Athena Bitcoin Global S-1/A, filed Feb 11, 2025
Athena Bitcoin Global (ABIT)
As filed with the Securities and Exchange Commission on February 11, 2025
Registration No. 333-262629
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 6
TO
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| |
6099 | |
| (State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
| incorporation or organization) | Classification Code Number) | Identification Number) |
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Matias Goldenhörn
Chief Executive Officer
1 SE 3rd Avenue Suite 2740
Miami, Florida 33131
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| Iwona Alami, Esq. |
| Law Office of Iwona J. Alami |
| 620 Newport Center Dr. |
| Suite 1100 |
| Newport Beach, CA 92660 |
| (949) 200-4626 |
Approximate date of commencement of the proposed sale to the public: As soon as practicable after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box: ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller reporting company | |
| Emerging growth company |
If an emerging growth company,
indicate by checkmark if the registrant has not elected to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. The selling shareholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED FEBRUARY 11, 2025
PRELIMINARY PROSPECTUS
34,650,000 Shares of Common Stock
This prospectus relates to the resale or other disposition of up to 34,650,000 shares of Athena Bitcoin Global (the “Company”, “we” or “us”) common stock, par value $0.001 per share (the “common stock” or “shares”), which may be offered for sale from time to time by the selling shareholders named in this prospectus (each a “Selling Shareholder” and, collectively, the “Selling Shareholders”). The shares of our common stock covered by this prospectus include up to 34,650,000 shares of common stock issued upon conversion of our outstanding 6% Convertible Debentures Due 2023 (the “6% Convertible Debentures”), as discussed in greater detail below under “Convertible Debentures” in the section entitled “Description of Capital Stock”, which were issued in connection with a private placement financing in 2021. We are registering the resale of the shares of common stock underlying the 6% Convertible Debentures as required by the Securities Purchase Agreement that we entered into with the Selling Shareholders as of June 22, 2021, which provided said Selling Shareholders with certain registration rights with respect to the common stock issuable upon conversion of the 6% Convertible Debentures. We are not selling any shares of common stock under this prospectus and will not receive any proceeds from the sale of any shares of common stock by the Selling Shareholders. The Selling Shareholders will bear all commissions and discounts, if any, attributable to the sale or other disposition of the shares of common stock. We will bear all costs, expenses and fees in connection with the registration of the shares of common stock.
Our common stock is quoted on the OTC Pink Market (“OTC Pink”) operated by the OTC Markets Group, Inc. under the symbol “ABIT”. On February 10, 2025, the last reported sale of our common stock was $0.06. There is a limited public trading market for our common stock. You are urged to obtain current market quotations for the common stock.
Until such time as our common stock is quoted on the OTCQX, or the OTCQB, operated by OTC Markets, or listed on any national securities exchange or automated interdealer quotation system, the shares covered by this prospectus will be sold by the Selling Shareholders from time to time at a fixed price of $[●] per share, representing the average of the high and low prices as reported on the OTC Pink on [●], 2025. If and when our common stock is regularly quoted on the OTCBB or the OTCQX, or the OTCQB or listed on any national securities exchange or automated interdealer quotation system, the Selling Shareholders may sell their respective shares of common stock, from time to time, at prevailing market prices or in privately negotiated transactions.
Our registration of the shares of common stock covered by this prospectus does not mean that the Selling Shareholders will offer or sell any of the shares. See “Plan of Distribution” for more information.
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus.
Investing in our shares involves a high degree of risk. You should carefully consider the Risk Factors of this prospectus before you make an investment in our securities.
We are an “emerging growth company” as that term is used in the Jumpstart Our Business Startups Act (the “Jobs Act”) and defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements in future reports after the completion of this offering. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”
We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should carefully consider the risks and uncertainties described under the heading “Risk Factors” of this prospectus before you make an investment decision.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is February 11, 2025.
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TABLE OF CONTENTS
You should rely only on information contained in this prospectus. We have not authorized anyone to provide you with information other than that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. We take no responsibility for and cannot provide any assurance as to the reliability of any other information others may give you. The Selling Shareholders are not offering to sell or seeking offers to buy shares of common stock in jurisdictions where offers and sales are not permitted. The information in this prospectus or any free writing prospectus is accurate only as of its date, regardless of its time of delivery or of any sale of shares of our common stock. Our business, financial condition, results of operations, and prospects may have changed since that date. We are responsible for updating this prospectus to ensure that all material information is included and will update this prospectus to the extent required by law.
For investors outside of the United States: Neither we nor any of the Selling Shareholders have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of common stock by the Selling Shareholders and the distribution of this prospectus outside of the United States.
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ABOUT THIS PROSPECTUS
This prospectus is a part of a registration statement on Form S-1 that we filed with the Securities and Exchange Commission (the “SEC”). Under this process, the Selling Shareholders may, from time to time, sell the shares of common stock covered by this prospectus in the manner described in the section titled “Plan of Distribution.” Additionally, we may provide a prospectus supplement to add information to, or update or change information contained in, this prospectus (except for the section titled “Plan of Distribution,” which additions, updates, or changes that are material shall only be made pursuant to a post-effective amendment). You may obtain this information without charge by following the instructions under the section titled “Where You Can Find More Information” appearing elsewhere in this prospectus. You should read this prospectus, any free writing prospectus and any prospectus supplement before deciding to invest in our shares.
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CAUTIONARY NOTE REGARDING Forward-Looking Statements
This prospectus contains forward-looking statements under the federal securities laws. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this prospectus, including those incorporated by reference into the section entitled “Risk Factors” herein.
In particular, forward-looking statements include, but are not limited to, any statements that are not statements of current or historical facts, such as statements relating to market acceptance of our products; our ability to protect our intellectual property rights; the impact of any infringement actions or other litigation brought against us; competition from other providers and products; our ability to develop and commercialize new and improved products and services and successfully pursue innovation; our ability to complete capital raising transactions; and other factors (including the risks contained in the section of this prospectus entitled “Risk Factors”) relating to our industry, our operations and results of operations. Actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Such statements are based on management’s current expectations and include, but are not limited to:
| · | our future financial performance, including our expectations regarding our net revenue, operating expenses, and our ability to achieve and maintain future profitability; | |
| · | our business plan and our ability to effectively manage our growth; | |
| · | anticipated trends, growth rates, and challenges in our business, the crypto economy, and in the markets in which we operate; | |
| · | market acceptance of our products and services; | |
| · | beliefs and objectives for future operations; | |
| · | our ability to further penetrate our existing customer base and maintain and expand our customer base; | |
| · | our ability to develop new products and services and grow our business in response to changing technologies, customer demand, and competitive pressures; | |
| · | our expectations concerning relationships with third parties; | |
| · | our ability to maintain, protect, and enhance our intellectual property; | |
| · | our ability to continue to expand internationally; | |
| · | the effects of increased competition in our markets and our ability to compete effectively; | |
| · | future acquisitions of or investments in complementary companies, products, services, or technologies and our ability to successfully integrate such companies or assets; | |
| · | our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business both in the United States and internationally; | |
| · | economic and industry trends, projected growth, or trend analysis; | |
| · | trends in revenue, cost of revenue, and gross margin; | |
| · | trends in operating expenses, including technology and development expenses, sales and marketing expenses, and general and administrative expenses, and expectations regarding these expenses as a percentage of revenue; | |
| · | increased expenses associated with being a public company; | |
| · | other risks and uncertainties, including those described under Risk Factors, herein; and | |
| · | other statements regarding our future operations, financial condition, and prospects and business strategies. |
Any forward-looking statements in this prospectus reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. All forward-looking statements included herein speak only as of the date of this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements above. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
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INDUSTRY AND MARKET DATA
Market data and certain industry data and forecasts used throughout this prospectus were obtained from internal Company surveys, market research, consultant surveys, publicly available information, reports of governmental agencies and industry publications and surveys. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. We have not independently verified any of the data from third party sources, nor have we ascertained the underlying economic assumptions relied upon therein, and we have not commissioned any such data or forecasts. Similarly, internal surveys, industry forecasts and market research, which we believe to be reliable based on our management’s knowledge of the industry, have not been independently verified. Forecasts are particularly likely to be inaccurate, especially over long periods of time. Statements as to our market position are based on the most currently available data. While we are not aware of any misstatements regarding the industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” in this prospectus.
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Glossary of Bitcoin and Crypto Terms
| · | Address: An alphanumeric reference to where crypto assets can be sent or stored. | |
| · | Bitcoin (BTC): The first system of global, decentralized, scarce, digital money as initially introduced in a white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto. Bitcoin, while having several of the primary attributes of money, is not considered a currency or money in the jurisdictions that the Company operates, with the exception of El Salvador where it is considered legal tender. | |
| · | Bitcoin ATM: A kiosk that can be used by a Customer to buy or sell bitcoin or other crypto assets in exchange for Cash. | |
| · | Bitcoin Cash (BCH): A fork of Bitcoin that seeks to add more transaction capacity to the network in order to be useful for everyday transactions. BCH is based on the original Bitcoin blockchain with some distinct differences. A major one is an increased maximum block size of 32MB, compared to just 1MB on Bitcoin. Increased block size allows BCH to process transactions faster than Bitcoin, with lower fees and an increased per-second transaction capacity. | |
| · | Block: A grouping of Transactions validated by Miners and disseminated by the Network to servers that maintain the records in a blockchain. Blocks are added to an existing blockchain as transactions occur on the network. Miners are rewarded for “mining” a new block. | |
| · | Blockchain: A cryptographically secure digital ledger that maintains a record of all transactions that occur on the Network and follows a consensus protocol for confirming new Blocks to be added to the blockchain. | |
| · | Cash: The physical specie or banknotes of a sovereign country including the U.S. Dollar and other countries that issue Fiat Currency in paper formats. | |
| · | Chivo: CHIVO, Sociedad Anonima de Capital Variable, a private company incorporated under the laws of the Republic of El Salvador, which is politically controlled by the Government of El Salvador (GOES), is the official bitcoin service provider of the Government of El Salvador. Chivo’s platform is used to support the use of bitcoin as legal tender in the country. The platform facilitates the exchange of bitcoin and U.S. Dollar between users and their counterparties. The Chivo brand, which is the exclusive property of CHIVO, Sociedad Anonima de Capital Variable, is used across multiple products and services including a mobile wallet (Chivo wallet), integrated ATM (Chivo ATMs) and point-of-sale (“POS”) terminals. | |
| · | Cold storage: The storage of private keys in any fashion that is disconnected from the internet. Common cold storage examples include offline computers, USB drives, or paper records. | |
| · | Confirmation: A Bitcoin or similar transaction is considered confirmed when it is included in a new Block in the Blockchain. Each time another Block is appended to the chain, the Transaction is confirmed again. | |
| · | Crypto: A broad term for any cryptography-based market, system, application, or decentralized network. | |
| · | Cryptocurrency: Bitcoin and alternative coins, or ‘altcoins’. This category of crypto asset is designed to work as a medium of exchange, store of value, or to power applications and excludes security tokens. |
| · | Customer: A retail user of our Bitcoin ATMs or client of one of our other services. |
| · | Customer Buying: When a Customer acquires bitcoin or another crypto asset in exchange for Cash or a Wire Transfer. In these transactions, the Company is selling bitcoin or the crypto asset and acquiring Fiat Currency. |
| · | Customer Selling: When a Customer acquires Fiat Currency, via either Cash or a Wire Transfer from the Company, in exchange for Bitcoin or another crypto asset. In these transactions, the Company is acquiring bitcoin or another crypto asset in exchange for Fiat Currency. |
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| · | Crypto Asset or Digital Asset: Bitcoin and alternative digital forms of money, or ‘altcoins,’ launched after the success of Bitcoin. This category of crypto asset is designed to work as a medium of exchange, store of value, or to power applications. The term “altcoins” is inclusive of Ethereum, Litecoin, Tether and Bitcoin Cash. | |
| · | Ethereum (ETH): A decentralized global computing platform that supports smart contract transactions and peer-to-peer applications, or “Ether,” the native crypto assets on the Ethereum network. |
| · | Fiat Currency: The currency issued by a sovereign government or bloc including the U.S. Dollar, Argentine Peso, or Euro. |
| · | Fork: A fundamental change to the software underlying a blockchain which results in two different blockchains, the original, and the new version. In some instances, the fork results in the creation of a new token. |
| · | Hot Wallet: A wallet that is connected to the internet, enabling it to broadcast transactions. |
| · | Miner: Individuals or entities who operate a computer or group of computers that add new transactions to blocks, and verify blocks created by other miners. Miners collect transaction fees and are rewarded with new tokens for their services. |
| · | Mining: The process by which new blocks are created, and thus new transactions are added to the blockchain. |
| · | Network: The collection of all Miners and Nodes that use computing power to maintain the ledger and add new blocks to the blockchain. Most networks are decentralized, reducing the risk of a single point of failure. |
| · | Node: A server that maintains a record of the blockchain and can communicate with other Nodes on the Network to propagate new Transactions. Nodes can also maintain wallets and safeguard Private Keys. |
| · | Protocol: A type of algorithm or software that governs how a blockchain operates. |
| · | Public key or private key: Each public address has a corresponding public key and private key that are cryptographically generated. A private key allows the recipient to access any funds belonging to the address, similar to a bank account password. A public key helps validate transactions that are broadcasted to and from the address. Addresses are shortened versions of public keys, which are derived from private keys. | |
| · | Stable Coin: A Token issued for the purpose of maintaining a constant value relative to a Fiat Currency, most commonly the U.S. Dollar. Examples include Tether, USDC, Dai, BinanceUSD or GUSD. Many of these operate as un-regulated money market fund equivalents. Stable coins are a popular method to transfer funds between exchanges without taking price risk. | |
| · | Tether (USDT): A blockchain-based cryptocurrency whose tokens in circulation are backed by an equivalent amount of U.S. dollars, making it a stable coin with a price pegged to U.S.Dollar $1.00. |
| · | Token: A unit of a crypto asset or other instrument secured by and recorded on a blockchain. Tokens could include the primary units of a blockchain as in Ethereum or Bitcoin, or be a separate construct whose ownership is recorded using such a blockchain as in an ERC-20 Token, whose ownership might convey any number of properties. |
| · | Transaction: The transfer of bitcoin or a crypto asset from one Address to one or more Addresses. The Transaction is validated by Nodes and Miners according to the Protocol and specifically must be signed using the private key of the sending Address to be included in a block, whereby it becomes Confirmed. | |
| · | Wallet: A place to store public and private keys for crypto assets. Wallets are typically software, hardware, or paper-based. |
| · | Wire Transfer: A permanent inter-bank transfer on a national or international settlement system including the Fedwire system in the United States or the SWIFT international system but excluding non-permanent systems like ACH (Automated Clearing House, a computer-based network that allows financial institutions to electronically process transactions). |
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Prospectus Summary
The following summary highlights selected information contained elsewhere in this prospectus and/or incorporated by reference herein and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire prospectus and the information incorporated by reference herein.
This summary does not contain all the information that you should consider before investing in our common stock. You should carefully read the entire Prospectus, including “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Financial Statements included herein, before making an investment decision. Unless the context suggests otherwise, all references to “Athena”, “we”, “us”, “our”, or “the Company” refer to Athena Bitcoin Global, a Nevada corporation and all of its consolidated subsidiaries, and all references to “Athena Bitcoin” refer solely to Athena Bitcoin, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company. As used below, Bitcoin with an uppercase “B” is used to describe the system as a whole that is involved in maintaining the ledger of bitcoin ownership and facilitating the transfer of bitcoin among parties. When referring to the crypto asset within the Bitcoin network, bitcoin is written with a lower case “b” (except, of course, at the beginning of sentences or paragraph sections, as below). The name “Athena Bitcoin” and the Athena Bitcoin logo service mark appearing in this prospectus are the property of Athena Bitcoin, Inc., a wholly-owned subsidiary of the Company. Solely for convenience, the trademarks, servicemarks and trade names in this prospectus are referred to without the ® and ™ symbols, but such references should not be construed as any indicator that the owner of such trademarks, servicemarks and trade names will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
Introduction
We are an early entrant in the crypto asset market and one of the first U.S. publicly traded companies using crypto assets and blockchain technologies in our business operations which include a global network of Athena Bitcoin ATMs.
Our management has determined that it is in our best interests to become a reporting company under the Securities Exchange Act of 1934 as amended (“Exchange Act”), and endeavor to establish a public trading market for our common stock on the OTCQB or other trading systems. Currently our trading volume is limited and we are subject to the Alternative Reporting Standard of OTC Pink Market. Our management believes that establishing a public market on the OTCQB or another exchange: (i) will increase our profile as a leading company in the international operation of Bitcoin ATMs, giving us greater identity and recognition, and (ii) will make it easier for us to attract additional equity capital, which we need to expand our business. There is no assurance that we will accomplish any of the foregoing goals and prospective investors are cautioned to carefully read the risk factors set forth herein prior to making an investment decision.
Athena Bitcoin connects the world’s
cash to the world of cryptocurrency.
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Overview
Athena Bitcoin Global owns and operates a global network of Athena Bitcoin ATMs, which we refer to as our ATMs, that allow our customers to buy or sell bitcoin in exchange for their local Fiat Currency, such as the U.S. Dollar. We are focused on making Bitcoin more easily accessible, functional and usable for people, businesses and other organizations. Athena believes the great promise of Bitcoin is the democratization of money. We believe that the traditional system of money and banking, with its many layers, costs and inefficiencies, results in the disenfranchisement of enormous numbers of individuals and businesses in the world. According to the World Bank, 1.4 billion people in the world are unbanked. This is typically due to geographic and socio-economic factors. We believe that Bitcoin, altcoins, blockchains and smart contracts are poised to transform the international financial order by providing the unbanked and billions of others in the world with a connection to the new global digital financial system.
Bitcoin is a system for decentralized digital value exchange that is designed to enable units of bitcoin to be transferred across borders without the need for currency conversion. Bitcoin is not legal tender, except in the country of El Salvador. The supply of bitcoin is not determined by a central government, but rather by an open-source software program that limits both the total amount of bitcoin that will be produced and the rate at which it is released into the network. The responsibility for maintaining the official ledger of who owns what bitcoin and for validating new bitcoin transactions is not entrusted to any single central entity. Instead, it is distributed among the network’s participants. As such, crypto assets are transferred entirely online, with no physical coins or bills. Instead of being held at a bank, crypto assets are held in one’s digital wallet, which is an online vault for holding public and private keys for crypto assets. Instead of being transferred through banks, brokers, clearing houses, custodians and payment processors, crypto assets are transferred directly to the recipient online and transactions are recorded on a blockchain or public ledger. This allows for an efficient and fully transparent transfer of funds. The value of each crypto asset is determined by trading among buyers and sellers all over the world. At the end of 2023, the overall market capitalization of crypto assets reached $1.7 trillion, representing a compounded average growth rate (CAGR) of approximately 66% since the end of 2013. The supply of bitcoin is greater than the M1 money supplies of the Swiss Franc and the Russian Ruble. One challenge for bitcoin and other crypto assets is that they typically cannot be used to pay for common expenditures like groceries, utility bills, or a house. When someone wants to spend their bitcoin, they will generally need to convert it to their local currency. Crypto asset owners can use crypto exchanges like Coinbase and Kraken and acquire U.S. Dollars by selling their crypto asset(s). On Coinbase, Kraken or other crypto exchange, users can oftentimes sell their bitcoin or other crypto assets for up to $50,000 U.S. Dollars a day which can be wired or otherwise sent directly to a bank account and typically usable after one or two business days. Crypto exchanges are well suited for larger, planned transactions but can be inconvenient or entirely unsuitable for smaller or more immediate transactional needs or for those who do not have access to institutionalized banking in their country. They also do not offer the level of convenience that bank customers are accustomed to. Most people in the United States use bank ATMs rather than bank tellers to get spending cash due to their convenience.
ATM Market
According to the PaymentsDive.com and atmia.com, there were 540,000 traditional ATMs operating in the United States as of September 20, 2023. Our two-way ATMs play a similar role by providing cash conveniently and quickly. Individuals that own bitcoin can visit our two-way ATMs and get up to $2,000 in cash in a single transaction. While our two-way ATMs dispense cash for bitcoin owners like a typical ATM cash machine does for a bank customer, our ATMs capabilities are more akin to currency exchange booths at international airports. Our ATMs perform real-time exchange between bitcoin and Fiat Currency. The majority of our customers use our services to purchase bitcoin with fiat currencies, most commonly the U.S. Dollar. However, in Central and South America, there is a more even distribution between purchases and sales of crypto assets. While our two-way ATMs differ substantially in function from bank ATMs, they provide a similar level of convenience. Our two-way ATMs benefit from the public’s vast experience using bank ATMs, which contributes to making our two-way ATMs a user-friendly and familiar method for anyone who wishes to buy or sell bitcoin.
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The Birth of Bitcoin ATMs
In the earliest days of Bitcoin, most transactions were done in person - often facilitated by websites. These sites matched prospective buyers with sellers and facilitated communications and wallet coordination, allowing them to meet in public places like coffee shops and street corners, and exchange bitcoin for envelopes of cash. The first Bitcoin ATMs began appearing in 2014. These ATMs were an instant success with retail customers because they offered instantaneous access to bitcoin in a familiar and safe method.
According to a CNBC article (Why bitcoin ATMs are taking over malls and gas stations across the U.S. Published Tue, Nov 7, 2023), Bitcoin ATMs exploded in popularity between 2020 and mid-2022, with a peak of approximately 34,000 Bitcoin ATMs located in the United States in mid-2022. There are many operators of Bitcoin ATM networks, from crypto businesses to major corporate and conventional kiosk companies including Coinstar.
Some Bitcoin ATMs offer one-way exchange, allowing customers to only buy crypto assets. Others offer two-way exchange, so customers can buy crypto assets for cash, or sell some of their crypto assets and receive cash. Athena Bitcoin ATMs currently serve clients with only one crypto asset, bitcoin, in either one-way or two-way exchanges, depending on the functionality of the ATM machine.
Bitcoin Adoption
Parties that want to use their bank accounts to buy bitcoin can do so without an ATM. These transactions are the domain of exchanges and specialty apps including services from Coinbase, Gemini, Binance, Kraken, and Square. These services generally accept U.S. Dollar transfers from bank accounts and do not accept physical currency. These services may or may not, depending on several factors including method of deposit, allow the purchaser of a crypto asset on their platforms to immediately transfer the crypto asset into their own wallet. These services cater to larger purchasers and investors of crypto assets. Users of exchanges and specialty apps may use ATMs as a convenient method to get spending cash, similar to how bank account and credit card holders use bank ATMs.
Global cryptocurrency owners increased by 13.0% in 2024, rising from 583 million in January to 659 million in December.
Based on on–chain estimates:
| · | Bitcoin (BTC) owners grew by 13.1%, from 298 million in January to 337 million in December, accounting for 51.1% of global cryptocurrency owners. | |
| · | Ethereum (ETH) owners grew by 13.6%, from 125 million in January to 142 million in December, accounting for 21.5% of global cryptocurrency owners. | |
| · | There
could be approximately 300,000 to 1.2 million people invested in BTC via U.S. spot exchange-traded
funds (ETFs) in addition to the above estimates. |
In the fourth quarter of 2024, PayPal reported significant developments in its cryptocurrency segment. PayPal’s crypto revenue saw a notable increase, with the company enabling U.S. merchants to buy, hold, and sell cryptocurrency directly from their business accounts. This expansion was highlighted by the launch of the PayPal USD (PYUSD) stablecoin in August 2023, further solidifying PayPal’s commitment to integrating crypto into mainstream financial transactions. Venmo, under PayPal, also expanded its crypto capabilities, allowing users to transfer cryptocurrency to friends and family as well as to other wallets and exchanges within the crypto ecosystem.
This information underscores PayPal and Venmo’s strategy to enhance the utility and accessibility of cryptocurrencies, aiming to drive further adoption both in the U.S. and globally. We believe that one of the main catalyst behind BTC’s adoption growth was the interests from institutions and then-President-elect Donald Trump’s pro-crypto policies during the 2024 U.S. presidential election.
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We believe the trends shown in the tables above are due in part to an increase in companies and online service providers that are helping to make bitcoin and other crypto assets more widely and easily usable. This trend is also correlated with the increase in the price of bitcoin and significant events that have occurred in the crypto economy. Given the infancy of the new digital global financial system, there has been significant variability of price since the inception of Bitcoin. There has also been negative press events, such as the FTX bankruptcy and Terra (LUNA), that have caused fluctuations in the price of bitcoin and in Bitcoin’s global adoption. These negative events played a significant role in the reduction of the Global Index Score from Q4 2021 to Q4 2022. However, despite the variability of the price and these negative events, the global index score has increased significantly since Q3 2020 and prior. We believe that this demonstrates the durability of the new digital global financial system and the Company is optimistic that as worldwide adoption continues, the variability of the price and the frequency of these negative events will decrease.
While the COVID-19 pandemic detrimentally impacted the world economy overall and aspects of our business operations, we also believe that the COVID-19 pandemic demonstrated the benefits of crypto assets to the world. According to Christine Zhenwei Qiang, Global Director for Digital Development Global Practice for the World Bank, “the COVID-19 pandemic has highlighted the fundamental role that digital infrastructure can play in rapidly delivering services and social assistance to people. Integration of digital ID, digital payments, and trusted data sharing platforms is critical for serving the poor at scale and connecting communities to opportunities.”
We believe that the use of Bitcoin ATMs will continue to rise as the Bitcoin and crypto industry and its many interconnected service providers expand.
Corporate History and Other Information
The Company was incorporated in the state of Nevada in 1991 under the name “GamePlan, Inc.” for the sole purpose of merging with Sunbeam Solar, Inc., a Utah corporation, which merger occurred as of December 31, 1991 with GamePlan, Inc. as a sole surviving entity. The Company was involved in various businesses, including, gaming and other consulting services, prior to becoming a company seeking acquisitions (a “shell company” as defined in Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”)). The Company was a reporting issuer under the Exchange Act from 1999 until 2015 when it filed Form 15 pursuant to Rule 12g-4(a)(1) with the Commission and ceased to be a reporting company.
On January 14, 2020 the Company entered into a Share Exchange Agreement (the “Agreement”), by and among the Company, Athena Bitcoin, Inc., a Delaware corporation (“Athena Bitcoin”) incorporated in 2015, and certain shareholders of Athena Bitcoin. The Agreement provides for the reorganization of Athena Bitcoin, with and into the Company, resulting in Athena Bitcoin becoming a wholly-owned subsidiary of the Company. The agreement was for the exchange of 100% of the outstanding shares of common stock of Athena Bitcoin, for 3,593,644,680 shares of the Company’s common stock (an exchange rate of 1,244.69 shares of common stock of the Company for each share of Athena Bitcoin common stock). The closing of the transaction occurred as of January 30, 2020. Subsequently, in May 2020, the Company filed its amended and restated articles of incorporation authorizing a total of 4,409,605,000 shares of common stock.
The Company approved a name change from “GamePlan, Inc.” to “Athena Bitcoin Global” on March 10, 2021 by the unanimous consent of its Board of Directors and a majority consent of its shareholders. The Company filed an amendment to its Articles of Incorporation with the Secretary of State of the state of Nevada on April 6, 2021, with the effective date of April 15, 2021. The Company’s name change and trading symbol change to “ABIT” was declared effective by FINRA on the OTC Pink Market as of June 9, 2021.
In January 2023, the Company filed its Second Amended And Restated Articles Of Incorporation authorizing a total of 10,000,000,000 shares of common stock and 5,000,000,000 shares of preferred stock, par value $0.001 per share.
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Our business operations are conducted by our subsidiary, Athena Bitcoin, Inc., a Delaware corporation. We have operating subsidiaries in the specific countries where we operate, as more fully described below:
OPERATING SUBSIDIARIES CHART
| (1) | Athena Bitcoin, Inc. owns 99% of Athena Holdings El Salvador S.A. de C.V. and Eric Gravengaard, our former Chief Executive Officer and Chief Financial Officer, holds 1% on behalf of the Company. |
| (2) | Athena Bitcoin, Inc. beneficially owns and controls Athena Holdings Colombia SAS which is nominally owned by Eric Gravengaard 95% and Matias Goldenhörn 5% (our current Chief Executive Officer. |
| (3) | Athena Bitcoin, Inc. beneficially owns and controls Athena Holding Company SRL which is nominally owned by Eric Gravengaard 45%, Gilbert Valentine 45%, and Matias Goldenhörn 10%. |
| (4) | Athena Bitcoin, Inc. owns 2,999 Shares of Athena Bitcoin SRL de C.V. and Matias Goldenhörn owns 1 Share on behalf of the Company. |
| (5) | Athena Bitcoin, Inc. is the only member of Athena Holdings of PR, LLC. |
| (6) | Athena Bitcoin, Inc. owns 100% of Athena Business Holdings Panama S.A. |
Our corporate office is located at 1 SE 3rd Avenue Suite 2740, Miami, Florida 33131, and our telephone number is 312-690-4466. Our website is www.athenabitcoin.com. The information on, or that can be accessed through, our website is not part of this prospectus and is not incorporated by reference herein.
Industry Summary
The Company is an active participant in the operation of Bitcoin ATMs in the United States and Latin America. More broadly we operate in the market of retail sales of crypto assets, where we facilitate small purchases of bitcoin. There are multiple avenues that retail consumers, individuals purchasing small amounts from one dollar to a few thousand dollars’ worth, can purchase or dispose of crypto assets.
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Company Summary
Athena Bitcoin ATMs
The Company is focused on developing, owning and operating a global network of Athena Bitcoin ATMs, which are free standing kiosks that permit customers to either buy or sell bitcoin (two-way ATMs) in exchange for fiat currencies or to just have the ability to buy bitcoin (one-way ATMs) in exchange for fiat currencies. The Company also offers personalized services (“Athena Plus”) for the purpose of selling and buying crypto assets. Through July 19, 2023, the Company transacted in various crypto assets including Bitcoin, Litecoin, Ethereum, Bitcoin Cash and Tether; however, since July 19, 2023, the Company has focused exclusively on Bitcoin. The Company places its ATMs in convenience stores, shopping centers, and other easily accessible locations. Our network presently includes ATMs in thirty-four U.S. states, the territory of Puerto Rico and 4 countries in Central and South America. We seek to expand our network in the U.S. and globally, and to further develop Athena Bitcoin as a trusted and preferred brand for parties seeking to exchange fiat currency for bitcoin.
Customers can purchase as little as $1 of bitcoin but normally choose between $100 and $1,000 using Athena Bitcoin ATMs. The typical ATM that the Company operates is about 5-feet tall and features a large touchscreen for customer interaction. The customer typically needs to have a wallet application on their smart phone to buy or sell bitcoin on our ATM. To initiate the transaction, the customer will follow the steps prompted on the screen. When a customer is buying bitcoin, the machine will require the customer to insert paper Fiat Currency since our ATMs do not accept debit or credit cards. When the transaction is complete, a receipt will print showing exactly how many crypto assets have been bought and the receiving address.
The Company’s ATMs do not contain the crypto asset’s private key. The Company sells bitcoin from cloud-based wallets in each country, enabling real-time supply of crypto assets to its customers. For the nine months ended September 30, 2024, and September 30, 2023 and for the twelve months ended December 31, 2023, and 2022, the Company’s breakdown of volume of ATM transactions per crypto asset is as follows:
VOLUME OF ATM TRANSACTIONS PER CRYPTO ASSET
| Crypto Asset | For the Nine Months Ended September 30, 2024 |
For the Nine Months Ended September 30, 2023 |
For the Twelve Months Ended December 31, 2023 |
For the Twelve Months Ended December 31, 2022 |
| Bitcoin | 128,056 | 59,134 | 99,265 | 42,731 |
| Ethereum (1) | – | 300 | 300 | 1,220 |
| Litecoin (1) | – | 861 | 861 | 3,868 |
| Bitcoin Cash (1) | – | 69 | 69 | 396 |
| Total | 128,056 | 60,364 | 100,495 | 48,215 |
| (1) | The Company stopped transacting in Ethereum, Litecoin and Bitcoin Cash in its ATMs on July 19, 2023 |
The Company buys most of its crypto assets through automated purchases on crypto exchanges (most commonly Kraken) and with digital assets trading firms based on algorithms the Company has developed for balancing its holdings with anticipated demand. The Company is also active in the over-the-counter dealer market and has bilateral relationships with several large crypto asset trading desks. We replenish our supply of bitcoin, multiple times daily as needed, and hold bitcoin in our wallet to sell to users of our ATMs. On average, we sell our holdings of bitcoin within 2 days of purchase and we previously sold our holdings of Ethereum, Litecoin and Bitcoin Cashholdings within 7 to 10 days of purchase. At this time, we only transact in bitcoin at our machines. We strive to keep holding periods short to reduce the effect of changes in bitcoin/U.S. Dollar exchange rates on our business and to maximize our working capital. We do not invest or have long term holdings of bitcoin, Ethereum, Litecoin or Bitcoin Cash BCH.
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We charge a fee per crypto asset available through our Athena Bitcoin ATM, equal to the prevailing price at U.S.- based exchanges plus a markup that typically ranges between 13% and 23%. The prices shown to customers on our Bitcoin ATM are inclusive of this price spread and are calculated by multiplying the prevailing price level of crypto asset by one plus the markup. The markup varies by location. It is determined by a proprietary method that is maintained as a trade secret. Our revenues associated with our ATM transactions are recognized at the time when the crypto asset is delivered to the customer’s wallet.
For the nine months ended September 30, 2024 and for the twelve months ended December 31, 2023, and 2022, the average markup by crypto asset sold for each period is as follows:
AVERAGE MARKUP BY CRYPTO ASSET SOLD
| Crypto Asset | For the Nine Months Ended September 30, 2024 |
For the Twelve Months Ended December 31, 2023 |
For the Twelve Months Ended December 31, 2022 |
| Bitcoin | 23% | 22% | 14% |
| Ethereum (1) | – | 23% | 13% |
| Litecoin (1) | – | 22% | 14% |
| Bitcoin Cash (1) | – | 20% | 14% |
| Total (Average) | 23% | 22% | 14% |
| (1) | The Company stopped transacting in Ethereum, Litecoin and Bitcoin Cash in its ATMs on July 19, 2023 |
Athena Plus
Our Athena Plus service allows us to assist crypto asset buyers and sellers who wish to use their bank accounts. Through Athena Plus, we also generate revenue by selling crypto assets directly to institutional traders, individuals and organizations. These transactions are typically done through the phone for amounts that exceed $10,000 U.S. Dollars. The Company utilizes crypto assets on hand and additional purchases, if necessary, to provide the crypto assets for the transaction. We charge a fee per crypto asset available, equal to the prevailing price at U.S.- based exchanges plus a markup.
White-label Service
The Company began working with the Government of El Salvador in June 2021 to support the implementation of its new Bitcoin Law. which went into effect in September 2021 and made bitcoin legal tender in El Salvador. To assist the Government of El Salvador with adoption of bitcoin as legal tender, the Company provided the white-label service discussed below, as well as certain ancillary services which went into effect in September 2021, and made bitcoin legal tender in El Salvador. These ancillary services were provided to Chivo, a private company incorporated under the laws of the Republic of El Salvador, which is politically controlled by the Government of El Salvador (see also “Business”). However, six articles of the Bitcoin Law were modified and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet.
This white-label service is comprised of installing and operating a fixed number of ATMs to Chivo. Our services provide Company owned ATMs to Chivo, which we operate on their behalf. These ATMs are located in El Salvador and in their consulates and other locations in the United States. In the U.S. the Company operated a total of 45 ATMS in service for Chivo and 2,763 Athena Bitcoin branded machines as of September 30, 2024. Our responsibilities operating the ATMs include ensuring that the ATM have sufficient cash, performing repairs and maintenance, loading and unloading cash, setting up the network connections, and software upgrades, as necessary. We charge a separate monthly fixed fee to operate the ATM. We also charge a separate fixed fee for installation of the ATM as determined by an applicable contract. The fixed fees provided in the contract are not the same for each ATM and depend on the location of the ATM. The Company does not sell crypto assets to the users of the machine, as the crypto assets are the property of the Government of El Salvador. The Company developed the Chivo Ecosystem and Chivo Website, which acts as El Salvador’s Bitcoin ecosystem (i.e., bitcoin digital wallet and platform). The development of the Chivo Ecosystem & Website was completed in 2021. The Company continued to provide support services to Chivo during fiscal year 2022 to assist with the Chivo Ecosystem, as necessary. The Company since the initial installation of the agreed upon ATMs only provides on-going support services for these ATMs. The Company has not installed any new white-label ATMs in fiscal year 2022, 2023, or 2024. The Company provided no services related to the Chivo ecosystem in fiscal year 2023 or 2024.
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Ancillary
The Company engages in ancillary services to customers as part of its mission to bring the new digital financial system to the world. This includes the sale of point-of-sale terminals (“POS Terminals”) and developing crypto ecosystems. In 2021, the Company agreed to develop and support the Chivo Ecosystem for the El Salvadoran government. The Chivo Ecosystem acts as the interface to El Salvador’s Bitcoin Digital Wallet and Website for El Salvador and its users. The Company’s contract to develop the Chivo Ecosystem ended December 31, 2021. The Company continued to provide support services to the El Salvadoran government during fiscal year 2022 to assist with the Chivo Ecosystem, as necessary. The Company provided no services related POS terminals and/or developing crypto ecosystems to Chivo in fiscal year 2023 or 2024.
Competitive Strengths
We are focused on strategically placing our ATMs in optimal locations that maximize both current income and future potential. Our ATMs are in urban, suburban, and rural locations. Our site selection criteria and metrics are a closely guarded proprietary aspect of our business. In placing our ATMs, we employ a data driven strategy based on a multitude of factors. In addition to data metrics, our placement strategy includes analysis of immediate trends, as we are in a dynamic business where usage is widening dramatically and often in unpredicted ways. Each location is chosen to complement the rest of the fleet and offer customers of diverse backgrounds access to convenient crypto assets transactions.
We are constantly working to improve our operational efficiency. Our ATMs serve as remote tellers that connect individuals to our cloud-based transaction operations. We utilize proprietary systems and methods of managing our currency transaction operations. Our founders and executives are well-versed in high-frequency trading and were some of the first to electronically trade bitcoin on multiple exchanges simultaneously. The objective of our purchasing algorithms is to frequently re-balance our crypto holdings to meet the dynamic demand of our many customers while minimizing risk of crypto asset rate fluctuations. Over-buying of bitcoin can result in inefficiencies and exposure to price fluctuations while under-buying may temporarily prevent us from selling bitcoin at our ATMs. We strive to improve the efficiency of our currency transaction operations to maximize our profits, manage risk and facilitate growth.
Our ATMs permit users to obtain bitcoin directly in their personal bitcoin wallet, which allows users to have full control of their crypto assets. Other payment providers often utilize a centralized system where the users, while able to make payments in crypto for everyday expenditures, do not have control of their crypto wallet due to not controlling the private keys to their crypto assets. We believe that this is contrary to many user’s preferences, which is be part of a transparent de-centralized digital financial system.
Business Strategies
We seek to grow and distinguish Athena Bitcoin services based on our method of location selection, our global expansion, operational efficiencies, and our authenticity as a crypto industry forerunner with respect to Bitcoin ATMs.
Our strategy is to become a global financial services company that can connect the world’s cash to the world of Bitcoin. We have spent years learning how to expand our business across borders. We believe that we have assembled the people, processes, and technologies to enable us to continue to grow our global footprint that we believe is unmatched by our competition.
According to database.earth report for 2024, the median age of the population in the United States is 38.3 years. In Latin America and the Caribbean, it is 31.3 years according to database.earth and Africa has a median age of only 19.2 years, as reported by statista.com.
As the youth digital generation accumulate their wealth, they are far more likely to embrace crypto assets than the predecessor generations. According to the joint Finra-CFA Institute report dated May 2023, 55% of US-based Generation Z investors and 57% of US-based Millennial investors currently invest in crypto, which is significantly higher than prior generations.
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As a result, we believe that Bitcoin is poised to quickly become a part of the lives of a huge percentage of the developing world’s population. We project that this “global south” offers a large green field expansion opportunity for us because it combines high usage of physical currency with low median age and reduced access to quality banking and the legacy global financial system.
See table below for our ATM breakdown by country, as of September 30, 2024.
NUMBER OF ATMs BY COUNTRY
| Country | Number of Athena Bitcoin ATMs (as of September 30, 2024) |
Type of Fiat Currency | |
| Total | Two-Way | ||
| United States | 2,850* | 13* | U.S. Dollar |
| El Salvador | 13* | 13* | U.S. Dollar |
| Argentina | 10 | 10 | Argentine peso |
| Colombia | 17 | 17 | Colombian peso |
| Mexico | 1 | 1 | Mexican peso |
| TOTAL | 2,891 | 54 | |
*Excludes Chivo-branded ATMs which the Company operates on behalf of the Government of El Salvador for Chivo as white-label service.
The Company is actively working to expand its geographic presence throughout the world, in particular in Latin America, by expanding our global Bitcoin ATMs and discussing with potential partners the service offerings that we are able to provide as the world continues to adopt the new digital financial system. By increasing our geographic service area, including our expansion of operations in El Salvador, we aim to make Athena into a global financial services company that can connect the world’s cash to the world of crypto assets.
Also, the Company has developed and has started rolling out the Athena Bitcoin Affiliates Program which provides Bitcoin ATM operators with a turnkey solution, offering industry-leading software, compliance support, cash management, and marketing services to streamline operations and maximize profitability.
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Risk Factors Associated with Our Business
Investing in our shares of common stock involves significant risks. You should carefully consider the risks described in “Risk Factors” before deciding to invest in our shares. If we are unable to successfully address these risks and challenges, our business, financial condition, results of operations, or prospects could be materially adversely affected. In any of such cases, the trading price of our common stock would likely decline, and you may lose all or part of your investment. Below is a summary of some of the risks we face.
| · | Our shares are subject to liquidity risks. | |
| · | A majority of our net revenue is derived from transactions in bitcoin. If demand for crypto assets declines, our business, operating results, and financial condition could be adversely affected. | |
| · | The future development and growth of crypto is subject to a variety of factors that are difficult to predict and evaluate. If crypto does not grow as we expect, our business, operating results, and financial condition could be adversely affected. | |
| · | Cyberattacks and security breaches of our platform, or those impacting our customers or third parties, could adversely impact our brand and reputation and our business, operating results, and financial condition. | |
| · |
We operate in a highly competitive industry and we compete against unregulated companies and companies with greater financial and other resources and our business, operating results and financial condition may be adversely affected if we are unable to respond to our competitors effectively.
| |
| · | We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition. | |
| · | As we continue to expand and localize our international activities, our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions will increase and we may be subject to investigations and enforcement actions by regulators and governmental authorities. | |
| · | We currently rely on third-party service providers and exchanges for certain aspects of our operations, and any interruptions in services provided by these third parties may impair our ability to support our customers. | |
| · | Loss of a critical banking relationship could adversely impact our business, operating results, and financial condition. | |
| · | Any significant disruption in our products and services, in our information technology systems, or in any of the blockchain networks we support, could result in a loss of customers or funds and adversely impact our brand and reputation and business, operating results, and financial condition. | |
| · | The loss or destruction of private keys required to access any crypto assets held for our business transactions with our customers may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any crypto assets, it could cause adversely impact our business operations, operating results, regulatory scrutiny, reputational harm, and other losses. | |
| · | None of our stockholders are party to any contractual lock-up agreement or other contractual restrictions on transfer. Following the registration of our shares, the sales or distribution of substantial amounts of our common stock, or the perception that such sales or distributions might occur, could cause the market price of our common stock to decline. |
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Offering Summary
We are registering the resale of 34,650,000 shares of our common stock that include up to 34,650,000 shares of common stock issued upon conversion of our outstanding 6% Convertible Debentures Due 2023 which were issued in connection with a private placement financing in 2021, as discussed in greater detail below under “Convertible Debentures” in the section entitled “Description of Capital Stock”.
Implications of Being an Emerging Growth Company and Smaller Reporting Company
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth until the end of the fifth fiscal year after the effective date of this Registration Statement, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of any December 31 before that time or, if we have total annual gross revenue of $1.235 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1. billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. Additionally, even if we no longer qualify as an emerging growth company, as long as we are neither a “large accelerated filer” nor an “accelerated filer,” we would not be required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We cannot predict if investors will find our securities less attractive because we may rely on these exemptions, which could result in a less active trading market for our securities and increased volatility in the price of our securities.
Finally, we are a “smaller reporting company” (and may continue to qualify as such even after we no longer qualify as an emerging growth company) and accordingly may provide less public disclosure than larger public companies, including the inclusion of only two years of audited financial statements and only two years of management’s discussion and analysis of financial condition and results of operations disclosure. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.
Summary Consolidated Financial and Other Data
The following tables set forth a summary of our historical consolidated financial data as of and for the periods indicated. The summary consolidated statements of operations data for the three and nine months ended September 30, 2024, have been derived from our condensed consolidated financial statements and related notes thereto included elsewhere in this prospectus. The summary consolidated statements of operations data for the periods ended December 31, 2023, and December 31, 2022, have been derived from our audited consolidated financial statements and related notes thereto included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected in the future. When you read this summary consolidated financial data, it is important that you read it together with the historical consolidated financial statements and the related notes thereto included elsewhere in this prospectus, which qualify this summary consolidated financial data in their entirety, as well as the sections of this prospectus titled “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The summary financial data in this section are not intended to replace our audited consolidated financial statements and the related notes and are qualified in their entirety by such financial statements and related notes included elsewhere in this prospectus.
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CONDENSED BALANCE SHEET SUMMARY
SEPTEMBER 30, 2024, DECEMBER 31, 2023, AND 2022
(in thousands)
| (in thousands) | September 30, 2024 Unaudited | December 31, 2023 Audited | December 31, 2022 Audited | |||||||||
| Current assets | $ | 25,565 | $ | 19,831 | $ | 4,870 | ||||||
| Other assets | 35,745 | 28,882 | 7,576 | |||||||||
| Total assets | $ | 61,310 | $ | 48,713 | $ | 12,446 | ||||||
| Current liabilities | $ | 24,540 | $ | 20,436 | $ | 7,389 | ||||||
| Long-term liabilities | 13,505 | 17,259 | 5,190 | |||||||||
| Total stockholders’ equity (deficit) | 23,265 | 11,018 | (133 | ) | ||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 61,310 | $ | 48,713 | $ | 12,446 | ||||||
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CONDENSED STATEMENT OF OPERATIONS SUMMARY
SEPTEMBER 30, 2024, AND 2023
(in thousands)
| For the nine months ended September 30, | ||||||||
2024 Unaudited | 2023 Unaudited | |||||||
| Revenues | $ | 221,737 | $ | 120,216 | ||||
| Cost of revenues | 190,108 | 102,842 | ||||||
| Gross profit | 31,629 | 17,374 | ||||||
| Operating expenses | 10,451 | 4,093 | ||||||
| Income from operations | 21,178 | 13,281 | ||||||
| Interest expense | 1,698 | 1,326 | ||||||
| Fees on virtual vault services | 1,557 | 557 | ||||||
| Other expense | 107 | 78 | ||||||
| Income before taxes | 17,816 | 11,320 | ||||||
| Income tax expense | 5,609 | 3,141 | ||||||
| Net income | $ | 12,207 | $ | 8,179 | ||||
STATEMENT OF OPERATIONS SUMMARY
DECEMBER 31, 2023, AND 2022
(in thousands)
| For the twelve months
ended December 31 |
||||||||
2023 Audited |
2022 Audited |
|||||||
| Revenues | $ | 191,807 | $ | 73,686 | ||||
| Cost of revenues | 162,624 | 59,643 | ||||||
| Gross profit | 29,183 | 14,043 | ||||||
| Operating expenses | 7,670 | 7,213 | ||||||
| Income from operations | 21,513 | 6,830 | ||||||
| Impairment of capitalized software development costs | 2,383 | – | ||||||
| Interest expense | 2,380 | 685 | ||||||
| Fees on virtual vault services | 1,039 | 113 | ||||||
| Other expense | 25 | 138 | ||||||
| Income before taxes | 15,686 | 5,894 | ||||||
| Income tax expense | 4,490 | 1,770 | ||||||
| Net income | $ | 11,196 | $ | 4,124 | ||||
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Key Business Metrics and Non-GAAP Financial Measure
In addition to our financial results, we use the following business metrics to evaluate our business, measure our performance, identify trends affecting our business, and make strategic decisions. To evaluate our operating performance, and for internal planning and forecasting purposes, we also use Adjusted EBITDA, a non-GAAP financial measure. For additional information regarding these measures, see the section titled “Selected Consolidated Financial and Other Data—Key Business Metrics and Non-GAAP Financial Measure.”
KEY BUSINESS AND NON-GAAP FINANCIAL METRICS
SEPTEMBER 30, 2024, DECEMBER 31, 2023, AND 2022
(in thousands)
| (in thousands) | Nine Months Ended September 30, 2024 | Twelve Months Ended December
31, 2023 | Twelve Months Ended December
31, 2022 | |||||||||
| Number of Athena Bitcoin ATMs end of period | 2,891 | 1,863 | 228 | |||||||||
| Number of bitcoin ATM transactions | 128,056 | 99,265 | 42,731 | |||||||||
| Net income | $ | 12,207 | $ | 11,196 | $ | 4,124 | ||||||
| Adjusted EBITDA | $ | 24,290 | $ | 23,687 | $ | 8,362 | ||||||
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The Offering
| Common Stock offered by Selling Shareholders | 34,650,000 shares of common stock which include up to 34,650,000 shares of common stock issued upon conversion of our outstanding 6% Convertible Debentures which were issued in connection with a private placement financing in 2021, as discussed in greater detail below under “Convertible Debentures” in the section entitled “Description of Capital Stock”. We are registering the resale of the shares of common stock underlying the principal amount of the 6% Convertible Debentures, as required by the Securities Purchase Agreement that we entered into with the Selling Shareholders as of June 22, 2021, which provided said Selling Shareholders with certain registration rights with respect to the common stock issuable upon conversion of the principal amount of the 6% Convertible Debentures (the “Purchase Agreement”). | |
| Common Stock outstanding before the offering | 4,095,009,545 shares of common stock as of September 30, 2024. | |
| Exchange Symbol | ABIT | |
| CUSIP | 046839106 | |
| Terms of the Offering | Until our shares are quoted on the OTCQX, or the OTCQB or listed on any national securities exchange or automated interdealer quotation system, the prices at which the selling shareholders may sell their shares is $[●], which was determined by the average of the high and low prices as reported on the OTC Pink Tier of the OTC Markets on [●], 2025. The Selling Shareholders have not engaged any underwriter regarding the sale of their shares of common stock. If our common stock becomes quoted on the OTCQX, or the OTCQB or listed on any national securities exchange or automated interdealer quotation system, then the sale price to the public will vary according to prevailing market prices or privately negotiated prices by the Selling Shareholders. | |
| Trading Market | Our common stock is currently quoted on the OTC Pink Market operated by OTC Markets Group, Inc. There is an uneven and limited trading market for our securities. We intend to apply for quotation on the OTCQB once we become a fully reporting company with the SEC. | |
| Risk Factors | The shares offered hereby involve a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See “Risk Factors”. |
The number of shares of common stock to be outstanding immediately after this offering is based on 4,095,009,545 shares of common stock outstanding as of February 11, 2025, and excludes 250,000,000 shares of common stock issuable upon conversion of 8% Amended and Restated Secured Convertible Debenture Due January 31, 2025, dated May 15, 2023 issued to KGPLA Holdings, LLC. The Secured Convertible Debenture was extended in January 2025 through January 31, 2026.
