million related to changes in the fair value of the ETH receivable within “Digital asset gains and losses” in the Consolidated Statements of Operations and Comprehensive Loss. No additional unrealized gains or losses were recognized after the receivable was settled.

 

In accordance with ASC 326 the Company evaluated expected credit losses on the ETH receivable while it was outstanding. No allowance for credit losses was recorded due to the short-term nature of the receivable, the creditworthiness of the counterparty, the contractual protections within the arrangement, and the fact that the receivable was settled in full. No write-offs or recoveries were recognized.

 

Loans Denominated in Digital Assets 

 

Equities First Master Loan and Collateral Agreement

 

On September 30, 2025, the Company and Equities First Holdings, LLC (“Equities First” or “the Lender”), entered into a Master Loan and Collateral Agreement (the “MLCA”). The Company received 12,500,000 in USDC on October 6, 2025 when 8,700 ETH were assigned as collateral to the Lender under the MLCA. On October 10, 2025, the Company received an additional 13,190,860 USDC to its ETH wallets. The total principal of the loan of $25.9 million matures in April 2027, bears interest at 3.5% per annum and a default rate of 7%. The Company incurred an origination fee of $0.3 million which was recorded as interest expense. The loan collateral had a fair value of $25.8 million as of December 31, 2025. During the year ended December 31, 2025, the Company received a series of margin calls on the loan. The Company paid $2.1 million in USDC from its cryptocurrency wallets related to these margin calls. The Equities First loan is included in “Collateralized loan” on the Company’s Consolidated Balance Sheet.

 

Aave Loan

 

On December 20, 2025, the Company borrowed 10,600 ETH under an Aave loan commitment (the “Aave Loan”). The Company pledged 13,935.91 ETH as collateral against the loan. As of December 31, 2025, the Aave Loan balance was $31.5 million. The loan accrues interest at a variable rate determined algorithmically by the Aave protocol based on supply and demand dynamics within the applicable liquidity pool. The interest rate has historically averaged approximately 1.57% but has been as high as 3.85% during periods of elevated market volatility. The Aave protocol establishes a maximum LTV of 93% and a liquidation threshold of 95%. If the value of the pledged collateral declines—or the value of the borrowed ETH increases—such that the LTV exceeds 95%, the protocol will automatically liquidate a portion of the collateral to repay the loan. Upon liquidation, a 1% liquidation penalty is applied, resulting in a loss of collateral value to the Company. The Company has incurred no loss of collateral through December 31, 2025.

 

The Aave Loan has no stated maturity date and remains outstanding until repaid by the Company or liquidated by the protocol. There are no scheduled principal payments, financial covenants, or prepayment penalties. The loan is permissionless and governed entirely by smart contracts deployed on the Ethereum blockchain.

 

The Aave Loan is included in “Collateralized loan” on the Company’s Consolidated Balance Sheets.