Quantum Cyber N.V. Debt Disclosure

NOTE 11 - CONVERTIBLE DEBT

 

Convertible debt at December 31, 2025 and 2024 consisted of the following:

 

		December 31,				December 31,
		2025				2024
2017 Convertible loan		$	47,101			$	41,762
2019 Convertible loan			35,204				31,213
Fourth promissory note			-				1,021,000
		$	82,305			$	1,093,975
Current		$	82,305			$	1,093,975
Non-current		$	-			$	-

 

Convertible loans

 

Issued in fiscal year 2017

 

In November 2017, the Company entered into loan agreements with a former shareholder of the Company for loan €40,139 (the “2017 Convertible Loan”). 2017 Convertible Loans is payable on demand and no bearing-interest. The remaining loan is convertible at the option of the lender to shares totaling 0.11% of the Company’s common shares outstanding at the time of conversion. The loan is non-interest bearing, are unsecured and are due on demand.

 

Issued in fiscal year 2019

 

In September 2019, the Company entered into a loan agreement with a related party, who ceased to be a related party in 2024, for an amount of €30,000 (the “2019 Convertible loan”). The 2019 Convertible loan bear interest at 3.5% and had a maturity date of September 30, 2022. The convertible loan has not been converted and is payable on demand. While the 2019 Convertible loan is outstanding, the lender is entitled to 0.5% of the Company’s net income each year should the Company be profitable and provided that the amount paid does not exceed the principal amount of the debt; the lender does not partake in the Company’s losses. At maturity, the 2019 Convertible loan is convertible into ordinary shares of the Company at €40 per share.

 

Convertible Promissory Notes (“Promissory Notes”)

 

On June 28, 2023, the Company entered into a Pre-Paid Advance Agreement (the “PPA”) with YA II PN, Ltd. (“Yorkville”), allowing the Company to issue up to $50,000,000 in promissory notes or sell shares directly to Yorkville.

 

The Promissory Notes are convertible at the Holder’s discretion into the Company’s ordinary shares at a conversion price (the “Conversion Price”) equal to the lower of a fixed price, determined by the market price at the time of issuance, and 92% of the average of the two lowest daily VWAPs of the shares during the eight trading days immediately prior to such conversion, or at a floor price set at the time the Notes are issued (the “Floor Price”).

 

Under the Promissory Notes, a “Trigger Event” occurs if the trading price of an ordinary share is lower than the applicable Floor Price for any five of seven consecutive trading days. Within five trading days of a Trigger Event, the Company must make a monthly cash payment to the Holder in connection with the Promissory Notes (the “Monthly Payment”) equal to the lesser of (i) $550,000, plus an 8% redemption premium on any principal being repaid plus any accrued and unpaid interest and (ii) all principal outstanding under all outstanding Promissory Notes, plus an 8% redemption premium on any principal being repaid plus any accrued and unpaid interest. Thereafter, the Company must pay the Holder a Monthly Payment every 30 calendar days after the due date of the initial Monthly Payment; provided that the Company’s monthly obligation hereunder will end with respect to a particular Trigger Event if (i) the daily VWAP of the ordinary shares for seven consecutive trading days immediately prior to the due date of the next Monthly Payment is 10% or greater than the Floor Price or (ii) the Company reduce the Floor Price for all outstanding Promissory Notes by 50%, unless a new Trigger Event occurs.

Promissory Notes at December 31, 2024 are as follows:

 

														Carrying amount				Fair value
Promissory notes issued														December 31,				December 31,
Note		Issue Date		Maturity		Principal				Net proceeds				2024				2024
First		June 28, 2023		June 28, 2024		$	5,500,000			$	5,060,000			$	-			$	-
Second		September 26, 2023		September 26, 2024		$	5,500,000			$	5,060,000				-				-
Third		April 18, 2024		April 18, 2025		$	3,300,000			$	2,970,000				-				-
Fourth		October 8, 2024		October 8, 2025		$	1,500,000			$	1,350,000				1,000,000				1,021,000
														$	1,000,000			$	1,021,000

 

On April 18, 2024, the Company sold the Holder the third promissory note under the PPA (the “Third Promissory Note”) in the principal amount of $3,300,000 and received $2,970,000, net of discount and paid legal fee of $25,000.

 

On October 8, 2024, the Company issued a fourth promissory note under our PPA in the original principal amount of $1,500,000 with a 10% original issue discount. This note matures one year from the date of its issuance. The note carries any interest at a rate of 7% per annum, except if there is an event of default in which case the interest will increase to 15% per annum. The Company may prepay the note with at a 5% premium with advance written notice ranging between five business days and thirty calendar days prior to such prepayment, depending on the market price of our ordinary shares. The note is convertible at holder’s discretion (but not before July 1, 2025) into our ordinary shares at a fixed conversion price equal to the lower of either the fixed price or 92% of the average of the two lowest daily volume weighted average prices during the eight (8) consecutive trading days immediately preceding a conversion. Pursuant to the Second Supplemental Agreement, the Company made monthly payments consisting of ten $100,000 principal payments beginning in January 2025, to fully repay the remaining principal balance outstanding to Yorkville pursuant to the fourth promissory note. No conversions were made on this note as it was repaid in cash. Such monthly payments included accrued but unpaid interest outstanding at the time of such payment and a prepayment premium.

 

The Company elected to account for the Promissory Notes utilizing the fair value option under ASC 825-10 and, accordingly, initially and subsequently measured them as fair value with the changes in fair value recognized in earnings and the portion attributable to changes in instruments specific credit risk is recognized in other comprehensive income. At issuance, the Company recorded the Third Promissory Note at its fair value of $2,822,000 and the Fourth Promissory Note at its fair value of $1,340,000 in 2024.

 

During the years ended December 31, 2025 and 2024, the Company recorded a change in fair value of $21,000 and $2,052,000, respectively.

 

Interest

 

During the years ended December 31, 2025 and 2024, the Company recorded interest expense of $78,091 and $646,269, respectively.

Repayment

 

During the year ended December 31, 2025, the Company fully repaid principal amounts of the Fourth Promissory Note of $1,000,000. During the year ended December 31, 2024, the Company repaid principal amounts of the Second Promissory Note of $787,633 and the Fourth Promissory Note of $392,200.

 

Conversion

 

During the year ended December 31, 2024, principal amounts of the First Note of $2,000,000, the Second Promissory Note of $3,612,367, the Third Promissory Note of $3,300,000 and the Fourth Promissory Note of $107,800 and accrued interest of $631,226 were converted into 807,388 ordinary shares, at conversion prices ranging from $7.37 to $38.06.

 

Summary of Repayment and conversion

 

During the year ended December 31, 2025 and 2024, the repayments and conversion of convertible promissory notes are as follows;

 

		First				Second				Third				Fourth
December 31, 2023		$	2,000,000			$	4,400,000			$	-			$	-
Issued			-				-				3,300,000				1,500,000
Repayment			-				(787,633	)			-				(392,200	)
Conversion			(2,000,000	)			(3,612,367	)			(3,300,000	)			(107,800	)
December 31, 2024		$	-			$	-			$	-			$	1,000,000
Repayment															(1,000,000	)
December 31, 2025		$	-			$	-			$	-			$	-