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Risk Factors
Investing in the Shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, before deciding to invest in the Shares. If any of the risks occur, our business, results of operations, financial condition, and prospects could be harmed. In that event, the trading price of the Shares could decline, and you could lose part or all your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
The Most Material Risks Related to Our Business and Financial Position
Our total revenue is substantially dependent on the volume of transactions conducted by our customers. If such volume declines, our business, operating results, and financial position would be adversely affected.
We generate substantially all our revenue from the sale of crypto assets to our customers, either using our Bitcoin ATMs or over the phone. Revenue is based on the prices that we charge our customers based on prevailing market prices. This revenue may fluctuate based on the price of crypto assets. As such, any declines in the volume of transactions, the price of crypto assets, or market liquidity for crypto assets generally may result in lower total revenue to us.
The price of crypto assets and associated demand for buying, selling, and trading crypto assets have historically been subject to significant volatility. The price and trading volume of any crypto asset is subject to significant uncertainty and volatility, depending on several factors, including:
| · | market conditions across all elements of the crypto-economy; | |
| · | our business is in a relatively new consumer product segment, which is difficult to forecast; | |
| · | our operating results may fluctuate due to the highly volatile nature of crypto; | |
| · | changes in liquidity, market-making volume, and trading activities; | |
| · | trading activities on other crypto platforms worldwide, many of which may be unregulated, and may include manipulative activities; | |
| · | investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; | |
| · | the speed and rate at which crypto assets and specifically bitcoin can gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; | |
| · | decreased user and investor confidence in crypto assets and associated exchanges and service providers; | |
| · | negative publicity and events relating to Bitcoin, blockchain technology, or the digital currency economy as a whole; | |
| · | unpredictable social media coverage or “trending” of bitcoin or other crypto assets; | |
| · | the ability for crypto assets to meet user and investor demands; | |
| · | consumer preferences and perceived utility and value of crypto assets and associated markets; | |
| · | increased competition from other payment services or other crypto assets that exhibit better speed, security, scalability, or other characteristics; | |
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| · | regulatory or legislative changes and updates affecting the use, storage, ownership, exchange, or any other aspect of the crypto-economy; | |
| · | the characterization of crypto assets under the laws of various jurisdictions around the world; |
| · | the maintenance, troubleshooting, and development of the blockchain networks underlying crypto assets, including by miners, validators, and developers worldwide; | |
| · | the ability for protocol networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; | |
| · | ongoing technological viability and security of protocols and their associated crypto assets, smart contracts, applications, and networks, including vulnerabilities against hacks and scalability; | |
| · | fees and speed associated with processing blockchain transactions, including on the underlying protocol networks and on exchanges and other platforms for trading; | |
| · | financial strength of wholesale market participants; | |
| · | the availability and cost of funding and capital; | |
| · | the liquidity of over-the-counter trading desks, market-makers, exchanges, and other wholesale dealers of crypto assets; | |
| · | interruptions in service from or failures of major crypto exchanges and platforms; | |
| · | availability of banking and payment services to support crypto-related projects; | |
| · | global level of interest rates and inflation; | |
| · | monetary policies of governments, trade restrictions, and Fiat Currency valuation changes; and | |
| · | national and international economic and political conditions. |
There is no assurance that any supported crypto asset will maintain its value or that there will be meaningful levels of interest from customers. If the demand for purchasing or selling crypto assets declines, our business, operating results, and financial condition would be adversely affected.
The prices of Bitcoin and other crypto assets are volatile.
We generate substantially all our revenue from the sale of crypto assets to our customers, either using our Bitcoin ATMs or over the phone. Revenue is based on the prices that we charge our customers based on prevailing market prices. The price at which we are able to purchase crypto assets prior to selling those same crypto assets may not be lower than the sale price if the market conditions change between those two points in time. Purchasing bitcoin or other crypto assets for prices higher than they can be later sold could result in an impairment of the asset value and our operating results could be adversely affected. The value of the entirety of our crypto assets held could be lost if the prices of those crypto assets were to significantly decrease, which would adversely affect our operating results. There are no assurances that the crypto assets we hold will have value from one day to the next and we could suffer a loss if any of the prices of those crypto assets declines or is permanently depressed.
As discussed in our financial statements included in this prospectus, we account for our crypto assets as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of our crypto assets decreased below their carrying value.
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Our transaction volume may be partially dependent on the prices of bitcoin we sell, which can be volatile. If such prices decline, the volume of user transactions could decrease and our business, operating results, and financial condition would be adversely affected.
We generate substantially all of our revenue from the cash paid by customers to purchase bitcoin from our ATMs. The number of user transactions and our transaction volumes may be partially dependent on the prices of bitcoin, as well as the associated demand for buying, selling and trading bitcoin, which can be and historically have been volatile. If such prices decline, the number of user transactions or our transaction volumes could decrease. As such, any such declines, or any declines in the price of bitcoin or market liquidity for cryptocurrency generally, may result in lower total revenue to us. The price and trading volume of any cryptocurrency, including bitcoin, is subject to significant uncertainty and volatility, depending on a number of factors, including:
| · | market conditions of, and overall sentiment towards, cryptocurrency; | |
| · | changes in liquidity, market-making volume, and trading activities; | |
| · | trading activities in cryptocurrency, including on other cryptocurrency platforms worldwide, many of which may be unregulated, and may include manipulative activities; | |
| · | investment and trading activities of highly active retail and institutional users, speculators, miners, and investors; | |
| · | the speed and rate at which cryptocurrency is able to gain adoption as a medium of exchange, utility, store of value, consumptive asset, security instrument, or other financial assets worldwide, if at all; | |
| · | changes in user and investor confidence in cryptocurrency and cryptocurrency platforms; | |
| · | negative publicity and events relating to the digital financial system; | |
| · | unpredictable social media coverage or “trending” of, or other rumors and market speculation regarding cryptocurrency; | |
| · | the ability for cryptocurrency to meet user and investor demands; | |
| · | the functionality and utility of cryptocurrency and its associated ecosystems and networks, including cryptocurrency designed for use in various applications; | |
| · | retail user preferences and perceived value of cryptocurrency and cryptocurrency markets; | |
| · | increased competition from other payment services or cryptocurrency for which we do not sell that exhibit better speed, security, scalability, or other characteristics; | |
| · | regulatory or legislative changes and updates affecting the digital financial system; | |
| · | the characterization of cryptocurrency under the laws of various jurisdictions around the world; | |
| · | the adoption of unfavorable taxation policies on cryptocurrency investments by governmental entities; | |
| · | the maintenance, troubleshooting, and development of the blockchain networks underlying cryptocurrency, including by miners, validators, and the development community; | |
| · | the ability for cryptocurrency networks to attract and retain miners or validators to secure and confirm transactions accurately and efficiently; | |
| · | legal and regulatory changes affecting the operations of miners and validators of blockchain networks, including limitations and prohibitions on mining activities, or new legislative or regulatory requirements as a result of growing environmental concerns around the use of energy in mining cryptocurrency, including Bitcoin, and other proof-of-work mining activities; | |
| · | ongoing technological viability and security of cryptocurrency and its associated smart contracts, applications and networks, including vulnerabilities against hacks and scalability; | |
| · | fees and speed associated with processing cryptocurrency transactions, including on the underlying blockchain networks and on cryptocurrency platforms; | |
| · | financial strength of market participants; | |
| · | the availability and cost of funding and capital; | |
| · | interruptions in service from or failures of major cryptocurrency platforms; | |
| · | availability of an active derivatives market for various cryptocurrencies; | |
| · | availability of banking and payment services to support cryptocurrency-related projects; | |
| · | level of interest rates and inflation; | |
| · | monetary policies of governments, trade restrictions, and Fiat Currency devaluations; and | |
| · | national, North American and international economic and political conditions. |
There is no assurance that any given cryptocurrency will maintain or increase in value or that there will be meaningful transaction volumes from our users. In the event that the price or trading of, or demand for, cryptocurrency declines, our business, operating results, and financial condition would be adversely affected.
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Bankruptcies of major crypto asset market participants have impacted the broader crypto economy.
The failure of several prominent crypto trading venues and lending platforms, such as FTX, Celsius Networks and Voyager has impacted and may continue to affect the broader cryptoeconomy. The full extent of these impacts may not yet be known but may include, the consequent and ongoing financial distress and bankruptcy of certain crypto market participants, loss of confidence in the broader cryptoeconomy, reputational harm to crypto asset platforms generally, increased negative publicity of the broader cryptoeconomy, heightened scrutiny by regulators and lawmakers and calls for increased regulation of crypto assets and crypto asset platforms. We have not experienced a material direct impact to our business, financial condition, customers or counterparties from these bankruptcies; however, these bankruptcies did cause a change to crypto market prices, crypto market volatility, crypto market volume and customer sentiment, and each of these drivers do indirectly impact our business and our revenue potential. A combination of such drivers could have been a contributing factor in a decrease in transaction volume that the Company experienced after these bankruptcies. We do not have any known material financial exposure to other cryptoeconomy participants that faced insolvency and liquidity issues, experienced excessive redemptions or suspended redemptions or withdrawals of crypto assets, allegedly mishandled customer funds, or experienced significant corporate compliance failures in connection with these bankruptcies.
Our business is in a new consumer product segment, which is difficult to forecast.
Our industry segment is new and is constantly evolving. As a result, there is a lack of available information with which to forecast industry trends or patterns. There is no assurance that sustainable industry trends or preferences will develop that will lead to predictable growth or earnings forecasts for individual companies or the industry segment. We are also unable to determine what impact future governmental regulation may have on trends and preferences or patterns within our industry segment. See “Risk Factors Related to Current and Future Regulations and other Law Enforcement Actions” for a discussion of the risks associated with governmental regulation.
We have a significant level of indebtedness that may have an adverse impact on us.
As of September 30, 2024, our total indebtedness, excluding lease liabilities, was $3,204,000 including $3,000,000 of secured convertible debenture, $138,000 of bank loan, and $66,000 of insurance financing debt. Our significant level of indebtedness could have important consequences for us, including the following:
| · | requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations and future business opportunities; | |
| · | restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; | |
| · | limiting our ability to obtain additional equity or debt financing for general corporate purposes, acquisitions, investments, capital expenditures or other strategic purposes; | |
| · | limiting our ability to adjust to changing business conditions and placing us at a competitive disadvantage to our less highly leveraged competitors; and | |
| · | making us more vulnerable to general economic downturns and adverse developments in our business. |
The above factors could limit our financial and operational flexibility and, as a result, could have a material adverse effect on our business, financial condition and results of operations. Furthermore, if our debt obligations are not repaid or converted into equity (with respect to convertible debentures) prior to their respective maturity dates, they will go into default which could cause you to lose a portion or all of your investment.
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Our secured convertible debentures and senior secured loan agreement with our senior secured lender contain restrictions that may limit our flexibility in operating our business.
Our debt obligations as of the date of this prospectus, under that certain senior secured loan agreement which include $3,000,000 amended and restated secured convertible debenture, are secured by substantially all assets of the Company and contain various covenants that limit our ability to engage in specified types of transactions. These covenants may limit our ability to, among other things:
| · | incur additional indebtedness; | |
| · | pay dividends on, repurchase or make distributions in respect of equity interests or make other restricted payments; | |
| · | make certain investments; | |
| · | sell certain assets; | |
| · | create liens on certain assets to secure debt; | |
| · | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; | |
| · | designate our subsidiaries as unrestricted subsidiaries. |
The future development and growth of crypto assets and protocols is subject to a variety of factors that are difficult to predict and evaluate. If the future does not develop and grow as we expect, our business, operating results, and financial condition could be adversely affected.
Blockchain technology was only introduced in 2008 and remains in the early stages of development. In addition, different protocols are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system, while Ethereum was designed to be a smart contract and decentralized application platform. Many other protocol networks—ranging from cloud computing to tokenized securities networks—have only recently been established. The further growth and development of any crypto assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and usage of crypto assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate, including:
| · | Many protocol networks have limited operating histories, have not been validated in production, and are still in the process of developing and making significant decisions that will affect the design, supply, issuance, functionality, and governance of their respective tokens and underlying blockchain networks, any of which could adversely affect their respective usefulness. | |
| · | Many networks are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks, or adversely affect the respective crypto networks. | |
| · | Several large networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the underlying crypto asset. | |
| · | Security issues, bugs, and software errors have been identified with many protocols and their underlying blockchain networks, some of which have been exploited by malicious actors. There are also inherent security weaknesses in some crypto assets and their networks and protocols, such as when creators of certain crypto networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a protocol, token or blockchain could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a volunteer or hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking power on a crypto network, as has happened in the past, it may be able to manipulate transactions, which could cause financial losses to holders, damage the network’s reputation and security, and adversely affect its value. |
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| · | The development of new technology for mining, such as improved application-specific integrated circuits (commonly referred to as ASICs), or changes in industry patterns, such as the consolidation of mining power in a small number of large mining farms, could reduce the security of blockchain networks, lead to increased liquid supply of the crypto asset token, and reduce its price and attractiveness. | |
| · | If rewards and transaction fees for miners or validators on any protocol network are not sufficiently high to attract and retain miners, a network’s security and speed may be adversely affected, increasing the likelihood of a malicious attack. | |
| · | The governance of many decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly compensated for their contributions. As a result, there may be a lack of consensus or clarity on the governance of any crypto network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, any of which could result in unexpected or undesirable errors, bugs, or changes, or stymie such network’s utility and ability to respond to challenges and grow. | |
| · | Many crypto networks are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely affect the usability and adoption of the respective crypto asset token. | |
| · | Various other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users’ personal information, theft of users’ assets, and other negative consequences, and which required resolution with the attention and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and if they are not resolved, the development and growth of crypto assets, blockchain technology, or Bitcoin may be significantly affected and, as a result, our business, operating results, and financial condition could be adversely affected. |
Loss of a banking relationship could adversely impact our business, operating results, and financial condition.
Athena depends on having regular and normalized access to a bank checking account for normal business purposes and also for taking deposits of the cash received from the ATM fleet. As a money services business registered with the Financial Crimes Enforcement Network (“FinCEN”) under the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, and its implementing regulations enforced by FinCEN, our banking partners view us as a higher risk customer for purposes of their anti-money laundering programs. We may face difficulty establishing or maintaining banking relationships due to our banking partners’ policies and some prior bank partners have terminated their relationship with Athena. The loss of these banking partners or the imposition of operational restrictions by these banking partners and the inability for us to utilize other redundant financial institutions may result in a disruption of business activity as well as regulatory risks. In addition, financial institutions in the United States and globally may, because of the myriad of regulations or the perceived risks of crypto assets, decide to not provide accounts, payments other financial services to us. Such events could negatively affect an investment in the Shares.
We may be unable to generate sufficient cash to service all of our indebtedness and financial commitments.
Our ability to make scheduled payments on or to refinance our indebtedness and financial commitments depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions including financial, business and other factors beyond our control. We may be unable to generate sufficient cash flow to permit us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund debt and other obligations, we may be forced to reduce or delay capital expenditures, sell assets, seek additional capital or restructure our indebtedness. Our ability to restructure or refinance indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In addition, any failure to service our debt would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. If we face substantial liquidity problems, we might be required to sell assets to meet debt and other obligations. Our debt restricts our ability to dispose of assets and dictates our use of the proceeds from such disposition.
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We may not be able to consummate dispositions, and the proceeds of any such disposition may be inadequate to meet obligations. We may be unable to access adequate funding as a result of a decrease in lender commitments due to an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover a defaulting lender’s portion. As a result, we may be unable to execute our plan of operations, make acquisitions or otherwise conduct operations, which would have a material adverse effect on our financial condition and results of operations.
We might require additional capital to support business growth, and this capital might not be available.
We have funded our operations since inception primarily through debt and revenue generated by our operations. While we believe that our existing cash and cash equivalents and availability under our debt financing agreements are sufficient to meet our working capital needs and planned capital expenditures, and to service our debt, there is no guarantee that this will continue to be true in the future. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments in our business to respond to business opportunities and challenges, including developing new products and services, enhancing our operating infrastructure, expanding our non-U.S. operations, and acquiring complementary businesses and technologies, all of which may require us to secure additional funds. In the future, we may also require additional capital due to refinancing needs, regulatory surety bond requirements, or unforeseen circumstances and may decide to engage in equity, equity-linked or debt financings, or enter into additional debt financing agreements for any of the foregoing reasons. We may not be able to secure any such additional financing on terms favorable to us, in a timely manner or at all.
The trading prices for our common stock may be highly volatile, which may reduce our ability to access capital on favorable terms or at all. In addition, a slowdown or other sustained adverse downturn in the general economic or digital asset markets could adversely affect our business and the value of our common stock. Because our decision to raise capital in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of the common stock and diluting their interests. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to continue supporting our business growth and responding to business challenges.
The Company may be forced to cease operations.
It is possible that, due to any number of reasons, including, but not limited to, an unfavorable fluctuation in the value of cryptographic and fiat currencies, the inability by the Company, whether in the United States or globally, to obtain clients, the failure of commercial relationships, the failure of development of the necessary technical environment, the failure of government actors to provide needed regulatory clarity, the failure of technology development by third parties, or intellectual property ownership challenges, the Company may no longer be viable to operate and the Company may dissolve, either in whole or part, or take actions that result in a dissolution event. During the past six years there have been several rumors that regulation specifically aimed at terminating the practice of selling crypto assets via kiosks, such as the Company’s fleet of Bitcoin ATMs, would be forthcoming. While the regulations hypothesized by these rumors have never been enacted, the state of California recently enacted the law (“DFAL”) regulating digital assets and restricting operations of financial assets kiosks (see “Business - State Regulation” of this prospectus), it remains a risk to the Company’s principal operations and could be detrimental to an investment in the Shares.
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Other Risk Factors Related to Our Business Operations and Financial Position
Currently, there is a small use of Bitcoin in the retail and commercial marketplace in comparison to relatively large use by speculators, thus contributing to price volatility that could adversely affect an investment in the Shares.
Bitcoin and the Bitcoin Network have only recently become accepted as a means of payment for goods and services by certain major retail and commercial outlets, and the use of bitcoin by consumers to pay such retail and commercial outlets remains limited. Conversely, a significant portion of bitcoin demand is generated by speculators and investors seeking to profit from the short- or long-term holding of bitcoin. A lack of expansion by bitcoin or other crypto assets into retail and commercial markets, or a contraction of such use, may result in decreased demand for the Company’s services or increased demand for services the Company is not able to provide, either of which could adversely affect an investment in the Shares.
The Company’s assets could be stolen and would be difficult to recover due to the nature of cash and crypto assets.
It is possible that, due to any number of reasons, including, but not limited to, a robbery by either a malicious external actor or an employee of the Company could adversely affect the Company’s operations and assets. From time to time, the Company has been the victim of vandalism and targeted attacks on our ATMs, which have resulted in loss of cash and equipment. The Company has also been the target of cyberattacks and has suffered security breaches of its websites, email, cellphones, and other systems related to the operations of the business. On March 31, 2021, we suffered a security breach which resulted in a loss of 29 bitcoin (approximately $1.7 million of market value as of March 31, 2021). We have initiated two independent investigations of the attack with the assistance of law enforcement and outside counsel. See also Management Discussion and Analysis of Financial Condition and Results of Operations. Historically, stolen bitcoin, crypto assets of multiple types, and cash have been difficult to recover by law enforcement or other means due to their fundamental nature as fungible instruments of value. At this time, we have no information regarding whether the stolen crypto assets can be recovered. The Company’s losses may negatively affect an investment in the Company’s shares. The Company has no knowledge of a security breach since March 31, 2021.
Crypto assets and funds that the Company holds on Bitcoin exchanges could be lost, stolen, or otherwise impaired.
From time to time and for customary reasons of procuring bitcoin on crypto exchanges. The Company uses Kraken as its primary crypto exchange. The Company carefully selects the platforms that it chooses to do business with, however this may not be sufficient to avoid losses if those exchanges suffer losses or other impairments. In 2018, Quadriga filed for bankruptcy protection following the death of its Chief Executive Officer and subsequent discovery of its insolvency. In addition, several other well-known and highly regarded exchanges have suffered similar fates. For example, in February 2014, Mt. Gox, then the largest bitcoin exchange worldwide, filed for bankruptcy protection in Japan after an estimated 700,000 bitcoin were stolen from its wallets. In May 2019, Binance, one of the world’s largest exchanges was hacked, resulting in losses of approximately $40 million. Neither of these incidents had any impact on the Company. Any such losses by an exchange could have a negative impact on the financial position of the Company and adversely impact an investment in the Shares.
The theft, loss, or destruction of private keys required to access any bitcoin may be irreversible. If we are unable to access our private keys or if we experience a hack or other data loss relating to our ability to access any bitcoin, it could cause regulatory scrutiny, reputational harm, and other losses.
Bitcoin is generally accessible only by the possessor of the unique private key relating to the digital wallet in which the bitcoin is held. While blockchain protocols typically require public addresses to be published when used in a transaction, private keys must be safeguarded and kept private to prevent a third party from accessing the bitcoin held in the applicable wallet. To the extent that any of the private keys relating to our wallets containing bitcoin held for our own account or our users’ private keys relating to their un-hosted wallets is lost, destroyed, or otherwise compromised or unavailable, and no backup of the private key is accessible, we or our users will be unable to access the bitcoin held in the related wallet. Further, we cannot provide assurance that our or our users’ wallets will not be hacked or otherwise compromised. Cryptocurrency and blockchain technologies have been, and may in the future be, subject to security breaches, hacking, or other malicious activities. Any loss of private keys relating to, or any hack or other compromise of, digital wallets used to store our users’ bitcoin could adversely affect our users’ ability to access or sell their bitcoin, as well as result in loss of user trust in us. As such, any loss of private keys due to a hack, employee or service provider misconduct or error, or other compromise by third parties could hurt our brand and reputation, result in significant losses, and adversely impact our business. The risk of this exposure is mitigated through a third-party vendor (BitGo Trust Company, Inc.) who manages the private keys.
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Any significant disruption in our ATMs or software, information technology systems, or any of the blockchain networks related to our business, could result in a loss of users or funds and adversely impact our brand and reputation and our business, operating results, and financial condition.
Our reputation and ability to attract and retain users and grow our business depends on our ability to operate our products and services at high levels of reliability, scalability, and performance, including the ability to process and monitor, on a daily basis, the transactions that occur across multiple systems. Our ATMs and software, the ability of our users to transact in bitcoin, and our ability to operate at a high level, are dependent on our ability to access the blockchain networks underlying the supported bitcoin, for which access is dependent on our systems’ ability to access the internet. Further, the successful and continued operations of such blockchain networks will depend on a network of computers, miners, or validators, and their continued operations, all of which may be impacted by service interruptions.
Our ATMs and certain cryptocurrency and blockchain networks have experienced from time to time, and may experience in the future, service interruptions or degradation because of hardware and software defects or malfunctions, distributed denial-of-service and other cyberattacks, insider threats, break-ins, sabotage, human error, vandalism, earthquakes, hurricanes, floods, fires, and other natural disasters, power losses, disruptions in telecommunications services, fraud, military or political conflicts, terrorist attacks, computer viruses or other malware, or other events. In addition, extraordinary transactions or site usage could cause our kiosks to operate at an unacceptably slow speed or even fail.
If any of our ATMs are disrupted for any reason, our products and services may fail, resulting in unanticipated disruptions, slower response times and delays in our users’ transaction execution and processing, failed transactions, incomplete or inaccurate accounting, recording or processing of transactions, unauthorized transactions, loss of user information, increased demand on limited user support resources, user claims, complaints with regulatory organizations, lawsuits, or enforcement actions. A prolonged interruption in the availability or reduction in the availability, speed, or functionality of our products and services could harm our business. Significant or persistent interruptions in our services could cause current or potential users to believe that our ATMs or software are unreliable, leading them to switch to our competitors or to avoid or reduce the use of our products and services, and could permanently harm our reputation and brands. Moreover, to the extent that any system failure or similar event results in damages to our users, these users could seek significant compensation from us for their losses, and those claims, even if unsuccessful, would likely be time-consuming and costly for us to address. Problems with the reliability or security of our ATMs or software could damage to our reputation and the cost of resolving these problems could negatively affect our business, operating results, and financial condition.
Because we are a regulated money services business in certain jurisdictions, interruptions have resulted and in the future may result in regulatory scrutiny, and significant or persistent interruptions could lead to significant fines and penalties, and mandatory and costly changes to our business practices, and ultimately could cause us to lose existing licenses or banking and other relationships that we need to operate or prevent or delay us from obtaining additional authorizations, registrations or licenses that may be required for our business.
In addition, we are continually improving and upgrading our information systems and technologies. We also rely on technologies developed by others, and if we are unable to continue to obtain licenses for such technologies or licenses to substitute for similar technologies, our business could be adversely impacted. Implementation of new systems and technologies is complex, expensive, time-consuming, and may not be successful. If we fail to timely and successfully implement new information systems and technologies, or improvements or upgrades to existing information systems and technologies, or if such systems and technologies do not operate as intended, it could have an adverse impact on our business, internal controls (including internal controls over financial reporting), operating results, and financial condition.
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Our lack of insurance protection for crypto assets held by the Company could adversely impact our business, operating results, and financial condition.
The crypto assets held by us are not insured. We also do not rely on insurance carriers to insure losses resulting from a breach of our physical security, cyber security, or by employee or service provider theft since we do not carry crime insurance. We only maintain a general liability insurance which does not cover crypto assets or breaches described above. Therefore, we may suffer a loss which is not covered by insurance in damages. Such a loss could cause a substantial business disruption of our operations, adverse reputational impact, inability to compete with our competitors, regulatory scrutiny, and consequently, it could adversely impact an investment in our shares of common stock.
The Company operates in locations outside of the United States and, as such, is subject additional risks with respect to enforcement of its contractual rights.
We currently operate and intend to grow our operations in a number of jurisdictions outside of the United States. Laws and business practices that favor local competitors or prohibit or limit foreign ownership of certain businesses, or our failure to adapt our practices, systems, processes, and business models effectively to the traveler and supplier preferences (as well as the regulatory and tax landscapes) of each country into which we expand, could impede our ability to enter into, negotiate or enforce contracts in those markets. In addition to the other risks described in this prospectus, our company’s international operations would be subject to numerous other risks, including, but not limited to, weaker enforcement of our company’s contractual rights, longer payment cycles, and difficulties in collecting accounts receivable.
The countries, we operate in, may or may not have stable economies, stable banking sectors, or stable governments which may or may not permit us to repatriate profits, maintain ownership of our business or its assets, or continue operations.
From time to time, certain governments have seized foreign companies, their assets, and or their operations. It is possible for us to face significant losses if such an event occurs, either specific to us or broadly across the entire country or industry in which we operate. We may, for example no longer be permitted to purchase additional crypto assets, or operate our machines, or return capital or profits to our parent company in the United States. This may result in a total and complete loss of our assets within that country as well as further costs to continue to pay our existing liabilities within that country.
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If we fail to retain existing users or add new users, or if our users decrease their level of engagement with our products and services, our business, operating results, and financial condition may be significantly harmed.
Our success depends on our ability to retain existing users and attract new users to increase engagement with our products and services. To do so, we must continue to offer leading technologies and ensure that our products and services are secure, reliable, and engaging. We must also expand our products and services and offer competitive transaction and other fees in an increasingly crowded and price-sensitive market. There is no assurance that we will be able to continue to do so, that we will be able to retain our current users or attract new users, or keep our users engaged. Any number of factors can negatively affect user retention, growth, and engagement, including if:
| · | we fail to increase awareness of our brand and successfully compete with the offerings and prices other companies, or if our users otherwise increasingly engage with competing products and services, including those that we are unable to offer due to regulatory reasons; | |
| · | we fail to introduce new and improved products and services, or if we introduce new products or services that are not favorably received; | |
| · | we fail to successfully identify and acquire or invest in businesses, products or technologies that we believe could complement or expand our business; | |
| · | we fail to support new and in-demand cryptocurrencies or if we elect to support cryptocurrencies with negative reputations; | |
| · | there are changes in sentiment about the quality or usefulness of our products and services or concerns related to privacy, security, or other factors including, without limitation, changes in macro-level user preference for using cash to purchase bitcoin; | |
| · | there are adverse changes in our products and services that are mandated by legislation, regulatory authorities, or litigation; | |
| · | we fail to maintain existing authorizations as well as obtain newly required authorizations, registrations and licenses for our products; | |
| · | users perceiving bitcoin and other cryptocurrencies to be a bad investment, or experiencing significant losses in bitcoin or other cryptocurrencies, may not desire to utilize our products and services; | |
| · | technical or other problems prevent us from delivering our products and services with the speed, functionality, security and reliability that our users expect, or if we fail to otherwise gain and maintain the trust and confidence of our users; | |
| · | there are cybersecurity incidents, employee or service provider misconduct or other unforeseen activities that cause losses to us or our users; | |
| · | there are modifications to our fee model, including as a result of changes in or the adoption of any laws or regulations imposing restrictions or limitations on the markup at which we sell bitcoin to users or the separate flat transaction fee that we are able to charge our users, or modifications by competitors to their fee models; | |
| · | we fail to provide adequate customer service for our users and retail partners; | |
| · | regulatory and governmental bodies in countries that we target for expansion express negative views towards cryptocurrency-related services and, more broadly, the digital financial system; or | |
| · | we or other companies in our industry are the subject of adverse media reports or other negative publicity. |
From time to time, certain of these factors have negatively affected user retention, growth, and engagement to varying degrees. If we are unable to maintain or increase our user base and user engagement, our revenue and financial results may be adversely affected. Any decrease in user retention, growth, or engagement could render our products and services less attractive to users, which may have an adverse impact on our revenue, business, operating results, and financial condition. If our user growth rate slows or declines, we will become increasingly dependent on our ability to maintain or increase levels of user engagement and monetization in order to drive growth of revenue.
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Adverse economic conditions may affect our business.
Our performance is subject to general economic conditions, and their impact on the digital currency markets and our customers. The United States and other international economies have experienced cyclical downturns from time to time in which economic activity declined resulting in lower consumption rates, restricted credit, reduced profitability, weaknesses in financial markets, bankruptcies, and overall uncertainty with respect to the economy. The impact of general economic conditions on the Company is highly uncertain and dependent on a variety of factors, including global adoption of cryptocurrencies, central bank monetary policies, and other events beyond our control. Geopolitical developments, such as trade wars and foreign exchange limitations can also increase the severity and levels of unpredictability globally and increase the volatility of global financial and digital currency markets. To the extent that conditions in the general economic and digital currency markets materially deteriorate, our ability to attract and retain customers may suffer.
Due to unfamiliarity and some negative publicity associated with cryptocurrency-related businesses, existing and potential users may lose confidence in cryptocurrency-related products and services, which could negatively affect our business.
Cryptocurrency and related products and services are relatively new. Many of our competitors are unlicensed, unregulated, operate without supervision by any governmental authorities, and do not provide the public with significant information regarding their ownership structure, management team, corporate practices, cybersecurity, and regulatory compliance. As a result, users and the general public may lose confidence in cryptocurrency businesses, including regulated businesses like ours.
Since the inception of the digital financial system, numerous cryptocurrency businesses have been sued, investigated, or shut down due to fraud, manipulative practices, business failure, and security breaches. In many of these instances, customers of these businesses were not compensated or made whole for their losses. Larger businesses like us are more appealing targets for hackers and malware and may also be more likely to be targets of regulatory enforcement actions. For example, in May 2019, Binance, one of the world’s largest platforms, was hacked, resulting in losses of approximately $40 million, and in February 2021, Bitfinex settled a long-running legal dispute with the State of New York related to Bitfinex’s alleged misuse of over $800 million of customer assets. Further, in the first half of 2022, major cryptocurrency lending platforms declared bankruptcy, resulting in a loss of confidence in participants of the digital financial system and negative publicity surrounding cryptocurrency more broadly.
If our estimates or judgment relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition, evaluation of tax positions, and crypto assets we hold, among others. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of analysts and investors, resulting in a decline in the trading price of our common stock.
Risk Factors Related to Our Operations in El Salvador
Expansion of business operations in El Salvador may not produce the positive results as planned.
We have established significant operations in El Salvador to support the country’s efforts to use bitcoin as legal tender. However, there are many factors that could disrupt the implementation of Bitcoin Law in El Salvador, and as a result, our operations in El Salvador. Any of such disruptions can have a negative impact on the financial position of the Company. They could jeopardize our expansion plan and be detrimental to our business. Six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact.
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Those risks, as summarized below include:
| · | Exposure to bitcoin volatility. While bitcoin can be used as a speculative asset to generate significant gains, it can also generate major losses. Bitcoin pricing has fluctuated from $16,500 on December 31, 2022 to $42,000 on December 31, 2023 to $63,300 on September 30, 2024. Holding or transacting in such an unstable asset is particularly risky for people with low incomes, who can ill afford to sustain price swings as large as 30% in a single day and may become victims of a significant collapse. If there was a significant reduction in the fair value of Bitcoin, the reduction of value of bitcoin held in the El Salvadoran national reserves could be a destabilizing event for the country and could impact the existing Bitcoin Law. Six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact. |
| · | Depletion of banking assets. In today’s El Salvador, banks connect savers and borrowers. If most Salvadorans start using bitcoin, their savings will be stored in digital wallets away from potential borrowers who would otherwise use it to fund projects. Massive adoption of bitcoin could drain banks of savings and raise the cost of borrowing for companies and individuals, who would face higher interest rates. If that occurs, the economy of El Salvador and implementation of the Bitcoin Law could be negatively affected. |
| · | Lack of transparency/money laundering. Adopting Bitcoin as legal tender is not without certain challenges or risks since bitcoin’s practical implementation has yet to be defined by regulators. Internationally, the cryptocurrency has been used for money laundering and to facilitate illegal activities. The intergovernmental Financial Action Task Force (“FATF”) may increase monitoring of El Salvadoran banks, businesses, and other financial institutions. The FATF is the international “money laundering and terrorist financing watchdog.” It reviews countries’ anti-money laundering and counter-financing terrorism practices. If the FATF determines that a country is exposed to financial crime, the flagged country is placed on either the list of “Jurisdictions under Increased Monitoring,” known as the “grey list,” or the list of “Jurisdictions subject to a Call for Action,” known as the “black list.” When a country is placed on the grey list, it must cooperate with increased FATF monitoring. When a country is placed on the black list, the FATF urges its 39 member nations and over 200 affiliated nations to apply enhanced due diligence and impose countermeasures, such as sanctions. From an FATF regulatory perspective, El Salvador has been in full compliance, however, that may likely change after the Bitcoin Law has been fully implemented. For example, the FATF mandates that the parties engaging in virtual-asset transactions provide complete and sufficient know-your-customer information. It also requires that senders and recipients of virtual assets obtain accurate knowledge and information about “the transaction, the source of funds, and the relationship with the counterparty.” The chances of bitcoin transactions meeting such requirements are unlikely and El Salvador may be subject to sanctions. Please note that six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact. |
| · | Loss of central bank reserves. El Salvador currently carries a large debt burden (approximately 78% of GDP as of December 31, 2023) and has a challenging amortization schedule. To navigate this difficult fiscal environment during the pandemic, El Salvador has reached out to the International Monetary Fund (“IMF”) for a $1.3 billion financing package. However, the IMF opposes the adoption of bitcoin as a legal tender. Thus, the funding program could be put in jeopardy at a time when El Salvador is running out of financial alternatives. Furthermore, the IMF has warned against adopting cryptocurrencies as legal tender, citing risks to macroeconomic stability, financial integrity, consumer protection and the environment (creating bitcoin consumes large amounts of electricity). The World Bank turned down a request to help advise El Salvador on bitcoin. Moody’s rating agency has downgraded the country’s debt further from B3 to Caa3, with its outlook stable. Those factors may negatively affect the economy of El Salvador and disrupt the implementation of the Bitcoin Law. However, six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact. |
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| · | Continued negative publicity in the media with respect to Chivo S.A. de C.V. the Chivo Ecosystem, of Bitcoin ATMs in general, or of the Company’s services could have a material adverse effect on our business. The Government of El Salvador, through Chivo operates the Chivo digital wallet. The government purchased software and related services from the Company and used this software from the launch of the Chivo digital wallet in September of 2021 until December of 2021. According to media reports, the Chivo company’s operation of the Chivo digital wallet is not subject to public reporting or auditing by a banking regulator. Therefore, there is no way for an outside observer to know that the assets held by Chivo S.A. de C.V. are sufficient to cover the liabilities (user balances) of the Chivo digital wallet. If there are negative views presented in the news about the assets held by Chivo S.A. de C.V, or of the quality of its service offerings, or its lack of transparency, or fraud, or identity theft connected with the usage of the Chivo digital wallet, or any reported problems related to the Chivo digital wallet (either the version written by the Company or any subsequent version not using the Company’s Intellectual Property), then the Company’s reputation could be damaged which may negatively affect an investment in the Shares. |
| · | Failure to maintain sufficient cash in Chivo branded ATMs to meet demand could have a material adverse effect on our reputation. Chivo S.A. de C.V. also directs the Company as to how much physical cash should be loaded into the Chivo ATMs in El Salvador for the purpose of ATM users retrieving U.S. Dollar currency in exchange for their bitcoin or dollars held in the Chivo digital wallet. If for any reason, there is not sufficient physical cash loaded into a Chivo ATM to meet the total demand for such cash, the ATM will be unable to initiate additional transactions to dispense cash to a user and the user will see the machine as non-functional. This could create negative impression of the Chivo Ecosystem, of Bitcoin ATMs in general, of the Company’s services, or the Company’s reputation and negatively affect an investment in the Shares. |
| · | Capital flight. Bitcoin Law could facilitate a capital flight, especially during a crisis. Many emerging markets control the flow of capital in and out of their countries to avoid a macroeconomic crisis or to prevent one from worsening. However, Bitcoin can facilitate such a flight: Once dollars are converted to bitcoin, they can easily be sent to anyone in the world, without any control or tracking. Such an event would have a negative effect on the economy of El Salvador. Six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact. |
| · | Environmental concerns about Bitcoin mining. The system on which Bitcoin is currently based consumes large amounts of electricity, making it particularly taxing for the environment. President Bukele believes that the country’s cheap, clean, and renewable geothermal energy from volcanoes can power Bitcoin mining rigs, thus reducing its carbon footprint. It is not clear at this time if such a solution would solve the environmental concerns. |
Political and economic developments in El Salvador may adversely affect Bitcoin Law.
El Salvador’s Bitcoin Law has been greeted with skepticism from both Salvadorans and international financial institutions. The population might not fully embrace Bitcoin. Requiring every business to accept bitcoin for goods and services without adequate access to technology may be a difficult obstacle to overcome and Bitcoin Law can be changed if it remains unpopular under a successor administration. Any of these concerns could disrupt our operations in El Salvador and have a negative impact on the financial position of the Company. Although several political leaders around the globe have voiced support for the Bitcoin Law enacted by El Salvador, and cryptocurrencies such as bitcoin are widely used and accepted as forms of payment in many countries, only Paraguay, Venezuela, Anguilla and Ukraine have taken official steps to adopt bitcoin as legal tender. However, six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact.
There is political discontent in El Salvador with President Bukele’s ouster of Supreme Court judges and the potential for the president to seek a second consecutive term. The presidential period is five years in El Salvador. Consecutive re-election is not permitted, though previously elected presidents may run for a second, non-consecutive term. Recently, El Salvador’s top court and its election authority have removed what seemed to be a constitutional ban on consecutive presidential reelection, which has resulted in President Nayib Bukele seeking a second term in 2024. President Bukele won his second term in February 2024 with the vote of 85%, however, if there is a change in El Salvador’s administration after his five-year term expires, it may negatively affect Bitcoin Law and our operations in El Salvador.
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Our contracts with the El Salvador government may be negatively impacted
We have entered into agreements with the Government of El Salvador, pursuant to which we have installed and are currently operating 200 Chivo Bitcoin ATMs in El Salvador, 11 Chivo Bitcoin ATMs at El Salvador consulates in the U.S., 34 Chivo Bitcoin ATMs in other U.S. locations, with 10 ATMs in storage (as of September 30, 2024), importing and delivering 950 Chivo POS terminals for local businesses in El Salvador to transact with bitcoin, and developing and maintaining the software for the Chivo digital wallet. Each obligation comes with its own set of operational risks in addition to risks set forth herein, including but not limited to the volatile nature of crypto assets, data breach and crypto hacks, fraud conducted by users of the services offered by the Government of El Salvador, changes in U.S. and foreign laws and regulations, talent acquisition and retention, and general economic conditions. If we fail to fulfil our contractual obligations, our agreements may be terminated which may negatively impact our financial standing and reputation. For the three and nine months ended September 30, 2024, approximately 2% of our revenues have been from the El Salvador government through our white-label service. In December 2024, the Company entered into a new Master Services Agreement (“MSA”) and Service Level Agreement (“SLA”) with the Government of El Salvador, which expires in December 2027. In conjunction with the new MSA and SLA, the Company and CHIVO completed a financial settlement agreement secured by certain assets to reconcile reporting, finalize balances owed between the parties and conclude the original MSA, Contracts and Addendums between the Company and the Department of Treasury of El Salvador, which settlement was terminated as of April 2023 upon full satisfaction of all obligations thereunder. Our agreements with the Government of El Salvador may also be modified or terminated by the Government of El Salvador for any reason including but not limited to regime change, additional competition, and loss of political support. Any such unfavorable change in our business operations in El Salvador, including the termination of any contracts with the Government of El Salvador, would adversely affect our revenues and profitability, and could negatively affect an investment in our shares of common stock. No white-label ATMs have been terminated by the El Salvador government through September 30, 2024. Please note that six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact.
Risk Factors Related to the Bitcoin Network, Wallets, Bitcoin, and Crypto Assets
Bitcoin, and most other crypto assets based on public key cryptography, are controllable only by the possessor of both the unique public key and private key relating to the local or online digital wallet in which the bitcoin are held.
While the Bitcoin Network, and similar blockchain protocol networks, require a public key relating to a digital wallet to be published when used in a spending transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the bitcoin held in such wallet. To the extent a private key is lost, destroyed, or otherwise compromised and no backup of the private key is accessible, Athena will be unable to access the bitcoin, or other crypto assets, held in the related digital wallet. Any loss of private keys relating to digital wallets used to store Athena’s bitcoin, or other crypto assets, could adversely affect an investment in the Shares.
The future and development of the Bitcoin Protocol and other blockchain technologies are subject to a variety of factors that are difficult to evaluate.
The further development and acceptance of the Bitcoin Network and other cryptographic and algorithmic protocols governing the issuance of transactions in bitcoin and other crypto asset, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. Athena does not participate in the development of the Bitcoin Network and has little to no influence over the software developers who write the code or the miners who run the Bitcoin Network. The slowing or stopping of the development or acceptance of the Bitcoin Network may adversely affect an investment in the Shares.
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The further development and acceptance of cryptocurrency networks and other cryptocurrencies, which represent a new and rapidly changing industry, are subject to a variety of factors that are difficult to predict and evaluate. The slowing or stopping of the development or acceptance of digital asset systems may adversely affect an investment in us.
Cryptocurrency that may be used to buy and sell goods and services, among other things, are a new and rapidly evolving industry which is subject to a high degree of uncertainty. The factors affecting the further development of the digital asset industry, as well as the digital asset networks, include:
| · | continued worldwide growth in the adoption and use of cryptocurrencies; | |
| · | governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the digital asset network or similar cryptocurrency systems; | |
| · | the maintenance and development of the open-source software protocol of cryptocurrency networks; | |
| · | changes in consumer demographics and public tastes and preferences; | |
| · | the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies; | |
| · | general economic conditions and the regulatory environment relating to cryptocurrency; and | |
| · | the impact of regulators focusing on cryptocurrencies and digital securities and the costs associated with such regulatory oversight. A decline in the popularity or acceptance of the digital asset networks could adversely affect an investment in us. |
We are, or may in the future, be susceptible to risks arising from disruptions in crypto asset markets. Such risks could potentially result in, among other things:
| · | the depreciation of investments held in us, including the depreciation in the price of our publicly traded stock; | |
| · | decreased user demand for our products and services; | |
| · | financing risks to us, including relating to our ability to obtain equity and debt financing; | |
| · | increased losses or impairments of the crypto assets held by us; | |
| · | legal proceedings and government investigations involving us or our affiliates or other third-parties with which we do business; or | |
| · | indirect risks to our business due to any adverse impact of recent or future crypto market disruptions on our users, suppliers or other counterparties. |
Additionally, although we are not directly connected to recent crypto market events, we may still suffer reputational harm due to our association with the cryptocurrency industry in light of the recent disruption in, or as a result of any future disruptions in, the crypto asset markets. Specifically, recent negative publicity stemming from these market disruptions and speculation of potential future disruptions increases our risk of reputational harm simply by association with the industry.
Further, any future market disruptions resulting in overall decreased interest in Bitcoin could harm our business. The prevalence of cryptocurrency is a relatively recent trend, and the long-term adoption of cryptocurrency by investors, consumers, and businesses remains uncertain.
The number of user transactions and our transaction volumes is partially dependent on the price of bitcoin, as well as the associated demand for buying, selling, and trading bitcoin, which can be and historically have been volatile. If such prices decline, the number of user transactions or our transaction volumes could decrease. As such, any such declines, or any declines in the price of bitcoin or market liquidity for cryptocurrency generally, may result in lower total revenue to us due to an associated decrease in demand for our products and services. The price and trading volume of any cryptocurrency, including bitcoin, is subject to significant uncertainty and volatility, depending on a number of factors, as discussed elsewhere in this section under the subheading “Our transaction volume may be partially dependent on the prices of bitcoin we sell, which can be volatile. If such prices decline, the volume of user transactions could decrease and our business, operating results, and financial condition would be adversely affected.”
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Stable Coins may not have any intrinsic value.
Tether, USD Coin, Dai and TrueUSD are examples of stable coins. Stable coins are crypto assets designed to have a stable value over time as compared to typically volatile crypto assets and are typically marketed as being pegged to a Fiat Currency, most commonly the U.S. Dollar, at a rate of 1:1. Stable coins make up an estimated 11% of the total market cap of crypto assets. The largest stable coin is Tether, which is the third largest crypto asset by market cap at 119.6 billion USD per Coinmarketcap.com as of September 30, 2024. The Company sells Tether as part of its Athena Plus services. Some have argued that some stable coins, particularly Tether, are improperly issued without sufficient backing, and have also argued that those associated with certain stable coins may be involved in laundering money. On February 17, 2021, the New York Attorney General entered an agreement with Tether’s operators, requiring them to cease any further trading activity with New York persons and pay $18.5 million in penalties for false and misleading statements made regarding the assets backing Tether. Terra (LUNA), another stable coin, collapsed in May 2022 due to issues with its algorithm, resulting in the stable coin losing all value. This sent shockwaves through the crypto market, with the total market cap of crypto assets decreasing by approximately 22% during May 2022. Volatility in stable coins, operational issues with stable coins (for example, technical issues that prevent settlement), concerns about the sufficiency of any reserves that support stable coins, or regulatory concerns about stable coin issuers or intermediaries, such as crypto asset spot markets, that support stable coins, could have a significant impact on the global crypto market.
A temporary or permanent blockchain “fork” to any supported crypto asset could adversely affect our business.
Blockchain protocols, including Bitcoin, Ethereum, and Litecoin, are open source. Any user can download the software, modify it, and then propose that Bitcoin, Ethereum, Litecoin, or other blockchain protocols users and miners adopt the modification. When a modification is introduced and a substantial majority of users and miners consent to the modification, the change is implemented and the Bitcoin, Ethereum, Litecoin, or other blockchain protocol networks, as applicable, remain uninterrupted. However, if less than a substantial majority of users and miners consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “fork” (i.e., “split”) of the impacted blockchain protocol network and respective blockchain, with one prong running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two parallel versions of the Bitcoin, Ethereum, Litecoin, or other blockchain protocol network, as applicable, running simultaneously, but with each split network’s crypto asset lacking interchangeability.
Both Bitcoin and Ethereum protocols have been subject to “forks” that resulted in the creation of new networks, including Bitcoin Cash ABC, Bitcoin Cash SV, Bitcoin Diamond, Bitcoin Gold, Ethereum Classic, and others. Some of these forks have caused fragmentation among platforms as to the correct naming convention for forked crypto assets. Due to the lack of a central registry or rulemaking body, no single entity can dictate the nomenclature of forked crypto assets, causing disagreements and a lack of uniformity among platforms on the nomenclature of forked crypto assets, and which results in further confusion to customers as to the nature of assets they hold on platforms. In addition, several of these forks were contentious and as a result, participants in certain communities may harbor ill will towards other communities. As a result, certain community members may take actions that adversely impact the use, adoption, and price of Bitcoin, Ethereum, Litecoin, or any of their forked alternatives.
Furthermore, hard forks can lead to new security concerns. For instance, when the Ethereum and Ethereum Classic networks split in July 2016, replay attacks, in which transactions from one network were rebroadcast on the other network to achieve “double-spending”, plagued platforms that traded Ethereum through at least October 2016, resulting in significant losses to some crypto asset platforms. Similar replay attacks occurred in connection with the Bitcoin Cash and Bitcoin Cash SV network split in November 2018. Another result of a hard fork is an inherent decrease in the level of security due to the splitting of some mining power across networks, making it easier for a malicious actor to exceed 50% of the mining power of that network, thereby making crypto assets that rely on proof-of-work more susceptible to attack, as has occurred with Ethereum Classic.
Future forks may occur at any time. A fork can lead to a disruption of networks and our information technology systems, cybersecurity attacks, replay attacks, or security weaknesses, any of which can further lead to temporary or even permanent loss of our assets.
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From time to time, we may encounter technical issues in connection with the integration of supported crypto assets and changes and upgrades to their underlying networks, which could adversely affect our business.
To support any crypto asset, a variety of front and back-end technical and development work is required ensure proper operations including pricing, transfer, accounting, and other solutions for our Bitcoin ATM fleet, and to integrate such supported crypto asset with our existing infrastructure. For certain crypto assets, a significant amount of development work is required and there is no guarantee that we will be able to integrate successfully with any existing or future crypto asset. In addition, such integration may introduce software errors or weaknesses into our platform, including our existing infrastructure. Even if such integration is initially successful, any number of technical changes, software upgrades, soft or hard forks, cybersecurity incidents, or other changes to the underlying blockchain network may occur from time to time, causing incompatibility, technical issues, disruptions, or security weaknesses to our platform. If we are unable to identify, troubleshoot and resolve any such issues successfully, we may no longer be able to support such crypto assets, our assets may be frozen or lost, the security of our crypto asset wallets may be compromised, and technical infrastructure may be affected, all of which could adversely impact our business.
If miners or validators of any crypto asset network demand high transaction fees, our operating results may be adversely affected.
We pay miner fees when transmitting crypto assets including bitcoin to customers upon completion of their purchase. In addition, we also pay miner fees when we move crypto assets for various operational purposes, such as when we transfer bitcoin between our regional wallets. However, miner fees can be unpredictable. For instance, in 2017, bitcoin miner fees increased from approximately $0.35 per transaction in January 2017 to over $50 per transaction in December 2017. Even though bitcoin’s miner fees have since decreased to $19.50 per transaction as of September 30, 2024, if the demand for bitcoin remains at current levels, we could experience high costs in excess of our historical performance. Although we attempt to adjust our pricing to pass through these expenses to our customers, we have in the past incurred, and expect to incur from time to time, losses associated with the payment of miner fees in excess of what we charge our customers, resulting in adverse impacts on our operating results.
We are subject to an extensive and rapidly evolving regulatory environment, and if a particular crypto asset we transact or transacted in is characterized as a “security”, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition.
Our business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, and legal and regulatory interpretations and guidance in the markets in which we operate. The scope of laws, rules, and regulations that can impact our business is expansive and includes certain of the requirements that apply to financial services, money transmission, privacy protection, cybersecurity, electronic payments, securities and commodities regulation, data governance, data protection, fraud detection, marketing (including the Telephone Consumer Protection Act of 1991), civil rights (including the Americans with Disabilities Act, which generally requires, among other things, that our Athena Bitcoin ATMs be accessible to individuals with disabilities, such as visually- impaired persons), competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing as well as bespoke cryptocurrency and cryptocurrency laws that have been adopted in some jurisdictions that can impact cryptocurrency custody, exchange, and transfer, cross-border and domestic cryptocurrency transmission.
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We evaluate all products and services prior to launch under U.S. federal and applicable international securities laws. As part of determining whether a particular crypto asset is a security for purposes of the federal securities laws, we have taken into account a number of factors, including the various definitions of “security” under the federal securities laws and federal court decisions interpreting elements of these definitions, such as the U.S. Supreme Court’s decisions in the Howey and Reves cases, as well as reports, orders, press releases, public statements and speeches by the SEC and its staff providing guidance on when a digital asset may be a security for purposes of the federal securities laws. Depending on its characteristics, a digital asset may be considered a “security” under the federal securities laws. The test for determining whether a particular digital asset is a “security” is complex and difficult to apply, and the outcome is difficult to predict. Whether a digital asset is a security under the federal securities laws depends on whether it is included in the lists of instruments making up the definition of “security” in the Securities Act, the Exchange Act and the Investment Company Act. Digital assets as such do not appear in any of these lists, although each list includes the terms “investment contract” and “note,” and the SEC has typically analyzed whether a particular digital asset is a security by reference to whether it meets the tests developed by the federal courts interpreting these terms, known as the Howey and Reves tests, respectively. For many digital assets, whether or not the Howey or Reves tests are met is difficult to resolve definitively, and substantial legal arguments can often be made both in favor of and against a particular digital asset qualifying as a security under one or both of the Howey and Reves tests. Adding to the complexity, the SEC staff has indicated that the security status of a particular digital asset can change over time as the relevant facts evolve. The laws, rules, and regulations thereunder may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the cryptoeconomy requires us to exercise our judgment as to whether these crypto assets meet the definition of a security. Our conclusions based on our legal analysis of the criteria discussed herein, do not constitute a legal determination and are not binding on regulators or the courts. It is possible that governmental bodies and regulators may disagree with our conclusions. To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of licenses, limitations on or temporary or permanent suspensions of our products and services, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws. The SEC’s Strategic Hub for Innovation and Financial Technology published a framework for analyzing whether any given crypto asset is a security in April 2019. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time. We have established policies and practices to evaluate each crypto asset that we sell to customers, as discussed above, including applying the Howey and Reves tests, as may be applicable, to each crypto asset that we sell to customers. The Howey test is a legal framework outlined by the U.S. Supreme Court to determine whether a transaction qualifies as an investment contract (security) and would be subject to U.S. securities laws. This test requires the following four criteria to be met: investment of money, expectations of profits, common enterprise and reliance on the efforts of others. The crypto assets that the Company sells to customers do not meet all four of these definitions. The Company does not believe that Bitcoin and Bitcoin Cash meet the criterion of satisfying the definition of a common enterprise; as investors are not pooling their funds, there is no promoter or issuer and they have never sought public funds to help develop its technology. Further, an investor’s success is not reliant on the efforts of others. The Company evaluated Ethereum, including the assessment of the impacts of the change from proof-of-work to proof-of-stake and concludes that Ethereum does not meet the definition of a security as it does not satisfy the common enterprise criterion or the reliance of others criterion. We believe that the Ethereum network remains decentralized and that there is no horizontal or vertical commonality between validators. Horizonal and vertical commonality requires the entrepreneurial efforts of a promoter, which the Company believes that Ethereum does not have. Profits (rewards) are determined primarily based on each validator’s individual effort and they do not expect rewards from the efforts of other validators. The Company further notes that the Company has not provided staking abilities and benefits to customers for Ethereum, resulting in no change in the Company’s conclusion that Ethereum does not meet the Howey test.
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We have considered and determined that the recent completion of Ethereum’s transition to Proof-of-Stake consensus, known as “the Merge”, has not caused Ethereum to have become a security for a variety of reasons including, but not limited to those discussed below. Consistent with the holdings in recent federal court cases involving Ripple and Terraform, we believe that whether something is an investment contract under the Howey test is a transaction-specific assessment that does not attach to the underlying object of that transaction as the underlying object of a transaction is not itself “a contract, transaction or scheme.” We therefore believe that a digital asset such as Ethereum cannot itself be an investment contract security, including after the Merge. We also believe that Ethereum is a consumable commodity that is not a security. Ethereum was used in making gas fee payments on the Ethereum Network prior to the Merge and continues to be extensively used in this capacity after the Merge. The Merge also introduced a new use for Ethereum as part of the new consensus mechanism, which provides further evidence that Ethereum is a consumable commodity and not a security. We further believe that any expectations of profit a purchaser of Ethereum may possess from their purchase depends on the overall market for Ethereum, not any identifiable “other” or issuer as required in the Howey test. Specifically, we believe that Ethereum’s value derives from the supply and demand for useful applications built on the Ethereum Network. We believe this to be the case before the Merge and continues be the case after the Merge. We also believe that even if a holder of Ethereum expects profits based upon the action of persons directly involved in updating the Ethereum Network’s code, or in publishing new blocks of transactions on the Ethereum Network, the group of persons involved in such activities is sufficiently decentralized such that there is no “other” upon whom a purchaser could rely for Howey purposes. There were thousands of developers working on the Ethereum Network’s code before the Merge, and there continue to be today, and the same can be said of thousands of miners publishing blocks on the Ethereum Network. We therefore believe that the Ethereum Network remains “sufficiently decentralized” and that Ethereum is not a security. We have also considered that, similar to profits that could be sought from mining under proof of work, any profits realized from validating Ethereum transactions only accrue to those who affirmatively engage in validation efforts, rather than holders of Ethereum more generally. Any of these profits are also based on the validator’s own efforts to engage in validation, and not the efforts of identifiable “others” more generally. We believe Ethereum is not a security because futures contracts with Ethereum as the underlying asset continue to be offered by trading platforms regulated only by the CFTC, even after the Merge. In addition, we have considered generally whether the Merge may have caused Ethereum to be classified as a security under Reves or any other instrument making up the definition of “security” in the Securities Act, the Exchange Act and the Investment Company Act, and concluded that it did not.
We believe that we have applied the proper legal standards in determining that Ethereum is not a security in light of the uncertainties inherent in the Howey and Reves tests. In light of these uncertainties and the fact-based nature of the analysis, we acknowledge that Ethereum may currently be a security, based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a security under the federal securities laws notwithstanding our prior conclusion; and our prior conclusion, even if reasonable under the circumstances, would not constitute a legal determination binding on regulators or the courts and would not preclude legal or regulatory action based on the presence of a security.
The Company does not believe that Tether meets the criterion of expectation of profit, as Tether is a stable coin that is pegged to the U.S. Dollar.
We currently offer only bitcoin for sale at all our ATM machines. We also operate Athena Plus for private clients and trade customers of the Company. We predominantly buy and sell bitcoin through our Athena Plus services, but we have also facilitated transactions in other crypto assets. For the year ended December 31, 2023, we had 113, 6, and 5 Athena Plus transactions for bitcoin, Ethereum and Tether, respectively. For the year ended December 31, 2022, we had 199, 1 and 19 Athena Plus transactions for bitcoin, Ethereum and Tether, respectively. Since July 19, 2023, we do not transact, or make offers to transact with our customers, in any crypto assets except bitcoin. We will update our disclosure in the prospectus if we decide to transact in other crypto assets. Such a change would only happen if there were significant customer demand for a specific crypto asset and that crypto asset was available to us through multiple trading partners, crypto exchanges and crypto asset brokers.
We believe that we have applied the proper legal standards in determining that the crypto assets we sell to customers are not a “security” in light of the uncertainties inherent in the Howey and Reves tests. In light of these uncertainties and the fact-based nature of the analysis, we acknowledge that a crypto asset we sell to customers may currently be a security, based on the facts as they exist today, or may in the future be found by the SEC or a federal court to be a security under the federal securities laws notwithstanding our prior conclusion based on our analysis; and our prior conclusion, even if reasonable under the circumstances, would not constitute a legal determination binding on regulators or the courts, and would not preclude legal or regulatory action based on the presence of a security.
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The classification of a crypto asset as a security under applicable law has wide-ranging implications for the regulatory obligations that flow from the offer, sale, trading, and clearing of such assets. For example, a crypto asset that is a security in the United States may generally only be offered or sold in the United States pursuant to a registration statement filed with the SEC or in an offering that qualifies for an exemption from registration. Persons that effect transactions in crypto assets that are securities in the United States may be subject to registration with the SEC as a “broker” or “dealer.” Platforms that bring together purchasers and sellers to trade crypto assets that are securities in the United States are generally subject to registration as national securities exchanges, or must qualify for an exemption, such as by being operated by a registered broker-dealer as an alternative trading system, or ATS, in compliance with rules for ATSs. Persons facilitating clearing and settlement of securities may be subject to registration with the SEC as a clearing agency. If Bitcoin, Ether, Litecoin, and BCH or any other crypto asset we transacted in the past as listed above, is deemed to be a security under any U.S. federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such supported crypto asset (if it is still being used in our transactions) or for our Company if it is determined that certain securities laws were violated and we may be subject to regulatory scrutiny, investigation and penalties. Moreover, the networks on which such supported crypto assets are utilized may be required to be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of the crypto asset. Also, it may make it difficult for such supported crypto asset to be traded, cleared, and custodied as compared to other crypto asset that are not considered to be securities. Additionally, new laws, regulations, or interpretations may result in litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying us from offering certain products or services, or could impact how we offer such products and services. Foreign jurisdictions may have similar regulations and licensing, registration, and qualification requirements.
Any failure to obtain or maintain necessary money transmission and virtual currency business activity registrations and licenses could adversely affect our operations.
In the United States, we have obtained licenses to operate as a money transmitter, or the equivalent, in the states where we understand such licenses or equivalent are required to conduct our business. We also currently operate in states where we do not believe we are required, or have been informed by the relevant jurisdiction that we are not required, to obtain money transmitter licenses or any other required licenses. This belief is based on our analysis of the applicable laws and regulations and/or our communications with the regulators in the relevant jurisdiction. We plan to apply for money transmitter or virtual currency licenses or their equivalents in additional jurisdictions as needed. As we obtain additional licenses, we may be required to bear substantial costs to comply with the requirements of the additional states or jurisdictions. If our licenses are not renewed, we are denied licenses in additional states or jurisdictions where we choose to apply for a license, or jurisdictions that have previously not required a license require a license in the future, we could be forced to seek a license or change our business practices.
As a money services business and a money transmitter, we are subject to a range of legal obligations and requirements including bonding, net worth maintenance, user notice and disclosure, reporting, recordkeeping and cybersecurity requirements, and obligations that apply to the safeguarding of third-party funds and crypto assets. In addition, the licensed entity within our corporate structure is subject to inspection and examination by the state licensing agencies and certain actions involving that entity, such as changes in controlling equity holders, board members, and senior management, may require regulatory approval. Further, if we were found by these regulators to be in violation of any applicable laws, rules, or regulations, we could be subject to fines, penalties, lawsuits, and enforcement actions, additional compliance requirements, increased regulatory scrutiny of our business, restriction of our operations, or damage to our reputation or brand. Regulatory requirements are constantly evolving, and we cannot predict whether we will be able to meet changes to existing regulations or the introduction of new regulations without such compliance harming our business, financial condition, and operating results.
Certain jurisdictions have enacted rules that require money transmitters, money services businesses, or virtual currency businesses to establish and maintain transaction monitoring, filtering, scanning and cybersecurity. programs. Wherever we are subject to these rules, we are required to adopt business practices that require additional expenditures and impact our operating results.
Additionally, if federal, state, or international regulators were to take actions that limit or prohibit us or our business partners from continuing to operate our business or their businesses as currently operated, whether by imposing additional requirements, compliance obligations or sanctions, such actions could harm our business. Any change to our business practices that makes our service less attractive to users or prohibits use of our services by residents of a particular jurisdiction could decrease our transaction volume and harm our business.
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Risk Factors Related to Current and Future Regulations and Other Law Enforcement Actions
The regulations that govern our primary business operations are in flux and could change in unpredictable ways that negatively affect our business operations, demand for our services, or our financial position.
Current regulations acknowledge and allow for companies to sell bitcoin and other crypto assets in the United States and other countries where Athena operates. If regulations change to disallow the sale of bitcoin or other crypto assets such a change could have a negative impact on revenues and adversely affect an investment in the Shares. Current regulations require Know Your Customer (“KYC”) information be collected as part of a Customer Information Program (“CIP”).
The Company currently has an Anti-Money-Laudnering (“AML”) / Bank Secrecy Act (“BSA”) policy and Procedures Manual to comply with FinCEN regulatory requirements regarding CIP and KYC. Athena employs a risk-based approach and a tiered system using a number of systems and AML analysts as well as various compliance triggers associated with its software. For transactions up to $2,000 per day, in the states and territories of the United States which do not currently restrict daily transaction limits (Tier 1) customers insert a phone number and Athena utilizes an onboarding tool which provides a name and address associated with the phone number provided. If a customer wishes to purchase greater than $2,000 a day (Tier 2), Athena requires a driver’s license ID scan which captures name, birthdate, physical address, and ID number. A customer cannot proceed at this level without complying with this step. If a customer wishes to use a passport, at this level, the customer can contact Athena to validate the passport. If a customer purchases $3,000, the customer will also be required to submit their social security number. Athena has other compliance triggers for similar information over the course of a customer’s spending as well as photos taken of the customer at each transaction. Athena has defined procedures for enhanced due diligence procedures based on a risk-based approach. These procedures utilize investigative software and customer question forms to obtain additional KYC and source of funds information. Athena also uses a sophisticated tool to ensure that when the Company transmits bitcoin, it is not sent to a high risk or prohibited wallet. The tool will block any such transmissions. Finally, Athena utilizes a variety of anti-fraud measures including various warnings and a pledge of ownership that the customer owns and controls the submitted wallet.
If regulations change and require significantly more information to be collected from customers, this change may have a negative impact on customer behavior and could adversely affect an investment in the Shares.
We are subject to an extensive and highly evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws, rules, and regulations could adversely affect our brand, reputation, business, operating results, and financial condition.
Our business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, and legal and regulatory interpretations and guidance in the markets in which we operate. The scope of laws, rules, and regulations that can impact our business is expansive and includes certain of the requirements that apply to financial services, money transmission, privacy protection, cybersecurity, electronic payments, securities and commodities regulation, data governance, data protection, fraud detection, marketing. civil rights (including the Americans with Disabilities Act, which generally requires, among other things, that our employees be accessible to individuals with disabilities), competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. These laws include bespoke cryptocurrency and cryptocurrency laws that have been adopted in some jurisdictions that can impact cryptocurrency custody, exchange, and transfer, cross-border and domestic crypto asset transmissions.
Many of these laws, rules and regulations were adopted prior to the advent of the internet, mobile technologies, crypto assets and related technologies. As a result, some applicable laws, rules and regulations may not contemplate or address unique issues associated with crypto assets or the digital financial system, may be subject to significant uncertainty, and may vary widely across U.S. federal, state, and local and international jurisdictions. These legal and regulatory regimes evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of cryptocurrencies and the digital financial system requires us to exercise our judgment as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions. See also Risk Factors: “We are subject to an extensive and rapidly evolving regulatory environment, and if a particular crypto asset we transact or transacted in is characterized as a “security”, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, which may adversely affect our business, operating results, and financial condition”.
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To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, revocation of authorizations, registrations or licenses, limitations on our products and services, whistleblower complaints, reputational harm, and other regulatory consequences, each of which may be significant and could adversely affect our business, operating results, and financial condition.
In addition to existing laws, rules and regulations, various governmental and regulatory bodies, including legislative and executive bodies, in the U. S. and in other jurisdictions may adopt new laws, rules, regulations and regulatory requirements. For example, we could become subject to laws, regulations or other regulatory action imposing restrictions, disclosure requirements or limitations on the transaction fees that we are able to charge our users for bitcoin transactions, including the markup at which we sell bitcoin to users and the separate flat transaction fee that we charge. As a result, we may not be able to sell bitcoin at a profitable margin, which would adversely affect our revenue and financial condition. Furthermore, new interpretations of existing laws, rules, and regulations may be issued by such bodies or the judiciary, which may adversely impact the development of the digital financial system as a whole and our legal and regulatory status in particular by changing how we operate our business, how our products and services are regulated, and what products or services we and our competitors can offer, requiring changes to our compliance and risk mitigation measures, imposing new registration or licensing requirements, or imposing a total ban on certain bitcoin transactions, as has occurred in certain jurisdictions in the past.
We are subject to ongoing supervision, examination, oversight, and reviews and currently are, and expect in the future, to be subject to investigations and inquiries, by U.S. federal and state regulators, and foreign financial service regulators. As a result of findings from these reviews and examinations, regulators have, are, and may in the future require us to take certain actions, including amending, updating, or revising our compliance policies and procedures from time to time, limiting the kinds of users that we provide services to, changing, terminating, or delaying our registrations or licenses and the introduction of our existing or new product and services, and undertaking further external audits. From time to time, we may receive examination reports citing violations of rules and regulations, inadequacies in existing compliance programs, and requiring us to enhance certain practices with respect to our compliance program, including user due diligence, transaction monitoring, training, and regulatory reporting and recordkeeping. Implementing appropriate measures to properly remediate these examination findings may require us to incur significant costs, and if we fail to properly remediate any of these examination findings, we could face civil litigation, significant fines, damage awards, forced removal of certain employees including members of our executive team, barring of certain employees from participating in our business in whole or in part, revocation of existing authorizations, registrations or licenses, limitations on existing and new products and services, reputational harm, negative impact to our existing relationships with regulators, exposure to criminal liability, or other regulatory consequences. Further, we believe increasingly strict legal and regulatory requirements and additional regulatory investigations and enforcement, any of which could occur or intensify, may continue to result in changes to our business practices, as well as increased costs, and supervision and examination for ourselves and our service providers. Moreover, new laws, rules, regulations, or interpretations may result in additional litigation, regulatory investigations, and enforcement or other actions, including preventing or delaying us from offering certain products or services offered by our competitors or could impact how we offer such products and services. Adverse changes to, or our failure to comply with, any laws, rules, and regulations have had, and may continue to have, an adverse effect on our reputation and brand and our business, operating results, and financial condition.
It may become illegal to acquire, own, hold, sell, or use bitcoin or other cryptocurrencies, participate in blockchains or utilize cryptocurrencies in other countries, which would adversely affect us.
Although currently the use of crypto assets generally is not restricted in most countries, countries such as China and Russia have taken harsh regulatory actions to curb the use of cryptocurrencies and may continue to take regulatory actions in the future that could severely restrict the right to acquire, own, hold, sell or use cryptocurrencies or to exchange them for Fiat Currency. In September 2021, China instituted a blanket ban on all cryptocurrency transactions and mining, including services provided by overseas cryptocurrency exchanges in mainland China, effectively making all cryptocurrency-related activities illegal in China. In other nations, including Russia, it is illegal to accept payment in cryptocurrency for consumer transactions, and banking institutions are barred from accepting deposits of bitcoin or other cryptocurrencies. In January 2022, the Central Bank of Russia called for a ban on crypto asset activities ranging from mining to trading. While our operations are currently limited to the U.S. and Latin America, such restrictions may adversely affect our growth potential or us if the restrictions limit the large-scale use of cryptocurrency or if the use of cryptocurrency becomes confined to certain regions globally. Such circumstances could have a material adverse effect on our business, prospects, operating results, and financial condition.
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The digital financial system is continually being developed. As a result, governments and policymakers are still considering what a regulatory regime for cryptocurrencies should look like. If we are unable to effectively react to future proposed legislation and regulation of cryptocurrencies or cryptocurrency businesses, our business, operating results, and financial condition could be adversely affected.
The digital financial system is continually being developed and the new laws are being proposed and enacted. As a result, many policymakers are just beginning to consider what a regulatory regime for cryptocurrency should look like and the elements that would serve as the foundation for such a regime. As cryptocurrency has grown in both popularity and market size, various U.S. federal, state, and local and foreign governmental organizations, consumer protection agencies, and public advocacy groups have been examining the operations of cryptocurrency networks, users and platforms, with a focus on how cryptocurrencies can be used to launder the proceeds of illicit activities, fund criminal or terrorist enterprises, and the safety and soundness of platforms and other service providers that hold cryptocurrencies for users. Many of these entities have called for heightened regulatory oversight, and have proposed legislation and regulations, undertaken enforcement actions and/or issued consumer advisories describing the risks posed by cryptocurrencies to users and investors. The impacts of such potential and proposed heightened regulatory oversight are not yet known. For example, on November 20, 2023, the California Department of Financial Protection and Innovation (“DFPI”) issued an invitation for comments on a potential rulemaking relating to two new California laws that will impose sweeping obligations on companies engaged in virtual currency activities in California and with California residents. The first law, Assembly Bill 39, prohibits people from engaging in digital financial asset business activity – or holding themselves out as being able to engage in digital financial asset business activity – without meeting certain criteria and obtaining a license from the DFPI, including compliance obligations and stable coin approvals among other guidelines. The second, Senate Bill 401, imposes requirements on operators of digital financial asset transaction kiosks. The DFPI refers to the two bills collectively as the Digital Financial Assets Law (“DFAL”). The DFAL began taking effect on January 1, 2024, with covered persons required to be licensed, or to have submitted a license application and be awaiting approval or denial of that application, on or before July 1, 2025.
Competitors, including traditional financial services, have spent years cultivating professional relationships with relevant policymakers on behalf of their industry so that those policymakers may understand that industry, the current legal landscape affecting that industry, and the specific policy proposals that could be implemented to responsibly develop that industry. The lobbyists working for these competitors have similarly spent years developing and working to implement strategies to advance these industries. Members of the digital financial system have started to engage policymakers directly and with the help of external advisors and lobbyists, but this work is still in a relatively nascent stage. As a result, new laws, rules, and regulations may be proposed and adopted in the U.S. and internationally, or existing laws, rules, and regulations may be interpreted in new ways, that harm the digital financial system or digital asset businesses, which could adversely impact our business.
Our obligations to comply with the laws, rules, regulations, and policies of a variety of jurisdictions may increase and we may be subject to inquiries, investigations, and enforcement actions by U.S. and non-U.S. regulators and governmental authorities, including those related to sanctions, export control, and anti-money laundering.
If we expand our activities to other countries we do not currently operate in, we may become obligated to comply with additional laws, rules, regulations, policies, and legal interpretations of both the jurisdictions in which we operate and those into which we offer products and services on a cross-border basis. For instance, financial regulators outside the U.S. have in recent months significantly increased their scrutiny of digital asset exchanges, such as by requiring digital asset exchanges operating in their local jurisdictions to be regulated and licensed under local laws. Moreover, laws regulating financial services, the internet, mobile technologies, cryptocurrencies, and related technologies outside of the U.S. are evolving, extensive and could impose different, more specific, or even conflicting obligations on us, as well as broader liability. In addition, we are required to comply with laws, rules, and regulations related to economic sanctions and export controls enforced by U.S. Department of Commerce’s Bureau of Industry and Security, and U.S. anti-money laundering and counterterrorist financing laws, rules, and regulations enforced by FinCEN and certain state financial services regulators. U.S. sanctions and export control laws and regulations generally restrict dealings by persons subject to U.S. jurisdiction with certain jurisdictions that are the target of comprehensive embargoes, currently the Crimea Region, the Donetsk People’s Republic of Ukraine, the Luhansk People’s Republic of Ukraine, Cuba, Iran, North Korea, and Syria, as well as with persons, entities, and governments identified on certain prohibited party lists. Moreover, as a result of the Russian invasion of Ukraine, the U.S., the E.U., the United Kingdom, and other jurisdictions have imposed wide-ranging sanctions on Russia and Belarus and persons and entities associated with Russia and Belarus. There can be no certainty regarding whether such governments or other governments will impose additional sanctions, or other economic or military measures against Russia or Belarus.
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We have an Office of Foreign Assets Control (“OFAC”) compliance program in place that includes monitoring of IP addresses to identify prohibited jurisdictions and of blockchain addresses that have either been identified by OFAC as prohibited or that otherwise are believed by us to be associated with prohibited persons or jurisdictions. Nonetheless, there can be no guarantee that our compliance program will prevent transactions with particular persons or addresses or prevent every potential violation of OFAC sanctions, and our expansion into additional jurisdictions may subject us to additional risks related to use of our services by sanctioned persons.
From time to time, we have submitted voluntary disclosures to OFAC or responded to administrative subpoenas from OFAC. Certain of these voluntary self-disclosures are currently under review by OFAC. To date, none of those proceedings has resulted in a monetary penalty or finding of violation. Any present or future government inquiries relating to sanctions could result in negative consequences for us, including costs related to government investigations, financial penalties, and harm to our reputation. The impact on us related to such matters could be substantial. Although we have implemented controls and are working to implement additional controls and screening tools designed to prevent sanctions violations, there is no guarantee that we will not inadvertently provide access to our products and services to sanctioned parties or jurisdictions in the future.
Regulators worldwide frequently study each other’s approaches to the regulation of the digital financial system. Consequently, developments in any jurisdiction may influence other jurisdictions. New developments in one jurisdiction may be extended to additional services and other jurisdictions. As a result, the risks created by any new law or regulation in one jurisdiction are magnified by the potential that they may be replicated, affecting our business in another place or involving another service. Conversely, if regulations diverge worldwide, we may face difficulty adjusting our products, services, and other aspects of our business with the same effect. The complexity of U.S. federal and state and international regulatory and enforcement regimes could result in a single event prompting numerous overlapping investigations and legal and regulatory proceedings by multiple government authorities across different jurisdictions. Any of the foregoing could, individually or in the aggregate, harm our reputation, damage our brands and business, and adversely affect our operating results and financial condition. Due to the uncertain application of existing laws, rules, and regulations, it may be that, despite our regulatory and legal analysis concluding that certain products and services are currently unregulated, such products or services may indeed be subject to financial regulation, licensing, or authorization obligations that we have not obtained or with which we have not complied. As a result, we are at a heightened risk of enforcement action, litigation, regulatory, and legal scrutiny which could lead to sanctions, cease and desist orders, or other penalties and censures which could significantly and adversely affect our continued operations and financial condition.
Complex and evolving U.S. and international laws, rules and regulation regarding privacy and data protection could result in claims, changes to our business practices, penalties, increased cost of operations, or otherwise harm our business.
We are subject to requirements relating to data privacy and the collection, processing, storage, transfer, and use of data under U.S. federal, state and foreign laws. For example, the FTC routinely investigates the privacy practices of companies and has commenced enforcement actions against many, resulting in multi-million dollar settlements and multi-year agreements governing the settling companies’ privacy practices. The California Consumer Protection Act, which became effective on January 1, 2020, imposes heightened data privacy requirements on companies that collect information from California residents. If we are unable to meet any such requirements, we may be subject to significant fines or penalties. As the number of jurisdictions enacting privacy and related laws increases and the scope of these laws and enforcement efforts expands, we will increasingly become subject to new and varying requirements. Failure to comply with existing or future data privacy laws, rules, regulations and requirements, including by reason of inadvertent disclosure of personal information, could result in significant adverse consequences, including reputational harm, civil litigation, regulatory enforcement, costs of remediation, increased expenses for security systems and personnel, and harm to our users. These consequences could materially adversely affect our business, financial condition and results of operations.
In addition, we make information available to certain U.S. federal and state agencies, as well as certain foreign, government agencies in connection with regulatory requirements to assist in the prevention of money laundering and terrorist financing and pursuant to legal obligations and authorizations. In recent years, we have experienced increasing data sharing requests by these agencies, particularly in connection with efforts to prevent terrorist financing or reduce the risk of identity theft. During the same period, there has also been increased public attention to the corporate use and disclosure of personal information, accompanied by legislation and regulations intended to strengthen data protection, information security, and consumer privacy. These regulatory goals may conflict, and the law in these areas may not be consistent or settled. While we believe that we are compliant with our regulatory responsibilities, the legal, political, and business environments in these areas are rapidly changing, and subsequent legislation, regulation, litigation, court rulings or other events could expose us to increased program costs, liability and reputational damage that could have a material adverse effect on our business, financial condition, and results of operations.
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Future developments in tax laws or regulations regarding the treatment and reporting of cryptocurrencies for U.S. and foreign tax purposes could adversely impact our tax expense and liabilities, reporting obligations, liquidity, and business.
Due to the new and evolving nature of cryptocurrencies and the absence of comprehensive legal and tax guidance with respect to digital asset products and transactions, many significant aspects of the U.S. and foreign tax treatment of transactions involving cryptocurrencies, such as the purchase and sale of cryptocurrencies, are uncertain, and it is unclear whether, when and what guidance may be issued in the future on the treatment of digital asset transactions for U.S. and foreign income tax purposes. In 2014, the IRS released Notice 2014-21, discussing certain aspects of “virtual currency” for U.S. federal income tax purposes and, in particular, stating that such virtual currency (i) is “property,” (ii) is not “currency” for purposes of the rules relating to foreign currency gain or loss, and (iii) may be held as a capital asset. In 2019, the IRS released Revenue Ruling 2019-24 and a set of “Frequently Asked Questions” (which have been periodically updated), that provide additional guidance, including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to ordinary income and guidance with respect to the determination of the tax basis of virtual currency. However, this guidance does not address other significant aspects of the U.S. federal income tax treatment of cryptocurrencies and related transactions.
There continues to be uncertainty with respect to the timing, character and amount of income inclusions for various digital asset transactions. Although we believe our treatment of digital asset transactions for federal income tax purposes is consistent with existing guidance provided by the IRS and existing U.S. federal income tax principles, because of the rapidly evolving nature of digital asset innovations and the increasing variety and complexity of digital asset transactions and products, it is possible the IRS and various U.S. states may disagree with our treatment of certain digital asset transactions for U.S. tax purposes, which could adversely affect our users and our business. Similar uncertainties exist in the foreign markets in which we operate, affecting our non-U.S. user base, and these uncertainties and potential adverse interpretations of tax law could affect our non-U.S. users and the vitality of our platforms outside of the U.S. There can be no assurance that the IRS, the U.S. state revenue agencies or other foreign tax authorities, will not alter their respective positions with respect to cryptocurrencies in the future or that a court would uphold the treatment set forth in existing guidance. It also is unclear what additional guidance may be issued in the future on the treatment of existing digital asset transactions and future digital asset innovations for purposes of U.S. tax or other foreign tax regulations. Any such alteration of existing IRS, U.S. state and foreign tax authority positions or additional guidance regarding digital asset products and transactions could result in adverse tax consequences for holders of cryptocurrencies and could have an adverse effect on the value of cryptocurrencies and the broader cryptocurrency markets. Future technological and operational developments that may arise with respect to cryptocurrencies may increase the uncertainty with respect to the treatment of cryptocurrency for U.S. and foreign tax purposes. The uncertainty regarding tax treatment of digital asset transactions impacts our users, and could adversely impact our business, including if the volume of cryptocurrency transactions decreases due to adverse tax effect.
Sanctions could cause us to cease operations in foreign countries or dealings with foreign citizens.
Sanctions, such as those promulgated by the U.S. Department of Treasury, could be brought against countries where the Company operates, or against citizens of certain countries regardless of where they reside. Ceasing operations in such a country would have a negative impact on revenues and the Company may also incur extraordinary costs which may adversely impact an investment in the Shares.
Heightened scrutiny by regulators could be detrimental to the operations of the Company or its brand image.
Our existing operations and any future operations or investments may become the subject of heightened scrutiny by regulators, stock exchanges and other authorities in the United States or globally. As a result, we may be subject to significant direct and indirect interaction with public officials. There can be no assurance that this heightened scrutiny will not in turn lead to the imposition of certain restrictions on our ability to operate or invest in the United States or any other jurisdiction, in addition to those described herein. Further any negative connotations directed at the Company by such public officials could be detrimental to the Company’s brand image and adversely impact an investment in the Shares.
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We or our assets may become subject to federal and state asset forfeiture laws which could negatively impact our business operations or financial position.
Violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions, or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, seizure of assets, disgorgement of profits, cessation of business activities or divestiture.
As an entity that conducts business in cash (physical currency), we are potentially subject to federal and state forfeiture laws (criminal and civil) that permit the government to seize the proceeds of suspected criminal activity. Civil forfeiture laws could provide an alternative for the federal government or any state (or local police force) that wants to discourage residents from conducting transactions with crypto asset related businesses. Also, an individual can be required to forfeit property suspected to be the proceeds of a crime even if the individual is not charged or convicted of a crime. Many law enforcement agencies consider large amounts of cash to be suspicious of criminal activity and have been known to seize such property when discovered. Any seizure or forfeiture of the Company’s assets, even if only temporary, could disrupt its normal operations or financial position and negatively affect an investment in the Shares.
Regulators and payment processors have historically taken actions relating to access to banking services, which could materially adversely affect our business.
Actions by the U.S. Department of Justice (the “Justice Department”), the Federal Deposit Insurance Corporation, (“FDIC”), and certain state regulators beginning in 2013, referred to as “Operation Choke Point,” appear to have been intended to discourage banks and payment processors from providing access to banking for certain businesses that are considered high-risk. This heightened regulatory scrutiny by the Justice Department, the FDIC and other regulators has caused various banks and payment processors to cease doing business with Bitcoin ATM companies or companies who do business with Bitcoin ATM companies, without consideration of the actual risk to the banks or processors, simply to avoid heightened federal and state regulatory scrutiny. The operation was officially ended in August 2017; however, future discouragement by the Justice Department, the FDIC, or the Office of the Comptroller of the Currency (“OCC”) could cause the Company, or its service providers including locations where the Company places its fleet of Bitcoin ATMs, to have restricted access to the U.S. financial system as provided by banks, payment providers, or other financial intermediaries, and that could have a negative impact on the Company’s operations, its ability to perform its contractual obligations, or its financial position.
If the Company is unable to satisfy data protection, security, privacy, and other government- and industry-specific requirements, its growth could be harmed.
There are several data protections, security, privacy, and other government and industry-specific requirements, including those that require companies to notify individuals of data security incidents involving certain types of personal data, enacted across various jurisdictions globally. In addition, our agreements to deliver software may have requirements for the protection of user data. Security compromises or cyberattacks could harm the Company’s reputation, erode market confidence in the effectiveness of its security measures and reliability of its endorsements, negatively impact its ability to attract new clients, or cause clients to stop using the Company’s services.
The nature of our business requires the application of complex financial accounting rules, and there is limited guidance from accounting standard setting bodies. If financial accounting standards undergo significant changes, our operating results could be adversely affected.
The accounting rules and regulations that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board (the “FASB”), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. In addition to the United States, the Company operates in several Latin American countries that may or may not offer similar accounting treatments to some of the Company’s transactions. This could have a significant effect on the ability of the Company to offer comparable results segmented by country in the future. A change in these principles or interpretations could have a significant effect on our reported financial results and may even affect the reporting of transactions completed before the announcement or effectiveness of a change. Recent actions and public comments from the FASB and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies’ accounting policies are being subject to heightened scrutiny by regulators and the public.
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On December 13, 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. When adopting the standard, entities are required to record a cumulative-effect adjustment to retained earnings as of the beginning of the annual period of adoption. Retrospective restatement would not be required or allowed for prior periods. For all entities, the ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the adoption of this ASU. There is expected to be no material impact on the financial statements due to the Company’s holding period of crypto assets being typically two days or less.
Our products and services may be negatively characterized by consumer advocacy groups, the media or certain federal, state and local government of officials, and if those negative characterizations become increasingly accepted by current or potential new users and/or our retail partners, or result in restrictions or limitations on the fees we charge to users, our reputation could be significantly impacted, which when coupled with required modifications to our fee model could result in decreased demand for our products and services and a corresponding decrease in our transaction volume, all of which could materially and adversely impact our business.
Certain media reports have asserted that laws and regulations regarding cryptocurrencies and related transactions and activities should be broader and more restrictive. In many cases, these media reports can focus on fees charged to users, which are often alleged to be higher than the fees typically charged by banks or similar institutions, as well as marketing tactics, which are alleged to target socioeconomically vulnerable communities. The fees and marketing strategies associated with our kiosks are from time to time characterized by consumer advocacy groups and media reports as predatory or abusive without discussing the numerous benefits to users. If the negative characterization of our marketing strategies and/or fee structure becomes increasingly accepted by current or potential new users of our ATMs demand for our products and services could decrease, which could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to effectively respond to such characterizations, or if there are modifications to our fee model, including as a result of changes in or the adoption of any laws or regulations imposing restrictions or limitations on the markup at which we sell bitcoin to users, we may experience declines in user loyalty and transactions, which could have a material adverse effect on our business, results of operations and financial condition. Additionally, any actions by our competitors that are challenged by users, advocacy groups, the media or governmental agencies or entities as being abusive or predatory, could result in our products and services being perceived as unlawful or inappropriate activities or business practices, merely because we operate in the same general industries as such competitors. Such perception, whether or not accurate, could have a material adverse effect on our business, results of operations and financial condition.
Litigation or investigations involving us, our agents or other contractual counterparties could result in material settlements, fines or penalties and may adversely affect our business, financial condition and results of operations.
We have been, and in the future may be, subject to allegations and complaints that individuals or entities have used our products and services for fraud-induced money transfers, as well as certain money laundering activities, which may result in fines, penalties, judgments, settlements and litigation expenses. We also are the subject from time to time of litigation related to our business (see “Legal Proceedings”). The outcome of such allegations, complaints, claims and litigation cannot be predicted.
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Regulatory and judicial proceedings and potential adverse developments in connection with ongoing litigation may adversely affect our business, financial condition and results of operations. There may also be adverse publicity associated with lawsuits and investigations that could decrease third-party and consumer use and acceptance of our products and services. Additionally, our business may be the subject of class action lawsuits including securities litigation, regulatory actions and investigations and other general litigation. The outcome of class action lawsuits, including securities litigation, regulatory actions and investigations and other litigation is difficult to assess or quantify but may include substantial fines and expenses, as well as the revocation of required authorizations, registrations or licenses or the loss of approved status, which could have a material adverse effect on our business, financial position, and results of operations or users’ confidence in our business. Plaintiffs or regulatory agencies in these lawsuits, actions or investigations may seek recovery of very large or indeterminate amounts, and the magnitude of these actions may remain unknown for substantial periods of time. The cost to defend or settle future lawsuits or investigations may be significant. In addition, improper activities, lawsuits or investigations involving third-parties may adversely impact our business operations or reputation even if we are not directly involved.
Proposed new regulation or legislation may impact our business operations and financial results.
The Proposed Rule on Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions requires brokers, including digital asset trading platforms, digital asset payment processors, and certain digital asset hosted wallets, to file information returns, and furnish payee statements, on dispositions of digital assets effected for customers in certain sale or exchange transactions. The IRS has received a significant amount of commentary on the Proposed Rule on Gross Proceeds and Basis Reporting by Brokers and Determination of Amount Realized and Basis for Digital Asset Transactions. The comment period for this proposed rulemaking was extended, indicating a high level of interest and engagement from the public. The Securities Industry and Financial Markets Association (SIFMA) provided comments to the IRS on the proposed digital asset reporting regulations as has the American Institute of Certified Public Accountants (AICPA.) These comments are part of the regulatory process, allowing stakeholders to provide feedback and raise concerns about proposed rules. This feedback can influence the final form of the regulations. The impact of this act on our business will depend on the final form of the regulations and how they are implemented.
The impact of these regulations on businesses can be significant.
These regulations, if enacted, could increase compliance costs, create operational challenges, cause our general and administrative costs to increase and potentially impact the profitability of our businesses. To comply with laws adopted by the United States government or other United States or foreign regulatory bodies, we may be required to increase our expenditures and hire additional personnel and additional outside legal, accounting and advisory services, all of which may cause our general and administrative and compliance costs to increase without an ability to pass through any increased expenses through higher prices considering that other federal and state regulations may also place restrictions on volume, margin and pricing.
The Company is diligently monitoring developments related to these regulations, but the ultimate outcome and the specific requirements that may be imposed remain uncertain. The uncertainty surrounding the interpretation and enforcement of these regulations may create additional challenges in our digital asset transactions and reporting practices as the regulatory landscape evolves.
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Risk Factors Related to Intellectual Property
Our intellectual property rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial condition.
Our business depends in large part on our proprietary technology and our brand. We rely on, and expect to continue to rely on, a combination of trademark, trade dress, domain name, copyright, and trade secret and laws, as well as confidentiality and license agreements with our employees, contractors, consultants, and third parties with whom we have relationships, to establish and protect our brand and other intellectual property rights. However, our efforts to protect our intellectual property rights may not be sufficient or effective. Our proprietary technology and trade secrets could be lost through misappropriation or breach of our confidentiality and license agreements, and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid or unenforceable. There can be no assurance that our intellectual property rights will be sufficient to protect against others offering products, services, or technologies that are substantially like ours and that compete with our business.
We may in the future be sued by third parties for alleged infringement of their proprietary rights.
In recent years, there has been considerable patent, copyright, trademark, domain name, trade secret and other intellectual property development activity in the crypto economy, as well as litigation, based on allegations of infringement or other violations of intellectual property, including by large financial institutions. Furthermore, individuals and groups (collectively “patent trolls”) can purchase patents and other intellectual property assets for the purpose of making claims of infringement to extract settlements from companies like ours. Our use of third-party intellectual property rights also may be subject to claims of infringement or misappropriation. We cannot guarantee that our internally developed or acquired technologies and content do not or will not infringe the intellectual property rights of others. From time to time, our competitors or other third parties may claim that we are infringing upon or misappropriating their intellectual property rights, and we may be found to be infringing upon such rights. Any claims or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial damages or ongoing royalty payments, prevent us from offering our products or services or using certain technologies, force us to implement expensive workarounds, or impose other unfavorable terms. We expect that the occurrence of infringement claims is likely to grow as the market grows and matures. Accordingly, our exposure to damages resulting from infringement claims could increase and this could further exhaust our financial and management resources. Further, during any litigation, we may make announcements regarding the results of hearings and motions, and other interim developments. If securities analysts and investors regard these announcements as negative, the market price of our common stock may decline. Even if intellectual property claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and require significant expenditures. Any of the foregoing could prevent us from competing effectively and could have an adverse effect on our business, operating results, and financial condition and negatively affect an investment in the Shares.
Risk Factors Related to Our Employees and Other Service Providers
The loss of one or more of our key personnel, or our failure to attract and retain other highly qualified personnel in the future, could adversely impact our business, operating results, and financial position.
We operate in a new industry that is not widely understood and requires highly skilled and technical personnel. We believe that our future success is highly dependent on the talents and contributions of our senior management team, members of our executive team, and other key employees across operations, customer support, finance, and compliance. Our future success depends on our ability to attract, develop, motivate, and retain highly qualified and skilled employees. Due to the nascent nature of the crypto asset industry, in particular the Bitcoin ATM market, the pool of qualified talent is extremely limited, particularly with respect to executive talent, engineering, cross-border operations, risk management, and financial regulatory expertise. We face intense competition for qualified individuals from numerous software, finance and other technology companies. To attract and retain key personnel, we incur significant costs, including salaries, benefits and equity incentives. Even so, these measures may not be enough to attract and retain the personnel we require to operate our business effectively. The loss of even a few qualified employees, or an inability to attract, retain and motivate additional highly skilled employees required for the planned expansion of our business could adversely impact our operating results and impair our ability to grow.
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In the event of employee or service provider misconduct or error, our business may be adversely impacted.
Employee or service provider misconduct or error could subject us to legal liability, financial losses, and regulatory sanctions and could seriously harm our reputation and negatively affect our business. Such misconduct could include engaging in improper or unauthorized transactions or activities, misappropriation of funds, identity theft, misappropriation of information, failing to supervise other employees or service providers, and improperly using confidential information. Employee or service provider errors, including mistakes in executing, recording, or processing transactions for customers, could expose us to the risk of material losses even if the errors are detected. Although we have implemented processes and procedures and provide training to our employees and service providers to reduce the likelihood of misconduct and error, these efforts may not be successful. Moreover, the risk of employee or service provider error or misconduct may be even greater for novel products and services. It is not always possible to deter misconduct, and the precautions we take to prevent and detect such activities may not be effective in all cases. If we were found to have not met our regulatory oversight, compliance and other obligations, we could be subject to regulatory sanctions, financial penalties, and restrictions on our activities for failure to properly identify, monitor and respond to potentially problematic activity and seriously damage our reputation. Our employees, contractors, and agents could also commit errors that subject us to financial claims for negligence, as well as regulatory actions, or result in financial liability. Further, allegations by regulatory or criminal authorities of improper trading activities could affect our brand and reputation.
Our officers, directors, employees, and large shareholders may encounter potential conflicts of interests with respect to their positions or interests in certain crypto assets, projects, entities, and other initiatives, which could adversely affect our business and reputation.
We frequently engage in a wide variety of transactions and maintain relationships with a significant number of other firms in the broad economy surrounding Bitcoin, blockchain and other crypto assets. These transactions and relationships could create potential conflicts of interests in management decisions that we make. For instance, certain officers, directors, and employees of the Company are active investors in crypto projects themselves, and may make investment decisions that favor projects that they have personally invested in. Many of our large shareholders also make investments in these crypto projects.
Similarly, certain directors, officers, employees, and large shareholders of the Company may hold crypto assets or have other beneficial ownership of sponsors of such crypto assets, tokens, or stable coins that we are considering supporting with our Bitcoin ATM fleet and may be more supportive of such listing notwithstanding legal, regulatory, and other issues associated with such crypto assets. If we fail to manage these conflicts of interests, our business may be harmed and the brand, reputation and credibility of our company may be adversely affected.
Risk Factors Related to Ownership of Our Common Stock
Our founders, single major shareholder, and director control, and may continue to control, our Company for the foreseeable future, including the outcome of matters requiring shareholder approval.
Our founders together with a single major shareholder, beneficially own approximately 70.35% of our outstanding shares of common stock. As a result, such individuals will, for the foreseeable future, have the ability, if acting together, to control the election of our directors and the outcome of corporate actions requiring shareholder approval, such as: (i) a merger or a sale of our company, (ii) a sale of all or substantially all of our assets, and (iii) amendments to our articles of incorporation and bylaws. This concentration of voting power and control could have a significant effect in delaying, deferring, or preventing an action that might otherwise be beneficial to our other shareholders and be disadvantageous to our shareholders with interests different from those entities and individuals. See “Management and Certain Security Holders” for further discussion of the Board of Directors’ structure and principal shareholders’ agreements.
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Our securities are “Penny Stocks” that may make them less desirable or accessible by investors or potential investors.
Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer must approve a person’s account for transactions in penny stocks; and (b) the broker or dealer must receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks
The market price of our common stock has been volatile in the past and may continue to be volatile and could decline significantly and rapidly.
The market price of our common stock has in the past been, and in the future may continue to be subject to wide fluctuations in response to factors beyond our control, including:
| · | the number of shares of common stock publicly owned and available for trading; | |
| · | overall performance of the equity markets or publicly-listed financial services, cryptocurrency and technology companies; | |
| · | our actual or anticipated operating performance and the operating performance of our competitors; | |
| · | changes in the projected operational and financial results we provide to the public or our failure to meet those projections; | |
| · | failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet the estimates or the expectations of investors; | |
| · | any major change in our board of directors, management or key personnel; | |
| · | the highly volatile nature of the digital financial system and the prices of cryptocurrencies; | |
| · | rumors and market speculation involving the digital financial system or us or other companies in our industry; | |
| · | announcements by us or our competitors of significant innovations, new products, services, features, integrations or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments; and | |
| · | other events or factors, including those resulting from political instability, and acts of war, or terrorism, or responses to these events, including the current conflict in Ukraine. |
In addition, broad market and industry fluctuations, as well as general macroeconomic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may negatively impact the market price of our common stock. In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business.
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Changes in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial statements, which could cause our stock price to decline.
We prepare our consolidated financial statements in accordance with U.S. GAAP. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect on our reported results and retroactively affect previously reported results.
Our Shares are subject to FINRA sales practice requirements that may make them less desirable or accessible by investors or potential investors.
The U.S. Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require a broker-dealer to have reasonable grounds for believing that an investment is suitable for a customer before recommending an investment to a customer. Prior to recommending speculative, low-priced securities to non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives, and other information. Pursuant to the interpretation of these rules, FINRA believes that there is a high probability that speculative, low-priced securities will not be suitable for at least some customers. Thus, the FINRA requirements make it more difficult for broker-dealers to recommend the Common Shares to customers which may limit an investor’s ability to buy and sell the Common Shares, have an adverse effect on the market for the Common Shares, and thereby negatively impact the price of the Common Shares.
Our Shares may be subject to dilution.
We may make future acquisitions or enter financings or other transactions involving the issuance of securities of the Company which may be dilutive to the other shareholders and any new equity securities issued could have rights, preferences, and privileges superior to those of holders of Common Shares.
We have never paid dividends on our common stock and have no plans to do so in the future.
Holders of shares of our common stock are entitled to receive such dividends as may be declared by our Board of Directors. To date, we have paid no cash dividends on our shares of common stock, and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common stock may have, will be in the form of appreciation, if any, in the market value of their shares of common stock. See “Dividend Policy.” In addition, the terms of the Senior Secured Loan Agreement related to the Amended and Restated Convertible Debenture dated May 15, 2023 preclude us from paying dividends without the written consent of the lender.
We will indemnify and hold harmless our officers and directors to the maximum extent permitted by Nevada law.
Our bylaws provide that we will indemnify and hold harmless our officers and directors against claims arising from our activities, to the maximum extent permitted by Nevada law. In addition, if we are called upon to perform under our indemnification agreements entered into with each one of our directors, then the portion of our assets expended for such purpose would reduce the amount otherwise available for our business.
We may engage in acquisitions, mergers, strategic alliances, joint ventures, and divestures that could result in results that are different than expected.
In the normal course of business, we engage in discussions relating to acquisitions, equity investments, mergers, strategic alliances, joint ventures, and divestitures. Such transactions are accompanied by a number of risks, including the use of significant amounts of cash, potentially dilutive issuances of equity securities, incurrence of debt on potentially unfavorable terms, accruement of impairment expenses related to goodwill and amortization expenses related to other intangible assets, the possibility that we overpay for an acquisition relative to the economic benefits that we ultimately derive from such acquisition, and various potential difficulties involved in integrating acquired businesses into our operations.
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We might require additional capital to support business growth, and this capital might not be available.
We have funded our operations since inception primarily through debt and equity financings and revenue generated by our services. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments in our business to respond to business challenges, including deploying more Bitcoin ATMs both in the United States and globally, enhancing our operating infrastructure, expanding our international operations to include additional regions and countries, and acquiring complementary businesses and technologies, all of which may require us to secure additional funds. Additional financing may not be available on terms favorable to us, if at all. If we incur additional debt, the debt holders would have rights senior to holders of our common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock.
The trading prices for our common stock may be highly volatile, which may reduce our ability to access capital on favorable terms or at all. In addition, a slowdown or other sustained adverse downturn in the general economic or crypto markets could adversely affect our business and the value of our common stock. Because our decision to raise capital in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of securities. As a result, our shareholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests. Our inability to obtain adequate financing or financing on terms satisfactory to us, when we require it, could significantly limit our ability to continue supporting our business growth and responding to business challenges.
Our Common Stock is subject to liquidity risks.
Our Common Stock is quoted on the OTC Pink Market Tier of the OTC Markets under the symbol “ABIT”. On February 10, 2025, the last reported sale of our Common Stock was $0.06 per share and the high and low sales prices of our common stock over the prior 52 weeks was $0.03 and $0.44, respectively`. As of the date of this prospectus, our Common Stock is quoted on the OTC Pink, and it is not otherwise regularly quoted on any other over-the-counter market or exchange.
The Company and its Common Stock may be negatively affected if any of the Company’s restricted securities are resold without registration or an available exemption from registration requirements under the Securities Act.
On March 17, 2022, the Company learned that one million shares of its restricted common stock owned by an existing shareholder was transferred by its transfer agent to another party. Such shares were subsequently deposited by a new holder into Depository Trust Company and some portion of said shares (approximately 50%) has been sold on the trading market. Our stock certificates representing restricted shares of common stock carry a legend that states that such shares “have not been registered under the Securities Act of 1933, and may not be sold, transferred, or otherwise disposed unless, in the opinion of counsel satisfactory to the issuer, the transfer qualifies for an exemption from or exemption to the registration provisions thereof.” The transfer took place without the Company’s knowledge, approval or required authorization. The Company immediately notified the relevant parties to cease any sales of such shares into the public market, and has been assured by the new holder that no shares will be sold pending the Company’s ongoing investigation. The Company believes that even though it was an unusual event (and the Company took immediate remedial steps to ensure that the resale of such shares was immediately ceased and prevented in the future, including termination of its transfer agent), any future sale of restricted and unregistered securities without registration or an available exemption can expose the Company and its Common Stock to the number of adverse consequences, including: (i) regulatory scrutiny, investigations, enforcement or other actions, potentially preventing or delaying us from offering our shares or trading our stock, which could negatively impact an investment in the Shares; (ii) decline or volatility of the market price of our Common Stock as a result of sales of a material number of shares of our Common Stock in the thinly trading public market, or (iii) securities litigation targeting the Company which could result in substantial costs and which could harm our business.
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We cannot predict at what prices the Common Stock of the Company will trade and there can be no assurance that an active trading market will develop or be sustained. There is a significant liquidity risk associated with an investment in the Company.
The shares of our common stock we may issue in the future and the options we may issue in the future may have an adverse effect on the market price of our common stock and cause dilution to investors.
We may issue shares of common stock and warrants to purchase common stock pursuant to private offerings and we may issue options to purchase common stock to our executive officers and employees pursuant to their employment agreements. The sale, or even the possibility of sale, of shares pursuant to a separate offering or to executive officers and employees could have an adverse effect on the market price of our common stock or on our ability to obtain future financing.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
As a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.
Being a public company results in additional expenses, diverts management’s attention and could also adversely affect our ability to attract and retain qualified directors.
As a public reporting company, we are subject to the reporting requirements of the Exchange Act. These requirements generate significant accounting, legal and financial compliance costs and make some activities more difficult, time consuming or costly and may place significant strain on our personnel and resources. The Exchange Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to establish the requisite disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight are required.
As a result, management’s attention may be diverted from other business concerns, which could have an adverse and even material effect on our business, financial condition and results of operations. These rules and regulations may also make it more difficult and expensive for us to obtain director and officer liability insurance. If we are unable to obtain appropriate director and officer insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent, could be adversely impacted.
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Our officers, directors, employees, and large stockholders may encounter potential conflicts of interests with respect to their positions or interests in cryptocurrencies, entities, and other initiatives and digital asset-related businesses, which could adversely affect our business and reputation.
Certain of our officers, directors, and employees are involved with or active investors in certain digital asset-related businesses, such as cryptocurrency miners, as well as active investors in digital asset projects themselves, and may make investment decisions that favor projects that they have personally invested in. Our largest stockholders may also make investments in these digital asset projects. Similarly, certain of our directors, officers, employees, and large stockholders may hold cryptocurrencies that we are considering supporting, and may be more supportive of such listing notwithstanding legal, regulatory, and other issues associated with such cryptocurrencies. While we have instituted policies and procedures to limit and mitigate such risks, there is no assurance that such policies and procedures will be effective, or that we will be able to manage such conflicts of interests adequately. If we fail to manage these conflicts of interests, or we receive unfavorable media coverage with respect to actual or perceived conflicts of interest, our business may be harmed and the brand, reputation and credibility of our company may be adversely affected.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or JOBS Act, and, for as long as we continue to be an “emerging growth company,” we intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We will remain an emerging growth until the end of the fifth fiscal year after the effective date of this Registration Statement, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.2357 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three year period.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
We do not currently have an independent audit or a compensation committee. As a result, directors have the ability, among other things, to determine each other’s level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it costlier or deter qualified individuals from accepting these roles.
In addition to the above risks, businesses are often subject to risks not foreseen or fully appreciated by management. In reviewing this Prospectus, potential investors should keep in mind other risks that could be important.
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Capitalization
The following table details the Company’s capitalization as of September 30, 2024:
| · | On an actual basis; | |
| · | On a pro forma basis to give effect to the sale of the shares by employees who have outstanding loans to exercise options and the pro-rata repayment of those loans; and | |
| · | On a pro forma basis as adjusted basis to give effect to the transaction described in the preceding bullet point as well as the conversion of the Convertible Debenture. |
In January 2020, the Company allowed its employees with vested stock options to exercise with the use of a non-recourse loan agreement for the issuance of 119,139,461 shares of common stock. These loan agreements originally had a maturity date of 48 months from the date of exercise, which was extended by one year in December 2023 to 60 months. And increase of $35 to additional paid in capital was recorded as a result of this modification. The loans carry an interest rate of 1.69%. The loans are required to be consistent with the accounting for stock options, with the exercise price of the stock option being the principal and interest due on the loan.
The fair value of the non-recourse loans as of the grant date (January 15, 2020) was determined using the Black-Scholes option pricing model. The following assumptions were used in estimating the fair value of the non-recourse loans:
| Stock price | $0.03 |
| Exercise price | $0.01 |
| Expected life (years) | 4.0 |
| Expected volatility | 78.3% |
| Annual dividend yield | 0.0% |
| Discount rate | 0.0% |
The Company elected, in accordance with FASB ASC 718, to deduct the increase in the exercise price (interest) from the risk-free interest rate, resulting in no discount rate.
A total of 727,900 shares of common stock held by employees (approximately 15% of each employee’s shares) are being registered in this offering. In the event the employees sell any or all of these shares before repaying the loan, an amount that bears the same proportion to the total loan including accrued interest thereon, as the registered number of shares bears to the total holding of the employee against which said loan has been given, will become due and payable to the Company. If all the registered shares are sold using the outstanding balance due of $494,000 as of September 30, 2024, the loan will be reduced by $5,000.
The pro-forma capitalization (see Pro Forma and Pro Forma As Adjusted table below) whereby both cash and equity increases by the amount being repaid (i.e. $5,000).
On January 31, 2020, the Company entered into a convertible debenture agreement with KGPLA LLC, an entity in which Mike Komaransky, a former director and principal shareholder of the Company has controlling interest. The convertible debenture provided for a principal amount of $3,000, with a maturity date of January 31, 2025 which has been extended to January 31, 2026. Interest as defined by the agreement is 8% per annum. KGPLA, LLC has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at 31 the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of September 30, 2024 and December 31, 2023, the outstanding principal debenture amount of $3,000.
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The pro forma and pro forma as adjusted information below is illustrative only, and our cash and cash equivalents and total capitalization following the completion of this offering will be adjusted based on several factors. You should read the following table together with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes thereto appearing elsewhere in this prospectus.
PRO FORMA AND PRO FORMA AS ADJUSTED
| As of September 30, 2024 | ||||||||||||
| (in thousands) | Actual | Pro forma | Pro forma as adjusted (1) | |||||||||
| Cash and cash equivalents | ||||||||||||
| Total cash and cash equivalents (2) | $ | 20,860 | $ | 20,865 | $ | 20,865 | ||||||
| Current liabilities | ||||||||||||
| Related party convertible debt (1) | 3,000 | 3,000 | – | |||||||||
| Total current liabilities | 3,000 | 3,000 | – | |||||||||
| Stockholders’ equity: | ||||||||||||
| Common stock, $0.001 par value (3) | 4,095 | 4,096 | 4,346 | |||||||||
| Additional paid in capital (4)(5) | 11,982 | 11,986 | 14,736 | |||||||||
| Accumulated income | 7,460 | 7,460 | 7,460 | |||||||||
| Accumulated other comprehensive loss | (272 | ) | (272 | ) | (272 | ) | ||||||
| Total stockholders’ equity | 23,265 | 23,270 | 26,270 | |||||||||
| Total capitalization | $ | 26,265 | $ | 26,270 | $ | 26,270 | ||||||
| (1) | Pro forma as adjusted includes the full conversion of $3,000,000 of 8% Convertible Debentures into 250,000,000 shares of common stock at the assumed conversion price of $0.012 per share for the 8% Convertible Debentures. See Convertible Debentures in the section entitled Description of Capital Stock. | |
| (2) | Pro forma cash and cash equivalents increased by $5,000 from the repayment of the non-recourse shares as part of this offering. | |
| (3) | Pro forma common stock at $0.001 par value increased by $1,000 assuming the sale of the non-recourse shares. Pro forma as adjusted common stock at $0.001 par value increased by $250,000 assuming the full conversion of the 8% Convertible Debentures at conversion price of $0.012 per share. | |
| (4) | Pro forma additional paid in capital related to employee shares redeemed increased by $4,000 as a result of non-recourse shares repayment from this offering. | |
| (5) | Pro forma as adjusted additional paid in capital increased by $2,750,000 to account for the principal value of the 8% Convertible Debenture of $3,000,000 less $250,000 in common stock value, which was recorded under common stock. |
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Management’s Discussion and Analysis OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our historical financial statements and the notes to those statements that appear elsewhere in this prospectus. Certain statements in the discussion contain forward-looking statements based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations, and intentions. You should read the sections titled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements”” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Overview
Our mission is to connect the world’s cash to the new global digital financial system. We believe that providing the world with access to crypto assets will help transform the international financial order by providing the unbanked and billions of others in the world with a connection to a new global digital financial system that is more accessible, efficient and transparent than the legacy financial system.
Athena Bitcoin ATMs and Athena Plus
In order to achieve our mission, we are focused on developing, owning, and operating a global network of Athena-branded Bitcoin ATM machines, which are free standing kiosks that permit customers to buy or sell crypto assets in exchange for cash (banknotes) issued by sovereign governments - often referred to as fiat currencies. We utilize purchasing algorithms and other proprietary systems to manage crypto assets to ensure that we are able to meet consumer demand for crypto assets.
We have become one of the largest Bitcoin ATM operators in the United States and Latin America by installing ATMs in strategic locations that seek to maximize the ability to provide crypto assets to customers. These locations include convenience stores, shopping centers, and other easily accessible locations in urban, suburban and rural locations. Our network presently includes Athena Bitcoin ATMs in 29 U.S. states, the U.S. territory of Puerto Rico and 4 countries in Latin America. See table below for our ATM breakdown by country and type, as of September 30, 2024.
ATMs BY COUNTRY AND TYPE
| Country | Number
of Athena Bitcoin ATMs (as of September 30, 2024) |
Type of Fiat Currency | |
| Total | Two-Way | ||
| United States | 2,850* | 13* | U.S. Dollar |
| El Salvador | 13* | 13* | U.S. Dollar |
| Argentina | 10 | 10 | Argentine peso |
| Colombia | 17 | 17 | Colombian peso |
| Mexico | 1 | 1 | Mexican peso |
| Total | 2,891 | 54 | |
*Excludes Chivo-branded ATMs which the Company operates on behalf of the Government of El Salvador for Chivo as white-label service.
We offer bitcoin for sale at all of our ATM machines. We also buy bitcoin at some of our ATM machines (also known as two-way ATMs). The cash withdrawal limit from our two-way ATMs is $2,000 per transaction (maximum of $1,000 in California). We replenish or withdraw fiat currencies at our ATMs twice a week or depending on usage, using bonded security companies.
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We operate Athena Plus for private clients and trade customers of the Company. Customers typically interact with the Company on the phone for transaction sizes in dollar terms greater than $10,000 and on some occasions, for crypto assets not included in our ATMs. Since 2019, we have been typically buying and selling bitcoin through Athena Plus, but we have also executed transactions in Ethereum, Litecoin, and in other less common crypto assets. As of the date of this prospectus, we do not transact in any crypto assets at our ATMs except bitcoin. We will update this prospectus if we decide to transact in other crypto assets. Such a change would only happen if there were significant customer demand for a specific crypto asset and that crypto asset was available to us through multiple trading partners, crypto exchange and crypto asset brokers.
Between January 1, 2022, and December 1, 2024, Bitcoin’s price exhibited significant fluctuations. In early 2022, Bitcoin’s price was around $47,459 by the end of March, before declining to approximately $29,000 by May 11, 2022. The downward trend continued, with the price falling below $23,000 in June 2022. By the end of 2022, Bitcoin’s price was under $20,000. In 2023, Bitcoin’s price rose consistently, ending the year at $42,258. In 2024, Bitcoin’s price continued to rise, reaching a then all-time high of $76,999 on November 7, 2024. By December 1, 2024, the price was approximately $101,236. Refer below for a log scale of bitcoin from May of 2022 through January of 2025. This shows the fluctuations of the price of bitcoin over time.
BITCOIN PRICE
We believe that we are in the early stages of the new digital financial order system and that as crypto asset use cases expand and there is more worldwide adoption, the fluctuations in volume and price will decrease. Our focus is on prioritizing growth, especially in geographic areas where consumers are restricted from accessing the global financial system.
The Company has been active in increasing its geographic presence by expanding its Athena Bitcoin ATM Fleet. Refer below for a chart showing the increase of active Athena Bitcoin ATMs from December 31, 2017, through December 31, 2024.
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INCREASE OF ACTIVE ATHENA BITCOIN ATMS
FROM DECEMBER 31, 2017, THROUGH DECEMBER 31, 2024
White-label Service
The Company, as part of its strategy to expand globally, began working with the Government of El Salvador in late June 2021 to support the implementation of its Bitcoin Law. Six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact.
We operate ATMs on behalf of the Government of El Salvador. These ATMs are owned by the Company. This white-label service is comprised of installing the machines for the customer and ensuring that the machines are operating in a way that they can be used by the Government of El Salvador and their users. To achieve this, the Company is responsible for loading and unloading cash, setting up the network, performing repairs and maintenance and other responsibilities to ensure that the machines are operating as intended. We charge a fixed monthly fee to operate these ATMs, as well as an additional fixed price for specific services that are required. The additional fixed price for specific services required is less than 1% of total revenue earned for the fixed monthly fee. The fixed price covers Athena’s cost plus a reasonable profit margin. The Company charges a separate fixed fee for installation of the ATM as determined by the contract. The Company also charges a fixed fee each month for operating the ATM. The Company does not sell crypto assets directly to the users of the ATM. The Government of El Salvador has title to the private keys to the crypto assets. However, the Company acts as the custodian for the cash in the ATM machine as well as cash that is in-transit.
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In 2021 and 2022, we installed a total of 200 Chivo Bitcoin ATMs in El Salvador, 11 Chivo Bitcoin ATMs at El Salvador consulates in the U.S and 45 Chivo Bitcoin ATMs in other U.S. locations. The Company has not installed any new white -label ATMs in fiscal year 2022, 2023, or 2024. As of September 30, 2024, we were operating 246 active white-label ATMs and held 7 white-label ATMs in storage for Chivo, Sociedad Anónima de Capital Variable, a wholly owned private company of the Government of El Salvador in El Salvador and in the U.S.
Ancillary
The Company engages in services as part of its mission to bring the new digital financial system to the world. This includes the sale of point-of-sale terminals (“POS Terminals”) and developing and supporting crypto ecosystems. In 2021, the Company agreed to develop the Chivo Ecosystem to El Salvador. The Chivo Ecosystem acts as the interface to El Salvador’s Bitcoin Digital Wallet for El Salvador and its users. The Company’s contract to develop the Chivo Ecosystem ended December 31, 2021.
The Company, due to contingencies related to not having title of the intellectual property in 2021 that serves as the foundation of the Chivo Ecosystem, did not recognize revenue in 2021. The contingency was lifted in 2022 when the Company obtained the right to use the intellectual property. The Company recognized revenue related to the development of the Chivo Ecosystem when the contingency was lifted. The Company anticipates no further revenue related to the Chivo intellectual property and ecosystem.
Key Performance Indicators and Non-GAAP Financial Measure and Trends
Athena Bitcoin ATMs
Number of Athena Bitcoin ATMs increased from 228 to 2,187 to 2,891 as of December 31, 2022, December 31, 2023, and September 30, 2024, respectively.
Transactions
Median ATM sale transaction size for all crypto assets decreased from $200 to $130, or 35% while the number of transactions increased from 31,041 to 47,103, or 52% during the three months ended September 30, 2023 and September 30, 2024, respectively.
Median ATM sale transaction size for all crypto assets increased from $160 to $180, or 13% while the number of transactions increased from 60,364 to 126,962, or 110% during the nine months ended September 30, 2023 and September 30, 2024, respectively.
Median OTC transaction size for all crypto assets decreased from $100,000 to $45,200 or 55% while number of transactions decreased from 27 to 11, or 59% during the three months ended September 30, 2023 and September 30, 2024, respectively.
Median OTC transaction size for all crypto assets decreased from $100,000 to $48,600 or 51% while number of transactions decreased from 98 to 39, or 60% during the nine months ended September 30, 2023 and September 30, 2024, respectively.
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Adjusted EBITDA
We use Adjusted EBITDA as a non-GAAP financial measure. We define Adjusted EBITDA as net earnings attributable to Athena Bitcoin Global stockholders and then adding back the following items: interest expense, fees on virtual vault services; income tax expense; depreciation and amortization and impairment on capitalized software development. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies because not all companies calculate this measure in the same fashion. You should review the reconciliation of net income to Adjusted EBITDA below and not rely on any single financial measure to evaluate our business. The Company believes that Adjusted EBITDA is a more relevant supplemental measure of performance than other GAAP performance measures. Adjusted EBITDA as presented in this prospectus is a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. Management presents the non-GAAP financial measure of Adjusted EBITDA in this prospectus because it considers this to be an important supplemental measure of performance. Management believes that this non-GAAP financial measure provides additional insight for analysts and investors evaluating the Company’s financial and operational performance by providing a consistent basis of comparison across periods.
ADJUSTED EBITDA
| Nine Months Ended September 30, | ||||||||||||
| 2024 | 2023 | $ Change | ||||||||||
| (in thousands) | ||||||||||||
| Net income | $ | 12,207 | $ | 8,179 | $ | 4,028 | ||||||
| Adjusted to exclude the following; | ||||||||||||
| Interest expense | 1,698 | 1,326 | 372 | |||||||||
| Fees on virtual vault services | 1,557 | 557 | 1,000 | |||||||||
| Income tax expense | 5,609 | 3,141 | 2,468 | |||||||||
| Depreciation and amortization | 3,219 | 1,531 | 1,688 | |||||||||
| Adjusted EBITDA | $ | 24,290 | $ | 14,734 | $ | 9,556 | ||||||
| Year Ended December 31, | ||||||||||||
| 2023 | 2022 | $ Change | ||||||||||
| (in thousands) | ||||||||||||
| Net income | $ | 11,196 | $ | 4,124 | $ | 7,072 | ||||||
| Adjusted to exclude the following; | ||||||||||||
| Interest expense | 2,380 | 685 | 1,695 | |||||||||
| Fees on virtual vault services | 1,039 | 113 | 926 | |||||||||
| Income tax expense | 4,490 | 1,770 | 2,720 | |||||||||
| Impairment on capitalized software development | 2,383 | – | 2,383 | |||||||||
| Depreciation and amortization | 2,199 | 1,670 | 529 | |||||||||
| Adjusted EBITDA | $ | 23,687 | $ | 8,362 | $ | 15,325 | ||||||
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Key Factors Affecting Our Performance
The performance of our business operations have been and will continue to be affected by a number of factors, including;
| · | The price and volatility of crypto assets | |
| · | Adoption of crypto assets as a medium of exchange by merchants and their trading partners | |
| · | Adoption of crypto assets as a store of value by investors | |
| · | The total number of Bitcoin ATMs could reach a saturation in the markets where the Company operates. And the demand, as measured on a per Bitcoin ATM basis, would decrease. | |
| · | Investments made by the Company, including in new technologies and strategic acquisitions | |
| · | Ability to determine the transaction fee for ATM transactions | |
| · | Product and service offerings, including potentially increasing its white-label service offerings. | |
| · | Regulations in U.S. and international market | |
| · | Access to supply of new ATM machines from third-party manufacturers |
Components of Results of Operations
Revenue
Athena Bitcoin ATM
We generate the majority of our revenue from the sale of bitcoin through our network of ATM machines. The Company generated 89% and 62% of its revenue from ATM sales for the years ended December 31, 2023, and December 31, 2022, respectively, and 97% and 85% for the nine months ended September 30, 2024, and 2023, respectively. The Company recognizes revenue at the point in time when the customer receives the crypto asset. The revenue recognized is the gross transaction amount of crypto assets sold. Revenue is primarily correlated with transaction volume. As the Company continues to expand its ATM fleet and as the world continues to adapt to the new global digital financial system, the Company expects to experience an increase in transaction volume.
Athena Plus
We generate revenue from selling crypto assets to institutional traders and organizations. These are typically done via the phone. The Company generated 8% and 22% of its revenue from Athena Plus for the years ended December 31, 2023, and December 31, 2022, respectively, and 1% and 12% for the nine months ended September 30, 2024, and 2023, respectively. The Company recognizes revenue at the point in time when the customers received the crypto asset. The revenue recognized is the gross transaction amount of crypto assets sold. Revenue is primarily correlated with transaction volume.
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White-label Service
We generate revenue by installing and operating ATMs on behalf of third parties. Operating responsibilities include providing the ATMs, loading and unloading cash, setting up the network, repairs and maintenance, and software upgrades, if necessary. The Company generated 3% and 7% of its revenue from white-label service for the years ended December 31, 2023, and December 31, 2022, respectively, and 2% and 3% for the nine months ended September 30, 2024, and 2023, respectively. We charge a fixed monthly service fee to operate these machines. We charge a fixed fee for installation as determined by contract. We also charge customers an additional fixed price for certain services (e.g., relocating the ATMs), which is an insignificant part of the total revenue for white-label service (less than 1 %). The Company does not sell crypto assets to these customers. The Company recognizes the installation fee when installation is performed. The Company recognizes the monthly service fee over the term of the service contract.
The Company permits the customer to terminate the white-label service contract for specific ATMs as well as in total at any point during the contractual term for no penalty. As a result, the contracts for each ATM are considered month to month.
Ancillary
The Company is actively engaged in looking into other revenue streams that may aid our mission to connect the world with the new global digital financial system. We have engaged in projects such developing software that may help customers manage their crypto assets as well as selling POS terminals to customers.
In 2021, the Company agreed to develop the Chivo Ecosystem for El Salvador for $4,000,000. The Company completed the development of the Chivo Ecosystem in September 2021. The Company’s contract to develop the Chivo Ecosystem ended December 31, 2021. The Company continued to provide support services to the Government of El Salvador during fiscal year 2022 to assist with the Chivo Ecosystem, as necessary. The Company provided no services related to Chivo Ecosystem in 2023 or 2024.
The Company received $4,000,000 as of December 31, 2021. In December 2022, the Company recognized the amount received of $4,000,000 as revenue when the Company obtained the rights to the intellectual property.
Through December 31, 2023, the ancillary revenue stream, outside of the development and support of the Chivo Ecosystem as discussed above, has been sporadic and immaterial.
The Company generated 0% and 9% of its revenue from these other revenue streams for the years ended December 31, 2023, and December 31, 2022, respectively, and 0% for the nine months ended September 30, 2024, and 2023, respectively.
Cost of Revenues
Cost of revenues consists primarily of expenses related to the acquisition of crypto assets (including the costs to purchase crypto assets from users in our ATMs and from third-party exchanges). The acquired crypto asset is recorded at cost of acquisition, i.e., it is inclusive of any surcharge or markdown. The Company commonly acquires crypto assets through third-party dealers and exchanges, as well as purchasing crypto assets from customers through our two-way ATMs. The Company assigns the costs of crypto assets sold in its revenue transactions on a first-in, first-out basis.
The crypto assets acquired are classified as indefinite-lived intangible assets are initially measured at cost and are impaired when the quoted price of the crypto asset is less than the price associated with the carrying value of that crypto asset. Impairment expense is reflected in cost of revenues in the consolidated statement of operations and comprehensive income. The Company through its proprietary knowledge rarely holds crypto assets for more than 2 days, reducing this risk.
Additionally, cost of revenues includes the cost of installing the ATMs, the costs of operating the ATMs from which crypto assets are sold (including the associated rent expense, related incentives, ATM cash losses, software licensing fees for the ATMs, depreciation, general liability insurance, and utilities), fees paid to service the ATM machines and transport cash to the banks, and outsourced customer support staff for white-label services.
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Operating Expenses
The Company’s expenses consist of general and administrative, sales and marketing, technology and development and other operating expenses.
General and Administrative
General and administrative expenses consist primarily of salaries and wage expense, non-personnel costs, such as legal, accounting, and other professional fees. In addition, general and administrative expenses include rent and travel costs, and all other supporting corporate expenses not allocated to other departments.
Sales and Marketing
Sales and marketing expenses generally consist of costs of general marketing and promotional activities, advertising fees used to drive subscriber acquisition, commissions, the production costs to create our advertisements and salaries, wages and contractor costs of marketing personnel.
Technology and Development
Technology and development costs are expenses incurred to develop the Company’s other revenue streams, primarily software.
Other Operating Expenses
Other operating expenses consists of fees related to immigration of employees and other employee transition expenses.
Impairment of Capitalized Software Development Costs
Impairment of capitalized software development costs relates to impairment specific to capitalized software associated with the development of the XPay Wallet and Ruru Wallet app.
Interest Expense
Interest expense consists of interest expense, and includes amortization of debt discount and issuance costs.
Fees on Virtual Vault Services
Virtual Vault is a term used in the Armored Car and Cash Transport industry to define a service provided by armored car services for assets considered property of the bank when the bank does not have a physical vault or location in a given state or location. The fees for virtual vault services included in the accompanying consolidated statement of operations and comprehensive income are for a currency availability service provided to the Company by its bank for making funds held in a virtual vault immediately available to the Company. Neither the term nor the service is related to virtual currency or crypto assets.
Other (Income) Expense
This includes foreign currency transaction gain/loss and penalties as applicable.
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Income Tax Expense
The Company was taxed as a partnership for U.S. federal and state income tax purposes for tax years prior to 2020. There is no provision for income taxes for those years.
For periods after 2020. income taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which are recorded on the consolidated balance sheets in accordance with FASB ASC 740, Income Taxes (“ASC 740”), which established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the consolidated statements of operations and comprehensive income.
The Company accrues liabilities for uncertain tax positions that are not, more likely than not, to be sustained upon examination as of September 30, 2024, December 31, 2023 and as of December 31, 2022. Interest and penalties related to uncertain tax positions are recorded in accrued liabilities in the accompanying consolidated balance sheets. The Company had no unrecognized tax benefits as of September 30, 2024, December 31, 2023 and December 31, 2022, that if recognized, would affect its annual effective tax rate.
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Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2024 and 2023
The following table summarizes our results of operations for the periods presented:
RESULTS OF OPERATIONS
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2024 | 2023 | $ Change | 2024 | 2023 | $ Change | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Revenues | $ | 69,406 | $ | 65,652 | $ | 3,754 | $ | 221,737 | $ | 120,216 | $ | 101,521 | ||||||||||||
| Cost of revenues | 61,322 | 55,027 | 6,295 | 190,108 | 102,842 | 87.266 | ||||||||||||||||||
| Gross profit | 8,084 | 10,625 | (2,541 | ) | 31,629 | 17,374 | 14,255 | |||||||||||||||||
| Gross profit percentage | 12% | 16% | (4% | ) | 14% | 14% | – | |||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Technology and development | 376 | 132 | 244 | 904 | 402 | 502 | ||||||||||||||||||
| General and administrative | 2,689 | 1,297 | 1,392 | 7,356 | 3,345 | 4,011 | ||||||||||||||||||
| Sales and marketing | 542 | 41 | 501 | 1,424 | 240 | 1,184 | ||||||||||||||||||
| Other operating expense | 349 | 42 | 307 | 767 | 106 | 661 | ||||||||||||||||||
| Total operating expenses | 3,956 | 1,512 | 2,444 | 10,451 | 4,093 | 6,358 | ||||||||||||||||||
| Income from operations | 4,128 | 9,113 | (4,985 | ) | 21,178 | 13,281 | 7,897 | |||||||||||||||||
| Interest expense | 201 | 879 | (678 | ) | 1,698 | 1,326 | 372 | |||||||||||||||||
| Fees on virtual vault services | 451 | 328 | 123 | 1,557 | 557 | 1,000 | ||||||||||||||||||
| Other (income) expense | (3 | ) | 3 | (6 | ) | 107 | 78 | 29 | ||||||||||||||||
| Income before income taxes | 3,479 | 7,903 | (4,424 | ) | 17,816 | 11,320 | 6,496 | |||||||||||||||||
| Income tax expense | 1,224 | 1,976 | (752 | ) | 5,609 | 3,141 | 2,468 | |||||||||||||||||
| Net income | $ | 2,255 | $ | 5,927 | $ | (3,672 | ) | $ | 12,207 | $ | 8,179 | $ | 4,028 | |||||||||||
| Comprehensive income | ||||||||||||||||||||||||
| Net income | $ | 2,255 | $ | 5,927 | $ | (3,672 | ) | $ | 12,207 | $ | 8,179 | $ | 4,028 | |||||||||||
| Foreign currency translation adjustment | 2 | (15 | ) | 17 | (17 | ) | (47 | ) | 30 | |||||||||||||||
| Comprehensive income | $ | 2,257 | $ | 5,912 | $ | (3,655 | ) | $ | 12,190 | $ | 8,132 | $ | 4,058 | |||||||||||
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COMPONENTS OF RESULTS OF OPERATIONS
REVENUES
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| 2024 | 2023 | % Change | 2024 | 2023 | % Change | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Revenue by Stream | ||||||||||||||||||||||||
| Athena ATM | $ | 66,918 | $ | 61,671 | 9% | $ | 214,402 | $ | 102,088 | 110% | ||||||||||||||
| Athena Plus | 1,010 | 2,679 | (62% | ) | 3,245 | 14,264 | (77% | ) | ||||||||||||||||
| White-label | 1,270 | 1,277 | (1% | ) | 3,811 | 3,802 | 0% | |||||||||||||||||
| Ancillary and other | 208 | 25 | 732% | 279 | 62 | 350% | ||||||||||||||||||
| Total revenue | $ | 69,406 | $ | 65,652 | 6% | $ | 221,737 | $ | 120,216 | 84% | ||||||||||||||
Three and Nine Months Ended September 30, 2024 and 2023
Athena Bitcoin ATM Revenue
Athena Bitcoin ATM revenue increased $5,247,000 or 9% and $112,314,000 or 110% for the three and nine months ended September 30, 2024, respectively, when compared to the three and nine months ended September 30, 2023. Median transaction size for all crypto assets decreased from $200 to $130, or 35% and increased from $160 to $180 or 13% for the three and nine months ended September 30, 2023 and 2024, respectively. The number of transactions increased from 31,041 to 46,609 or 50% and increased from 60,364 to 124,260 or 106% for the three months and nine months ended September 30, 2023 and 2024, respectively. The increase in Athena ATM revenue was driven by the following factors:
| · | Number of ATMs increased from 1,422 as of September 30, 2023 to 2,891 as of September 30, 2024, which is an increase of 103.3%. This is the primary driver of the increase. | |
| · | The increase in ATMs was offset by a reduction quantity of bitcoin sold during these periods. Quantity of bitcoin sold during the nine months ended September 30, 2024, when compared to September 30, 2023, decreased from 2,870 to 2,775, or 3%. Quantity of bitcoin sold during the three months ended September 30, 2024, when compared to September 30, 2023, decreased from 1,664 to 850, or 49%. |
Athena Plus
Athena Plus revenue decreased $1,669,000 or 62% and $11,019,000 or 77% for the three months and nine months ended September 30, 2024, respectively when compared to three and nine months ended September 30, 2023. Median transaction size for all crypto assets decreased from $100,000 to $45,200 or 55% and from $100,000 to $48,600 or 51% for the three and nine months ended September 30, 2024 when compared to the three and nine months ended September 30, 2023, respectively. The number of transactions decreased from 27 to 11 or 59% and decreased from 98 to 39 or 60% for the three and nine months ended September 30, 2024 when compared to the three and nine months ended September 30, 2023, respectively. Athena Plus revenue is dependent on the demands of certain institutional traders, which vary period to period.
White-Label Service
White-Label Service revenue decreased $7,000 or 1% and increased $9,000 or 0% for the three and nine months ended September 30, 2024, respectively, when compared to the three and nine months ended September 30, 2023. This decrease is driven by slight changes in the servicing of white-label ATMs.
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Ancillary
Ancillary revenue is immaterial for the three and nine months ended September 30, 2024, and 2023. This revenue stream is not for recurring revenue and therefore is sporadic in nature.
Cost of Revenues and Gross Profit
Three and Nine Months Ended September 30, 2024 and 2023
Cost of revenues is comprised primarily of the expenses related to the acquisition of crypto assets sold and the costs of operating the ATMs from which the crypto assets are sold. For the three months ended September 30, 2024 and 2023, the cost related to the acquisition of crypto assets sold were $53,804,000 and $49,819,000, respectively. For the nine months ended September 30, 2024, and 2023, the expenses related to the acquisition of crypto assets sold were $168,544,000 and $93,440,000, respectively. The increase in cost related to acquisition of crypto assets sold was primarily a result of the increased sales of crypto assets. For the three months ended September 30, 2024 and 2023, the costs of operating the ATMs were $7,518,000 and $5,208,000, respectively. For the nine months ended September 30, 2024 and 2023, the costs of operating the ATMs were $21,564,000 and $9,402,000, respectively. This was primarily driven by the increasing number of Athena Bitcoin ATMs in the periods presented, consisting of 1,422 at September 30, 2023 and 2,891 at September 30, 2024.
Gross profit decreased $2,541,000 or 24% and gross profit percentage decreased from 16% to 12% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. The change was primarily due to less revenue recognized per ATM. Gross profit increased $14,255,000 or 82% and gross profit percentage remained the same at 14% for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase was primarily due to the significant increase of machines that occurred in Q2 and Q3 2023.
Operating Expenses
Three and Nine Months Ended September 30, 2024 when compared to the three months ended September 30, 2023
For the three months ended September 30, 2024, total operating expenses increased $2,444,000 or 162% when compared to the three months ended September 30, 2023.
For the nine months ended September 30, 2024, total operating expenses increased $6,358,000 or 155% when compared to the nine months ended September 30, 2023.
A breakdown of operating expenses are shown below.
OPERATING EXPENSES
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||
| Technology and development | $ | 376 | $ | 132 | 185% | $ | 904 | $ | 402 | 125% | ||||||||||||||
| General and administrative | 2,689 | 1,297 | 107% | 7,356 | 3,345 | 120% | ||||||||||||||||||
| Sales and marketing | 542 | 41 | 1,222% | 1,424 | 240 | 493% | ||||||||||||||||||
| Other operating expense | 349 | 42 | 731% | 767 | 106 | 624% | ||||||||||||||||||
| $ | 3,956 | $ | 1,512 | 162% | $ | 10,451 | $ | 4,093 | 155% | |||||||||||||||
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Technology and development expenses increased by $244,000 or 185% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. Technology and development expenses increased by $502,000 or 125% for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase was mostly due to the hiring of the Company’s Chief Information Technology Officer and the subsequent increase in security and project implementation.
General and administrative expenses increased $1,392,000 or 107% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. General and administrative expenses increased $4,011,000 or 120% for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase was mostly due to an increase in audit, professional and legal fees and increases in general expenses in connection with the additional ATMs installed during the periods.
Sales and marketing expenses increased $501,000 or 1,222% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023. Sales and marketing expenses increased $1,184,000 or 493% for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase was mostly due to an increase in branding and an increase in our formal marketing and sale infrastructure to support the expansion of the ATM Bitcoin Fleet offset by a decrease in marketing expenses in El Salvador.
Interest and Fees
Three and Nine Months Ended September 30, 2024 and 2023
INTEREST AND FEES
Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||||||||||
| (in thousands) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||
| Interest expense | $ | 201 | $ | 879 | (77% | ) | $ | 1,698 | $ | 1,326 | 28% | |||||||||||||
| Fees for virtual vault services | 451 | 328 | 38% | 1,557 | 557 | 180% | ||||||||||||||||||
Interest expense decreased $678,000 or 77% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023 and increased $372,000 or 28% for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The decrease in interest expense for the three months ended September 30, 2024 was due to a reduction of average interest-bearing debt during the period. The increase in interest expense for the nine months ended September 30, 2024 was due to an increase in overall debt and embedded interest in a purchase agreement.
Fees for virtual vault services increased $123,000 or 38% for the three months ended September 30, 2024 when compared to the three months ended September 30, 2023 and increased $1,000,000 or 180% for the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase was due mostly to the Company’s increased use of its bank currency availability service which makes funds held in a virtual vault immediately available to the Company.
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Income Tax Expense
Three and Nine Months Ended September 30, 2024 and 2023
Income tax expense decreased $752,000 or 38% and increased $2,468,000 or 79% for the three months and nine months ended September 30, 2024, respectively when compared to prior respective period. Income tax expense, as a percentage of income before taxes, was 35% and 25% for the three months ended September 30, 2024 and 2023, respectively. Income tax expense, as a percentage of income before taxes, was 31% and 28% for the nine months ended September 30, 2024 and 2023, respectively.
Income tax expense decreased $752,000 or 38%. The decrease in income tax expense is due to an decrease in U.S. income before income taxes, which decreased from $7,903,000 to $3,479,000 for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, respectively,
Income tax expense increased $2,468,000 or 79%. The increase in income tax expense is due to an increase in U.S. income before income taxes, which increased from $11,320,000 to $17,816,000 for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, respectively,
Comparison of the Years Ended December 31, 2023 and 2022
The table below sets forth, for the periods presented, certain historical financial information.
RESULTS OF OPERATIONS
| Year Ended December 31 | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| (in thousands,) | ||||||||||||||||
| Revenues | $ | 191,807 | $ | 73,686 | $ | 118,121 | 160% | |||||||||
| Cost of revenues | 162,624 | 59,643 | 102,981 | 173% | ||||||||||||
| Gross profit | 29,183 | 14,043 | 15,140 | 108% | ||||||||||||
| Gross profit percentage | 15% | 19% | ||||||||||||||
| Operating expenses: | ||||||||||||||||
| Technology and development | 978 | 776 | 202 | 26% | ||||||||||||
| General and administrative | 5,714 | 5,784 | (70 | ) | (1% | ) | ||||||||||
| Sales and marketing | 550 | 594 | (44 | ) | (7% | ) | ||||||||||
| Other operating expenses | 428 | 59 | 369 | 625% | ||||||||||||
| Total operating expenses | 7,670 | 7,213 | 457 | 6% | ||||||||||||
| Income from operations | 21,513 | 6,830 | 14,683 | 215% | ||||||||||||
| Impairment of capitalized software development | 2,383 | – | 2,383 | 100% | ||||||||||||
| Interest expense | 2,380 | 685 | 1,695 | 247% | ||||||||||||
| Fees on virtual vault services | 1,039 | 113 | 926 | 819% | ||||||||||||
| Other expense | 25 | 138 | (113 | ) | (82% | ) | ||||||||||
| Income before income taxes | 15,686 | 5,894 | 9,792 | 166% | ||||||||||||
| Income tax expense | 4,490 | 1,770 | 2,720 | 154% | ||||||||||||
| Net income | $ | 11,196 | $ | 4,124 | $ | 7,072 | 171% | |||||||||
| Comprehensive income | ||||||||||||||||
| Net income | $ | 11,196 | $ | 4,124 | $ | 7,072 | 171% | |||||||||
| Foreign currency translation adjustment, net of tax | (80 | ) | 1 | (81 | ) | (8,100% | ) | |||||||||
| Comprehensive income | $ | 11,116 | $ | 4,125 | $ | 6,991 | 169% | |||||||||
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COMPONENTS OF RESULTS OF OPERATIONS
REVENUES
| Year Ended December 31 | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Revenue by stream | ||||||||||||||||
| Athena Bitcoin ATM | $ | 171,399 | $ | 45,340 | $ | 126,059 | 278% | |||||||||
| Athena Plus | 15,267 | 16,528 | (1,261 | ) | (8% | ) | ||||||||||
| White-label Service | 5,071 | 5,011 | 60 | 1% | ||||||||||||
| Ancillary and other | 70 | 6,807 | (6,737 | ) | (99% | ) | ||||||||||
| Total Revenue | $ | 191,807 | $ | 73,686 | $ | 118,121 | 160% | |||||||||
Athena Bitcoin ATM Revenue
Athena Bitcoin ATM revenue increased $126,059,000 or 278%. Revenue increased as the result of an increase in the number of Athena Bitcoin ATMs and transactions, as well as market expansion into 15 additional states during the fiscal year ended December 31, 2023. Median transaction size for all crypto assets increased from $140 to $150, or 7% and the average markup for bitcoin increased from 14% to 22% during the years ended December 31, 2022 to December 31, 2023, respectively. The number of ATMs increased from 228 to 2,187, or 859% as of December 31, 2022 to December 31, 2023, respectively. The increase in ATMs resulted in an increase in the number of transactions from 48,215 to 100,495 or 108% for the year ended December 31, 2022 to December 31, 2023, respectively.
Athena Plus
Athena Plus revenue decreased 1,261,000 or 8%. Median transaction size for all crypto assets increased from $32,948 to $101,548 or 208% while number of sales transactions decreased from 181 to 118, or 35%. Athena Plus revenue is dependent on the demands of certain institutional traders, which vary period to period.
White-Label Service
White-Label Service revenue increased $60,000 or 1%. This increase is driven by a slight increase in the servicing fees of white-label ATMs in service in 2023 when compared to 2022.
Ancillary
Ancillary revenue decreased $6,737,000 or 99%. This decrease is primarily due to the Company recognizing revenue related to the Chivo Ecosystem development project in December 2022. The Company finished this project in 2021; however, given the contingency related to the license that was acquired from XPay, the Company was unable to recognize the revenue until the contingency was lifted. Refer to the Critical Accounting Policies and Estimates section below for more information regarding this transaction. Ancillary revenue is non-recurring revenue, as it is dependent on one-time projects to help develop the crypto ecosystem. As such, the Company anticipates that there may be significant fluctuations in ancillary revenue recognized each period.
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Cost of Revenues and Gross Profit
Cost of revenues is comprised primarily of the expenses related to the acquisition of crypto assets sold and the costs of operating the ATMs from which the crypto assets are sold. For the year ended December 31, 2023 and 2022, the costs related to the acquisition of crypto assets sold were $146,863,000 and $51,530,000, respectively. Impairment of crypto assets held for the year ended December 31, 2023 and 2022 was $440,000 and $973,000 respectively. The increase in cost related to acquisition of crypto assets sold was primarily a result of the increased transactions of crypto assets. For the year ended December 31, 2023 and 2022, the costs of operating the ATMs were $15,321,000 and $7,140,000, respectively. The increase in operating the ATMs was primarily driven by the increase in the number of ATMs installed which increased from 228 to 2,187, or 859% from December 31, 2022 to December 31, 2023.
Gross profit increased $15,140,000 or 108% and gross profit percentage decreased from 19% to 15%, primarily due to the one-time recognition of revenue of $5,642,000 in December 2022 for the finalization of the development of the Chivo Ecosystem.
Operating Expenses
Total operating expenses increased $457,000 or 6%. Breakdown of total operating expenses are shown below.
OPERATING EXPENSES
| Year Ended December 31 | ||||||||||||||||
| (in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||
| Technology and development | $ | 978 | $ | 776 | $ | 202 | 26% | |||||||||
| General and administrative | 5,714 | 5,784 | (70 | ) | (1% | ) | ||||||||||
| Sales and marketing | 550 | 594 | (44 | ) | (7% | ) | ||||||||||
| Other operating | 428 | 59 | 369 | 625% | ||||||||||||
| $ | 7,670 | $ | 7,213 | $ | 457 | 6% | ||||||||||
Technology and development expenses increased by $202,000 or 26% mostly due to an increase in overhead to support the expansion of the Athena Bitcoin ATM Fleet.
General and administrative expenses decreased $70,000 or 1%, due mostly to the Company transitioning a significant portion of the workforce to lower cost environment locations in Latin America, in particular El Salvador.
Sales and marketing expenses decreased of $44,000 or 7%, due to an increase in branding and an increase in our formal marketing and sales infrastructure to support the expansion of the ATM Bitcoin Fleet offset by a decrease in marketing and sales personnel, as we have pivoted employees to lower cost environment locations in Latin America, in particular El Salvador.
Impairment of Capitalized Software Development Costs
Impairment of capitalized software development costs increased $2,383,000 for the year ended December 31, 2023. The Company evaluated the capitalized software associated with the development of the XPay Wallet and Ruru Wallet software, which relate to a one-time project and are not part of the Company’s ordinary course of business, and found that the carrying amount of the software exceeded its recoverable amount due to factors including, but not limited to, technical obsolescence, changes in business strategy, and changes in market conditions.
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INTEREST AND FEES
| Year Ended December 31 | ||||||||||||||||
| (in thousands) | 2023 | 2022 | $ Change | % Change | ||||||||||||
| Interest expense | $ | 2,380 | $ | 685 | $ | 1,695 | 247% | |||||||||
| Fees for virtual vault services | 1,039 | 113 | 926 | 819% | ||||||||||||
Interest expense increased $1,695,000 or 247% due mostly to the Company entering into a royalty agreement in 2023 offset by a reduction of average interest-bearing debt from year ended December 31, 2022 to December 31, 2023.
Fees for virtual vault services increased $926,000 or 819% primarily due to a significant increase in the number of active Athena Bitcoin ATMs from 228 to 2,187 as of December 31, 2022 to December 31, 2023, respectively. The increase was due mostly to the Company’s increased use of its bank currency availability service which makes funds held in a virtual vault immediately available to the Company.
Income Tax Expense
Income tax expense increased $2,720,000 or 154%. The increase in income tax expense is due to an increase in U.S. income before income taxes, which increased from $5,894,000 to $15,686,000 from the years ended December 31, 2022 to December 31, 2023, respectively.
Liquidity and Capital Resources
As of September 30, 2024, we had working capital of $1,025,000 resulting from current assets of $25,565,000 less current liabilities of $24,540,000; current liabilities include the current portion of related party convertible debt of $3,000,000 and the current portion of leased liabilities of $8,721,000.
As of December 31, 2023, we had working deficit amounted to $605,000 resulting from current assets of $19,831,000 less current liabilities of $20,436,000; current liabilities include the current portion of related party note payable of $4,000,000 and current portion of leased liabilities of $7,593,000.
Our ATM business has two significant components of working capital – holdings of crypto assets and cash holdings in the machines and in transit, i.e., once it has been removed from the machines and it is the process of being counted and credited to our account with the appropriate banking institution. We must buy our holdings in cash and do not get a credit from our counterparties. On average, we hold 2 days of anticipated sales of bitcoin and at this time do not transact in Ethereum, Litecoin or BCH at our machines. We strive to keep this period short to reduce the effect of changes in crypto asset/U.S. Dollar exchange rates on our business and to minimize our working capital. Our cash logistics contractors restock or remove cash from our machines periodically, the frequency of this service determined by a host of operational considerations like historical trend of sales, current levels of cash in the machines, route considerations, public holidays, and incremental cost of each removal etc. We employ a data driven strategy based on factors we have learned over the years to reduce the amount of cash deployed and as low as possible. It currently takes anywhere from 3 to 7 days from the time the cash is picked up from the machines to be credited to our account. An increase in this period or amount impacts our ability to restock our holdings of crypto assets in a timely manner to avoid a situation where there are insufficient amounts of crypto assets to fulfill customer orders.
The Company, given how actively we manage our cash logistics, and how we prioritize and leverage cash pick up based on proprietary operating algorithms and practices, is able to finance and perform its daily operating activities and manage liquidity, while also maintaining the noted levels of cash in the ATM machines. For the nine months ending September 30, 2024, the average cash balance was $4,327 per machine in the United States. For the twelve months ended December 31, 2023, the average cash balance was $2,362 per machine in the United States. For newly installed ATMs, it may take weeks before the ATMs reach normal operating activity, resulting in a reduction of cash in these machines compared to normal operating ATMs. The Company generally has minimum cash of $2,500 in each dispenser in two-way ATM machines in order to have sufficient cash to operate them. The remaining cash is withdrawn from the machine in order to fund the Company’s operations.
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The Company leverages tools it has developed, tested and implemented, as well as analytics to monitor and balance the crypto assets it owns and controls. When the Company’s tools, analytics or professional judgement indicate that there are insufficient amounts of crypto assets owned and controlled by the Company, purchases of additional crypto assets are conducted. There had been periods of time prior to fiscal year 2023 and each less than 24-hours, where there had not been sufficient amounts of crypto assets owned and controlled by the Company to execute future customer transactions. During those times, no customer transactions were permitted. The employees of the Company used the working capital of the Company to purchase more crypto assets, during times when banking transactions are permitted, and once those crypto assets were delivered to the Company and owned and controlled by the Company, customer transactions were again permitted.
Our Athena Plus (phone sales) has a lower level of capital required since we only function on days other market participants and banks and our trades are cash settled every day. The Company does not separately hold crypto assets earmarked for ATM sales as opposed to phone sales and the Company holds approximately 2 days’ worth of bitcoin needed for transactions at its ATMs. We strive to minimize the amount of working capital deployed for better financial results.
Our financing needs are influenced by our level of business operations and generally increase with higher levels of revenue. We strive to minimize the amount of financing requested to assist with operating the business.
During the nine months ended September 30, 2024 received gross proceeds from debt of $167,000 compared to the $4,065,000 of gross proceeds received from debt during the nine months ended September 30, 2023. Also, we received $57,000 in gross proceeds from the issuances of stock during the nine months ended September 30, 2024; no proceeds were received during the nine months ended September 30, 2023 from the issuance of stock. These aforementioned proceeds were offset by (i) the repayment of debt of $4,604,000 compared to $2,661,000 that was repaid during the nine months ended September 30, 2023 and (ii) the payments in reduction of financing leases of $1,115,000 during the nine months ended September 30, 2024; no payments to reduce financing leases were made during the nine months ended September 30, 2023. In summary, during the nine months ended September 30, 2024, $5,495,000 of net payments were made for our financing activities compared to net proceeds received for our financing activities during the nine months ended September 30, 2023.
During the 12 months ended December 31, 2023 we received proceeds from debt of $4,160,000 compared to $549,000 of proceeds received from debt for the twelve months ended December 31, 2022. These proceeds were offset by repayments of debt of $3,268,000 and $1,612,000 for the twelve months ended December 31, 2023 and 2022, respectively. In summary, during the twelve months ended December 31, 2023, $892,000 of net proceeds received for our financing activities compared to net payments that were made for our financing activities during the twelve months ended December 31, 2022.
Contractual Obligations and Commitments
Related Party
Promissory Note Agreements with the Company’s Director and Shareholders
In 2017, the Company entered into several subordinated note agreements with shareholders of the Company’s common stock. The notes had a principal amount of $117,000 with maturity dates in 2021 and 2022. Interest as defined in the notes was 12% per annum. As of September 30, 2024, the outstanding principal was $0.
On August 4, 2022, the Company completed a lending transaction with Mike Komaransky, the Company’s principal shareholder and former director, whereby the Company borrowed $500,000 from Mr. Komaransky pursuant to the terms of a secured promissory note and security agreement. The promissory note had an interest rate of 6% and the repayment of the principal amount and any accrued interest was secured by certain assets of the Company with respect to which Mr. Komaransky held first priority lien and security interest. The terms of the secured promissory note and the security agreement were subsequently amended by the parties on January 17, 2023. Pursuant to the terms of the amended secured promissory note, the Company agreed to make monthly payments of $50,000 until the maturity date of the secured promissory note, which was on August 31, 2023. As of September 30, 2024, the outstanding principal was $0.
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Secured Loan from KGPLA
As of May 15, 2023, the Company entered into a certain Senior Secured Loan Agreement, as amended (the “Loan Agreement”) and Senior Secured Revolving Credit Promissory Note (the “Revolving Credit Note”) with KGPLA Holdings LLC (“KGPLA”), an entity in which Mike Komaransky, a former director and principal shareholder of the Company has a controlling interest. The Revolving Credit Note allows the Company to borrow up to $4,000,000 for the operations of its New Bitcoin ATMs, as defined in the Loan Agreement, with a maturity date of May 15, 2024. Fees for these borrowings are calculated based on a percentage of the gross daily receipts generated from these machines and are recorded as part of Cost of Revenue in the Consolidated Income Statement. As of December 31, 2023 the outstanding principal of the Revolving Credit Note was $4,000,000. In connection with the above loan transaction and issuance of Revolving Credit Note, the Company granted KGPLA a first priority lien and security interest in and to all of the Company’s assets, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien. The principal of $4,000,000 and accrued interest was fully repaid as of March 28, 2024. As of September 30, 2024, the outstanding principal was $0.
KGPLA Convertible Debt
On January 31, 2020, the Company entered into a convertible debenture agreement with KGPLA, an entity in which Mike Komaransky, a former director and principal shareholder of the Company has controlling interest. The convertible debenture provided for a principal amount of $3,000,000, with a maturity date of January 31, 2025 which was extended to January 31, 2026. Interest as defined by the agreement is 8% per annum. KGPLA, LLC has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of September 30, 2024, the outstanding principal debenture amount of $3,000,000 was presented under related party convertible debt in the Consolidated Balance Sheets.
Third-Party
Promissory Note
On August 1, 2018, the Company entered into a promissory note with LoanMe, Inc. The promissory note provided for a principal amount of $100,000, with a final maturity date of August 1, 2028, with equal monthly installment payments of $2,000. Interest as defined in the promissory note is 24% per annum. On December 11, 2023, the Company extinguished the note with a final payment of $75. As of September 30, 2024 the outstanding principal was $0.
Loan from Banco Hipotecario
In September 2021, the Company’s El Salvador subsidiary, Athena Holdings El Salvador, S.A. de C.V. (“Athena El Salvador”) entered into a loan agreement with Banco Hipotecario for the loan amount of $1,500,000. The loan has an interest rate of 7.5% and is secured by Athena El Salvador’s assets in El Salvador. The maturity date is 36 months after the disbursement of the funds. The monthly payments on the loan in the equal amounts of $49,108, begin two (2) months after the disbursement of the funds. As of September 30, 2024 and December 31, 2023, the outstanding principal was $138,000 and $546,000, respectively. The amount due in the next twelve months is $138,000.
Loan from Capital Premium Financing
In December 2022 and December 2023, the Company entered into financing agreements with Capital Premium Financing, Inc. to pay the insurance premium on its commercial liability insurance. The annual interest rate was 20.53% and 17.65% per annum in 2023 and 2022, respectively, repayable in nine monthly installments beginning February 1 of the subsequent year. As of September 30, 2024 and December 31, 2023, the outstanding principal was $12,000 and $95,000, respectively.
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Taproot Acquisition Enterprises, LLC (Lender) Equipment Financing Agreement
On December 31, 2023, the Company entered into a second Equipment Financing Agreement with the Lender for an additional purchase of Bitcoin ATM machines subject to payment of the purchase price based on the set schedule of payment dates, with the final payment due by December 31, 2024. The Agreement is structured as an extended vendor account payable. The Company made the required payments for the first three months of 2024. Title to the Bitcoin ATMs transferred to Athena upon signing of the Agreement.
On February 22, 2024, the Company entered into a third Equipment Financing Agreement with the Lender for the purchase of additional Bitcoin ATMs. Title to the Bitcoin ATMs transferred to Athena upon signing of the Agreement and required down payment which was paid on February 22, 2024. The Equipment Financing Agreement is also structured as an extended vendor account payable, requiring several equal installments, after the down payment, from March through December 31, 2024.
On September 19, 2024, the Company and the Lender, entered into the Omnibus Equipment Refinancing Agreement providing for the refinance of the Company’s outstanding payables,
On October 30, 2024, the Company entered with Lender, into an Equipment Financing Agreement to purchase certain Bitcoin ATMs listed in the Equipment Financing Agreement.
Operating Leases
The Company has entered into multiple operating leases, primarily related to the renting of space for our Bitcoin ATMs. As of September 30, 2024, the Company has a total lease liability of $21,249,000, of which $8,721,000 is due in the next twelve months.
Off Balance Sheet Arrangements
Our contract with the Government of El Salvador for the operation of the Chivo branded ATMs, specifically the Service Addendum 1 Section 11.2, which is included as Exhibit 10.27 to the registration statement which this prospectus is a part of, obligates the Company to assume the risk of loss for funds used in the operation of the Chivo branded ATMs while those funds are in transit. The Company has contracted with licensed and insured cash logistics companies to securely transport such funds, including Proteccion de Valores, S.A. de C.V. (PROVAL, Servicio Salvadoreño de Protección, S. A. de C. V.(SERSAPROSA) and Move On Security LLC. The amount of funds in transit as of September 30, 2024 and December 31, 2023 were $562,000 and $875,000, respectively.
The Company is obligated to assume the risk of loss for crypto assets that are in transit. However, crypto assets that are in transit are governed by the blockchain and are in transit for a short duration (typically less than an hour). As a result, there are no funds in transit as of any reporting date.
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Cash Flow
The following summarizes our cash flow for the nine months ended September 30, 2024 and 2023:
CASH FLOW SUMMARY
| Nine Months Ended September 30 | ||||||||||||||||
| 2024 | 2023 | $ Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net cash provided by operating activities | $ | 18,415 | $ | 10,095 | $ | 8,320 | 82% | |||||||||
| Net cash used in investing activities | (9,369 | ) | (834 | ) | (8,535 | ) | 1023% | |||||||||
| Net cash provided by (used in) financing activities | (5,495 | ) | 1,404 | (6,899 | ) | (491% | ) | |||||||||
| Effect of exchange rate changed | (17 | ) | (47 | ) | 30 | (64% | ) | |||||||||
| Net increase in cash and cash equivalents | 3,534 | 10,618 | (7,084 | ) | (67% | ) | ||||||||||
| Cash and cash equivalents, beginning of period | 18,360 | 3,873 | 14,487 | 374% | ||||||||||||
| Cash and cash equivalents, end of period | $ | 21,894 | $ | 14,491 | $ | 7,403 | 51% | |||||||||
The following summarizes our cash flow for the year ended December 31, 2023 and 2022:
| Year Ended December 31 | ||||||||||||||||
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net cash provided by operating activities | $ | 16,117 | $ | 4,490 | $ | 11,627 | 259% | |||||||||
| Net cash used in investing activities | (2,442 | ) | (4,610 | ) | 2,168 | (47% | ) | |||||||||
| Net cash provided by (used in) financing activities | 892 | (1,063 | ) | 1,955 | (184% | ) | ||||||||||
| Effect of exchange rate changed | (80 | ) | 1 | (81 | ) | (8,100% | ) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 14,487 | (1,182 | ) | 15,669 | (1,326% | ) | ||||||||||
| Cash and cash equivalents, beginning of period | 3,873 | 5,055 | (1,182 | ) | (23% | ) | ||||||||||
| Cash and cash equivalents, end of period | $ | 18,360 | $ | 3,873 | $ | 14,487 | 374% | |||||||||
Cash flow used in operating activities
Operating activities provided $18,415,000 in cash for the nine months ended September 30, 2024, compared to $10,095,000 for the nine months ended September 30, 2023, representing an increase in cash provided of $8,320,000. The changes in sources of cash from operating activities for the nine months ended September 30, 2024, comprised primarily of an increase in net income of $4,028,000, an increase in accounts payable of $3,078,000, an increase cash held for customers of $1,382,000, an increase in crypto asset payments for expenses of $3,104,000, and an increase in depreciation and amortization of $1,688,000. This was offset by uses of cash due to crypto assets held of $3,584,000 and prepaid expenses and other assets of $1,516,000.
Operating activities provided $16,117,000 in cash for the twelve months ended December 31, 2023, compared to $4,490,000 for the twelve months ended December 31, 2022, representing an increase in cash used in operating activities of $11,627,000. The changes in sources of cash from operating activities for the twelve months ended December 31, 2023, are comprised primarily of net income of $7,072,000, accounts payable and other liabilities of $1,087,000, crypto asset payments for expenses of $3,171,000, impairment of capitalized software development of $2,383,000, liability for cash held for customers of $1,712,000. The additional sources were offset by uses in cash comprised primarily of crypto assets held of $4,311,000, prepaid expenses and other assets of $798,000, accounts receivable of $1,938,000, other advances of $845,000, advances received for revenue of $3,500,000, and impairment of crypto assets held of $533,000.
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Cash flow provided by investing activities
Our investing activities used $9,369,000 in cash for the nine months ended September 30, 2024 which was comprised entirely of purchases of property and equipment. In the nine months ended September 30, 2023, investing activities used $834,000 which was comprised entirely of purchases of property and equipment to expand our fleet of ATMs.
Our investing activities used $2,442,000 in cash for the year ended December 31, 2023 for purchases of property and equipment. Our investing activities used $4,610,000 in cash for the year ended December 31, 2022 for purchases of property and equipment.
Cash flow provided by (used in) financing activities
Our financing activities used $5,495,000 in cash for the nine months ended September 30, 2024, primarily due to additional sourcing of debt and payments on financing leases compared to cash provided of $1,404,000 for the nine months ended September 30, 2023 for the net proceeds of debt.
For the year ended December 31, 2023, net cash provided by financing activities was $892,000, primarily due to additional sourcing of debt. For the year ended December 31, 2022, net cash used by financing activities was $1,063,000, primarily due to debt reduction.
Critical Accounting Policies and Estimates
Our financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates, judgments, and assumptions that affect reported amounts of assets, liabilities, revenues, and expenses. We continually evaluate the accounting policies and estimates used to prepare the financial statements. The estimates are based on historical experience and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management. Certain accounting policies that require significant management estimates and are deemed critical to our results of operations or financial position. Our critical accounting estimates are more fully discussed in Note 1 to our audited financial statements contained herein.
Revenue Recognition
The Company derives its recurring revenues primarily from three sources: (i) sale of crypto assets at Athena Bitcoin ATMs, (ii) customized investor trading services for the sale or purchase of crypto assets through our Athena Plus desk and (iii) white label operations in El Salvador. The Company also generates revenue from ancillary items, such as sale of intellectual property and maintenance of software. The Company adopted FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019, using the modified retrospective method. Under ASC 606 the Company recognizes revenue at the point of sale or over time of the service period for these products or services to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company determines revenue recognition through the following five steps:
| · | Identification of the contract, or contracts, with a customer. | |
| · | Identification of the performance obligations in the contract. | |
| · | Determination of the transaction price. | |
| · | Allocation of the transaction price to the performance obligations in the contract. | |
| · | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied.
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Judgment is required in determining whether we are the principal or the agent in transactions between customers. We evaluate the presentation of revenue on a gross or net basis based primarily on inventory risk (are we at risk for potentially fluctuations of the crypto asset price) and whether we control the crypto asset provided before it is transferred to the customer or whether we act as an agent by arranging for others to provide the crypto asset to the customer.
The Company enters into contracts that may include multiple performance obligations. The Company identifies the promises in the contract and assigns them to their appropriate performance obligation. These performance obligations may be part of a different revenue source and are listed separately below.
Athena Bitcoin ATM
The Company requires all users of the Athena Bitcoin ATM to agree to ATM Terms of Service. The ATM Terms of Service stipulate the terms and conditions of the transaction. The user, by inserting Fiat Currency and confirming that they agree to the transaction, is agreeing to the contract that governs the transaction. This contract meets all of the criteria to be a revenue contract under ASC 606.
The Company has a single performance obligation to provide a specific quantity of a crypto asset to the customer’s crypto wallet. We utilize a mark-up for crypto assets sold to the customer. Athena Bitcoin ATMs permit customers to purchase as little as one US dollar of Bitcoin. The Company considers itself the principal in this arrangement, as it controls the crypto asset prior to delivering, incurs inventory risk due to potential fluctuations in the market price of the crypto asset and has discretion in establishing the price of the crypto asset sold in the Athena Bitcoin ATM. Therefore, it records the gross cash received from the customer as the transaction price for the performance obligation.
Revenue is recognized at the point in time when the crypto asset is delivered to the customer’s crypto wallet. Delivery to the customer’s crypto wallet is governed by the crypto asset’s blockchain and typically less than an hour.
Athena Plus
The Company requires all users of Athena Plus to agree to Athena Plus Terms of Service. The Athena Plus Terms of Service stipulate the terms and conditions of the transaction. The user, by wiring fiat currencies to the Company’s bank account, is agreeing to the contract that governs the transaction. This contract meets all of the criteria under ASC 606.
The Company has a single performance obligation to provide a specific quantity of a crypto asset to the customer’s crypto wallet. We utilize a mark-up for crypto assets sold to the customer. The minimum transaction is $10 (or equivalent value of local currency). The Company considers itself the principal in this arrangement, as it controls the crypto asset prior to delivering, incurs inventory risk due to potential fluctuations in the market price of the crypto asset and has discretion in establishing the price of the crypto asset sold. Therefore, it records the gross cash received from the customer as the transaction price for the performance obligation. The only exception for this is stable coins, which are considered financial assets. As such, the Company, in accordance with FASB ASC 860-20, Sale of Financial Assets, will recognize revenue net (markup) for any sale of stable coins.
Revenue is recognized at the point in time when the crypto asset is delivered to the customer’s crypto wallet. Delivery to the customer’s crypto wallet is governed by the crypto asset’s blockchain.
White-label Service
The Company entered into multiple contracts that govern the white-label service with the El Salvadoran government for ATMs located in El Salvador and in the United States. These contracts detail the obligations and rights of both parties, including pricing and meet all of the criteria under ASC 606. The contracts permit the customer to terminate the contract at any point or to adjust the number of ATMs that are in use without a substantive penalty. This results in each ATM and each service month for the ATM being considered a separate revenue contract per ASC 606.
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The Company makes multiple promises to the customer. This includes installation as well as multiple promises for operating the ATMs on behalf of the customer. Installation is a separate performance obligation. This is due to the customer benefitting from the installation, the customer’s ability to utilize a third-party to perform the installation if desired, no significant modification or customization is part of the installation, no significant integration of installation with operating the ATMs and installation does not affect the operating of the ATMs performance obligation (discussed below). This results in installation services being capable of being distinct and distinct in the context of the contract.
The Company is responsible under the White Label Service for operating the ATMs on behalf of the customer over the month service term. The promises that are in the contract may vary each day, for instance performing cash logistics services, testing or repairing the machines. However, these services are highly integrated to provide a combined output (operating ATMs for the customer). These are not services that the Company offers separately and by providing them together, it ensures a cohesive and effective approach to operating the ATMs for the customer. This integrated approach is critical to the value that the Company is offering the customer. As such, given the interrelated nature of the service, this results in a single performance obligation.
This single performance obligation meets the definition of continuous service obligation due to the Company continuously managing operations of their ATMs. There is no defined number of services that are provided each month. The Company is required to provide the same service each month to operate the ATMs, pricing resets each month and customer does not make separate purchase decisions. Each fulfilment activity may have separate pricing but the approval for these services is considered perfunctory, as these activities are all necessary to ensure that the ATMs operate in accordance with the terms of the service agreement.
The Company evaluated if this meets the definition of a series. Each increment of the promised service to operate the machines (i.e., each day) is distinct in accordance with ASC 606. This is because the customer can benefit from each increment of service on its own (it is capable of being distinct) and each increment of service is separately identifiable because no day of service significantly modifies or customizes another, and no day of service significantly affects either the entity’s ability to fulfill another day of service or the benefit to the customer of another day of service. Therefore, the days are substantially the same and have the same pattern of transfer. Therefore, this meets the criteria to be considered part of a series.
One of the promises included in operating the ATM performance obligation is providing Company owned ATMs to the customer. The Company elected the expedient in FASB ASC 842, Leases (“ASC 842”), which permits combining the lease and non-lease components together if the lease component has the same timing and pattern of transfer as the non-lease component and the lease component is an operating lease. Both of these conditions are met. Given that that the predominant obligation is the non-lease component (servicing the ATM), the Company, in accordance with ASC 842, will account for the performance obligation under the terms of ASC 606.
The Company generally charges a fixed fee for installation and a fixed fee each month for operating the ATMs. The fixed fees collected are allocated to the performance obligations based on an adjusted market assessment approach.
The Company charges the customer for services necessary to operate the ATMs, including repairs and cash logistics. The fees are included in the contract. The fees meet the definition of variable consideration, as it is dependent on the specific service performed, which is not known before each service term. The Company applies the variable consideration allocation exception, as noted in ASC 606-10-32-39(b). This is met due to the variable payment being specific to the Company transferring a specific service and the allocation is consistent with the allocation objective in ASC 606. As such, the Company recognizes the variable transaction fee when they perform the specific service to which it relates. The additional services and reimbursement of costs do not meet the definition of a material right, as this is not considered an option to acquire additional good or service but part of the existing contract. These services are considered perfunctory, as they are necessary for the Company to fulfill its performance obligation to operate the machines on behalf of the customer.
The Company is considered the principal, as it controls any third-party good or service before it is transferred to the customer.
For operating the ATM, revenue is recognized straight line over the requisite service period, which is one month. For installation, revenue is recognized at the point in time when installation is complete. The variable transaction fees are recognized in the month in which the Company has earned the fee.
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Development of Chivo Ecosystem and Support
In 2021, the Company entered into a series of contracts to develop the Chivo Ecosystem for El Salvador. The Chivo Ecosystem is comprised of the Bitcoin Chivo Wallet and the Chivo Website. In order to develop the Chivo Ecosystem, the Company provided a license to intellectual property. The license is nonexclusive, non-sublicensable (except to representatives of the El Salvador government), royalty-free, fully paid-up, irrevocable, perpetual and a worldwide right. There are no exclusivity terms and no commitments. The license to the intellectual property was subject to completion of the asset acquisition of XPay. As of December 31, 2021, the Company had not completed the asset acquisition. This meets the definition of a contingency and results in the Company not meeting the criterion in ASC 606 as the Company cannot commit to performing their obligation. The other elements of a revenue contract, including identification of their rights to the services to be transferred, payment terms, commercial substance and collecting the consideration are all met. Due to the contingency, this results in the contracts not being a revenue contract under ASC 606 until the contingency is lifted. All consideration received until the contingency is lifted is a liability. The performance obligations for the contract were completed in 2021 and the Company received all consideration by December 31, 2021. This consideration received was accounted for as deferred revenue as of December 31, 2021.
The contingency was lifted in 2022 with the acquisition of the rights to utilize the license.
XPay Asset Acquisition
The Company entered into a non-binding Letter of Intent in 2021 with Arley Lozano, a principal beneficial owner of XPay for the purchase and sale of certain assets of XPay; primarily intellectual property assets, including the XPay Wallet (the precursor to the Chivo Wallet) and XPay POS software. This was evaluated under FASB ASC 805, Business Combinations, and determined to meet the definition of an asset acquisition, if finalized. This is due to the fact that there was no substantive process being acquired. No workforce was acquired and substantially all of the assets acquired were acquiring the intellectual property specific to the XPay Wallet. We made advances of $780,000 in 2021 and an additional $815,000 in 2022, resulting in total advances paid of $1,595,000.
The Company terminated the non-binding letter of intent in December 2022. As part of the termination, the Company agreed to obtain the rights to utilize the software license in exchange for the advances previously made. The cost of the software license was capitalized as software development on the consolidated balance sheet in December 2022.
As noted above, given technical obsolescence, changes in business strategy, and changes in market conditions, the capitalized costs related to the XPay Wallet and XPay POS Software were impaired in December 2023.
Expenses Paid in Crypto Assets
The Company enters into agreements with certain vendors and service providers that provide us with the option to settle their invoices in crypto assets. The amount due is fixed and is denominated in USD. There are no payment terms that include conversion options, variable settlement features, or alternative settlement provisions contingent upon future events or market price fluctuations that could potentially give rise to embedded derivatives.
The Company considers the guidance in FASB ASC 350, FASB ASC 606, FASB ASC 610, and FASB ASC 845 when it evaluates the derecognition of its crypto assets paid to vendors in lieu of cash payments. In these transactions, we have been invoiced by a vendor and given the option to pay in USD or crypto assets, typically Bitcoin. The amount of Bitcoin is determined by the market wide and easily determined price in accordance with the guidance of FASB ASC 820, Fair Value Measurement. The Company records as an expense the USD value of the invoice and then considers the above references to determine the proper way to derecognize the intangible longlived asset used as payment.
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We consider the scoping exceptions for each of those topics and conclude that that the scope of 610-20 most closely matched the facts of the transactions. ASC 610-20-15-2 states “nonfinancial assets within the scope of this Subtopic include intangible assets,” which is how the company treats crypto assets.
We evaluated two possibilities to exclude these transactions from the scope FASB ASC 845, Nonmonetary Transactions. The relevant exceptions to the scope of that Topic are as follows:
1. The transfer of goods or services in a contract with a customer within the scope of ASC 606 in exchange for noncash consideration (ASC 845-10-15-4(j))
2. The transfer of a nonfinancial asset within the scope of ASC 610-20 in exchange for noncash consideration (ASC 845-10-15- 4(k))
For these transactions, our usage of the crypto asset is as a payment instrument to a vendor, therefore our interpretation of (1) above is for ASC 606 not to apply. We interpret (2) above to apply when the Company pays a vendor (who is not a customer) with a crypto asset (nonfinancial asset) in lieu of paying that same vendor with Fiat Currency (USD). Therefore, we account for the derecognition of the crypto assets, in these transactions, under the guidance of ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets. This is the same guidance as in ASC 350-10-40-1, Transfer or Sale of Intangible Assets.
ASC 610-20-15-2 explicitly states the scope to include intangible assets. We treat crypto assets as intangible assets. We then apply the general principle of ASC 610-32-2 for recognizing the gain or loss for the difference between the amount of goods or services we receive (fair market value, per ASC 820 Level 2) and the cost of acquiring the crypto asset.
We record invoices from vendors in the appropriate expense category, in the correct time period in which services were provided, in USD and for vendors who elect to be paid in crypto assets, we transfer the crypto assets at market value at the time of transfer in line with ASC 820, Fair Value Measurement. We then recognize as a gain or loss, the difference between the current carrying value of the crypto asset, less impairment and its value at the time of transfer to cost of revenues in the consolidated statements of operations and comprehensive income.
Income Taxes
We utilize the asset and liability method for computing our income tax provision. Deferred tax assets and liabilities reflect the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities as well as operating loss, capital loss, and tax credit carryforwards, using enacted tax rates. Management makes estimates, assumptions, and judgments to determine our provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we establish a valuation allowance.
We recognize the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The Company recognizes interest and penalties related to unrecognized tax benefits are included in income tax expense in the consolidated statement of operations and comprehensive income.
For U.S. federal tax purposes, crypto asset transactions are treated on the same tax principles as property transactions. We recognize a gain or loss when crypto assets are exchanged for other property, in the amount of the difference between the fair market value of the property received and the tax basis of the exchanged crypto assets. Receipts of crypto assets in exchange for goods or services are included in taxable income at the fair market value on the date of receipt.
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The Business
Overview
Athena is focused on connecting the world’s cash to the new global digital financial system. We believe that providing the world with access to crypto assets will help transform the international financial order by providing the unbanked and billions of others in the world, including small businesses, with a connection to a new global digital financial system that is more accessible, efficient and transparent than the legacy financial system.
We believe that it is critical that in order for this ecosystem to be adopted by the world, that there must be operators that are receptive to the needs of the unbanked, the underbanked and small businesses. While much of the worldwide focus is on investors of crypto assets, we believe in the functionality that crypto assets can provide. The Company is focused primarily on the cash buyer of crypto assets who not only want bitcoin or other crypto assets quickly for common expenditures but also those who want crypto assets transferred to their private wallet and not in the hands of a third-party. We serve these customers with the highest level of customer care through a broad product selection, trained customer service staff, multi-lingual support, and convenient ATM locations located in the United States, El Salvador, Argentina and Colombia.
We started with our first ATM in St. Louis, Missouri in 2015 and our first ATM in South America in 2018. Now, we currently have a total of 2,891 ATMs in five countries and operate 249 ATMs on behalf of the Government of El Salvador in order to achieve our Company’s objectives to develop the new digital financial ecosystem. From January 1, 2022 through September 30, 2024, we have generated $487,230,000 in revenue, the majority of which has come from Bitcoin ATM transactions. During this same time, the price of bitcoin has increased from approximately $46,300 to $63,300 from January 1, 2022 to September 30, 2024. This increase has not been linear, bitcoin hit $73,084 as a high on March 13, 2024 to a low of $15,600 on November 21, 2022. Given the infancy of the new digital financial system, we expect that there will continue to be variability in our results and the price of crypto assets. However, we are focused on the long-term and believe that our results will continue to increase and improve as the ecosystem continues to develop.
Our primary product offerings are discussed more below.
Background and Corporate History
The Company was incorporated in the state of Nevada in 1991 under the name “GamePlan, Inc.” for the sole purpose of merging with Sunbeam Solar, Inc., a Utah corporation, which merger occurred as of December 31, 1991 with GamePlan, Inc. as a sole surviving entity. The Company was involved in various businesses, including, gaming and other consulting services, prior to becoming a company seeking acquisitions (a “shell company” as defined in Rule 405 of the Securities Act). The Company was a reporting issuer under the Exchange Act from 1999 until 2015 when it filed Form 15 pursuant to Rule 12g-4(a)(1) with the Commission.
On March 28, 2014, the Company entered into an Agreement and Plan of Merger (the “Plan”) with VPartments; VPartments Acquisition Corp., a Georgia corporation that was formed as a wholly-owned subsidiary of the Company (the “Merger Subsidiary”); and Mark D. Anderson, Sr., who was the beneficial owner of approximately 60.1 percent of the issued and outstanding shares of common stock of VPartments. Under the terms of the Plan, the parties agreed that at the closing, the Merger Subsidiary would merge with and into VPartments, with each 7.52034545757 then-outstanding shares of VPartments common stock to be converted into the right to receive one share of the Company’s common stock. The Company issued a total of 150,525,000 “restricted” shares of its common stock to the stockholders of VPartments Inc., causing such stockholders to become the collective owners of approximately 90.8 percent of the Company’s issued and outstanding shares of common stock. In connection with the change of control pursuant to the Plan, the Company’s then current officers and directors resigned, and the officers and directors were appointed. The Company (GamePlan, Inc.) had no operations and was seeking acquisitions from April, 2014 until January 30, 2020. The Company (GamePlan, Inc.) did not enter into any debt obligations during that period.
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In July, 2018, Magellan Capital Partners, Inc., a Wyoming corporation, became a majority shareholder of the Company after the purchase of 90,421,378 shares of common stock (approximately 55% of the Company’s outstanding shares of common stock) in a private transaction with a majority shareholder, Mark D. Anderson. Following the acquisition of control, Dempsey Mork, a beneficial owner of Magellan Capital Partners, Inc., was appointed a sole officer and director of the Company, and subsequently elected as its sole director at a November, 2018 shareholders’ meeting. On December 6, 2018, Mr. Mork entered into an agreement with Robert Berry, a former officer and director, to cancel all debts due to Mr. Berry from the Company in consideration for the issuance of the total of 90,421,000 shares of common stock of the Company to Mr. Berry and another shareholder.
On January 14, 2020, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”), by and among the Company, Athena Bitcoin, Inc., a Delaware corporation (“Athena Bitcoin”) incorporated in 2015, and certain shareholders of Athena Bitcoin. The Agreement provides for the reorganization of Athena Bitcoin, with and into the Company, resulting in Athena Bitcoin becoming a wholly-owned subsidiary of the Company (the “Share Exchange”). The Company had a total of 486,171,020 shares outstanding prior to the Share Exchange. The Agreement was for the exchange of 100% shares of the outstanding common stock of Athena Bitcoin, for 3,593,644,680 shares of the Company’s common stock (an exchange rate of 1,244.69 shares of common stock of the Company for each share of Athena Bitcoin common stock). The exchange rate was determined by the Board of Directors of Athena Bitcoin based on the arbitrary valuation of Athena Bitcoin by its Board of Directors and negotiations with the principals of the Company No independent valuation was obtained. The authorized capital stock of Athena Bitcoin immediately preceding the closing of the Share Exchange consisted of (i) 3,000,000 shares of the Athena Bitcoin’s common stock, par value $0.001 per share, authorized, of which: 2,887,175 shares were issued and outstanding immediately prior to the Share Exchange, which included the following conversion events in connection with the Share Exchange: (i) 1,328,381 shares resulting from the conversion of certain Simple Agreements for Future Tokens (“SAFT”) issued by Athena Bitcoin in 2018 pursuant to the SAFT provisions providing for the conversion into Athena Bitcoin equity under certain conditions were exchanged for 1,653,425,404 shares of the Company’s common stock at a conversion price of $4.09 (see also Note 1 to the Company’s audited financial statements for the fiscal years ended December 2021 and 2022); (ii) 93,106 shares resulting from the exercise of certain outstanding warrants at an average exercise price of $2.00 per share, issued by Athena Bitcoin were exchanged for 115,888,490 shares of the Company’s common stock (see also Note 1 to the Company’s audited financial statements for the fiscal years ended December 2021 and 2022); (iii) 126,646 shares resulting from the exercise of stock options issued by Athena Bitcoin were exchanged for 157,635,309 shares of the Company’s common stock (see also Note 1 to the Company’s audited financial statements for the fiscal years ended December 31, 2021 and 2022); and (iv) 336,692 shares resulting from the conversion of the Swingbridge Conversion and Release Agreement were exchanged for 419,078,082 shares of the Company’s common stock (see also Note 1 to the Company’s audited financial statements for the fiscal years ended December 31, 2021 and 2022). The closing of the Share Exchange transaction occurred as of January 30, 2020. Following the closing date of the transaction, there were 4,079,815,704 shares of the Company’s common stock outstanding. The Company had 5,000,000,000 shares of common stock authorized as of the closing date of the Share Exchange transaction. Subsequently, in May, 2020, following the Company’s Convertible Debenture financing (see Recent Financings below), the Company filed its amended and restated articles of incorporation authorizing a total of 4,409,605,000 shares of common stock. In January 2023, the Company filed second amended and restated articles of incorporation authorizing 10,000,000,000 shares of common stock and 5,000,000 shares of preferred stock, at $0.001 par value per share.
The Company approved the name change from “GamePlan, Inc.” to “Athena Bitcoin Global” on March 10, 2021 by the unanimous consent of its Board of Directors and a majority consent of its shareholders. The Company filed an amendment to its Articles of Incorporation with the Secretary of State of the state of Nevada on April 6, 2021, with the effective date of April 15, 2021. The Company’s name change, and trading symbol change to “ABIT” on the OTC Pink Market were declared effective by FINRA on June 9, 2021. The Company’s Board of Directors and its shareholders approved a 10-for-1 reverse stock split as of October 15, 2021 the effects of which have been retroactively reflected herein.
The Company, Athena Bitcoin Global, is a Nevada corporation which owns our 100% of our operating subsidiary, Athena Bitcoin, Inc., a Delaware corporation. Our domestic business operations are conducted by Athena Bitcoin, Inc. We also have operating subsidiaries in the specific countries where we operate, or in the case of Mexico, where we previously operated until 2019. Our wholly-owned subsidiaries located outside of the United States are: Athena Bitcoin S. de R.L. de C.V., incorporated in Mexico; Athena Holdings Colombia SAS, incorporated in Colombia; Athena Holding Company S.R.L, incorporated in Argentina; Athena Holdings of PR LLC, incorporated in Puerto Rico; and Athena Holdings El Salvador, S.A. de C.V., incorporated in El Salvador.
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| (1) | Athena Bitcoin, Inc. owns 99% of Athena Holdings El Salvador S.A. de C.V. and Eric Gravengaard, our former Chief Executive Officer and Chief Financial Officer, holds 1% on behalf of the Company. |
| (2) | Athena Bitcoin, Inc. beneficially owns and controls Athena Holdings Colombia SAS which is nominally owned by Eric Gravengaard 95% and Matias Goldenhörn 5% (our current Chief Executive Officer. |
| (3) | Athena Bitcoin, Inc. beneficially owns and controls Athena Holding Company SRL which is nominally owned by Eric Gravengaard 45%, Gilbert Valentine 45%, and Matias Goldenhörn 10%. |
| (4) | Athena Bitcoin, Inc. owns 2,999 Shares of Athena Bitcoin SRL de C.V. and Matias Goldenhörn owns 1 Share on behalf of the Company. |
| (5) | Athena Bitcoin, Inc. is the only member of Athena Holdings of PR, LLC. |
| (6) | Athena Bitcoin, Inc. owns 100% of Athena Business Holdings Panama S.A. |
Our corporate office is located at 1 SE 3rd Avenue Suite 2740, Miami, Florida 33131, and our telephone number is 312-690-4466. Our website is www.athenabitcoin.com. The information on, or that can be accessed through, our website is not part of this prospectus and is not incorporated by reference herein.
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Private Financings of Athena Bitcoin Global
On June 22, 2021, the Company commenced a private offering of up to $5,000,000 of 6% Convertible Debentures to accredited investors only. The maturity date on the 6% Convertible Debentures is two years after the date of issuance. The investor has an option to convert the principal amount of the Debenture into shares of common stock of the Company at a conversion price equal to the lesser of (i) $0.10 or (ii) 25% less than the twenty trading day (20-trading day) volume weighted average price (“VWAP”) of the common stock-based on the closing prices per share reported by the OTC Pink Market operated by the OTC Markets Group, Inc., for said twenty-day trading period, commencing ten-trading days prior to the date of election to convert the Debenture and ending ten-trading days after such election is made and the notice of conversion has been submitted to the Company. The investor is required to convert the Debenture if the Company’s common stock is admitted or listed for trading on a national stock exchange or if certain corporate transactions occur, such as merger, sale or change of control of the Company. The accrued interest on the 6% Convertible Debentures is paid quarterly and is not subject to conversion to common stock. The holders of the Debentures are provided with the registration rights to register the shares of common stock the Debentures are convertible into, in a registration statement to be filed by the Company on Form S-1 with the Commission. The Company sold a total of $4,985,000 of the 6% Convertible Debentures to 75 accredited investors. The proceeds of the private placement are to be used for working capital and operations of the Company. The Company closed its private placement as of September 30, 2021. As of December 31, 2023, none of the 6% Convertible Debentures were issued and outstanding. A total of $3,465,000 of the principal amount of 6% Convertible Debentures was converted to common stock of the Company at a price of $0.10 per share, and $1,520,000 of the principal amount of the 6% Convertible Debenture was repaid by the Company.
On January 31, 2020 immediately following the closing of the Share Exchange Agreement transaction, the Company closed a private placement of its 8% Convertible Debentures in the total amount of $3,125,000 (the “8% Convertible Debentures”). The closing of the private placement was subject to the closing of the Share Exchange transaction by the Company. There were two purchasers of the 8% Convertible Debentures: KGPLA, LLC, an entity in which a director of the Company and the Company’s beneficial owner of 37% has ownership interest ($3,000,000 principal amount of 8% Convertible Debenture) and Swingbridge Crypto III, LLC ($125,000 principal amount of 8% Convertible Debenture), an affiliate and former noteholder of the Company – see Note 11 to the Financial Statements. The 8% Convertible Debentures have a maturity date of January 31, 2025 and bear interest at 8% per annum. The purchasers have an option to convert the outstanding principal and accrued interest amount of their respective 8% Convertible Debentures into shares of common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. Swingbridge Crypto III, LLC. converted its $125,000 Debenture into 10,416,666 shares of the Company’s common stock in December, 2021. In connection with the 8% Convertible Debentures private placement, the purchasers acquired certain registration and voting rights (see also Description of Capital Stock.) The 8% Convertible Debenture held by KGPLA, LLC was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company (the “Amended and Restated Secured Convertible Debenture”), on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of the date of this prospectus, the outstanding principal amount of the Amended and Restated Secured Convertible Debenture is $3,000,000. The repayment of the Amended and Restated Secured Convertible Debenture is secured by all the assets of the Company, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien pursuant to that certain Security Agreement dated as of the date thereof by the Company, KGPLA, LLC. and Athena Bitcoin, Inc. and Athena Holdings El Salvador SA de C.V., the Company’s subsidiaries as guarantors.
Debt Obligations of Athena Bitcoin, Inc. and the Company
Notes
In 2017, Athena Bitcoin, Inc. entered into several subordinated note agreements with shareholders of its common stock. The notes had a principal amount of $117,000 with maturity dates in 2021 and 2022 at an interest rate of 12% per annum. As of September 30, 2024, and December 31, 2023, the outstanding principal was $0.
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On May 30, 2017, the Company entered into a senior note agreement with Consolidated Trading Futures, LLC (“CTF”). The note provided for a principal amount of $1,490,000 of the loan secured against the Company’s cash in machines and held by service providers with a maturity date of May 31, 2022. The maturity date was subsequently extended to May 31, 2023 pursuant to the Loan Restructuring Agreement by and between the Company and CTF, dated as of June 9, 2022 (the “Restructuring Agreement”). Under the terms of the Loan Restructuring Agreement, the Company agreed to make a one-time payment in the amount of $200,000 and weekly payments in the amount of $25,000 towards the reduction of the principal amount of the loan. Interest as defined in the note was 15% per annum. As of December 31, 2022, the outstanding principal was $565,000. In May, 2023 pursuant to the Loan Transaction Documents, a term loan note was issued for the remaining amount of the above promissory note in the principal amount of $65,000 and including any unpaid interest. The term loan note, including the principal balance and accrued interest due, was fully repaid as of May 19, 2023.
On August 1, 2018, Athena Bitcoin, Inc. entered into a promissory note with LoanMe, Inc. The promissory note provided for a principal amount of $100,000, with a final maturity date of August 1, 2028, with equal monthly installment payments of $2,205. The promissory note had 24% interest per annum. As of September 30, 2024 and December 31, 2023, the outstanding principal was $0.
Loan from Banco Hipotecario
In September 2021, the Company’s El Salvador subsidiary, Athena Holdings El Salvador, S.A. de C.V. (“Athena El Salvador”) entered into a loan agreement with Banco Hipotecario for the loan amount of $1,500,000. The loan has an interest rate of 7.5% and is secured by Athena El Salvador’s assets in El Salvador. The maturity date is 36 months after the disbursement of the funds. The monthly payments on the loan in the equal amounts of $49,108, begin two (2) months after the disbursement of the funds. As of September 30, 2024 and December 31, 2023, the outstanding principal was $138,000 and $546,000, respectively. The amount due in the next twelve months is $138,000. The loan proceeds were used to expand its fleet of Bitcoin ATMs and for other general corporate purposes. .
Borrowing Agreements with the Company’s Former-Director and Shareholder
On January 31, 2020, the Company entered into a convertible debenture agreement with KGPLA LLC, an entity in which Mike Komaransky, a former director and principal shareholder of the Company has controlling interest. The convertible debenture provided for a principal amount of $3,000,000, with a maturity date of January 31, 2025. Interest as defined by the agreement is 8% per annum. KGPLA, LLC has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date (see below). As of September 30, 2024 and December 31, 2023, the outstanding principal amount of the debenture was $3,000,000.
The Company (together with its subsidiaries, Athena Bitcoin, Inc., a Delaware corporation and Athena Holdings El Salvador S.A.de C.V., an El Salvador company) entered into a secured loan transaction and related transactions pursuant to the terms of that certain Senior Secured Loan Agreement, as amended, entered into by and between the Company and KGPLA Holdings LLC, a Delaware limited liability company, beneficially owned and controlled by the Company’s former director and 37% shareholder (the “Lender”) together with other agreements and documents entered into in connection with the secured loan transaction (collectively, the “Loan Transaction Documents”), effective as of the Closing Date, as herein defined below. The material terms of the Loan Transaction Documents include: (i) the Lender making a payment to the Company to pay in full the Consolidated Futures Trading LLC loan pursuant to the term loan note in the amount of $65,000; (ii) the Lender, at the request of the Company, making revolving credit loans in an aggregate principal amount not to exceed $4,000,000, or as otherwise adjusted by Lender pursuant to that certain secured loan agreement, evidenced by a secured promissory note, the proceeds of which must be used solely for the purchase of bitcoin or other digital currency for the Company’s Bitcoin ATM machines pursuant to the revolving credit note in the principal sum of $4,000,000 (the “Senior Secured Revolving Credit Promissory Note”); and (iii) the Company granting the Lender, as collateral security for payment and performance of its obligations under the secured loan agreement, a first priority lien and security interest in and to all of the Company’s assets, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien pursuant to that certain Security Agreement dated as of the date thereof (the “Security Agreement”). In connection with the execution of the Security Agreement, the Company provided the Lender with special power of attorney exercisable upon the occurrence and continuance of the Event of Default, as defined in the Security Agreement. Additionally, the Company’s subsidiaries executed unconditional guaranties of the performance of the Company’s obligations under the Loan Transaction Documents. In connection with the secured loan transaction and as a condition to loaning additional funds to the Company by the Lender under the Loan Transaction Documents, the Company amended and restated the 8% convertible debenture in the principal amount of $3,000,000 issued to the Lender in January, 2020 (the “Amended Convertible Debenture”), such that it become a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Loan Transaction Documents. The closing of the secured loan transaction pursuant to the Loan Transaction Documents took place as of May 19, 2023 (the “Closing Date”).
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The Company repaid the principal amount of $4,000,000 (together with any fees) on the Senior Secured Revolving Credit Promissory Note as of March 28, 2024. The Company’s obligations under the Security Agreement and the Senior Secured Loan Agreement with respect to the Amended Convertible Debenture remain unchanged.
On August 4, 2022, the Company completed a lending transaction with Mike Komaransky, the Company’s principal shareholder and former director, whereby the Company borrowed $500,000 from Mr. Komaransky pursuant to the terms of a secured promissory note and security agreement. The promissory note had an interest rate of 6% and the repayment of the principal amount and any accrued interest was secured by certain assets of the Company with respect to which Mr. Komaransky held first priority lien and security interest. The terms of the secured promissory note and the security agreement were subsequently amended by the parties on January 17, 2023. Pursuant to the terms of the amended secured promissory note, the Company agreed to make monthly payments of $50,000 until the maturity date of the secured promissory note, which was on August 31, 2023. As of September 30, 2024 and December 31, 2023, the outstanding principal was, $0. The note was fully repaid, including any accrued interest as of August 31, 2023.
Loan from Capital Premium Financing
In December 2022 and December 2023, the Company entered into financing agreements with Capital Premium Financing, Inc. to pay the insurance premium on its commercial liability insurance. The annual interest rate was 20.53% and 17.65% per annum in 2023 and 2022, respectively, repayable in nine monthly installments beginning February 1 of the subsequent year. As of September 30, 2024 and December 31, 2023, the outstanding principal was $12,000 and $95,000, respectively.
Swingbridge Crypto LLC Loans
On October 22, 2018, Athena Bitcoin, Inc. entered into a loan agreement and a promissory note with Swingbridge Crypto I, LLC. The promissory note provided for an aggregate of $500,000 in principal with a maturity date of May 30, 2019. Interest as defined in the promissory note was simple interest equal to 8% per annum. As of December 31, 2019, the outstanding principal was $500,000. The principal amount and accrued interest on the note were converted into 153,817 shares of common stock of Athena Bitcoin, Inc. at a price of $4.09 per share. The conversion price was determined by the negotiation of the parties with an implied valuation of Athena Bitcoin, Inc. of not less than $5 million, pursuant to the terms of the loan agreement. Such shares of Athena Bitcoin, Inc. were then exchanged in the Share Exchange transaction (see also “Background and Corporate History”).
On May 21, 2019, the Company entered into a loan agreement and a promissory note with Swingbridge Crypto II, LLC. The promissory note provided for an aggregate of $300,000 in principal with a maturity date of August 21, 2019. Interest as defined in the promissory note was simple interest equal to 30% per annum. As of December 31, 2019, the outstanding principal was $300,000. The principal amount and accrued interest on the note were converted into 40,389 shares of common stock of Athena Bitcoin, Inc. at a price of $9.24 per share. The conversion price was determined by the negotiation of the parties with an implied valuation of Athena Bitcoin, Inc. of not less than $5 million, pursuant to the terms of the loan agreement. Such shares of Athena Bitcoin, Inc. were then exchanged in the Share Exchange transaction (see also “Background and Corporate History”).
On July 26, 2019, the Company entered into a loan agreement and a promissory note with Swingbridge Crypto III, LLC. The promissory note provided for an aggregate of $1,000,000 in principal with a maturity date of July 26, 2020. Interest as defined in the promissory note was simple interest equal to 40% per annum. As of December 31, 2019, the outstanding principal was $1,000,000. The principal amount and accrued interest on the note were converted into 142,486 shares of common stock of Athena Bitcoin, Inc. at a price of $8.32 per share. The conversion price was determined by the negotiation of the parties with an implied valuation of Athena Bitcoin, Inc. of not less than $5 million, pursuant to the terms of the loan agreement. Such shares of Athena Bitcoin, Inc. were then exchanged in the Share Exchange transaction see also “Background and Corporate History”).
In connection with the Share Exchange Agreement transaction of the Company on January 30, 2020, and pursuant to the Swingbridge Conversion and Release Agreement, the 336,692 shares of common stock resulting from the conversion of the above Swingbridge notes were exchanged for 419,078,082 shares of the Company’s common stock.
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SAFT Investments
In 2018, Athena Bitcoin issued a series of instruments called “Simple Agreements for Future Tokens” (“SAFTs”) in exchange for investments in cash or crypto assets. The SAFTs entitle holders to receipt of tokens representing equity in the Athena Bitcoin. under certain pre-defined circumstances. These include a qualified financing event in which the Company raises $15 million or more in a single transaction, a “corporate transaction” (which definition includes a sale of all or substantially all of the Company’s assets), or a dissolution. Athena Bitcoin may also elect to issue equity in lieu of tokens in settlement of the SAFTs. In January 2020, Athena Bitcoin issued 1,653,425,404 shares of common stock for the full outstanding SAFT balance of $5,434,819 since the Share Exchange transaction between GamePlan and Athena qualified as a corporate transaction, based upon the conversion price of $4.09 per share implied by the valuation of the Company as of the date of SAFT determined in good faith by the Board of Directors of Athena Bitcoin and the capitalization of Athena Bitcoin immediately prior to the “corporate transaction” (see also “Background and Corporate History” above).
Athena Bitcoin ATM
The primary business activity of the Company is the purchase and sale of bitcoin through our Athena Bitcoin ATMs —which are free standing kiosks that allow customers to exchange their physical currency for crypto assets. Customers can buy and sell bitcoin using Athena Bitcoin ATMs - either spending or receiving physical currency (cash). We do not charge transaction fees but rather make a spread on the price of the Bitcoin. The typical Athena Bitcoin ATM that the Company uses is about 5-feet tall and features a large touchscreen for customer interaction. We offer bitcoin for sale at all our ATM machines. See below for a summary of transactions by crypto asset for the nine months ended September 30, 2024 and twelve months ended December 31, 2023.
SUMMARY OF TRANSACTIONS BY CRYPTO ASSET
| Crypto Asset |
For the Nine Months Ended September 30, 2024 |
For the Twelve Months Ended December 31, 2023 |
| Bitcoin | 128,056 | 99,265 |
| Ethereum(1) | – | 300 |
| Litecoin (1) | – | 861 |
| Bitcoin Cash (BCH) (1) | – | 69 |
| Total | 128,056 | 100,495 |
(1) The Company stopped transacting in Ethereum, Litecoin and Bitcoin Cash in its ATMs on July 19, 2023
We also buy bitcoin at some of our ATM machines (also known as two-way ATMs), subject to sufficient cash in the ATM dispenser. The cash withdrawal limit from our two-way ATMs is $2,000 per transaction. We replenish our ATMs with local fiat currencies about twice a week or depending on usage, using bonded security companies.
Customers can purchase as little as $1 of bitcoin, but typically choose between $100 and $1,000 per transaction. The Company charges a fee per bitcoin equal to the prevailing price at U.S. crypto-based exchanges plus a markup. The Company’s revenue associated with ATM transactions are recognized when the crypto asset is delivered to the customer.
Our Bitcoin ATMs do not contain any crypto assets or keys to crypto assets. We sell crypto assets from cloud-based wallets in each country, enabling real-time supply of crypto assets to our customers. We utilize purchasing algorithms and other proprietary systems to manage crypto assets to ensure that we are able to meet consumer demand for crypto assets. The retail crypto asset space is crowded with large digital players including Coinbase, Square, Gemini, and PayPal. The Company focuses on the cash buyer, who needs bitcoin in the here and now. We also focus on the cash buyer who wants the crypto assets in their private wallet and not in the hands of a third-party. We do not seek to hold excess quantity of any crypto asset.
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A perfect match between supply and demand can never be achieved as demand is generally predictable but not exact, and there are often demand spikes due to bitcoin price movements. If we ever fail to fully anticipate a spike in demand or if our buying turned out to be short for any reason, our users may not be able to purchase crypto assets from our Bitcoin ATMs. This is something we strive to minimize and manage such that we maintain a slight excess of crypto holdings.
Our hot wallets are maintained by the staff of the Company. Access is limited to as few persons as is necessary to maintain their proper functionality. The Company does not utilize any third-party custodial services for the hot wallets. At this time, the Company does not maintain any balance of crypto asset in cold storage. The crypto assets the Company holds are available for immediate sale. We do not have any insurance policies that cover the crypto assets held in our wallets.
We are a provider of bitcoin through our Athena Bitcoin ATMs in the United States and Latin America, integrating one-stop convenience with expert-level customer service. In the past we had also provided Ethereum, Litecoin and BCH at our ATMs. We were one of the first companies to introduce Bitcoin ATMs into the United States, Mexico, Colombia, Argentina, and El Salvador. We are committed to serving retail purchasers of crypto assets with the highest level of customer care through a broad product selection, trained customer service staff, multi-lingual support, and convenient locations. We seek to address the consumer who prefers to transact in cash for crypto assets such as bitcoin, in addition to or in place of the traditional means of access to the financial system. We have experienced a CAGR of our ATMs of 77% from December 31, 2017 through September 30, 2024. See below for the increase in active ATMs over time.
INCREASE OF ACTIVE ATHENA BITCOIN ATMS
FROM DECEMBER 31, 2017, THROUGH DECEMBER 31, 2024
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ATM by location are shown below as of September 30, 2024.
ATMs BY LOCATION
AS OF SEPTEMBER 30, 2024
| Country |
Number of Athena Bitcoin ATMs (as of September 30, 2024) |
Type of Fiat Currency | |
| Total | Two-Way | ||
| United States | 2,850* | 13* | U.S. Dollar |
| El Salvador | 13* | 13* | U.S. Dollar |
| Argentina | 10 | 10 | Argentine peso |
| Colombia | 17 | 17 | Colombian peso |
| Mexico | 1 | 1 | Mexican peso |
| TOTAL | 2,891 | 54 | |
*Excludes Chivo-branded ATMs which the Company operates on behalf of the Government of El Salvador for Chivo as white-label service.
Suppliers of our ATMs
As of September 30, 2024, 265 of our Athena Bitcoin ATMs and their software systems, which include advanced security protections, were sold to us by Genesis Coin, Inc. (“Genesis Coin”), a major supplier of Bitcoin ATMs. We supplement these protections with our own added risk management methods. The Genesis Coin machines have a demonstrated track record for stability. We have worked with the company for many years and were among its first customers, and we continue to be impressed with the Genesis Coin hardware and software. To this date, our ATMs have accepted a negligible number of counterfeit bills.
As of September 30, 2024, for our white label service in El Salvador, we are operating and managing a mix of ATMs supplied by Genesis Coin, and Bitaccess, Inc.
The ATMs purchased from Bitaccess, Inc. were acquired from that supplier pursuant to the agreement entered into in August 2021, and included 100 Bitaccess BTM machines. All the machines purchased from Bitaccess, Inc. were paid in full. The machines are located in El Salvador of which 5 are Athena branded and 95 are Chivo branded machines. Currently, the Company does not have an agreement with Bitaccess regarding its supply of ATMs, and the agreement signed in August 2021 is no longer valid following the acquisition of Bitaccess, Inc. by another company. The Company continues to pay per transaction amount processing fee in good faith for the 5 machines that it operates.
Agreement with Genesis Coin, Inc.
We currently do not have a written contract for purchase and sale of ATMs with Genesis Coin (currently operating under the name “BitcoinATM.com). We have been operating based on our working relationship and the terms of the original purchase and sale contract with Genesis Coin, which we entered into on October 1, 2015 and terminated on September 12, 2024 as part of a confidential settlement agreement and release in a case captioned as Athena Bitcoin, Inc. v. Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard, Douglas O. Carrillo, and Neil Hernandez at the U.S. District Court for the Norther District of Illinois, Case No. 1:24-cv-5985.
On July 16, 2024, Company, filed a Complaint against Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard, Douglas O. Carrillo, and Neil Hernandez, for damages for violation of a federal statute and other claims, filed at the U.S. District Court for the Northern District of Illinois (the “Court”). By September 12, 2024, the pertinent parties reached a settlement agreement and release where the complaint and other proceedings that were initiated at other forums were dismissed, and certain monetary and technological considerations were afforded between the parties. At this time, the parties have substantially completed the mutual considerations of the agreement.
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Although said contract was terminated when the equipment described therein was delivered and paid for, we continue to honor bilaterally, the terms of said contract in our ongoing business relationship. While the purchase price and delivery of each order of ATM machines is subject to negotiation and prevailing market conditions, we follow the terms agreed to in the 2015 contract, which include the agreement that: the software license we receive is limited and non-exclusive and/or sublicense; we pay to Genesis Coin or nominee a software license fee based on the value of all transactions processed by us (such fees are assessed in bitcoin, deducted automatically and transferred automatically to Genesis Coin or nominee); the term of license granted by Genesis Coin commences at delivery of equipment and continues as long as we retain legal right and title to operate the ATMs purchased from Genesis Coin; and Genesis Coin provides us with the one year limited parts warranty for the ATM kiosks we purchase.
Agreements with Taproot Acquisition Enterprises, LLC
On April 13, 2023, the Company signed a sublease agreement with Taproot Acquisition Enterprises, LLC (“Taproot”) to acquire 800 Bitcoin ATM machines. The agreement had a term of three years unless terminated by either party subject to specified conditions and notifications. Lease payments under the agreement were based on revenue generated by the locations subject to a cap and allows the Company to buy out or purchase the Bitcoin ATM machines based on a formula that considers original cost, depreciation and market value of each unit.
On November 2, 2023, the Company modified and amended the sublease agreement into an equipment financing agreement with Taproot pursuant to which the Company agreed to purchase additional ATM machines in 2023 for a cash purchase price and certain revenue share payments. On December 31, 2023, the Company entered into another equipment financing agreement with Taproot for a purchase of additional Bitcoin ATMs subject to payment of the purchase price based on the specific payment dates, with the full balance due by December 31, 2024. Title to all Bitcoin ATM machines was transferred to the Company as of December 31, 2023 upon signing the second financing agreement. The first payment was made to Taproot in January, 2024. The final payment was due by December 31, 2024. However, the October 2024, November 2024 and December 2024 payments were rolled into a new Agreement dated September 19, 2024 (below) along with the Agreements of April 13, 2023, this December 31, 2023 Agreement and the February 22, 2024 Agreement (below).
On February 22, 2024, the Company entered into a third equipment financing agreement with Taproot for the purchase of additional Bitcoin ATMs. Title to the machines was transferred to the Company upon signing of the third financing agreement and required down payment which was paid on February 22, 2024. As of September 30, 2024, the Company is operating 917 ATMs leased from Taproot.
On September 19, 2024, the Company and Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“Taproot”), entered into that certain Omnibus Equipment Refinancing Agreement providing for the refinance of the Company’s outstanding payables,
On October 30, 2024, the Company entered with Taproot, into an Equipment Financing Agreement (the “Agreement”) to purchase certain Bitcoin ATM kiosks (the “Equipment” units) listed in the Agreement.
Rental Agreements for our ATMs
We pay rent to the establishments where we place our ATMs. Our rental agreements are for one year, three years, five years, or less than one year with auto renewal and we are typically free to move our ATMs from sites that are not meeting expectations, at minor cost. In addition to rent, we also pay for internet connection costs and cash logistics (handling) costs.
Technical Support for our ATMs
Our ATMs can experience down-time due to internet connection failures as well as technical problems. For technical problems like a frozen screen, our tech support team can typically reboot the machine remotely or we contact our national network of technical support service providers to resolve the issue.
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Global Cash Logistics
A significant operational aspect of our business involves collecting physical fiat currencies from our Bitcoin ATM fleet and getting them safely deposited into our bank account. The collection and deposit of the physical currencies received in our ATMs is a multi-step process. We do not directly handle the currency operations. This function is contracted to bonded security companies that have armored vehicles and cash storage vaults in many locations and includes multiple national and regional carriers such as Brinks International, Garda World, Thillens, Loomis, New Century Armored Logistics (NCAL) and Move On Security LLC as well as Proteccion de Valores, S.A. de C.V. (PROVAL) and Servicio Salvadoreño de Protección, S. A. de C. V.(SERSAPROSA) in El Salvador.
For logistic efficiency, it is impractical to retrieve cash from one machine and go directly to a bank branch. Rather the cash from all our machines in a city is collected by contracted armored vehicle companies on a periodic basis and brought to their regional centers where it is counted, inventoried, and grouped with cash coming from our ATMs in other cities.
We actively oversee this process in conjunction with our cash logistics contractors to adjust for factors like three-day weekends and unanticipated surges. While we can manage the crypto side of our business with real-time tracking, the current time period from retrieving cash from our ATMs to having the funds available in our bank account is about three-to-seven (3-7) days. In our early years, the time period was close to twenty-one (21) days. This time period directly impacts our working capital and our ability to buy more crypto assets; thus, we strive to keep it as short as possible.
Just as shortages of crypto assets can temporarily prevent us from selling crypto assets to our customers, our ATMs running out of cash or becoming fully loaded with cash (and unable to take more bills) can impede our users from completing certain transactions until our cash logistics contractors fix the issue at their next visit to our ATMs. Our business has variable demand, and it is unavoidable that some machines will at times run out of cash or become fully loaded with cash (and unable to take more bills) for a time period.
Athena Plus
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Our Athena Plus service allows us to assist crypto asset buyers and sellers who wish to use their bank accounts. This service caters to investors who are making larger purchases of bitcoin in exchange for wire transfers from their bank accounts. These customers are often looking for the same crypto assets that we sell at our Athena Bitcoin ATMs but sometimes request a less traded crypto asset. In such cases where we do not have such a crypto asset in our possession, we first acquire the crypto asset and then subsequently make the sale to the customer. We earn their business through education, service, and quality execution of their transaction. Customers typically interact with the Company on the phone for transaction sizes in dollar terms greater than $10,000 and on some occasions, for crypto assets not included in our ATMs.
This business currently constitutes about 1% percent of our overall sales by revenue, with a median transaction size of $79,000 in the nine months ended September 30, 2024. As the transaction sizes are larger for this business area, our mark ups are smaller than transactions using our ATMs. As of the date of this prospectus, we do not transact in any crypto assets except bitcoin, Ethereum, Tether, Litecoin, and BCH. We will update this prospectus if we decide to transact in other crypto assets. Such a change would only happen if there were significant customer demand for a specific crypto asset and that crypto asset was available to us through multiple trading partners, crypto exchanges, and crypto asset brokers.
To serve our customers, we follow AML and KYC guidelines appropriate for BSA compliance. The Company’s operating unit, Athena Bitcoin, Inc., is FinCEN registered and undergoes an annual Compliance and Financial audit to maintain good standing. We also comply with state regulations and reporting in each state where it is required.
Expansion of Business Operations in El Salvador (White-label Services and Chivo Ecosystem)
On June 8, 2021, the Bitcoin Law, proposed by President of El Salvador, Nayib Bukele, was passed by the Legislative Assembly of El Salvador giving bitcoin the status of legal tender within El Salvador. Under this law, effective as of September 7, 2021, Salvadorans can pay taxes in bitcoin and businesses will be obliged to accept bitcoin as payment for goods and services. However, six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact.
The U.S. Dollar will continue to circulate alongside bitcoin as the national currency and legally recognized tender. When Salvadorans convert their bitcoin to dollars within the Chivo digital wallet, they do not receive dollars in the digital wallet in the same sense as having a dollar balance with a chartered bank. Instead, they become holders of dollar obligations as represented by a dollar balance within the Chivo digital wallet, which are only a claim to real dollars. At that point, Salvadorans hold an asset backed by Chivo S.A. de C. V., which according to news reports is not a chartered bank, and the full faith and credit of President Bukele’s government. According to news reports, the government spent up to $120 million to supply $30 worth of bitcoin into each Chivo wallet, the country’s new official bitcoin wallet application. That funding would cover the cost of providing 4 million citizens with bitcoin in a country of 6.5 million. The government created a $150 million fund to support bitcoin to U.S. Dollar conversions and began implementation of Chivo ATMs to give citizens access to paper-currency in exchange for their bitcoin and U.S. Dollar balances held in their Chivo digital wallets.
El Salvador ranks among the lowest in its region regarding banking access. As of 2021, only around 36% of Salvadorans had an account with a bank or financial service provider, leaving approximately 64% of the adult population unbanked.
This limited access to traditional banking underscores the potential of bitcoin and digital wallets as tools for financial inclusion, serving as savings instruments and democratizing access to electronic payments.
With 161 mobile subscriptions per 100 inhabitants in El Salvador, we believe that it is likely more practical to provide financial services through mobile-linked solutions than by expanding traditional banking infrastructure.
The legalization of bitcoin offers an opportunity to lower the cost of financial transactions, particularly for cross-border remittances. Bitcoin’s ability to facilitate fast, low-cost international payments could significantly reduce remittance fees, which currently account for a substantial portion of the country’s GDP.
In 2023, remittances accounted for approximately 24.1% of El Salvador’s GDP, totaling $8.2 billion.
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Globally, the cost of sending remittances averages 6.20% of the amount sent, often exceeding 10% for smaller transactions. These high costs translate to an economic loss of over 0.5% of GDP in remittance fees annually. The Chivo digital wallet, introduced under the Bitcoin Law, allows Salvadorans in the U.S. to send money home without incurring remittance fees, further enhancing financial accessibility.
Since adopting bitcoin as legal tender, El Salvador has attracted interest from Bitcoin enthusiasts and investors worldwide. The country offers significant incentives, including capital gains tax exemptions on bitcoin trading profits, relatively low tax rates, and permanent residency for individuals investing $1 million or more in bitcoin. This policy is expected to attract crypto asset investors, miners, and tourists, potentially fostering economic growth and positioning El Salvador as a hub for cryptocurrency innovation
Business Operations
Since June 2021, when the Bitcoin Law was enacted, the Company has focused its resources and expanded its operations in El Salvador. The Company’s operating subsidiary in El Salvador is Athena Holdings El Salvador, S.A. de C.V.; however, our agreements with the Government of El Salvador discussed below, have also been entered with Athena Bitcoin Global, a Nevada corporation and Athena Bitcoin, Inc., a Delaware corporation, our wholly-owned operating subsidiary. We began discussions with the Government of El Salvador in late June 2021, and successfully executed agreements with the Department of Treasury (Ministerio de Hacienda) in August 2021. Under those agreements, the Company is responsible for several major projects, which currently include the operation of 200 Chivo Bitcoin ATMs in El Salvador, 10 Chivo Bitcoin ATMs at El Salvador consulates in the U.S. (in the states of California, Florida, Georgia, Illinois, and Texas), 45 Chivo Bitcoin ATMs in other U.S. locations (including de-installations,) and the delivery to the Government of El Salvador 950 Chivo point-of-sale (“POS”) terminals for local businesses in El Salvador to process transactions with bitcoin. Please note that six articles of the Bitcoin Law were modified, and three others were repealed as of January 29, 2025. Under the new rules, bitcoin is no longer considered "currency," though it remains "legal tender." Another change makes using bitcoin entirely voluntary. (Previously, the law mandated that businesses accept bitcoin for any goods or services they provided.) Additionally, bitcoin can no longer be used to pay taxes or settle government debts. The government is also stepping back from its involvement in Chivo Wallet, the state-backed digital wallet. We are assessing the impact of this legislative change on our business, but we do not foresee a negative impact.
For operating 200 Bitcoin ATMs the Company was paid a one-time non-refundable installation fee and will recognize recurring monthly service fees for maintaining the machines. The Department of Treasury of El Salvador paid the Company the agreed price per contract for each POS terminal delivered in 2021. We are also charging a monthly fee to maintain Chivo Bitcoin ATMs in the U.S. for each consulate. The agreement terms vary by project from one year to three years with monthly or annual renewal terms. Currently, we do not face any direct competition for the services we provide since we are operating under contract with the Government of El Salvador.
Contracts with the Government of El Salvador
In the third quarter of 2021, the Company signed several contracts with the Department of Treasury (Ministerio de Hacienda) of El Salvador (“El Salvador Contracts”) which include installing and operating 200 Chivo Bitcoin ATMs in El Salvador, 11 Chivo Bitcoin ATMs at El Salvador consulates with one subsequently deactivated in the U.S., 45 Chivo Bitcoin ATMs in other U.S. locations, and sales of 950 point-of-sale (POS) terminals for local businesses in El Salvador to process transactions with Bitcoin. Additionally, the Company contracted to sell intellectual property in software, and develop and maintain a Bitcoin platform designed to support a branded digital wallet, as specified in El Salvador Contracts.
From time to time, the Company receives money from GOES to facilitate replenishment of cash in the ATMs that we provide and operate for them. As of September 30, 2024 and December 31, 2023, the cash received as advances from GOES was $1,031,000 and $7,000, respectively.
The Company completed contract negotiations with Chivo, Sociedad Anónima de Capital Variable, a wholly owned private company of the Government of El Salvador (“CHIVO”) in which both parties signed on October 5, 2022, a Master Services Agreement (MSA) and a Service Level Agreement (SLA) with an effective date of July 1, 2022, replacing the existing Master Services Agreement, Contracts and Athena Service Addendums 1 and 2 with the Department of Treasury of El Salvador. The services, performance obligations, pricing and terms continue the services, performance obligations, pricing and terms outlined in the original Master Services Agreement, Contracts and Addendums through July 30, 2024, in line with the original MSA, Contracts and Addendums. In conjunction with the new MSA and SLA, the Company and CHIVO completed a financial settlement agreement secured by certain assets of the Company in El Salvador, to reconcile reporting, finalize balances owed between the parties and conclude the original MSA, Contracts and Addendums between the Company and the Government of El Salvador, which settlement agreement was terminated as of April 19, 2023 upon full satisfaction of all obligations thereunder.
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Termination of Letter of Intent with Vakano Industries
In September 2021, the Company entered into a non-binding Letter of Intent with Arley Lozano, a principal beneficial owner of Vakano Industries and XPay, both Colombian entities (collectively, “XPay”), for the purchase and sale of certain assets of XPay, primarily intellectual property assets, including the XPay Wallet (the precursor to the Chivo Wallet and the Chivo App), all software code and IT developments regarding Chivo Wallet and XPay POS System software and other intellectual property (“XPay Assets”), to the Company. The total purchase price was comprised of $3 million in cash and the issuance of 270 million of the Company’s shares of common stock (valued at $27 million at a $0.10 per share valuation), however the parties did not agree on the final terms of the transaction. The definitive agreement for the purchase and sale of XPay Assets has never been executed and the acquisition was never completed as contemplated in the letter of intent, however, the Company paid certain advances in a total of $1,595,000 for those certain XPay Assets which were transferred to the Company. In December 2022, the Company terminated its Letter of Intent with XPay and any future negotiations. The Company agreed to the purchase of already transferred XPay Assets in exchange for the advances previously made to the Company. XPay filed a legal action against the Company in connection with the transfer of XPay Assets, see “Legal Proceedings”.
Environmental Impact
El Salvador’s Bitcoin plan has put a spotlight on the environmental impact of cryptocurrency with the World Bank flagging such potential adverse effects among its concerns. Mining digital currency requires large amounts of energy, and the Bitcoin industry’s global CO2 emissions have risen to an equivalent of 85.89 million tons of Co2 during the 2020 to 2021 period, equal to burning 84 billion pounds of coal, according to a 2023 report by the American Geophysical Union (referred to in the article by Sanaz Chamanara, S. Arman Ghaffarizadeh, & Madani, K. (2023), The Environmental Footprint of Bitcoin Mining Across the Globe). President Bukele sought to counter sustainability concerns by engaging state-owned geothermal electric company, LaGeo SA de CV to offer Bitcoin mining facilities using renewable energy from the country’s volcanoes.
Marketing
Our marketing consists of:
| · | Trade shows, | |
| · | Digital advertising on search engines, map sites, and industry-specific platforms, | |
| · | Social media, and | |
| · | SMS messaging. |
Athena also maintains country-specific websites that include information about how to access our service offerings as well as country-specific disclosures. Total advertising costs amounted to $37,000, $41,000 and $48,000 for the nine months ended September 30, 2024, twelve months ended December 31, 2023, and twelve months ended December 31, 2022, respectively.
Technology Research and Intellectual Property Development
Athena licenses most of its technology from third party vendors including the software that runs on our ATM kiosks. Our intellectual property (“IP”) includes proprietary algorithms that we have developed. Some effort is devoted to automating a majority of our crypto purchases in a manner that helps us match supply with anticipated demand. In addition, we have invested in building automated systems for customer onboarding including the collection of required KYC documentation as well as government transaction reporting.
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Total technology costs amounted to $3,350,000, $4,136,000 and $2,910,000 for the nine months ended September 30, 2024 and years ended December 31, 2023 and 2022, respectively. Athena has not filed for protection of our algorithms and maintains them as private and proprietary business information. The IP we use for the security of our ATMs and transaction integrity is mostly provided by vendors, although we have added additional layers and extra private security measures that are unique to the Company.
Athena Bitcoin has previously registered both its name and distinctive owl logo with the United States Patent and Trademark Office. On December 18, 2024, the Company renewed its registration of its name and logo.
Competition
There are many different companies that enable people and businesses to buy or sell bitcoin and other crypto assets, including other operators of Bitcoin ATM networks, online services and exchanges such as Coinbase and Gemini, and payment services such as Square and PayPal.
Our direct competition in the U.S. includes Bitcoin Depot, Inc. a public corporation with operations in the U.S. and Canada, Coinflip, a private company with operations in the U.S., Canada and Australia and other smaller bitcoin kiosk operators, as well as Coinstar, a major corporation that runs one of the largest kiosk networks in the U.S. Coinstar is an existing operator of kiosks at major grocery chains that are used to exchange coinage for a variety of payment instruments such as gift cards and in-store vouchers. In recent years, they have added the ability to use physical coins and cash bills to buy bitcoin on many of their kiosks, in partnership with Coinme. The other Bitcoin ATM network operators use machines similar to the Company’s fleet of Bitcoin ATMs.
The financial performance of any Bitcoin ATM network is influenced by several factors. We believe that site selection and branding have the biggest effect on per-ATM transaction volumes. Bitcoin Depot is a public corporation whose operating performance can be measured. We are not aware of the operating performance of other competitors as they are private companies and do not provide any public financial disclosures. From our years of experience in this industry, we believe the Company’s Bitcoin ATMs perform at or above industry averages.
While there are many other Bitcoin ATM operators, we believe the industry is nascent and that worldwide tens of thousands of attractive locations remain untouched. While we recognize that there is a terminal limit to the number of Bitcoin ATMs that the U.S. market can support, we believe that that limit has not yet been reached and is expanding as bitcoin and other crypto assets gain more widespread use, especially in Latin America and other regions. According to the Wall Street Journal, there were 451,500 traditional ATMs operating in the United States at the end of 2022.1
Per Fact.MR. a market research and competitive intelligence provider, the global crypto ATM market size was estimated at $181 million in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 57% from 2023 to 2033.2
Below is a partial list of U.S. Bitcoin ATM networks that operate in the regions where the Company also operates:
| Company Name | Units |
| Bitcoin Depot Inc. | 8,125 |
| Coinflip | 4,185 |
| RockitCoin | 2,597 |
| CoinHub | 1,747 |
| Margo | 1,743 |
| Bitstop | 1,738 |
| Byte Federal | 1,346 |
| Cash2Bitcoin | 864 |
| National Bitcoin ATM | 518 |
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1 Carlton, J. (2023, March 3). The Number of ATMs Has Declined as People Rely Less on Cash. Wall Street Journal. https://www.wsj.com/articles/the-number-of-atms-has-declined-as-people-rely-less-on-cash-81268fa2
2 Fact.MR. (2023, October 19). Crypto ATM Market to Hit U.S. Dollar $ 16.85 Billion by 2033: Fact.MR Report. Yahoo Finance. https://finance.yahoo.com/news/crypto-atm-market-hit-us-080000153.html
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In the United States, we have a small percentage of the total market, operating approximately 12.3% of ATMs according to one industry reporting service (https://coinatmradar.com3).
Apps like Robinhood, PayPal, and Cash App offer customers a way to purchase crypto assets using their smartphones and funds from their bank accounts. These apps offer competitive pricing relative to our ATMs; however, they do not accept physical currency and typically require users to connect their bank accounts. They also typically do not allow users access to the private keys of the cryptocurrency, thus resulting in centralization which we believe many users do not want.
Full-service exchanges like Coinbase Pro, Gemini, and Kraken allow traders to make investments in a wide variety of crypto assets. These exchanges cater to active traders and the most highly price sensitive consumers. The Company often uses such services for purchasing its crypto assets. Users from this segment of the overall market rarely overlaps with the Bitcoin ATM industry.
Competitive Advantages
We believe we enjoy several competitive advantages. We believe our foremost advantage is our many years of business experience combined with our insight into optimizing many interrelated factors and aspects of the crypto business. We believe that this combination ultimately drives our bottom-line profits.
We believe that site selection is a substantial factor in our overall performance. Our site selection methodology is a trade secret of our business. We believe that our methodology is not easily uncovered as we have ATMs located in rural, urban, and suburban areas. We have learned and refined our site selection methodology over the years, and we believe our expertise in this area constitutes a material competitive advantage.
We believe our operational efficiencies provide us with another competitive advantage. It took six years of significant efforts and achievements to grow the Company from a start-up with initial operating losses to steady profitability. This process to profitability included developing and implementing several proprietary approaches to manage our operations efficiently with respect to all aspects of crypto transactions, risk management, and efficient cash handling spanning five countries. We believe operational efficiency is in the same category of importance to us as site selection.
Unlike many competitors that focus on quickly installing dozens or hundreds of ATMs, we prioritized getting to profitability on a global scale with a small base of ATMs that were installed in strategic sites. From 2017 through 2022, we focused on developing and putting in place scalable systems and methods for managing a diverse global operation. This gave us a foundation to not only provide us with profitable operations but also the foundation to continue to grow. As a result of this strategy, we were able to increase our total ATMs in service from 60 to 3,118 from 2017 to September 2024, respectively, with the ability to install hundreds of ATMs at scale. When comparing Bitcoin ATMs to other methods of transacting, the primary advantage of an ATM is its ability to complete a transaction from accepting payment to delivering crypto assets quickly. The ATM will only accept physical Fiat Currency, which is an immediate and permanent form of payment. This subsequently facilitates the immediate delivery of crypto assets; also, an immediate and permanent form of transaction. Apps and services that rely on ACH or other bank mechanisms for the fiat leg of a transaction often cannot deliver the crypto assets quickly because of the funding mechanism is neither immediate nor permanent.
We believe our branding gives us a competitive advantage with many store owners. Large companies often have access to capital, but they have minimal to no experience in the crypto industry. Companies that want to start a Bitcoin ATM network tomorrow can copy our offerings and hire top branding specialists, but what they cannot do is create a brand that has roots to the early years of Bitcoin and Bitcoin ATMs. In our experience, many of these large companies are treated with skepticism by many users of Bitcoin, as they represent centralized and institutionalized interests that many believe are contrary to the goals of Bitcoin. The bright orange on our Athena Bitcoin ATMs is the same color as the orange in the original Bitcoin logo, helping our brand stand out and represent the spirit and essence of Bitcoin and the entire crypto industry in any stores where our ATMs are placed.
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3 Coin ATM Radar. (n.d.). Top Crypto ATM Operators (United States). Coin ATM Radar. https://coinatmradar.com/charts/top-operators/united-states/
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While the end result of a transaction on one Bitcoin ATM versus another may be similar, we believe that many store owners and customers looking for a Bitcoin ATM will often prefer an Athena Bitcoin ATM versus, for example, a multipurpose Coinstar machine that can handle your loose change and also sell you bitcoin. That is our opinion from anecdotal feedback we have received over the years. We believe our branding and brand authenticity have been a contributing factor to getting good performing sites, and that it will continue to be a big contributor to our future growth.
Competitive Disadvantages
Our competitive disadvantages are that while we have achieved profitability and have more substantial operational and financial resources as a result, some of our competitors still have greater resources available to deploy new ATMs, develop new markets, and invest in technology. We intend to raise capital several times in the coming years, through the sale of debt or equity, which may be dilutive to existing stockholders, to expand our network, but we remain focused on keeping true to our core principles and will continue to focus on bottom line performance and maintain our standards of effective site selection and monitoring.
Need for Government Approval of Principal Products and Services
Compliance with laws and regulations is a vital part of our business. In the United States, there are several important federal laws and regulations aimed at preventing money-laundering and terrorist financing that require specific record-keeping, filings, and other compliance procedures. In addition, there are laws and regulations in state jurisdictions that also require permits, reporting, and other compliance and customer service procedures. Finally, we are often contacted by federal, state, and local law enforcement agencies and subpoenaed for information on the activities of some customers.
Federal Regulation
In the United States, the Department of the Treasury through the Financial Crimes Enforcement Network has primary authority over dealers in crypto assets. This was established in 2013 when FinCEN released interpretive guidance to “clarify the applicability of the regulations implementing the Bank Secrecy Act (“BSA”) to person creating, obtaining, distributing, exchanging, accepting, or transmitting virtual currencies” (FIN-2013-G001). Since that time, all businesses that deal in crypto assets in the manner of the Company must register as a Money Service Business (“MSB”) with FinCEN and comply with the requirements of the BSA, the Patriot Act, and other amendments and administrative guidance issued by FinCEN and the Department of the Treasury.
We are subject to various anti-money laundering and counter-terrorist financing laws, including the BSA in the United States, and similar laws and regulations abroad. In the United States, as a money services business registered with FinCEN, the BSA requires us to among other things, develop, implement, and maintain a risk-based anti-money laundering program, provide an anti-money laundering-related training program, report suspicious activities and transactions to FinCEN, comply with certain reporting and recordkeeping requirements, and collect and maintain information about our customers. In addition, the BSA requires us to comply with certain customer due diligence requirements as part of our anti-money laundering obligations, including developing risk-based policies, procedures, and internal controls reasonably designed to verify a customer’s identity. Many states and other countries impose similar and, in some cases, more stringent requirements related to anti-money laundering and counter-terrorist financing. We have implemented a compliance program designed to prevent our platform from being used to facilitate money laundering, terrorist financing, and other illicit activity in countries, or with persons or entities, included on designated lists promulgated by Office of Foreign Assets Control (“OFAC”) and equivalent foreign authorities. Our compliance program includes policies, procedures, reporting protocols, and internal controls, and is designed to address legal and regulatory requirements as well as to assist us in managing risks associated with money laundering and terrorist financing. Anti-money laundering regulations are constantly evolving and vary from jurisdiction-to-jurisdiction. We continuously monitor our compliance with anti-money laundering and counter-terrorist financing regulations and industry standards and implement policies, procedures, and controls in light of the most current legal requirements.
Athena Bitcoin is registered with FinCEN and has registration number 31000207507771. In addition, Athena Bitcoin has appointed Sam Nazzaro as its Chief Compliance Officer, written and distributed a BSA Compliance Policy, and engages an outside review firm to perform an annual review of its Compliance Policy.
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Under the U.S. Commodities Exchange Act of 1936, the Commodity Futures Trading Commission (“CFTC”) has broad enforcement authority to police market manipulation and fraud in spot commodity markets, including the spot crypto markets. The CFTC has authority over intermediaries transacting in crypto assets, to the extent those crypto assets are considered commodities and not securities.
The Securities and Exchange Commission (the SEC”) has broad regulatory and enforcement authority over intermediaries transacting in crypto assets, to the extent those crypto assets meet the criteria to be considered to constitute securities (see also “Risk Factors”). The SEC continues to view crypto assets related enforcement as a top priority, bringing 46 enforcement actions against various digital asset market participants in 2023 according to Cornerstone Research report released in January 2024.
State Regulation
Depending on the state where the Company places a Bitcoin ATM, there are local laws and regulations which the Company must comply with to operate legally. These laws usually require the Company to register with a state agency, provide a surety bond, and make regular reports about its activities in the state and its financial health.
In some jurisdictions, the Company may be required to obtain operating permits from the city or county. These typically involve the payment of registration fees.
On November 20, 2023, the California Department of Financial Protection and Innovation (“DFPI”) issued an invitation for comments on a potential rulemaking relating to two new California laws that impose sweeping obligations on companies engaged in virtual currency activities in California and with California residents. The first law, Assembly Bill 39, prohibits people from engaging in digital financial asset business activity – or holding themselves out as being able to engage in digital financial asset business activity – without meeting certain criteria and obtaining a license from the DFPI, including compliance obligations and stable coin approvals among other guidelines. The second, Senate Bill 401, imposes requirements on operators of digital financial asset transaction kiosks. The DFPI refers to the two bills collectively as the Digital Financial Assets Law (“DFAL”). The DFAL begins taking effect on January 1, 2024, with covered persons required to be licensed, or to have submitted a license application and be awaiting approval or denial of that application, on or before July 1, 2025.
Requirements applicable to digital financial asset kiosks
The State Senate Bill 401 supplements the DFAL by prohibiting an operator of a digital financial asset kiosk from accepting or dispensing more than $1,000 a day from, or to, a customer through a kiosk. Further, this law requires operators to provide certain written disclosures to a customer before the digital financial asset transaction takes place, including disclosure of terms and conditions of the transaction, whether the operator provides a method to reverse or refund a transaction (including any warnings if such transaction is final and cannot be reversed), the amount of the digital financial asset involved, and the amount of fees and other charges in U.S. Dollars, among other disclosures. The operators will also be required to provide customers with detailed transaction disclosures, including the crypto amount, dollar amount, and fees charged thus customers must receive receipts containing vital transaction details, including the information of the licensed exchange used to calculate the price spread.
The law includes various customer protections and prohibits an operator from charging fees that exceed the greater of $5.00 or 15% of the U.S. Dollar equivalent of the digital financial assets involved in the transaction based on the market price of that same asset quoted by a licensed digital financial asset exchange. Under the new law, operators must maintain an up-to-date list of kiosk locations.
There is no private right of action under the DFAL except under a narrow exception related to a covered person’s obligation to hold digital financial assets on behalf of California residents pursuant to the state Uniform Commercial Code.
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Impact of DFAL on digital assets regulation
The enactment of the new laws is significant as it pushes California to the forefront of the digital asset regulatory landscape with other states that have enacted similar requirements and effectively ends the ability of companies to freely engage in digital asset activities in California without adhering to a state regulatory framework. The new laws will require companies engaging in digital asset activities in California to evaluate whether their activities bring them within the scope of these laws and be prepared to apply for any necessary licenses.
Moreover, in light of the acknowledgment from California Governor Newsom that certain aspects of the laws are ambiguous, as well as the legal complexity of engaging in digital assets activities throughout the United States, we expect further refinement of the DFAL requirements as the DFPI introduces regulations or guidance to supplement the law.
The Company tested its procedures in its kiosks in the state of California and believes that they are fully compliant with the requirements of DFAL. See also “Risk Factors”.
Subpoenas and Other Law Enforcement Interactions
From time to time, the Company is subpoenaed for its records and asked to testify in legal proceedings. These requests come from all branches of local, state, and federal law enforcement agencies and are usually requests for information about our clients, their transactions, and other information that we have collected. Our compliance team is charged with responding in a timely and accurate manner to these requests once the validity and legality of the request has been determined.
Consumer Protection
The Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), and other U.S. federal, state, and local and foreign regulatory agencies regulate financial products, including money transfer services related to remittance or peer-to-peer transfers. These agencies, as well as certain other governmental bodies, in particular state attorneys general, have broad consumer protection mandates and discretion in enforcing consumer protection laws, including matters related to unfair or deceptive, and, in the case of the CFPB, abusive, acts or practices (“UDAAPs”), and they promulgate, interpret, and enforce rules and regulations that affect our business. For example, all persons offering or providing financial services or products to consumers in the United States, directly or indirectly, can be subject to enforcement actions related to the prohibition of UDAAPs. The CFPB has enforcement authority to prevent an entity that offers or provides consumer financial services or products or a service provider in the United States from committing or engaging in UDAAPs, including the ability to engage in joint investigations with other agencies, issue subpoenas and civil investigative demands, conduct hearings and adjudication proceedings, commence a civil action, grant relief (e.g., limit activities or functions; rescission of contracts), and refer matters for criminal proceedings.
International Regulations
Outside of the United States, the countries where the Company operates are members of an array of regional Anti-Money-Laundering (“AML”) treaty organizations. Specifically, Argentina and Colombia are signatories to the Financial Action Task Force of Latin America (“GAFILAT”). Argentina is also a member of Financial Action Task Force (“FATF”). El Salvador is a member of Caribbean Financial Action Task Force (“CFATF”). The United States is a member of both FATF and Asia/Pacific Group on Money Laundering (“APG”). These relationships, both overlapping and non-overlapping, result in legal interpretations, regulation, and enforcement that is heterogeneous. In each of these jurisdictions, membership in one or more AML treaty organizations can influence the specific documentation, record keeping, and financial limits placed on MSB, or dealers in crypto assets.
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Employees
We strive to foster a productive and engaging work environment. Our talent strategy is aligned with our business vision and platform strategy. We hire smart people with a passion for crypto assets and the possibilities to empower our customers to achieve their financial and transactional goals.
As of February 11, 2025 we employed 17 people within the United States, and through subsidiaries had 41 direct employees in foreign subsidiaries. We also engage temporary employees and consultants. As of February 11, 2025 we had 39 direct employees and have engaged 1 independent contractor to support our El Salvador operations. They are primarily responsible for customer support of the Bitcoin ATMs, the Chivo wallet and the Chivo POS terminals. In Colombia Athena has 3 direct employees. We continue to search for additional personnel as we grow our operations in El Salvador.
Properties
We lease approximately 3,000 square feet of space in Miami. Monthly lease payments for the Miami office are approximately $22,000. The Company has short-term storage, office, and warehousing contracts in Illinois and Florida for approximately 1,750 square feet. We also lease approximately 3,650 square feet of space in El Salvador with monthly lease payments of approximately $7,000. We maintain international offices or co-working facilities in Colombia and Argentina. We believe we will be able to obtain additional space on commercially reasonable terms.
Legal Proceedings
On September 8, 2022, Athena Bitcoin, Inc. (“Athena” or the “Company”) received from the Office of the Commissioner of Financial Institutions (“OCFI”), a “Final Resolution and Order to Cease and Desist” (“OC&D”), requiring to, among other matters, the Company to stop the operations and marketing of the Bitcoin automated teller machines (“kiosks”), that were operating in Puerto Rico. On September 12, 2022, Athena filed a Complaint for Declaratory Judgment and Permanent Injunction and a Petition for Preliminary Injunction before the Courts of the Commonwealth, Superior Part requesting that the determination and effects of the OC&D be stayed until final resolution of the case. On November 10, 2022, the Court dismissed the civil action with the interpretation that the controversy presented before it was not ripe for resolution by the Court. The Company sought a reversal of such determination before the Court of Appeals of the Commonwealth by a Motion Requesting a Stay of the determination and effects of the OC&D. On April 10, 2023, the Puerto RicoCourt of Appeals issued a judgment unfavorable to Athena’s appeal. Athena determined not to pursue further redress against the OC&D that was issued by OCFI and with which it has been complied since September 2022. Athena implemented another option available under Puerto Rico law that has permitted resumption of operations of the kiosks in Puerto Rico. The Court of Appeals is yet to issue the Mandate to return the case to the lower Court and to OCFI. Effective since September 5, 2024, upon Company completing a new application, OCFI issued Athena a license for money transmission, TM-177, and are in the process of restarting operating the kiosks under its brand.
Revenue from operations in Puerto Rico for the periods ended September 30, 2024 and December 31, 2023 were 0% of total revenue respectively.
On October 9, 2023, Arley Lozano-Jaramillo (“Lozano”), an individual, commenced proceedings against the Company by filing a complaint with the 11th Judicial Circuit Court for Miami-Dade County, Florida (the “Court”) which named the Company as the defendant. Lozano, alleged that either individually or through the entities controlled by him (XPay, Vakano Industries) that he entered into certain non-binding letters of intent on July 13, 2021 and as of September 2021 (the second letter of intent was a draft and not signed by the parties) pursuant to which Lozano was a seller of certain assets and technology related to XPay Wallet, intellectual property regarding the AthenaPay POS System, XPay POS System and related technology (the “XPay Assets”) for the proposed purchase price of $3,000 and 270,000,000 shares of common stock of the Company (valued at $0.10 per share). The acquisition of the XPay Assets was subject to the execution of a definitive acquisition agreement. No such agreement was finalized nor entered into by the parties. The Company made payments to Lozano for a total amount of approximately $1,600 and Lozano transferred the ownership of XPay Assets to the Company. Lozano alleges breach of contract, promissory estoppel, unjust enrichment, fraud in the inducement and conversion. He asserts the claim for failure to compensate Lozano pursuant to the terms of the purchase price provided in the nonbinding letter of intent (and the unsigned draft letter of intent), which includes remaining amount of the purchase price ($1,400) and 270,000,000 shares of the Company’s common stock. Lozano did not offer any evidence of a signed and binding acquisition agreement. The claim also seeks an award for legal and other costs relating to the proceeding.
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The Company does not believe the allegations made against it are valid and intends to vigorously defend against them. Accordingly, the Company filed with the Court on February 9, 2024, the motion to dismiss Lozano’s complaint. The Court granted the Company’s motion in part and denied in part, dismissing two of the five causes of action. The Company proceeded to file its counter-complaint against Plaintiff who presented his answer on October 6, 2024. The range of potential loss related to the identified claim is between $0 and $1,400 and the issuance of 270,000,000 shares of common stock valued at $27,000, the amount of damages that Lozano is seeking in the lawsuit. The additional costs mentioned in the claim are not able to be estimated at this time. The Company does not believe that it is probable that a liability has been incurred as of September 30, 2024 and December 31, 2023 related to this lawsuit.
On July 16, 2024, Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), filed a Complaint against Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard, Douglas O. Carrillo, and Neil Hernandez, for damages for violation of a federal statute and other claims, filed at the US District Court for the Northern District of Illinois (the “Court”). On September 12, 2024, the parties reached a settlement agreement and release pursuant to which the complaint and other proceedings that were initiated at other forums, were dismissed and certain monetary and technological considerations were afforded between the parties.
On September 9, 2024, S.M. on behalf of herself and all others (“S.M.”), an individual, filed a complaint that includes class action allegations, against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), Genesis Coin, Inc., and two other defendants, filed at the Common Pleas Court at Cuyahoga County, Ohio (the “Court”). The complaint against ABInc alleges negligence and violations to the Ohio Products Liability Act because of alleged elder financial scams involving cryptocurrency and the operation of kiosks. Plaintiff alleges the need for implementing effective and sufficient checks and procedures both at the kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond what already ABInc has in place. The claim by plaintiff against ABInc is for an undetermined amount of compensation (which cannot exceed $5,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are not able to be estimated at this time, if any would be applicable.
On August 20, 2024, Keon Jackson (“Jackson”), an individual, commenced what was entitled as a “Class Action Complaint” against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), filed at the US District Court for the Northern District of Florida (the “Court”). The complaint alleges receipt of unwanted telemarketing text messages in contravention to federal and state statutes while seeking class certification status. An initial dispositive motion filed by ABInc was denied by the Court. Reconsideration of that determination was requested and remains pending. The claim by plaintiff is for the award of the statutory amounts as established in the corresponding acts which could be up to $1.50 per occurrence. In this case, Plaintiff alleges it happened to him a total of six (6) times after purportedly requesting messages to stop. The additional costs, if any, mentioned in the claim are not able to be estimated at this time.
On June 21, 2024, Digital Access, LLC, a Michigan limited liability company (“Digital Access”) and two additional co-defendants, filed a complaint against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), before the US District Court for the Eastern District of Michigan (the “Court”). The complaint alleges tortious interference with business relationships and business expectancy, statutory and common law conversions, trespass to chattels and injunctive relief against it. The case has been recently removed to the US District Court for the Northern District of Indiana. The amount claimed against ABInc is not less than $750. The Company intends to defend its self against the claims vigorously.
We believe we have strong arguments against these open claims and litigation matters and plan to defend ourselves vigorously in these matters.
Occasionally we are involved in various claims, lawsuits, regulatory examinations, investigations and other legal matters arising, for the most part, in the ordinary course of business. In making a determination regarding accruals, using available information, we evaluate the likelihood of an unfavorable outcome in legal or regulatory proceedings to which we are a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. Where we determine an unfavorable outcome is not probable or reasonably estimable, we do not accrue for any potential litigation loss. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of our defenses and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates.
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MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is quoted on the OTC Pink Market operated by OTC Markets Group, Inc. under the symbol “ABIT”. Our common stock last traded at $0.06 on February 10, 2025. The volume of shares of common stock traded was insignificant and therefore, does not represent a reliable indication of the fair market value of these shares. The following table sets forth the high and low closing-bid quotations for our common stock as reported on the OTC Pink Market for the periods indicated. These quotations reflect inter-dealer prices, without retail mark up, mark down or commission and may not necessarily represent actual transactions. The OTC Markets Quotation System is a quotation service that display real-time quotes, last-sale prices and volume information in over-the-counter equity securities. The market is limited for our stock and any prices quoted may not be a reliable indication of the value of our shares of common stock.
HIGH AND LOW CLOSING-BID QUOTATIONS
| For the year ending December 31, 2023 | High | Low | ||||||
| First Quarter | $ | 0.7500 | $ | 0.5600 | ||||
| Second Quarter | $ | 0.1500 | $ | 0.0400 | ||||
| Third Quarter | $ | 0.0800 | $ | 0.0500 | ||||
| Fourth Quarter | $ | 0.5000 | $ | 0.3000 | ||||
| For the year ended December 31, 2024 | High | Low | ||||||
| First Quarter | $ | 0.4400 | $ | 0.0800 | ||||
| Second Quarter | $ | 0.1900 | $ | 0.0700 | ||||
| Third Quarter | $ | 0.0900 | $ | 0.0400 | ||||
| Fourth Quarter | $ | 0.2200 | $ | 0.0260 | ||||
Holders of Record
As of September 30, 2024, we had 4,095,009,545 shares of our common stock issued and outstanding held by 190 shareholders of record. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers or held by other nominees.
Dividends
We have not paid, nor declared any cash dividends since our inception and do not intend to declare or pay any such dividends in the foreseeable future as we intend to retain any earnings for use in our business. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to limitations imposed by state law.
Securities Authorized for Issuance Under Equity Compensation Plans
The Company’s Board of Directors and its majority shareholders approved the 2021 Equity Compensation Plan (the “2021 Plan”) effective as of October 15, 2021. On February 28, 2023, in conjunction with a signed contractor service agreement, the Company issued a Restricted Stock Units Agreement for 2,000,000 shares of common stock under the 2021 Plan.
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Description of Capital Stock
The following description of our capital stock is based upon our Second Amended and Restated Articles of Incorporation (the “Amended Articles”), our bylaws, as amended and restated, and applicable provisions of law, in each case as currently in effect. The Company amended and restated its articles of incorporation in January 2023, and filed Second Amended and Restated Articles of Incorporation. This discussion does not purport to be complete and is qualified in its entirety by reference to our Amended Articles of Incorporation, and our bylaws, copies of which are filed with the SEC as exhibits to the registration statement of which this prospectus is a part.
Authorized Capital Stock
We are authorized to issue 10,000,000,000 shares of common stock, par value $0.001 per share, and 5,000,000,000 shares of preferred stock, par value $0.001 per share. As of the date of this prospectus, there were 4,095,009,545 shares of common stock issued and outstanding and no preferred shares issued or outstanding. The outstanding shares of stock have been duly authorized and are fully paid and non-assessable.
Common Stock
The holders of common stock are entitled to one vote per share on all matters submitted to a vote of shareholders, including the election of directors. There is no cumulative voting in the election of directors. The holders of common stock are entitled to receive ratably any dividends that may be declared by the Board of Directors out of funds legally available for payment. Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities.
In the event of our liquidation, dissolution, or winding-up, the holders of our common stock will be entitled to share ratably in all assets remaining after payment of or provision for any liabilities.
Preferred Stock
The Company has 5,000,000,000 shares of preferred stock, $0.001 par value, authorized. Our Amended Articles of Incorporation provide that shares of preferred stock may be designated from time to time in one or more series. Our Board of Directors will be authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our Board of Directors will be able to, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the common stock and could have anti-takeover effects. The ability of our Board of Directors to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. We have no preferred stock outstanding at the date hereof. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future. No shares of preferred stock are being issued or registered in this offering.
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Warrants to Purchase Common Shares
The Company does not have any outstanding warrants to purchase its common stock.
The only outstanding warrants are in the Company’s wholly-owned subsidiary, Athena Bitcoin. In 2017, Athena Bitcoin for $14,005, issued warrants to purchase 202,350 shares of Athena Bitcoin’s common stockwith exercise price between $2.00 to $3.00 per share, at an average exercise price of $2.49 per share. There was no activity related to these warrants in 2019 and the warrants to purchase 202,350 shares of Athena common stock remained outstanding on December 31, 2019 and were classified as equity. In January 2020, warrants to purchase 102,350 shares of Athena Bitcoin common stock at an average exercise price of $2.00 per share were exercised, some of them in a cashless manner, against a lesser number of shares. As a result of the exercise of these warrants, the net issuance of Athena Bitcoin common stock was 93,106 shares (exchanged into 115,888,490 shares of the Company’s common stock on January 31, 2020). The unexercised warrants to purchase 100,000 shares of Athena Bitcoin common stock, at an exercise price of $3 per share, remain outstanding as of September 30, 2024 and December 31, 2023. The warrants will expire on May 30, 2025.
Anti-takeover Effects of Nevada Law
We may currently be subject to the provisions of the Nevada Revised Statutes regarding the acquisition of controlling interest (the “Controlling Interest Law”). A corporation is subject to the Controlling Interest Law if it has more than 200 stockholders of record, at least 100 of whom are residents of Nevada, and if the corporation does business in Nevada, directly or through an affiliated corporation. The Controlling Interest Law may have the effect of discouraging corporate takeovers. As of February 11, 2025, we had 12 stockholders of record who are residents of Nevada.
The Controlling Interest Law focuses on the acquisition of a “controlling interest,” which means the ownership of outstanding voting shares that would be sufficient, but for the operation of law, to enable the acquiring person to exercise the following proportions of the voting power of the corporation in the election of directors: (1) one-fifth or more but less than one-third; (2) one-third or more but less than a majority; or (3) a majority or more. The ability to exercise this voting power may be direct or indirect, as well as individual or in association with others.
The effect of the Controlling Interest Law is that an acquiring person, and those acting in association with such person, will obtain only such voting rights in the controlling interest as are conferred by a resolution of (1) a majority of the stockholders of the corporation and, if applicable (2) a majority of each class or series of outstanding shares of which the acquisition would adversely affect or alter a preference or relative or other right, approved at a special or annual stockholders’ meeting. The Controlling Interest Law contemplates that voting rights will be considered only once by the other stockholders. Thus, there is no authority to take away voting rights from the control shares of an acquiring person once those rights have been approved in accordance with the Controlling Interest Law. However, if the stockholders do not grant voting rights to the shares acquired by an acquiring person, those shares do not become permanent non-voting shares. The acquiring person is free to sell the shares to others, and so long as the subsequent buyer or buyers of those shares themselves do not acquire a controlling interest, those shares would not be governed by the Controlling Interest Law.
If control shares are accorded full voting rights and the acquiring person has acquired control shares with a majority or more of the voting power, a stockholder of record, other than the acquiring person, who did not vote in favor of approval of voting rights, is entitled to dissent to the acquisition and demand fair value for such stockholder’s shares pursuant to applicable provisions of Chapter 92 of the Nevada Revised Statutes governing rights and procedures for dissenting stockholders.
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In addition to the Controlling Interest Law, Nevada has a business combination law, which prohibits certain business combinations between Nevada publicly traded corporations and any “interested stockholder” for two years after the interested stockholder first becomes an interested stockholder, unless the Board of Directors of the corporation approved the combination before the person became an interested stockholder or the corporation’s Board of Directors approves the transaction and at least 60% of the corporation’s disinterested stockholders approve the combination at an annual or special meeting thereof. For purposes of Nevada law, an interested stockholder is any person who is: (a) the beneficial owner, directly or indirectly, of 10% or more of the voting power of the outstanding voting shares of the corporation, or (b) an affiliate or associate of the corporation and at any time within the previous two years was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then-outstanding shares of the corporation. The definition of “combination” contained in the statute is sufficiently broad to cover virtually any kind of transaction that would allow a potential acquirer to use the corporation’s assets to finance the acquisition or otherwise to benefit its own interests rather than the interests of the corporation and its other stockholders.
The effect of Nevada’s business combination law is to potentially discourage parties interested in taking control of the Company from doing so if they cannot obtain the approval of our Board or stockholders.
In addition, under Nevada law directors may be removed only by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote, which could also have an anti-takeover effect.
Dividends
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends will be within the discretion of our Board of Directors at such time. In addition, our Board of Directors is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future.
Convertible Debentures
6% Convertible Debentures
On June 22, 2021, the Company commenced a private offering of up to $5,000,000 of 6% Convertible Debentures to accredited investors only. The maturity date of the 6% Convertible Debentures is two years after the date of issuance. The Holders of the Convertible Debentures have the option of converting the principal amount of the 6% Convertible Debentures into shares of common stock of the Company at a conversion price equal to the lesser of (i) $0.10 or (ii) 25% less than the twenty trading day (20-trading day) volume weighted average price (“VWAP”) of the common stock-based on the closing prices per share reported on the OTC Pink Market operated by the OTC Markets Group, Inc., for said twenty-day trading period, commencing ten-trading days prior to the date of election to convert the Convertible Debenture and ending ten-trading days after such election is made and the notice of conversion has been submitted to the Company. The accrued interest is not convertible and is payable quarterly. A Holder is required to convert the 6% Convertible Debenture if the Company’s common stock is admitted for trading on a national stock exchange or if certain corporate transactions occur, such as merger, sale or change of control of the Company. The holders of the 6% Convertible Debentures are provided with the registration rights to register the shares of common stock the 6% Convertible Debentures are convertible into, and the registration of which this prospectus forms a part is such registration statement. The Company sold a total of $4,985,000 of the 6% Convertible Debentures to 75 accredited investors. The Company closed its private placement in September, 2021. On March 31, 2022, the Company issued 34,650,000 shares of its common stock upon conversion of $3,465,000 principal amount of the 6% Convertible Debentures. The Company repaid a total of $1,520,000 in the principal amount of the 6% Convertible Debentures in fiscal year 2023. As of the date of this prospectus, none of the 6% Convertible Debentures remain outstanding.
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8% Convertible Debentures
On January 31, 2020, we issued 8% Convertible Debentures in the total principal amount of $3,125,000 to two (2) accredited investors pursuant to that certain securities purchase agreement as of the same date, which has been amended in connection with the Company’s Loan Restructuring and Related Amendments Agreement entered into as of July 12, 2021 (the “Restructuring Agreement”). The holders of the 8% Convertible Debentures have the right to convert their principal amount and any unpaid accrued interest into 260,416,667 shares of common stock-based on the conversion price equal to dividing the total amount of principal and accrued interest, if any, of the 8% Convertible Debenture by the lesser of $0.012 per share or a 20% discount to a next equity financing, subject to certain limitations requiring the consent of the lead investor. The holders of the 8% Convertible Debentures are also subject to the mandatory conversion (except for the lead investor whose consent is required) at the next equity financing. Next equity financing has been defined in the securities purchase agreement between the respective holders and the Company as the next sale (or series of related sales) by the Company of additional equity securities under an exemption from registration available under the rules promulgated under the Securities Act, from which the Company receives gross proceeds of not less than U.S. Dollar $3,000,000.00 (excluding, the aggregate principal amount of the 8% Convertible Debentures) The maturity date for the 8% Convertible Debentures is January 31, 2025. The holders of 8% Convertible Debenture have certain registration rights as described below (the “Registration Rights”). A holder of 8% Convertible Debenture in the principal amount of $125,000, Swingbridge Crypto III LLC, converted the principal amount and accrued interest of its 8% Convertible Debenture into 10,416,666 shares of common stock in February 2022 at the conversion price of $0.012 per share. The 8% Convertible Debentures in the principal amount of $3,000,000 held by KGPLA, LLC was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company (the “Amended and Restated Secured Convertible Debenture”), on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of the date of this prospectus, the outstanding principal amount of the Amended and Restated Secured Convertible Debenture is $3,000,000. The repayment of the Amended and Restated Secured Convertible Debenture is secured by all the assets of the Company, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien pursuant to that certain Security Agreement dated as of the date thereof and entered into by and among the Company, as the grantor, KGPLA, LLC, as the secured party and Athena Bitcoin, Inc. and Athena Holdings El Salvador S.A. de C.V., the Company’s subsidiaries, as guarantors.
Registration Rights
We are party to an Investors’ Rights Agreement dated as of January 31, 2020 which was entered into in connection with the Company’s issuance of 8% Convertible Debentures with lead investor and certain key holders as defined in the Investors Rights Agreement, which grants them certain registration rights with respect to our common stock. The registration of shares of our common stock pursuant to the exercise of registration rights described below would enable holders to sell these shares without restriction under the Securities Act when the registration statement is declared effective. We will pay all expenses related to any demand, piggyback, or Form S-3 registration statement described below, with the exception of underwriting discounts and commissions.
Demand Registration Rights
At any time beginning 180 days after the effective date of the registration statement of which this prospectus forms a part or five (5) years after the date of the Investors’ Rights Agreement, the holders of 30% or more of at least 30% of the registrable securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of underwriting discounts and commissions would exceed $15 million) may make a written request that we register all or a portion of their shares, subject to certain specified exceptions. The holders of shares having registration rights are entitled to written notice from the Company. We will prepare and file a registration statement as requested, unless, in the good faith judgment of our Board, such registration would be seriously detrimental to the Company and its stockholders and filing should be deferred. We may defer only once in any 12-month period, and such deferral shall not exceed 120 days after receipt of the request. In addition, we are not obligated to effect more than two of these registrations within any 12-month period or if the holders’ proposed registered securities may be immediately registered on Form S-3.
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Piggyback Registration Rights
Subject to certain specified exceptions, if we propose to register any of our securities under the Securities Act either for our own account or for the account of other stockholders, the holders of shares having registration rights are entitled to written notice and certain “piggyback” registration rights allowing them to include their shares in our registration statement. These registration rights are subject to specified conditions and limitations, including the right of the underwriters, in their sole discretion, to limit the number of shares included in any such offering under certain circumstances, but not below 30% of the total amount of securities included in such offering, unless (i) such offering is the initial public offering or (ii) all other securities, other than our securities, are entirely excluded from the offering.
Form S-3 Registration Rights
At any time after we are qualified to file a registration statement on Form S-3, if ever and subject to limitations and conditions, the holders of 35% or more of the registrable securities then outstanding are entitled to written notice of such registration and may make a written request that we prepare and file a registration statement on Form S-3 under the Securities Act covering their shares, so long as the aggregate price to the public, net of the underwriters’ discounts and commissions, is at least $5,000,000. We will prepare and file the Form S-3 registration as requested, unless, in the good faith judgment of our Board of Directors, such registration would be seriously detrimental to the Company and its stockholders and filing should be deferred. We may defer only once in any 12-month period, and such deferral shall not exceed 90 days after receipt of the request. In addition, we are not obligated to prepare or file any of these registration statements (i) within 180 days after the effective date of a registration statement pursuant to demand or piggyback registration rights or (ii) if two of these registrations have been completed within any 12-month period.
In accordance with the Investors’ Rights Agreement, the Company delivered the required notice of a proposed filing in a timely manner, of the Company’s registration statement on Form S-1 to the holders with the registration rights. The holders elected not to include in the registration statement any of the common stock issuable upon the conversion of their respective Convertible Debentures.
Right of First Refusal and Co-Sale Agreement
In connection with the offering of the 8% Convertible Debentures, Eric Gravengaard, the Company’s, director and principal shareholder (the “Key Holder”), and investors in the 8% Convertible Debentures (the “Investors”), entered with the Company into a Right of First Refusal and Co-Sale Agreement dated as of January 31, 2020 (the “RFR Agreement”), pursuant to which the Key Holder granted to the Company the right of first refusal to purchase all or any portion of common stock that the Key Holder proposes to transfer, at the same price and terms as offered to the proposed transferee. The right of first refusal is subject to certain notice requirements and applicable purchase terms. The Key Holder also agreed to grant to the Investors, secondary refusal right to purchase all or any portion of the common stock proposed to be transferred by the Key Holder that has not been purchased by the Company pursuant to the right of first refusal. The grant of the secondary refusal right is subject to certain notice requirements and additional purchase terms as set forth in the RFR Agreement.
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Shares Eligible for Future Sale - Rule 144
Under Rule 144, as currently in effect, subject to the “shell company” rules discussed below, once we have been subject to the public company reporting requirements of the Exchange Act for at least 90 days, and we are current in our Exchange Act reporting at the time of sale, a person (or persons whose shares are required to be aggregated) who is not deemed to have been one of our “affiliates” for purposes of Rule 144 at any time during the 90 days preceding a sale and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months, including the holding period of any prior owner other than one of our “affiliates,” is entitled to sell those shares in the public market without complying with the manner of sale, volume limitations, or notice provisions of Rule 144, but subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than one of our “affiliates,” then such person is entitled to sell such shares in the public market without complying with any of the requirements of Rule 144, subject to the below restrictions on sales of securities under Rule 144 by “shell companies” and former “shell companies.”
In general, under Rule 144, as currently in effect, once we have been subject to the public company reporting requirements of the Exchange Act for at least 90 days, our “affiliates,” as defined in Rule 144, who have beneficially owned the shares proposed to be sold for at least six months, are entitled to sell in the public market, within any three-month period, a number of those shares that does not exceed the greater of:
| · | 1% of the number of shares of our common stock then outstanding, which will equal shares immediately after the completion of this offering; or | |
| · | the average weekly trading volume of our common stock on all national securities exchanges and/or reported through the automated quotation system of a registered securities association during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale. |
Such sales under Rule 144 by our “affiliates” or persons selling shares on behalf of our “affiliates” are also subject to certain manner of sale provisions, notice requirements, and requirements related to the availability of current public information about us.
Restrictions on the Reliance of Rule 144 by Shell Companies or Former Shell Companies
Rule 144(i) “Unavailability to Securities of Issuers with No or Nominal Operations and No or Nominal Non-Cash Assets” provides that Rule 144 is not available for the resale of securities initially issued by an issuer that is a “shell company” as that term is defined in Section 405 of the Securities Act. The Company has previously been identified as a shell company until January 30, 2020 (see “Corporate History and Other Information”). Rule 144 is not available for resale of securities issued by any shell companies (other than business combination related shell companies) or any issuer that has been at any time previously a shell company. Rule 144(i) provides an important exception to this prohibition, however, if the following conditions are met:
| · | The issuer of the securities that was formerly a shell company has ceased to be a shell company; | |
| · | The issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; | |
| · | The issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Current Reports on Form 8-K; and | |
| · | At least one year has elapsed from the time that the issuer filed current comprehensive disclosure with the SEC reflecting its status as an entity that is not a shell company. |
As a result of the above, we expect that Rule 144 will first be available for the sale of our securities beginning one year after the date of this prospectus.
Transfer Agent
The transfer agent and registrar of our common stock is Issuer Direct Corporation, located at One Glenwood Avenue, Suite 1001, Raleigh, NC, 27603.
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Management
Directors and Executive Officers
The following table sets forth certain information regarding our directors and executive officers as of the date of this prospectus.
| Name | Age | Position(s) | DIRECTOR/OFFICER SINCE |
| Executive Officers | |||
| Matias Goldenhörn | 47 | Chief Executive Officer and Chairman | August 2022 |
| Carlos Carreno | 63 | Chief of Staff and Director | January 2023 |
| Omar Jimenez | 63 | Chief Financial Officer and Director | December 2024 |
| Non-Employee Directors | |||
| Huaxing “Jason” Lu | 37 | Director | December 2024 |
| Renata Szkoda | 48 | Director | December 2024 |
The following is a biographical summary of the experience of our directors and executive officers. Each director of the Company serves for a term of one year or until the successor is elected at the Company’s annual shareholders’ meeting and is qualified, subject to removal by the Company’s shareholders. Each executive officer serves at the discretion of the Board of Directors and holds office until the officer’s successor is duly elected and qualified, or until the officer’s earlier resignation or removal.
Matias Goldenhörn has been the CEO and Director of the Company since August, 2022, He had previously served five years as the Company’s Director – Latin America prior to his appointment as CEO and Director. Mr. Goldenhörn has over 20 years of management experience working with Fortune 500 companies including Walmart, Starbucks, Microsoft and Yum Brands! with specializations in the development of Latin American and Caribbean markets. His entrepreneurial success stems from his founding of Swift Trust a financial technology brand. Mr. Goldenhörn’s strengths include planning and implementing growth strategies, development of multi-national footprint expansions and a record of business development strategies and executions that reflect high yield, year-to-year growth. As a global business leader, he has managed teams near and far, reporting to both corporate officers and regional country directors. He is fully bilingual and has attended business school between 1995 to 1999 at Pontifica Universidad Católica Argentina ’Santa Maria de los Buenos Aires’. The Company believes that Mr. Goldenhörn is highly qualified to serve on the Company’s Board because of his business acumen.
Carlos Carreno has been a Director since January, 2023. Mr. Carreno was appointed as the Company’s Chief of Staff in August 2023. Mr. Carreno served as a consultant to the Company from March, 2023 until his appointment to the position of Chief of Staff of the Company. Mr. Carreno served from August 2021 until July 2022, as the Global Head of Financial Crime Compliance for Insigneo Financial Group in Miami, a global broker dealer, developing framework, control structure and governance, and managing five legal entities in Latin America and in the United States. From August 2017 until April 2021, Mr. Carreno was a Managing Director, Chief Compliance Officer, Director of regulatory compliance, Anti-Money-Laundering compliance and governance for Latin America with a global bank of HSBC based out of Mexico City. Mr. Carreno has over 25 years of compliance, risk management, governance and business development experience working with global banks and financial institutions, including IPB CitiBank, Banco Atlantico International, SunTrust Bank, Barclays, Banco Industrial de Venezuela, and Kroll. He is bilingual and attended the University of Central Florida. The Company believes that Mr. Carreno is highly qualified to serve on the Company’s Board because of his valuable experience in corporate governance, business development, financial and global risk management and compliance.
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Omar Jimenez has served as the Company’s Chief Financial Officer since January 16, 2025. Mr Jimenez, age 63, has held a variety of senior financial management positions during his career. Most recently, from March 2024 through December 2024, Mr. Jimenez served as a Board member, chairman of Audit Committee, Chief Financial Officer and Secretary of 180 Life Sciences Corp. (ATNF:NASDAQ), a clinical stage biotechnology company focused on the development of therapeutics in chronic pain, inflammation, fibrosis, and other inflammatory diseases. The Company recently pivoted business objectives and entered into online casinos and gaming operations using blockchain technology through asset acquisitions. From April 2021 until September 2024, Mr. Jimenez served as the Chief Financial Officer (Principal Financial/Accounting Officer) and Chief Compliance Officer of Golden Matrix Group, Inc. (GMGI:NASDAQ), an established business-to-business and business-to-consumer gaming technology company operating across multiple international markets. From February 2020 until April 2021, Mr. Jimenez served as the Chief Financial Officer and Chief Operating Officer of Alfadan, Inc. a pre-startup that will provide a series of marine specific engines. From September 2016 to January 2020 and from January 2016 to January 2020, Mr. Jimenez served as the Treasurer and Secretary and Chief Financial Officer and Chief Operating Officer, respectively, of Monaker Group, Inc. (MKGI:NASDAQ), a travel services company. Mr. Jimenez also served as a member of the Board of Directors of Monaker Group, Inc. from January 2017 to August 2019. From May 2009 to January 2016, he served as the founder of MARMEL International, Inc., a company that provides accounting and consulting services. In addition, from June 2004 to May 2009, he served as President and Chief Financial Officer at American Leisure Holdings, Inc. (AMLH:NASDAQ & ALG:AIM), focusing on leisure and business travel, hospitality & hotels, call centers and real estate development. Mr. Jimenez is a Certified Public Accountant (CPA), Chartered Global Management Accountant (CGMA), Chartered Property Casualty Underwriter (CPCU), a Member of the AICPA and FICPA. Mr. Jimenez holds a B.B.A in Accounting and a B.B.A in Finance from the University of Miami and an M.B.A from Florida International University.
Huaxing “Jason” Lu age 37, has been previously a director of the Company since March 2020 until January 2023. Mr. Lu has been a managing director at Komodo Bay Capital since May 2020. Prior to joining Komodo Bay Capital, he was a trader at 4170 Trading from February 2018 until May 2020, where he started and ran the cryptocurrency focused subsidiary, Grapefruit Trading. From March 2017 until February 2018, Mr. Lu worked in numerous other trading roles at Old Mission Capital, and prior to 2017, at MSR Investments (2011-2017). Mr. Lu graduated from the University of Illinois Urbana-Champaign in 2008 with a dual degree in Electrical Engineering and Economics.
Renata Szkoda age 48, has been a Chief Financial Officer of INX Digital Company, Inc.(“INX”), the owner of digital asset trading platforms, since May 2022 until May 2024. Prior to joining INX, she was a director of finance for Galaxy Digital, the financial services and investment management firm offering institutional-grade products and services in digital assets, from November 2020 to May 2022. From July 2014 to May 2022, Ms. Szkoda served as Chief Financial Officer and Chief Operating Officer of Blue Fire Capital, LLC. She had previously held various financial and accounting positions. Ms. Szkoda is seasoned financial executive who offers extensive experience in regulated capital markets and a strong record of achievement in building financial infrastructure and enabling business expansion via financial solutions, and delivering results with laser focus on financial performance. She currently serves as chair of the Global Digital Asset & Cryptocurrency Association, a global self-regulatory association for the digital assets and cryptocurrency industry which she co-founded. Ms. Szkoda graduated from the University of Illinois at Chicago in 1999 with a degree in Accounting (B.S.)
Family Relationships
There are no family relationships among any of our executive officers or directors.
Board Structure
Our business and affairs are managed under the direction of our Board, which currently consists of five members. Each of our current directors will continue to serve until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Board will stand for election at each annual meeting of stockholders. Each director will hold office for a one-year term and until the election and qualification of his or her successor. The authorized number of directors is set in our bylaws and can be determined from time to time solely by resolution of the Board.
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Our Board has designated Matias Goldenhörn, our Chief Executive Officer, to serve as Chairman of the Board. Combining the roles of Chief Executive Officer and Chairman allows one person to drive strategy and agenda setting at the board level while maintaining responsibility for executing on that strategy as Chief Executive Officer. Although our Amended Articles and bylaws do not require that we combine the Chief Executive Officer and Chairman positions, our Board believes that having the positions be combined is the appropriate leadership structure for us at this time. Our Board recognizes that, depending on the circumstances, other leadership models, such as separating the roles of Chief Executive Officer and Chairman, might be appropriate. Accordingly, our Board of Directors may periodically review its leadership structure. Our Board believes its administration of its risk oversight function has not affected its leadership structure.
We face a number of risks, including those described under the section titled “Risk Factors” included elsewhere in this prospectus. Our Board of Directors believes that risk management is an important part of establishing, updating, and executing on the Company’s business strategy. Our Board, as a whole and at the committee level, has oversight responsibility relating to risks that could affect the corporate strategy, business objectives, compliance, operations and the financial condition and performance of the Company. Our Board focuses its oversight on the most significant risks facing the Company and on its processes to identify, prioritize, assess, manage, and mitigate those risks. While our Board has an oversight role, management is principally tasked with direct responsibility for management and assessment of risks and the implementation of processes and controls to mitigate their effects on the Company. We have no independent directors as of the date of this prospectus.
Committees of the Board of Directors.
Due to the Company’s size, the Company has not formally designated a nominating committee, an audit committee, a compensation committee or committees performing similar functions. The Board currently acts as our audit committee.
Code of Conduct and Ethics
Our Board has adopted a Code of Ethics that applies to all of our employees, including our Chief Executive Officer and Chief Financial Officer. The Code of Ethics provides written standards that we believe are reasonably designed to deter wrongdoing and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships, full, fair, accurate, timely and understandable disclosure and compliance with laws, rules and regulations, including insider trading, corporate opportunities and whistleblowing or the prompt reporting of illegal or unethical behavior. We will provide a copy, without charge, to anyone that requests a copy of our Code of Ethics in writing by contacting us at our address provided in this prospectus.
Involvement in Certain Legal Proceedings
Except as otherwise disclosed below in paragraph (a), none of our directors and executive officers has been involved in any of the following events during the past ten years:
| (a) | any petition under the federal bankruptcy laws or any state insolvency laws filed by or against, or an appointment of a receiver, fiscal agent or similar officer by a court for the business or property of such person, or any partnership in which such person was a general partner at or within two years before the time of such filing, or any corporation or business association of which such person was an executive officer at or within two years before the time of such filing. Mr. Goldenhörn filed for personal bankruptcy through the filing of a Chapter 7 bankruptcy petition in 2019 and the bankruptcy was discharged in 2020. | |
| (b) | any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
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| (c) | being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining such person from, or otherwise limiting, the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; engaging in any type of business practice; or (iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; |
| (d) | being the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (c)(i) above, or to be associated with persons engaged in any such activity; | |
| (e) | being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission to have violated a federal or state securities or commodities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been reversed, suspended, or vacated; | |
| (f) | being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; | |
| (g) | being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| (h) | being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Indemnification Agreements
We have entered into indemnification agreements with each of our directors. The indemnification agreements have been effective since the beginning of the term of each respective director and require us to indemnify these individuals to the fullest extent permitted by Nevada law.
Shareholder Communications
Shareholders who wish to communicate with the Board may address their written correspondence to either the Board of Directors, or an individual director and mail it to the offices of the Company at the address on the front page of this prospectus.
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Executive AND DIRECTOR Compensation
Executive Compensation
Summary Compensation Table
The following table sets forth, for the fiscal years of 2023 and 2024, information regarding each element of all compensation awarded to, earned by or paid to Matias Goldenhörn, our Chief Executive Officer (since August 4, 2022), Tina Gregory, our Chief Financial Officer ( August 24, 2022 to May 27, 2024), Eyal Segal, our Interim Chief Financial Officer (May 2024 to January 2025), and Carlos Carreno, our Chief Operating Officer (since August, 2023), our named executive officers (collectively, the “Named Executive Officers” or “NEOs”). No other executive officers or directors received annual compensation in excess of $100,000 during the last two fiscal years.
| Name and Principal Position |
Year | Salary | Bonus | Stock | Option | Non- Equity |
Nonqualified | All Other | Total | ||||||||||||||||||
| ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ||||||||||||||||||||
| Matias Goldenhörn (1) | 2024 | 281,250 | 500,000 | – | – | – | – | – | 781,250 | ||||||||||||||||||
| Chief Executive Officer | 2023 | 300,000 | – | – | – | – | – | – | 300,000 | ||||||||||||||||||
| Tina Gregory (2) | 2024 | 100,517 | 100,000 | – | – | – | – | 200,517 | |||||||||||||||||||
| Former Chief Financial Officer | 2023 | 62,500 | 10,000 | – | – | – | – | 102,500 | 175,000 | ||||||||||||||||||
| Eyal Segal | 2024 | 88,143 | – | – | – | – | – | – | 88,143 | ||||||||||||||||||
| Former Interim Chief Financial Officer | |||||||||||||||||||||||||||
| Carlos Carreno (3) | 2024 | 184,167 | 82,250 | 266,417 | |||||||||||||||||||||||
| Chief of Staff/Chief Operating Officer | 2023 |
| (1) | Excludes $500,000 bonus accrued and awarded to our CEO in fiscal year 2023, and paid in March 2024; excludes the salary of $118,889 received by Mr. Goldenhörn in fiscal year 2022 as the Director of Latin America (for the period excludes a bonus in the amount of $300,000 awarded in fiscal year 2021 to Mr. Goldenhörn in fiscal year 2022 as the Director of Latin America (for the period excludes award of 43,564,230 shares of common stock in fiscal year 2021 to Mr. Goldenhörn as the Director of Latin America which have not been issued; excludes 15,000,000 shares awarded to Mr. Goldenhörn as equity compensation in fiscal year 2022 for his services as the CEO of the Company, which shares have not been issued as of the date of this prospectus. The 15,000,000 shares of common stock have not been included in this Summary Compensation Table because they have not been issued by the Company. The compensation for Mr. Goldenhörn’s services as the Director of Latin America (including equity) is not included in this Summary Compensation Table because such compensation was received prior to his appointment as the Company’s CEO. Mr. Goldenhörn was not the Company’s executive officer prior to his appointment as the Company’s Chief Executive Officer in August of 2022. |
| (2) | Ms. Gregory as the Company’s Chief Financial Officer, became the Company’s employee as of October 1, 2023 pursuant to the terms of the Offer Letter dated as of October 1, 2023. Includes $100,000 of bonus accrued and awarded in fiscal year 2023 and paid in March 2024. Ms. Gregory resigned as the Company’s Chief Financial Officer effective May, 27, 2024, and her resignation was accepted by the Company’s Board of Directors. |
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| (3) | Includes $86,250 bonus accrued and awarded in fiscal year 2023 and paid in March 2024; includes $71,700 paid to Mr. Carreno in consulting fees under his consulting agreement with the Company, prior to his appointment as Chief of Staff and later Chief Operating Officer; excludes $5,000 paid to Mr. Carreno in independent director fees. |
Outstanding Equity Awards at 2024 Fiscal-Year End
The Company: (i) did not grant any stock options to its executive officers or directors during the year ended December 31, 2024; (ii) did not have any outstanding equity awards as of December 31, 2024; and (iii) had no options exercised by its Named Executive Officers during the year ended December 31, 2024.
There are no outstanding options as of the date of this prospectus.
Compensation of Directors
Summary Director Compensation Table
The following table provides information regarding all compensation awarded to, earned by or paid to each person who served as a non-executive director of the Company during the year ended December 31, 2024. Other than as set forth in the table and described more fully below, the Company did not pay any fees, make any equity or non-equity awards, or pay any other compensation, to its non-employee directors. All compensation paid to its employee directors is set forth in the tables summarizing executive officer compensation above.
| Name | Fees Earned or paid in cash | Stock Awards | Option Awards | All Other Compensation | Total | |||||||||||||||
| Carlos Carreno | $ | 5,000 | 0 | 0 | 0 | $ | 5,000 | |||||||||||||
The table above does not include the amount of any expense reimbursements paid to the above directors. No directors received any Non-Equity Incentive Plan Compensation, Change in Pension Value and Nonqualified Deferred Compensation Earnings during the period presented. Does not include perquisites and other personal benefits, or property, unless the aggregate amount of such compensation is more than $10,000.
We reimburse directors for their reasonable out-of-pocket expenses, including travel, food, and lodging, incurred in attending meetings of our Board and/or its committees. Independent directors receive a quarterly stipend of $2,500. Mr. Carreno received $5,000 in stipends as of December 31, 2024 for his services as an independent director prior to becoming a consultant of the Company.
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Eric Gravengaard agreed to be a personal guarantor (as the Company’s more than 10% shareholder) in connection with the Company’s grant of certain business licenses. Mr. Gravengaard received $10,000 (as of the date of this prospectus) for providing his personal guaranty in 2022 and $5,000 in 2023 and $0 in 2024. Mr. Gravengaard has not received any fees for his services on the Board of Directors of the Company.
Consulting Agreements with Directors
The Company’s operating subsidiary, Athena Bitcoin, Inc. entered into an Independent Contractor Agreement as of January 1, 2023, with Antonio Valiente, the Company’s director for certain legal services, primarily related to, but not limited to, managing the legal and regulatory requirements for the Company’s global operations as Athena Bitcoin’s Deputy General Counsel. Mr. Valiente’s agreement provided for a monthly compensation of $8,500 for 20 hours of work per week (increased to $18,056 per month from October 2023). The Agreement can be terminated at any time by either party.
Carlos Carreno entered into a Consulting Agreement with the Company as of March 15, 2023 to provide certain advisory and consulting compliance services with respect to the Company’s business operations. Mr. Carreno was compensated based on an hourly fee of $200 per hour. The Agreement was terminated in July 2023 upon Mr. Carreno’s appointment as the Company’s Chief of Staff. There are currently no agreements between Mr. Carreno and the Company.
Equity Compensation Plans
In October 2021, the Company’s Board of Directors and its majority shareholders approved the Company’s 2021 Equity Compensation Plan providing for up to 100 million awards of shares of the Company’s common stock. On February 28, 2023, in conjunction with a signed contractor service agreement, the Company granted 2,000,000 Restricted Stock Units under the 2021 Plan.
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Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership of our capital stock outstanding as of the date of this prospectus by:
| · | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock; | |
| · | each of our directors; | |
| · | each of our named executive officers; and | |
| · | all of our directors and named executive officers as a group. |
The percentage ownership information is based on 4,094,459,545 shares of common stock outstanding as of February 11, 2025. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules attribute beneficial ownership of securities as of a particular date to persons who hold options or warrants to purchase shares of common stock and that are exercisable within 60 days of such date. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Except as otherwise noted below, the address for each person or entity listed in the table is c/o Athena Bitcoin Global, 1 SE 3rd Avenue, Miami, Florida 33131.
Principal Shareholders
| Name of Beneficial Owner | Number of shares beneficially owned (1) |
Percentage of shares beneficially owned |
||||||
| Directors and Named Executive Officers | ||||||||
| Matias Goldenhörn | 4,356,423 | *% | ||||||
| Tina Gregory | – | – | ||||||
| Carlos Carreno | – | – | ||||||
| Eric Gravengaard (2) | 1,151,484,077 | 28.1% | ||||||
| Antonio Valiente | – | – | ||||||
| All Named Executive Officers and Directors as a Group (5 persons) | 1,155,840,500 | 28.2% | ||||||
| 5% Stockholders | ||||||||
| Michael Komaransky (3) | 1,521,141,192 | 37.2% | ||||||
| Tom Kerestes (4) | 429,494,750 | 10.5% | ||||||
*Less than one percent
___________________
| (1) | Based on 4,094,459,545 shares of our common stock outstanding as of February 11, 2025. To calculate a stockholder’s percentage of beneficial ownership, the common stock outstanding and all shares of our common stock issuable to that person in the event of the conversion of outstanding Convertible Debentures owned by that person which are convertible within 60 days of the date of this prospectus. Convertible Debentures held by other stockholder(s) are disregarded in this calculation. Therefore, the denominator used in calculating beneficial ownership among our stockholders may differ. |
| (2) | Consists of: (i) 863,960,473 shares of common stock held of record by Eric Gravengaard, as Trustee of the Eric L. Gravengaard Trust of 2011 (the “Trust”), which shares Eric Gravengaard is deemed to beneficially own due to his position as trustee of the Trust and (ii) 287,523,604 shares of common stock held of record by Eric Gravengaard and does not reflect the ongoing transfer of 287,523,604 shares of common stock from Mr. Gravengaard to Liberty Digital Holdings, LLC. which has not been completed. Mr. Gravengaard resigned as the Company’s CEO on August 4, 2022. |
| (3) | Consists of: (i) 1,521,141,192 shares of common stock held of record by Athena Equity LLC, an entity beneficially owned and controlled by Mr. Komaransky. |
| (4) | Consists of: (i) 191,454,966 shares of common stock held of record by Swingbridge Crypto I LLC; (ii) 50,271,880 shares of common stock held of record by Swingbridge Crypto II LLC; (iii) and 187,767,904 shares of common stock held of record by Swingbridge Crypto III LLC. Tom Kerestes is the manager and beneficial owner of Swingbridge Crypto I LLC, Swingbridge Crypto II LLC and Swingbridge Crypto III LLC. |
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Certain Relationships and Related Party Transactions
Except as set forth below, there were no transactions during our fiscal years ended December 31, 2024 and 2023, to which we were a party, including transactions in which the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this registration statement. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
On January 31, 2020, the Company entered into a securities purchase agreement for Convertible Debenture with KGPLA Holdings LLC, an entity in which Mike Komaransky, the Company’s former director and principal shareholder, has a controlling beneficial ownership interest. The convertible debenture provided for a principal amount of $3,000,000, with a maturity date of January 31, 2025. Interest as defined in the securities purchase agreement is 8% per annum. KGPLA Holdings, LLC has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of September 30, 2024 and December 31, 2023, the outstanding principal debenture amount of $3,000,000 was presented under related party convertible debt in the consolidated balance sheet.
On January 31, 2020, the Company entered into a security purchase agreement for 8% Convertible Debenture with Swingbridge Crypto III, LLC., a shareholder of the Company. The convertible debenture provided for a principal amount of $125,000, with a maturity date of January 31, 2025. Interest as defined by the agreement was 8% per annum. Swingbridge Crypto III LLC. had the option to convert the outstanding principal and accrued interest balance into common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. As of December 31, 2021, the outstanding principal was $125,000. As of February 28, 2022, the principal amount and accrued interest was converted to 10,416,666 shares of the Company’s common stock at $0.012 conversion price per share. This debt conversion is included in the increase of 45,066,666 capital units in the Consolidated Statement of Stockholder’s Equity (Deficit) for the year ended December 31, 2022.
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On August 4, 2022, the Company completed a lending transaction with Mike Komaransky, the Company’s principal shareholder and former director, whereby the Company borrowed $500,000 from Mr. Komaransky pursuant to the terms of a secured promissory note and security agreement. The promissory note has an interest rate of 6% and the repayment of the principal amount and any accrued interest is secured by certain assets of the Company with respect to which Mr. Komaransky holds first priority lien and security interest. The terms of the secured promissory note and the security agreement were subsequently amended by the parties on January 17, 2023. Pursuant to the terms of the amended secured promissory note, the Company agreed to make monthly payments of $50,000 until the maturity date of the secured promissory note, which is on August 31, 2023. As of September 30, 2024 and December 31, 2023, the outstanding principal was $0.
As of May 15, 2023, the Company entered into a certain Senior Secured Loan Agreement, as amended (the “Loan Agreement”) and Senior Secured Revolving Credit Promissory Note (the “Revolving Credit Note”) with KGPLA Holdings LLC, an entity in which Mike Komaransky, a former director and principal shareholder of the Company has a controlling interest. The Revolving Credit Note allows the Company to borrow up to $4,000,000 for the operations of its New Bitcoin ATMs, as defined in the Loan Agreement, with a maturity date of May 15, 2024. Fees for these borrowings are calculated based on a percentage of the gross daily receipts generated from these machines and are recorded as part of Cost of Revenue in the Condensed Consolidated Income Statement. As of December 31, 2023 the outstanding principal of the Revolving Credit Note was $4,000,000. In connection with the above loan transaction and issuance of Revolving Credit Note, the Company granted KGPLA a first priority lien and security interest in and to all of the Company’s assets, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien. The principal of $4,000,000 together with applicable fees was repaid in full as of March 28, 2024.
The Company carries a payables balance to Red Leaf Advisors, an entity in which Eric Gravengaard, our former CEO and current director, has controlling interest for previous purchases of crypto assets. The outstanding balance due to Red Leaf Advisors was $407,000 as of September 30, 2024, December 31, 2023 and 2022, and is recorded in accounts payable, related party in the Consolidated Balance Sheets.
During the nine months ended September 30, 2024 and twelve months ended December 31, 2023, the Company incurred cash logistics services of $3,730,000 and $2,096,000 and ATM conversion cost of $0 and $1,149,000, respectively, to Swift Trust, LLC and subsequently Move On Security LLC. The current Chief Executive Officer and director of the Company has a 100% interest in Swift Trust, LLC. He also has a 50% interest in Move On Security LLC. As of September 30, 2024 and December 31, 2023 the Company recorded payables to Move On Security LLC, presented as part of accounts payable, related party in the Consolidated Balance Sheets of $797,000 and $389,000, respectively.
During the three and nine months ended September 30, 2024, the Company incurred $1,136 and $2,921, respectively for related services. The Company recorded payables to Move On Tech Service LLC, presented as part of Accounts payable, related party in the Condensed Consolidated Balance Sheets of $416 as of September 30, 2024.
Investors’ Rights Agreement
In January 2020, we entered into investors’ rights agreement (the “Investors’ Rights Agreement”) with certain holders of our 8% Convertible Debentures, including KGPLA Holdings, LLC and Swingbridge Crypto III LLC, each holder of the registration rights under the agreement is a holder of more than 5% of our capital stock. Mr. Komaransky, a beneficial owner of KGPLA Holdings LLC, is also a former member of our Board of Directors (resigned in May 2022). These stockholders are entitled to rights with respect to the registration of their shares issuable upon the conversion of 8% Convertible Debentures following the effectiveness of the registration statement of which this prospectus forms a part. For a description of these registration rights, see the section titled “Description of Capital Stock—Registration Rights.”
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Indemnification Agreements
We have entered into indemnification agreements with each of our current directors. The indemnification agreements, our Amended Articles, and our restated bylaws, require us to indemnify our Directors to the fullest extent not prohibited by Nevada law. Subject to certain limitations, our restated bylaws also require us to advance expenses incurred by our directors and officers. See also “Description of Capital Stock”.
Right of First Refusal and Co-Sale Agreement
In January 2020, we entered into a Right of First Refusal and Co-Sale Agreement with Eric Gravengaard, the Company’s officer, director and principal shareholder and investors in the 8% Convertible Debentures (the “Investors”) pursuant to which Mr. Gravengaard granted to the Company the right of first refusal to purchase all or any portion of common stock that he proposes to transfer, at the same price and terms as offered to the proposed transferee. Mr. Gravengaard also agreed to grant to the Investors, secondary refusal right to purchase all or any portion of the common stock proposed to be transferred by him that has not been purchased by the Company pursuant to the right of first refusal. See also “Description of Capital Stock”.
Conflicts of Interest and Policy Regarding Transactions with Related Persons
We do not have a formal, written policy for the review, approval or ratification of transactions between us and any director or executive officer, nominee for director, 5% stockholder or member of the immediate family of any such person that are required to be disclosed under Item 404(a) of Regulation S-K. However, our policy is that any activities, investments or associations of a director or officer that create, or would appear to create, a conflict between the personal interests of such person and our interests must be reviewed by our Board of Directors and determined in accordance with the applicable provisions of Nevada law, and specifically pursuant to Section 78.140 of the Nevada Revised Statutes, which provides restrictions on transactions involving interested directors or officers, including requirement of full disclosure of such interest to the Board of Directors, abstention from voting on the matter involving conflict of interest and the determination of the fairness of the transaction.
Use of Proceeds
We will not receive any proceeds from the sale of Common Stock by the selling security holders. All net proceeds from the sale of our Common Stock will go to the selling security holders as described below in the sections entitled “Selling Shareholders” and “Plan of Distribution.” We have agreed to bear the expenses relating to the registration of the Common Stock for the selling security holders.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We intend to retain future earnings, if any, to finance the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our Board of Directors after considering our financial condition, results of operations, capital requirements, business prospects and other factors our Board of Directors deems relevant.
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Selling ShareHolders
The Selling Shareholders named in this prospectus are offering 34,650,000 shares of common stock including up to 34,650,000 shares of common stock issued upon conversion of the principal amount of our outstanding 6% Convertible Debentures which were issued in connection with a private placement financing in 2021 (the “Private Placement”), see “Convertible Debentures” in the section entitled “Description of Capital Stock”. We are registering the resale of the shares of common stock underlying the Convertible Debentures that were converted into the Company’s common stock, as required by the Purchase Agreement, as defined in this prospectus, that we entered into with the Selling Shareholders as of June 22, 2021, which provided said Selling Shareholders with certain registration rights with respect to the common stock issuable upon conversion of the 6% Convertible Debentures. A total of $3,465,000 of the principal amount of the 6% Convertible Debentures was converted into the Company’s common stock, and $1,520,000 of the principal amount of the 6% Convertible Debentures was repaid in full. We will not receive any proceeds from the sale of shares being sold by Selling Shareholders.
The shares being offered hereby are being registered to permit public secondary trading, and the Selling Shareholders may offer all or part of the shares for resale from time to time, however, they are under no obligation to sell all or any portion of such shares nor are the Selling Shareholders obligated to sell any shares immediately upon effectiveness of this prospectus. The Selling Shareholders and their pledgees, donees, transferees, assignees, or other successors-in-interest may elect to sell their shares common stock covered by this prospectus, as and to the extent they may determine. As such, we will have no input if and when any Selling Shareholders may elect to sell their shares of common stock or the prices at which any such sales may occur. We cannot provide an estimate of the number of our securities that the Selling Stockholders will hold in the future. See the section titled “Plan of Distribution.”
The amount of shares of common stock of each Selling Shareholder registered pursuant to this prospectus has been arbitrarily determined by the Company and is not subject to any pre-existing agreement(s). The Selling Shareholders have furnished all information with respect to share ownership.
The Selling Shareholders have not, nor have they within the past three years had, any position, office, or other material relationship with us, other than as disclosed in this prospectus. See the sections titled “Management” and “Certain Relationships and Related Party Transactions” for further information regarding the Selling Shareholders.
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Selling ShareHolders
Beneficial Ownership of Common Stock After the Offering |
||||||||||||
| Name of Selling Shareholder | Number of Shares of Common Stock Prior to the Offering (1) | Common Stock Saleable Pursuant to This Prospectus | Number of Shares (2) |
Percent of Class (2) |
||||||||
| Purchasers of the 6% Convertible Debenture | ||||||||||||
| 2S HOLDINGS LLC | 375,000.00 | 375,000.00 | – | – | ||||||||
| ANTHONY TEMESVARY | 200,000.00 | 200,000.00 | – | – | ||||||||
| APRIL GIVEN | 250,000.00 | 250,000.00 | – | – | ||||||||
| BRANDON S REIF | 250,000.00 | 250,000.00 | – | – | ||||||||
| BRYAN BLOOM | 250,000.00 | 250,000.00 | – | – | ||||||||
| CAUFFIEL INVESTMENTS LLC | 300,000.00 | 300,000.00 | – | – | ||||||||
| CHARLES J WILDES IV | 250,000.00 | 250,000.00 | – | – | ||||||||
| CHRISTOPHER FAHY | 100,000.00 | 100,000.00 | – | – | ||||||||
| CORT BARRETT | 300,000.00 | 300,000.00 | – | – | ||||||||
| CRAIG HERKIMER | 500,000.00 | 500,000.00 | – | – | ||||||||
| DANIEL KING | 125,000.00 | 125,000.00 | – | – | ||||||||
| DANIEL J TUREK | 100,000.00 | 100,000.00 | – | – | ||||||||
| DANIEL WINOGRAD | 100,000.00 | 100,000.00 | – | – | ||||||||
| DAVID PERL | 250,000.00 | 250,000.00 | – | – | ||||||||
| EDWARD CRIMMINS | 250,000.00 | 250,000.00 | – | – | ||||||||
| ET FAMILY CORP | 250,000.00 | 250,000.00 | – | – | ||||||||
| FP AUSTRALIA LLC | 1,000,000.00 | 1,000,000.00 | – | – | ||||||||
| IAN SAMUEL | 100,000.00 | 100,000.00 | – | – | ||||||||
| IVANKOVICH FAMILY TRUST | 100,000.00 | 100,000.00 | – | – | ||||||||
| JAMES STEVEN GRANAT | 500,000.00 | 500,000.00 | – | – | ||||||||
| JAMES LYDIARD MEAD | 350,000.00 | 350,000.00 | – | – | ||||||||
| JARED MACKOUL | 250,000.00 | 250,000.00 | – | – | ||||||||
| JASON BURSTEIN | 200,000.00 | 200,000.00 | – | – | ||||||||
| JEFFREY STEVEN EVERSON | 500,000.00 | 500,000.00 | – | – | ||||||||
| JEFFREY CURTIS GOOCH | 250,000.00 | 250,000.00 | – | – | ||||||||
| JEROME KLINT | 250,000.00 | 250,000.00 | – | – | ||||||||
| JOHN CAUFFIEL | 500,000.00 | 500,000.00 | – | – | ||||||||
| JOHN CRICK | 750,000.00 | 750,000.00 | – | – | ||||||||
| JOHN HENRY SUPERSON | 500,000.00 | 500,000.00 | – | – | ||||||||
| JOHN WILLIAM WHITAKER, JR. AND HEIDI LELAND WHITAKER, CO-TRUSTEES OF THE JOHN WILLIAM WHITAKER, JR. TRUST DATED SEPTEMBER 24, 2009. | 250,000.00 | 250,000.00 | – | – | ||||||||
| JOHN-MARC BERTHOUD | 200,000.00 | 200,000.00 | – | – | ||||||||
| JONATHAN STEVEN BURSTEIN | 200,000.00 | 200,000.00 | – | – | ||||||||
| JONATHAN A CARSON | 500,000.00 | 500,000.00 | – | – | ||||||||
| JONATHAN LAMENSDORF | 1,000,000.00 | 1,000,000.00 | – | – | ||||||||
| JORDAN POSELL | 100,000.00 | 100,000.00 | – | – | ||||||||
| KYLE CETRULO | 100,000.00 | 100,000.00 | – | – | ||||||||
| LAWRENCE SPIELDENNER | 2,500,000.00 | 2,500,000.00 | – | – | ||||||||
| LIMPHAM LLC | 250,000.00 | 250,000.00 | – | – | ||||||||
| NICKY GATHRITE | 250,000.00 | 250,000.00 | – | – | ||||||||
| MATHEW THACKER | 250,000.00 | 250,000.00 | – | – | ||||||||
| MBL MANAGEMENT LLC | 250,000.00 | 250,000.00 | – | – | ||||||||
| MERCER STREET GLOBAL OPPORTUNITY FUND, LLC | 3,500,000.00 | 3,500,000.00 | – | – | ||||||||
| MICHAEL LEON | 100,000.00 | 100,000.00 | – | – | ||||||||
| MICHAEL O’GRADY | 500,000.00 | 500,000.00 | – | – | ||||||||
| ORGANIC GROWTH CAPITAL CORP | 350,000.00 | 350,000.00 | – | – | ||||||||
| PALINDROME MASTER FUND LP | 336,195.00 | 336,195.00 | – | – | ||||||||
| PAUL J KUSAK | 1,000,000.00 | 1,000,000.00 | – | – | ||||||||
| QUANT TWO LLC | 150,000.00 | 150,000.00 | – | – | ||||||||
| QUANTUM PARTNERS LP | 4,313,805.00 | 4,313,805.00 | – | – | ||||||||
| RKVP LLC | 2,600,000.00 | 2,600,000.00 | – | – | ||||||||
| RODOLFO I FLORES | 500,000.00 | 500,000.00 | – | – | ||||||||
| RYAN C MYERS AND KELSEY L MYERS | 500,000.00 | 500,000.00 | – | – | ||||||||
| RYAN MYERS | 1,000,000.00 | 1,000,000.00 | – | – | ||||||||
| STEVEN HELLER | 750,000.00 | 750,000.00 | – | – | ||||||||
| STEVEN ROSS PETERSON | 100,000.00 | 100,000.00 | – | – | ||||||||
| TARA S MAJEED | 250,000.00 | 250,000.00 | – | – | ||||||||
| TODD KLEIN | 2,500,000.00 | 2,500,000.00 | – | – | ||||||||
| TOI FUND LP | 1,000,000.00 | 1,000,000.00 | – | – | ||||||||
| WILLIAM STEWART JONES | 50,000.00 | 50,000.00 | – | – | ||||||||
| ZACH BROYER | 200,000.00 | 200,000.00 | – | – | ||||||||
| SUB TOTAL | 34,650,000.00 | |||||||||||
* Represents less than 1%
| (1) | Based on 4,094,459,545 shares of common stock issued and outstanding as of December 31, 2023. This registration statement covers a maximum of 34,650,000 shares. Assumes that each shareholder will sell all the shares registered in this prospectus. |
| (2) | This is on a non-diluted basis and reflects only the percentage of the issued and outstanding shares. |
To our knowledge, none of the Selling Shareholders is a registered broker-dealer or an affiliate of a broker-dealer.
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Plan of Distribution
This prospectus relates to the resale of an aggregate of 34,650,000 shares of our common stock, par value $0.001 per share.
The Selling Shareholders may, from time to time, sell any or all of the shares of our common stock covered by this prospectus at a fixed price of $[●] per share, representing the average of the high and low prices as reported on the OTC Markets on [●], 2025. If and when our common stock is regularly quoted on the OTCQX, or the OTCQB or listed on any national securities exchange or automated interdealer quotation system, the Selling Shareholders may sell all or a portion of their respective shares of common stock covered by this prospectus from time to time at prevailing market prices at the time of sale, at varying prices or at negotiated prices. A selling shareholder may use any one or more of the following methods when selling securities:
| · | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
| · | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; | |
| · | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | |
| · | an exchange distribution in accordance with the rules of the applicable exchange; | |
| · | privately negotiated transactions; | |
| · | in transactions through broker-dealers that agree with the selling stockholder to sell a specified number of such securities at a stipulated price per security; | |
| · | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | |
| · | a combination of any such methods of sale; or | |
| · | any other method permitted pursuant to applicable law. |
The Selling Shareholders may also sell securities under Rule 144 under the Securities Act of 1933, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as may be set forth in a supplement to this prospectus, in the case of an agency transaction, not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or mark down in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out such short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities that require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (however, in such case, we must file a prospectus supplement or an amendment to this registration statement under applicable provisions of the Securities Act amending it to include such successors in interest as Selling Shareholders under this prospectus).
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The Selling Shareholders might not sell any, or all, of the shares of our common stock offered pursuant to this prospectus. In addition, we cannot assure you that the Selling Shareholders will not transfer the shares of our common stock by other means not described in this prospectus.
The Selling Shareholders and any brokers, dealers, agents or underwriters that participate with the Selling Shareholders in the distribution of our common stock pursuant to this prospectus may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In this case, any commissions received by these broker-dealers, agents or underwriters and any profit on the resale of our common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. In addition, any profits realized by the Selling Shareholders may be deemed to be underwriting commissions. If the Selling Shareholders and any brokers, dealers, agents or underwriters that participate with the Selling Shareholders in the distribution of our common stock pursuant to this prospectus are deemed to be an underwriter, the Selling Shareholders and such other participants in the distribution may be subject to certain statutory liabilities and would be subject to the prospectus delivery requirements of the Securities Act in connection with sales of shares of our common stock.
The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Securities Exchange Act of 1934, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholder will be subject to applicable provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and will inform them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
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CHANGES IN ACCOUNTANTS
On September 13, 2024, the Company engaged FGMK LLC (“FGMK”), as its independent registered accounting firm to replace BF Borgers CPA PC’s (“BF Borgers”). The decision to change independent registered public accounting firms was made by the Board of Directors of the Company.
During the years ended December 31, 2022 and December 31, 2021, and the subsequent period through the engagement of FGMK, the Company did not consult with FGMK with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by FGMK that FGMK concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item 304 of Regulation S-K under the Exchange Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.
Effective May 6, 2024, the Company dismissed BF Borgers as its independent registered public accounting firm, which dismissal was approved by the Board of Directors of the Company.
BF Borgers’ audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2022 and December 31, 2021 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to audit scope or accounting principles.
BF Borgers’ audit opinion on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2022 and December 31, 2021 did contain a modification indicating that the Company’s historical operating losses raise substantial doubt about its ability to continue as a going concern.
During the fiscal years ended December 31, 2022 and 2021, and the subsequent interim period through the date of the dismissal of BF Borgers, there were no disagreements, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, between the Company and BF Borgers on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to BF Borgers’ satisfaction, would have caused BF Borgers to make reference to such disagreements in its audit reports. During the fiscal years ended December 31, 2022 and 2021, and the subsequent interim period through the date BF Borgers was dismissed, there were no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K.
The SEC has advised that, in lieu of obtaining a letter from BF Borgers stating whether or not it agrees with the statements herein, the Company may indicate that BF Borgers is not currently permitted to appear or practice before the SEC for reasons described in the SEC’s Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act, Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order, dated May 3, 2024.
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Legal Matters
Unless otherwise indicated, Law Office of Iwona J. Alami, Newport Beach, California, will pass upon the validity of the shares of our common stock to be sold in this offering.
EXPERTS
The consolidated financial statements of Athena Bitcoin Global as of December 31, 2023 and 2022, and for the years then ended, included in this prospectus, have been audited by FGMK, LLC, Chicago, Illinois, an independent registered public accounting firm, as stated in their report dated January 28, 2025. Such consolidated financial statements are included in reliance upon the report of such firm given their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by Nevada law, our Second Amended and Restated Articles of Incorporation, and our bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a Registration Statement on Form S-1 under the Securities Act, and the rules and regulations promulgated thereunder, with respect to the common stock offered hereby. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the exhibits thereto. While we have summarized the material terms of all agreements and exhibits included in the scope of this Registration Statement, for further information regarding the terms and conditions of any exhibit, reference is made to such exhibits. Upon effectiveness of this Prospectus, we will be subject to the reporting and other requirements of Section 15(d) of the Securities Exchange Act of 1934 and will file periodic reports with the Securities and Exchange Commission, including a Form 10-K for the year ended December 31, 2024. We will make available to our shareholders, annual reports containing financial statements audited by our independent auditors and our quarterly reports containing unaudited financial statements for each of the first three quarters of each year; however, we will not send the annual report to our shareholders unless requested by an individual shareholder or required by law.
For further information with respect to us and the common stock, reference is hereby made to the Registration Statement and the exhibits thereto. Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov or may be requested from us by contacting Matias Goldenhörn, our Chief Executive Officer, at the address set forth on the cover page of this prospectus.
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INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
Athena Bitcoin Global
| UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023: | |
| Condensed Consolidated Balance Sheets (Unaudited) | F-2 |
| Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) | F-4 |
| Condensed Consolidated Statements of Cash Flows (Unaudited) | F-5 |
| Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) | F-7 |
| Notes to Unaudited Condensed Consolidated Financial Statements | F-8 |
| CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2023 AND DECEMBER 31, 2022: | |
| Report of Independent Registered Public Accounting Firm (FGMK LLC, Chicago, IL Auditor Firm ID: 3968) | F-37 |
| Consolidated Balance Sheets | F-38 |
| Consolidated Statements of Operations and Comprehensive Income | F-40 |
| Consolidated Statements of Cash Flows | F-41 |
| Consolidated Statements of Shareholders’ Equity (Deficit) | F-43 |
| Notes to Consolidated Financial Statements | F-44 |
| F-1 |
Athena Bitcoin Global
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except number of shares)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 20,860 | $ | 18,105 | ||||
| Restricted cash held for customers | 1,034 | 255 | ||||||
| Crypto assets held | 781 | 421 | ||||||
| Accounts receivable | 1,109 | 625 | ||||||
| Prepaid expenses and other current assets | 1,781 | 425 | ||||||
| Total current assets | 25,565 | 19,831 | ||||||
| Property and equipment, net | 14,474 | 6,812 | ||||||
| Right of use assets – operating leases | 21,249 | 21,068 | ||||||
| Right of use assets – finance leases | – | 991 | ||||||
| Other noncurrent assets | 22 | 11 | ||||||
| Total assets | $ | 61,310 | $ | 48,713 | ||||
| Liabilities and stockholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 9,387 | $ | 6,027 | ||||
| Accounts payable, related party | 1,620 | 796 | ||||||
| Liability for cash held for customers | 1,034 | 255 | ||||||
| Operating lease liabilities, current portion | 8,721 | 7,205 | ||||||
| Finance lease liabilities, current portion | – | 1,075 | ||||||
| Income tax payable | 439 | 349 | ||||||
| Long-term debt, current portion | 138 | 546 | ||||||
| Short-term debt | 66 | 95 | ||||||
| Note payable, related party | – | 4,000 | ||||||
| Convertible debt, related party | 3,000 | – | ||||||
| Other current liabilities | 135 | 88 | ||||||
| Total current liabilities | $ | 24,540 | $ | 20,436 | ||||
See accompanying notes.
| F-2 |
Athena Bitcoin Global
Condensed Consolidated Balance Sheets (Unaudited), Continued
(in thousands, except number of shares)
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Long-term liabilities: | ||||||||
| Operating lease liabilities, net of current portion | $ | 12,528 | $ | 13,863 | ||||
| Deferred tax liabilities, net | 977 | 396 | ||||||
| Convertible debt, related party | – | 3,000 | ||||||
| Total liabilities | 38,045 | 37,695 | ||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.001 par value 5,000,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023 | – | – | ||||||
| Common stock, $0.001 par value 10,000,000,000 shares authorized; 4,095,009,545 and 4,094,459,545 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively. | 4,095 | 4,094 | ||||||
| Additional paid in capital | 11,982 | 11,926 | ||||||
| Accumulated income (deficit) | 7,460 | (4,747 | ) | |||||
| Accumulated other comprehensive loss | (272 | ) | (255 | ) | ||||
| Total stockholders’ equity | 23,265 | 11,018 | ||||||
| Total liabilities and stockholders’ equity | $ | 61,310 | $ | 48,713 | ||||
See accompanying notes.
| F-3 |
Athena Bitcoin Global
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)
(in thousands, except number of shares)
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Revenues | $ | 69,406 | $ | 65,652 | $ | 221,737 | $ | 120,216 | ||||||||
| Cost of revenues | 61,322 | 55,027 | 190,108 | 102,842 | ||||||||||||
| Gross profit | 8,084 | 10,625 | 31,629 | 17,374 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Technology and development | 376 | 132 | 904 | 402 | ||||||||||||
| General and administrative | 2,689 | 1,297 | 7,356 | 3,345 | ||||||||||||
| Sales and marketing | 542 | 41 | 1,424 | 240 | ||||||||||||
| Other operating expense | 349 | 42 | 767 | 106 | ||||||||||||
| Total operating expenses | 3,956 | 1,512 | 10,451 | 4,093 | ||||||||||||
| Income from operations | 4,128 | 9,113 | 21,178 | 13,281 | ||||||||||||
| Interest expense | 201 | 879 | 1,698 | 1,326 | ||||||||||||
| Fees on virtual vault services | 451 | 328 | 1,557 | 557 | ||||||||||||
| Other (income) expense | (3 | ) | 3 | 107 | 78 | |||||||||||
| Income before income taxes | 3,479 | 7,903 | 17,816 | 11,320 | ||||||||||||
| Income tax expense | 1,224 | 1,976 | 5,609 | 3,141 | ||||||||||||
| Net income | $ | 2,255 | $ | 5,927 | $ | 12,207 | $ | 8,179 | ||||||||
| Basic earnings per share | $ | 0.00057 | $ | 0.00149 | $ | 0.00307 | $ | 0.00206 | ||||||||
| Diluted earnings per share | $ | 0.00052 | $ | 0.00134 | $ | 0.00278 | $ | 0.00188 | ||||||||
| Weighted average shares outstanding - Basic | 3,975,611,408 | 3,975,320,084 | 3,975,611,408 | 3,975,320,084 | ||||||||||||
| Weighted average shares outstanding - Diluted | 4,456,401,260 | 4,471,917,365 | 4,462,165,814 | 4,479,128,161 | ||||||||||||
| Comprehensive income | ||||||||||||||||
| Net income | $ | 2,255 | $ | 5,927 | $ | 12,207 | $ | 8,179 | ||||||||
| Foreign currency translation adjustment, net of tax | 2 | (15 | ) | (17 | ) | (47 | ) | |||||||||
| Comprehensive income | $ | 2,257 | $ | 5,912 | $ | 12,190 | $ | 8,132 | ||||||||
See accompanying notes.
| F-4 |
Athena Bitcoin Global
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
For the nine months ended | ||||||||
September 30, 2024 | September 30, 2023 | |||||||
| Operating activities | ||||||||
| Net income | $ | 12,207 | $ | 8,179 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 3,219 | 1,531 | ||||||
| Impairment of crypto assets held | 419 | 342 | ||||||
| Deferred income tax | 581 | 267 | ||||||
| Realized loss on crypto assets | 39 | 23 | ||||||
| Crypto asset payments for expenses | 6,784 | 3,680 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Crypto assets held | (7,784 | ) | (4,200 | ) | ||||
| Accounts receivable | (485 | ) | (218 | ) | ||||
| Prepaid expenses and other assets | (1,368 | ) | 148 | |||||
| Liability for cash held for customers | 779 | (603 | ) | |||||
| Accounts payable and other liabilities | 4,024 | 946 | ||||||
| Net cash provided by operating activities | 18,415 | 10,095 | ||||||
| Investing activities | ||||||||
| Purchase of property and equipment | (9,369 | ) | (834 | ) | ||||
| Net cash used in investing activities | (9,369 | ) | (834 | ) | ||||
| Financing activities | ||||||||
| Proceeds of debt | 167 | 4,065 | ||||||
| Repayment of debt | (4,604 | ) | (2,661 | ) | ||||
| Payments in reduction of financing leases | (1,115 | ) | – | |||||
| Proceeds from issuance of stock | 57 | – | ||||||
| Net cash (used in) provided by financing activities | (5,495 | ) | 1,404 | |||||
| Effect of exchange rate changed on cash and cash equivalents | (17 | ) | (47 | ) | ||||
| Net increase in cash and cash equivalents | 3,534 | 10,618 | ||||||
| Cash, cash equivalents and restricted cash, beginning of period | 18,360 | 3,873 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 21,894 | $ | 14,491 | ||||
See accompanying notes.
| F-5 |
Athena Bitcoin Global
Condensed Consolidated Statements of Cash Flows (Unaudited), Continued
(in thousands)
| For the nine months ended | ||||||||
September 30, 2024 | September 30, 2023 | |||||||
| Cash, cash equivalents, and restricted cash consisted of the following: | ||||||||
| Cash and cash equivalents | $ | 20,860 | $ | 13,987 | ||||
| Restricted cash held for customers | 1,034 | 504 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 21,894 | $ | 14,491 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 217 | $ | 354 | ||||
| Cash paid for taxes | $ | 5,958 | $ | 2,258 | ||||
| Leased assets obtained in exchange for operating lease liabilities | $ | 7,454 | $ | 15,048 | ||||
| Leased assets obtained in exchange for finance lease liabilities | $ | – | $ | 1,049 | ||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Property and equipment purchased in credit | $ | 3,621 | $ | 132 | ||||
| Crypto assets used to buy property and equipment | $ | 181 | $ | 29 | ||||
| Crypto assets used to for interest | $ | 1,037 | $ | 984 | ||||
| Crypto assets used for other payments | $ | – | $ | 814 | ||||
See accompanying notes.
| F-6 |
Athena Bitcoin Global
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except number of shares)
| Common Stock Amount | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Total | |||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||||||||
| Balance, December 31, 2022 | 4,094,459,545 | $ | 4,094 | $ | 11,891 | $ | (15,943 | ) | $ | (175 | ) | $ | (133 | ) | ||||||||||
| Net income | – | – | – | 62 | – | 62 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | (5 | ) | (5 | ) | ||||||||||||||||
| Balance, March 31, 2023 | 4,094,459,545 | $ | 4,094 | $ | 11,891 | $ | (15,881 | ) | $ | (180 | ) | $ | (76 | ) | ||||||||||
| Net income | – | – | – | 2,190 | – | 2,190 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | (27 | ) | (27 | ) | ||||||||||||||||
| Balance, June 30, 2023 | 4,094,459,545 | $ | 4,094 | $ | 11,891 | $ | (13,691 | ) | $ | (207 | ) | $ | 2,087 | |||||||||||
| Net income | – | – | – | 5,927 | – | 5,927 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | (15 | ) | (15 | ) | ||||||||||||||||
| Balance, September 30, 2023 | 4,094,459,545 | $ | 4,094 | $ | 11,891 | $ | (7,764 | ) | $ | (222 | ) | $ | 7,999 | |||||||||||
| Balance, December 31, 2023 | 4,094,459,545 | $ | 4,094 | $ | 11,926 | $ | (4,747 | ) | $ | (255 | ) | $ | 11,018 | |||||||||||
| Net income | – | – | – | 6,046 | – | 6,046 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | (11 | ) | (11 | ) | ||||||||||||||||
| Balance, March 31, 2024 | 4,094,459,545 | $ | 4,094 | $ | 11,926 | $ | 1,299 | $ | (266 | ) | $ | 17,053 | ||||||||||||
| Net income | – | – | – | 3,906 | – | 3,906 | ||||||||||||||||||
| Issuance of stocks | 550,000 | 1 | 56 | – | – | 57 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | (8 | ) | (8 | ) | ||||||||||||||||
| Balance, June 30, 2024 | 4,095,009,545 | $ | 4,095 | $ | 11,982 | $ | 5,205 | $ | (274 | ) | $ | 21,008 | ||||||||||||
| Net income | – | – | – | 2,255 | – | 2,255 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | 2 | 2 | ||||||||||||||||||
| Balance, September 30, 2024 | 4,095,009,545 | $ | 4,095 | $ | 11,982 | $ | 7,460 | $ | (272 | ) | $ | 23,265 | ||||||||||||
See accompanying notes.
| F-7 |
Athena Bitcoin Global
Notes to Unaudited Condensed Consolidated Financial Statements
For the three and nine months ended September 30, 2024 and 2023
(in thousands, except number of shares)
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Athena Bitcoin Global (f.k.a. GamePlan, Inc.), a Nevada corporation, and its wholly owned subsidiary, Athena Bitcoin, Inc., a Delaware corporation (together referred to as “Athena Global” or “the Company”) is a provider of various crypto asset transaction platforms, including the operation of automated teller machines (ATMs) and personalized services (Athena Plus) for the purpose of selling and buying crypto assets, white-label operations and payment services. The Company’s network of Athena Bitcoin ATMs is active in thirty-three states and the territory of Puerto Rico in the United States, and 4 countries in Central and South America as of September 30, 2024. The Company places its machines in convenience stores, shopping centers, and other easily accessible locations.
The Company has changed its name to Athena Bitcoin Global from GamePlan, Inc. in a filing with the Secretary of State of the State of Nevada effective as of April 15, 2021.
Athena Bitcoin Global was a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act) immediately before the completion of the transactions described below. Athena Bitcoin Global was incorporated in the state of Nevada in 1991 under the name “GamePlan, Inc.” for the sole purpose of merging with Sunbeam Solar, Inc., a Utah corporation, which merger occurred as of December 31, 1991. The Articles of Merger were filed in the state of Nevada pursuant to which the Company was the surviving entity following the merger. The Company was involved in various businesses, including gaming and other consulting services, prior to becoming a company seeking acquisitions. The Company filed form 10-SB with the Securities and Exchange Commission in September 1999 thus becoming a reporting company under section 12(g) of the Securities and Exchange Act of 1934. The Company subsequently filed Form 15 in March 2015, terminating its reporting status.
On January 14, 2020, Athena Bitcoin Global (f.k.a. GamePlan, Inc.) entered into a Share Exchange Agreement (the “Agreement”), by and among the Company, Athena Bitcoin, Inc., a Delaware corporation (“Athena”) founded in 2015, and certain shareholders of Athena Bitcoin, Inc. The Agreement provides for the reorganization of Athena Bitcoin, Inc., with and into Athena Bitcoin Global (f.k.a. GamePlan, Inc.), resulting in Athena Bitcoin, Inc. becoming a wholly owned subsidiary of Athena Bitcoin Global upon the closing of the transaction. The agreement is for the exchange of 100% shares of the outstanding Common Stock of Athena Bitcoin, Inc., for 3,593,644,680 shares of Athena Bitcoin Global common stock (an exchange rate of 1,244.69 shares of Athena Bitcoin Global stock for each share of Athena Bitcoin, Inc. stock). The closing of the transaction occurred as of January 30, 2020.
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805-10-55-12, because the former shareholders of Athena Bitcoin, Inc. acquired the majority (88%) of the voting rights of the Company and control of the Company’s board of directors and senior management of Athena Bitcoin, Inc. became management of the combined entity, the Company determined that the Share Exchange was a reverse acquisition.
As the Share Exchange is considered a reverse acquisition, in accordance with FASB ASC 805-40-45-2, for financial statement purposes Athena Bitcoin, Inc. is considered the accounting acquiror. Accordingly, the historical financial statements prior to the Share Exchange are those of Athena Bitcoin, Inc., except that the historical equity of Athena Bitcoin Global has been retroactively restated to reflect the number of shares received in the business combination at the exchange rate of 1,244.69 shares of Athena Bitcoin Global common stock for each share of Athena Bitcoin, Inc. common stock. The historical common stock carrying amount has been adjusted to reflect the revised par value of the outstanding stock and the corresponding offset was reflected in the additional paid-in capital. All share and per share information included in these financial statements have been adjusted to reflect the 1,244.69 to 1 share conversion.
| F-8 |
In 2018, the Company issued a series of instruments called “Simple Agreements for Future Tokens” (SAFTs) in exchange for investments in cash or crypto assets. The SAFTs entitled holders to receipt of tokens representing equity in the Company under certain pre-defined circumstances. These include a qualified financing event in which the Company raised $15,000 or more in a single transaction, a “corporate transaction” (sale of all or substantially all of the Company’s assets), or a dissolution. In connection with the Share Exchange, the SAFT Notes were converted into 1,653,425,404 shares of Athena Bitcoin, Inc. (which were then exchanged for Athena Bitcoin Global common stock). Additionally, warrants to purchase 115,888,490 shares of Athena Bitcoin, Inc.’s common stock were exercised for proceeds of $69. These shares were then exchanged for Athena Bitcoin Global common stock). Additionally, Swingbridge notes were converted into 419,078,082 shares of Athena Bitcoin, Inc’s common stock (which was then exchanged for Athena Bitcoin Global common stock). Lastly, 157,635,309 shares of Athena Bitcoin, Inc. were issued upon exercise of stock options (which was then exchanged for Athena Bitcoin Global common stock).
There were 4,079,815,704 shares of Athena Bitcoin Global’s common stock outstanding following the closing date of the transaction.
Athena Bitcoin Global subsequently purchased and cancelled 30,422,825 shares.
There were two debt conversions in fiscal year 2022 resulting in the issuance of 45,066,666 shares of common stock.
Athena Bitcoin Global has 4,095,009,545 and 4,094,459,545 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively, and authorized capital of 10,000,000,000 shares as of September 30, 2024 and December 31, 2023.
Principles of Consolidation
The accompanying condensed consolidated financial statements include the accounts of Athena Bitcoin Global, Athena Bitcoin, Inc. and its wholly owned subsidiaries, Athena Bitcoin S. de R.L. de C.V., incorporated in Mexico; Athena Holdings Colombia SAS, incorporated in Colombia; Athena Holding Company S.R.L, incorporated in Argentina; Athena Holdings of PR LLC, incorporated in Puerto Rico; Athena Holdings El Salvador, S.A. de C.V., incorporated in El Salvador; and Athena Business Holdings Panama S.A. incorporated in Panama. All significant intercompany account balances and transactions have been eliminated in consolidation.
A summary of the Company’s significant accounting policies is as follows:
Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Significant estimates and assumptions made by management are used for, but not limited to, the useful lives of property and equipment and impairment assessment for long-lived assets. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
| F-9 |
Revenue Recognition
Revenue Recognition
The Company derives its recurring revenues primarily from three sources: (i) sale of crypto assets at Athena Bitcoin ATMs, (ii) customized investor trading services for the sale or purchase of crypto assets through our Athena Plus desk and (iii) white label operations in El Salvador. The Company also generates revenue from ancillary items, such as sale of intellectual property and maintenance of software. The Company adopted FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019, using the modified retrospective method. Under ASC 606, the Company recognizes revenue at the point of sale or over time of the service period for these products or services to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company determines revenue recognition through the following five steps:
| · | Identification of the contract, or contracts, with a customer | |
| · | Identification of the performance obligations in the contract | |
| · | Determination of the transaction price | |
| · | Allocation of the transaction price to the performance obligations in the contract | |
| · | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied.
Judgment is required in determining whether we are the principal or the agent in transactions between customers. We evaluate the presentation of revenue on a gross or net basis based primarily on inventory risk (are we at risk for potentially fluctuations of the crypto asset price) and whether we control the crypto asset provided before it is transferred to the customer or whether we act as an agent by arranging for others to provide the crypto asset to the customer.
The Company enters into contracts that may include multiple performance obligations. The Company identifies the promises in the contract and assigns them to their appropriate performance obligation. These performance obligations may be part of a different revenue source and are listed separately below.
Athena Bitcoin ATM
The Company requires all users of the Athena Bitcoin ATM to agree to ATM Terms of Service. The ATM Terms of Service stipulate the terms and conditions of the transaction. The user, by inserting fiat currency and confirming that they agree to the transaction, is agreeing to the contract that governs the transaction. This contract meets all of the criteria to be a revenue contract under ASC 606.
The Company has a single performance obligation to provide a specific quantity of a crypto asset to the customer’s crypto wallet. We utilize a mark-up for crypto assets sold to the customer. Athena Bitcoin ATMs permit customers to purchase as little as one US dollar of Bitcoin. The Company considers itself the principal in this arrangement, as it controls the crypto asset prior to delivering, incurs inventory risk due to potential fluctuations in the market price of the crypto asset and has discretion in establishing the price of the crypto asset sold in the Athena Bitcoin ATM machine. Therefore, it records the gross cash received from the customer as the transaction price for the performance obligation.
Revenue is recognized at the point in time when the crypto asset is delivered to the customer’s crypto wallet. Delivery to the customer’s crypto wallet is governed by the crypto asset’s blockchain and typically less than an hour.
| F-10 |
Athena Plus
The Company requires all users of Athena Plus to agree to Athena Plus Terms of Service. The Athena Plus Terms of Service stipulate the terms and conditions of the transaction. The user, by wiring fiat currencies to the Company’s bank account, is agreeing to the contract that governs the transaction. This contract meets all of the criteria under ASC 606.
The Company has a single performance obligation to provide a specific quantity of a crypto asset to the customer’s crypto wallet. We utilize a mark-up for crypto assets sold to the customer. The minimum transaction is $10 (or equivalent value of local currency). The Company considers itself the principal in this arrangement, as it controls the crypto asset prior to delivering, incurs inventory risk due to potential fluctuations in the market price of the crypto asset and has discretion in establishing the price of the crypto asset sold. Therefore, it records the gross cash received from the customer as the transaction price for the performance obligation. The only exception for this are stable coins, which are considered financial assets. As such, the Company, in accordance with FASB ASC 860-20, Sale of Financial Assets, will recognize revenue net (markup) for any sale of stable coins.
Revenue is recognized at the point in time when the crypto asset is delivered to the customer’s crypto wallet. Delivery to the customer’s crypto wallet is governed by the crypto asset’s blockchain.
White-label Service
The Company entered into multiple contracts that govern the white-label service with the government of El Salvador for ATMs located in El Salvador and in the United States. These contracts detail the obligations and rights of both parties, including pricing and meet all of the criteria under ASC 606. The contracts permit the customer to terminate the contract at any point or to adjust the number of ATMs that are in use without a substantive penalty. This results in each ATM and each service month for the ATM being considered a separate revenue contract per ASC 606.
The Company makes multiple promises to the customer. This includes installation as well as multiple promises for operating the ATMs on behalf of the customer. Installation is a separate performance obligation. This is due to the customer benefitting from the installation, the customer’s ability to utilize a third-party to perform the installation if desired, no significant modification or customization is part of the installation, no significant integration of installation with operating the ATMs and installation does not affect the operating of the ATMs performance obligation (discussed below). This results in installation services being capable of being distinct and distinct in the context of the contract.
The Company is responsible under the White Label Service for operating the ATMs on behalf of the customer over the month service term. The promises that are in the contract may vary each day, for instance performing cash logistics services, testing or repairing the machines. However, these services are highly integrated to provide a combined output (operating ATMs for the customer). These are not services that the Company offers separately and by providing them together, it ensures a cohesive and effective approach to operating the ATMs for the customer. This integrated approach is critical to the value that the Company is offering the customer. As such, given the interrelated nature of the service, this results in a single performance obligation.
This single performance obligation meets the definition of continuous service obligation due to the Company continuously managing operations of their ATMs. There is no defined number of services that are provided each month. The Company is required to provide the same service each month to operate the ATMs, pricing resets each month and customer does not make separate purchase decisions. Each fulfilment activity may have separate pricing but the approval for these services is considered perfunctory, as these activities are all necessary to ensure that the ATMs operate in accordance with the terms of the service agreement.
| F-11 |
The Company evaluated if this meets the definition of a series. Each increment of the promised service to operate the machines (i.e., each day) is distinct in accordance with ASC 606. This is because the customer can benefit from each increment of service on its own (it is capable of being distinct) and each increment of service is separately identifiable because no day of service significantly modifies or customizes another, and no day of service significantly affects either the entity’s ability to fulfill another day of service or the benefit to the customer of another day of service. Therefore, the days are substantially the same and have the same pattern of transfer. Therefore, this meets the criteria to be considered part of a series.
One of the promises included in operating the ATM performance obligation is providing Company owned ATMs to the customer. The Company elected the expedient in FASB ASC 842, Leases (“ASC 842”), which permits combining the lease and non-lease components together if the lease component has the same timing and pattern of transfer as the non-lease component and the lease component is an operating lease. Both of these conditions are met. Given that that the predominant obligation is the non-lease component (servicing the ATM), the Company, in accordance with ASC 842, will account for the performance obligation under the terms of ASC 606.
The Company charges a fixed fee for installation when determined by contract and the Company always charges a fixed fee each month for operating the ATMs. The fixed fees collected are allocated to the performance obligations based on an adjusted market assessment approach.
The Company charges the customer for services necessary to operate the ATMs, including repairs and cash logistics. The fees are included in the contract. The fees meet the definition of variable consideration, as it is dependent on the specific service performed, which is not known before each service term. The Company applies the variable consideration allocation exception, as noted in ASC 606. This is met due to the variable payment being specific to the Company transferring a specific service and the allocation is consistent with the allocation objective in ASC 606. As such, the Company recognizes the variable transaction fee when they perform the specific service to which it relates. The additional services and reimbursement of costs do not meet the definition of a material right, as this is not considered an option to acquire additional good or service but part of the existing contract. These services are considered perfunctory, as they are necessary for the Company to fulfill its performance obligation to operate the machines on behalf of the customer.
The Company is considered the principal, as it controls any third-party good or service before it is transferred to the customer.
For operating the ATM, revenue is recognized straight line over the requisite service period, which is one month. For installation, revenue is recognized at the point in time when installation is complete. The variable transaction fees are recognized in the month in which the Company has earned the fee.
Cost of Revenues
Cost of revenues consists primarily of expenses related to the acquisition of crypto assets (including the costs to purchase crypto assets from users in our ATMs and from third-party exchanges). The Company assigns the costs of crypto assets sold in its revenue transactions on a first-in, first-out basis.
Additionally, cost of revenues includes the costs of operating the ATMs from which some of the crypto assets are sold (including the associated rent expense, related incentives, ATM cash losses, software licensing fees for the ATMs, depreciation, insurance, and utilities), crypto asset impairment and fees paid to service the ATMs and transport cash to the banks.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include cash maintained at various financial institutions, cash in transit, and cash in ATMs owned and leased by the Company.
The Company maintains cash balances at various financial institutions. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation (FDIC) up to $250 per institution. The Company has deposits in excess of the FDIC-insured limit. The Company has not experienced any losses in such accounts and believes that it is not exposed to significant credit risk due to the financial position of the depository institutions, third-party crypto exchanges or investment vehicles in which those deposits are held. The Company has significant cash in ATMs, held on various third-party crypto exchanges and in transit with cash logistic providers.
| F-12 |
Cash in transit consists of cash that is picked up by armored truck companies from the Company’s ATMs but not yet deposited in the Company’s bank accounts. As of September 30, 2024 and December 31, 2023, the Company had cash in transit of $6,794 and $6,164, respectively. Management evaluates cash in transit based on outstanding cash deposits on cash picked up by the armored truck companies, historical cash deposits and cash that is lost during transit, which is immaterial. The armored truck companies maintain insurance over theft and losses.
Restricted Cash Held for Customers
Restricted cash held for customers consists of money on hand received from white-label customers for replenishment of ATMs.
Accounts Receivable
Accounts receivables are stated at the amount the Company expects to collect. In 2021 the Company adopted FASB ASC 326 – Financial Instruments - Credit Losses. This methodology is referred to as the current expected credit loss (“CECL”) method and replaces the previous incurred loss methodology. The measurement of CECL applies to all financial assets measured at amortized cost, including receivables for revenue. The Company recognized no allowance for credit losses as of September 30, 2024, December 31, 2023, and December 31, 2022, respectively, utilizing the CECL methodology.
Leases
The Company determines if an arrangement is a lease at inception. The Company determines if an arrangement is a lease, or contains a lease, primarily by determining if the arrangement conveys to the Company the right to control or use an identified asset. The Company classifies its arrangements for ATM retail spaces as operating leases. The Company has classified certain arrangements for ATMs as finance leases. The Company does not have any significant arrangements where it is the lessor.
The Company elected to separate lease and non-lease components for arrangements where the Company is a lessee. The Company determined the relative standalone price of the separate lease components and non-lease components by utilizing observable information to estimate the standalone price of each component. The Company allocated the consideration on a relative standalone price basis to the separate lease components and the non-lease components of the contract.
Leases with an initial lease term of 12 months or less are not recorded on the condensed consolidated balance sheets. Operating lease expense is recognized on a straight-line basis over the lease term.
Operating and finance lease right of use (“ROU”) assets and operating and finance lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The right of use assets are shown net of subsequent amortization. For purposes of calculating lease obligations under the standard, the Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company’s leases do not contain material residual value guarantees or material restrictive covenants. The discount rate used to measure a lease obligation should be the rate implicit in the lease; however, the Company’s leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term while finance lease ROU assets are amortized on a straight-line basis and interest expense is recorded over the lease term based on the incremental borrowing rate and the amount of lease liability outstanding during each month.
The operating and finance lease asset also includes any initial direct costs and lease payments made prior to lease commencement and excludes lease incentives incurred.
| F-13 |
Concentration of Credit Risk
The Company’s revenues, other than white-label services below, are generated primarily from ATM sales to customers located in the United States and Latin America. As the Company collects all amounts from these customers and holds $0 in accounts receivable from its ATM or over the counter customers, there is no credit risk associated with customer concentration for these customers.
The Company has revenues from white-label services in El Salvador and ancillary sales to customers where it provides services on customary credit terms, typically Net 30 or Net 60. As of September 30, 2024 and December 31, 2023, one customer, Chivo, Sociedad Anónima de Capital Variable represents substantially all of our total accounts receivable balance.
No single customer is responsible for over 10% of revenue.
Property and Equipment, Net
Property and equipment are stated at cost, net of accumulated depreciation. Equipment is depreciated over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful lives of improvements or the term of the related lease. Repairs and maintenance costs are expensed as incurred.
Following are the estimated useful lives by type:
| Computer equipment | Three years |
| ATM equipment | Three years |
| Office equipment | Six years |
| Capitalized software | Five years |
Capitalized software consists of costs related to the design, coding, testing and documentation of software, as well as salaries and compensation costs for employees, fees paid to third-party consultants who are directly involved in development efforts, and costs incurred for upgrades and enhancements to add functionality of the software. Other costs that do not meet the capitalization criteria are expensed as incurred. The criteria for capitalization include the completion of the preliminary project stage, demonstration of feasibility of the project and the ability to reliably estimate future economic benefits. Capitalized software is subject to periodic impairment tests to ensure that the carrying value of the asset is not overstated. If an impairment is identified, the carrying value of the capitalized software will be reduced to its recoverable amount.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment in accordance with the FASB ASC 360 – Property, Plant and Equipment whenever events or changes in circumstances have indicated that an asset may not be recoverable. Management has determined an impairment of long-lived assets relating to crypto assets held as of September 30, 2024 and December 31 2023 as discussed in the next section. In addition, on December 31, 2023 the Company recognized an impairment for its capitalized software cost of $2,383 as discussed in Note 6.
Crypto Assets Held
Crypto assets are considered indefinite-lived intangible assets under FASB ASC 350 – Intangibles—Goodwill (“ASC 350”) and are initially measured at cost and are not amortized. As intangible assets, the crypto assets held are initially recorded at cost and tested for impairment at the end of the month. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the crypto asset at the time its fair value is being measured in its principal market. The Company continuously assesses crypto assets for impairment.
| F-14 |
The Company purchases Bitcoin, which is held in the Company’s hot wallets, on a just-in-time basis to facilitate sales to customers and mitigate exposure to volatility in Bitcoin prices. As of July 19, 2023, the Company only transacts in Bitcoin at its bitcoin automated teller machines (“BTMs”) in exchange for cash, on a predetermined markup at the time of the transaction. However, there may be multiple days between the purchase of the crypto asset and the sale of the crypto asset. The Company has determined that a decline in the quoted market price below the carrying value at any time during the assessed period is viewed as an impairment indicator because the cryptocurrencies are traded in active markets where there are observable prices. Therefore, the fair value is used to assess whether an impairment loss should be recorded. If the fair value of the cryptocurrency decreases below the initial cost basis or the carrying value during the assessed period, an impairment charge is recognized at that time in cost of revenue in the condensed consolidated statements of operations and comprehensive income. After an impairment loss is recognized, the adjusted carrying amount of the cryptocurrency becomes its new accounting basis and this new cost basis will not be adjusted upward for any subsequent increase in fair value. For purposes of measuring impairment on its cryptocurrencies, the Company determines the fair value of its cryptocurrency on a non-recurring basis in accordance with FASB ASC 820 – Fair Value Measurement (“ASC 820”), based on quoted (unadjusted) prices active exchanges in the United States that the Company has determined is its principal market (Level 1 inputs). The Company assigns cost to transactions on a first-in, first-out basis. Gains on such assets are not recorded or recognized until their final disposition. The Company had impairment charges related to crypto assets held of $293 and $168 for the three months ended September 30, 2024 and 2023, respectively and $419 and $342 for the nine months ended September 30, 2024 and 2023, respectively.
When Bitcoin is sold to customers, the Company relieves the adjusted cost basis of the crypto asset, net of impairments, on a first-in, first-out basis within cost of revenue. The related cash flows from purchases and sales of cryptocurrencies are presented as cash flows from investing activities on the condensed consolidated statements of cash flows.
Expenses Paid in Crypto Assets
The Company enters into agreements with certain vendors and service providers that provide us with the option to settle their invoices in crypto assets. The amount due is fixed and is denominated in USD. There are no payment terms that include conversion options, variable settlement features, or alternative settlement provisions contingent upon future events or market price fluctuations that could potentially give rise to embedded derivatives.
The Company considers the guidance in FASB ASC 350, FASB ASC 606, FASB ASC 610, and FASB ASC 845 when it evaluates the derecognition of its crypto assets paid to vendors in lieu of cash payments. In these transactions, we have been invoiced by a vendor and given the option to pay in USD or crypto assets, typically Bitcoin. The amount of Bitcoin is determined by the market wide and easily determined price in accordance with the guidance of FASB ASC 820. The Company records as an expense the USD value of the invoice and then considers the above references to determine the proper way to derecognize the intangible long-lived asset used as payment.
We consider the scoping exceptions for each of those topics and conclude that that the scope of 610-20 most closely matched the facts of the transactions. ASC 610-20-15-2 states “nonfinancial assets within the scope of this Subtopic include intangible assets,” which is how the company treats crypto assets.
We evaluated two possibilities to exclude these transactions from the scope FASB ASC 845, Nonmonetary Transactions. The relevant exceptions to the scope of that Topic are as follows:
| 1. | The transfer of goods or services in a contract with a customer within the scope of ASC 606 in exchange for noncash consideration (ASC 845-10-15-4(j)) | |
| 2. | The transfer of a nonfinancial asset within the scope of ASC 610-20 in exchange for noncash consideration (ASC 845-10-15-4(k)) |
For these transactions, our usage of the crypto asset is as a payment instrument to a vendor, therefore our interpretation of (1) above is for ASC 606 not to apply. We interpret (2) above to apply when the Company pays a vendor (who is not a customer) with a crypto asset (nonfinancial asset) in lieu of paying that same vendor with fiat currency (USD). Therefore, we account for the derecognition of the crypto assets, in these transactions, under the guidance of ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets. This is the same guidance as in ASC 350-10-40-1, Transfer or Sale of Intangible Assets.
| F-15 |
ASC 610-20-15-2 explicitly states the scope to include intangible assets. We treat crypto assets as intangible assets. We then apply the general principle of ASC 610-32-2 for recognizing the gain or loss for the difference between the amount of goods or services we receive (fair market value, per ASC 820 Level 2) and the cost of acquiring the crypto asset.
We record invoices from vendors in the appropriate expense category, in the correct time period in which services were provided, in USD and for vendors who elect to be paid in crypto assets, we transfer the crypto assets at market value at the time of transfer in line with ASC 820, Fair Value Measurement. We then recognize as a gain or loss, the difference between the current carrying value of the crypto asset, less impairment and its value at the time of transfer to cost of revenues in the condensed consolidated statements of operations and comprehensive income.
The Company had losses related to the derecognition of crypto assets of $5 and $22 for the three months ended September 30, 2024 and 2023 and $39 and $23 for the nine months ended September 30, 2024 and 2023, respectively.
Crypto Assets Held for Customers
Crypto assets held for customers represents the Company’s obligation to safeguard certain customers’ crypto assets in digital wallets on the Company’s platform from a prior service offering. The Company safeguards crypto assets for customers in digital wallets and portions of cryptographic keys necessary to access crypto assets on the Company’s platform. The Company safeguards these assets and/or keys and is obligated to safeguard them from loss, theft, or other misuse. The Company records customer crypto assets as well as corresponding customer crypto liabilities, in accordance with Staff Accounting Bulletin No. 121 (“SAB 121”).
The Company maintains a record of all customer assets in segregated digital wallets held by the Company as well as the private keys to the crypto assets, which are maintained on behalf of customers. For crypto assets where the Company does not maintain a private key or the ability to recover a customer’s private key, these balances are not recorded, as there is no related safeguarding obligation in accordance with SAB 121.
The Company records the assets and liabilities, on the initial recognition and at each reporting date, at the fair value of the crypto assets which it safeguards for its customers. The Company has committed to securely store all crypto assets and cryptographic keys (or portions thereof) it holds on behalf of customers, and the value of these assets have been recorded as customer crypto liabilities and corresponding customer crypto assets. As such, the Company may be liable to its customers for losses arising from theft or loss of private keys. The Company has no reason to believe it will incur any expense associated with such potential liability because it has established security around private key management to minimize the risk of theft or loss. The Company holds the customer crypto assets on a 1:1 basis. Any loss or theft would impact the measurement of the customer crypto assets. During the three and nine months ended September 30, 2024 and 2023, no material losses have been incurred in connection with customer crypto assets.
Foreign Currency
The functional currency of our wholly owned subsidiaries is the currency of the primary economic environment in which the Company operates. Our foreign subsidiaries that utilize foreign currency as their functional currency translate such currency into U.S. dollars using (i) the exchange rate on the balance sheet dates for assets and liabilities, (ii) the average exchange rates prevailing during the period for revenues and expenses, and (iii) historical exchange rates for equity. Translation adjustments are included in comprehensive income in our condensed consolidated statements of operations and comprehensive income. The amount of taxes allocated to translation adjustments was immaterial for the three and nine months ended September 30, 2024 and 2023.
Assets and liabilities of a subsidiary that are denominated in currencies other than the Company’s functional currency are re-measured into the functional currency. Transaction gains and losses related to exchange rate fluctuations on transactions denominated in a currency other than the functional currency of an entity are recorded within the Company’s condensed consolidated statements of operations and comprehensive income as a component of other expense. The Company’s foreign currency transaction gains (losses) were 2 and (15) for the three months ended September 30, 2024 and 2023, respectively and (17) and (47) for the nine months ended September 30, 2024 and 2023, respectively.
| F-16 |
Stock-Based Compensation Expense
The Company accounts for stock-based compensation according to the provisions of FASB ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and non-vested stock awards, based on the fair values on the dates they are granted. The Company records the fair value of awards expected to vest as compensation expense on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of stock-based awards, including the options expected term, expected volatility of the underlying stock, risk-free rate, and expected dividends. The expected volatility is based on the average historical volatility of certain comparable publicly traded companies within the Company’s industry. The expected term assumptions are based on the simplified method, due to insufficient historical exercise data and the limited period of time that the Company’s equity securities have been available for issuance. The risk-free interest rates are based on the U.S. Treasury yield in effect at the time of grant. The Company does not expect to pay dividends on common stock in the foreseeable future; therefore, it estimated the dividend yield to be 0%.
Technology and Development
Technology and development include non-capitalized costs incurred in operating, maintaining the Company’s network, website hosting, and technology infrastructure.
Warrants to Purchase Common Stock
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and FASB ASC 815, Derivatives and Hedging (“ASC 815”). Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period-end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, they are recorded at their initial fair value on the date of issuance and subject to remeasurement each balance sheet date with changes in the estimated fair value of the warrants to be recognized as a non-cash gain or loss in the condensed consolidated statements of operations and comprehensive income.
Income Taxes
Income taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which would be recorded on the condensed consolidated balance sheets in accordance with FASB ASC 740, Income Taxes (“ASC 740”), which established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the condensed consolidated statements of operations and comprehensive income.
| F-17 |
We recognize interest and penalties related to uncertain tax benefits on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet.
ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s condensed consolidated financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As a result of the implementation of ASC 740-10, the Company does not have a liability for unrecognized income tax benefits.
Segment Reporting
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information presented on a global consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. While the Company does have revenue from multiple products and geographies, no measures of profitability by product or geography are available, so discrete financial information is not available for each such component. As such, the Company has determined that it operates as one operating segment and one reportable segment.
Earnings per share
Basic earnings per share is calculated by dividing net income by the number of weighted average common shares outstanding for the applicable period, excluding the shares exercised from the proceeds of the non-recourse loan. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average shares outstanding. Potentially dilutive shares, which are based on the weighted average shares of common stock underlying outstanding stock-based awards, warrants and convertible senior notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income per share of common stock attributable to common stockholders when their effect is dilutive.
Loss Contingencies
Loss contingencies are accrued if the loss is probable and the amount of the loss can be reasonably estimated. Legal costs associated with potential loss contingencies are expensed as incurred.
Advertising
The Company expenses advertising costs as incurred. Advertising expense for the three months ended September 30, 2024 and 2023 was $10 and $25, respectively. Advertising expense for the nine months ended September 30, 2024 and 2023 was $37 and $33, respectively.
Recently Adopted Accounting Pronouncements
On March 31, 2022, the SEC issued SAB 121, which sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard crypto assets that an entity holds for its platform users. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets and recognize an associated asset for the crypto assets held for users. Both the liability and asset should be measured initially and subsequently at the fair value of the crypto assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of crypto assets that the entity is responsible for holding for its platform users, with separate disclosure for each significant crypto asset, and the vulnerabilities the entity has due to any concentration in such activities. The guidance in SAB 121 is effective for interim or annual periods ending after June 15, 2022, with retrospective application as of the beginning of the fiscal year to which the interim or annual period relates. For financial statements, the SAB 121 requires companies to include clear disclosure of the nature and amount of crypto-assets a company is responsible for holding for its platform users, with separate disclosure for each material crypto-asset, and the vulnerabilities of a business as a result of any concentration in those activities. Because crypto-asset protection liabilities and corresponding assets are measured at the fair value of the crypto-assets held for users of its platform, the Company is required to include information about fair value measurements. The Company has adopted this guidance for the presentation of its financial statements. There was no material effect in adopting this guidance.
| F-18 |
Recently Issued Accounting Pronouncements
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The new guidance is intended to align U.S. GAAP and SEC requirements while facilitating the application of U.S. GAAP for all entities. The effective date of ASU 2023-06 depends on (1) whether an entity is already subject to the SEC’s current disclosure requirements and (2) whether and, if so, when the SEC removed related requirements from its regulations. For entities that are already subject to the SEC’s current disclosure requirements, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the related requirements from its regulations by June 30, 2027, the amendments made by ASU 2023-06 will be removed from the Codification and will not become effective for any entity. The Company is currently evaluating the impact of this standard on the consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items in interim and annual periods and expands the ASC 280 disclosure requirements for interim periods. The ASU also explicitly requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures under the ASU. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements but doesn’t expect a material impact.
In December 2023, the FASB issued ASU 2023-08 – Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. When adopting the standard, entities are required to record a cumulative-effect adjustment to retained earnings as of the beginning of the annual period of adoption. Retrospective restatement would not be required or allowed for prior periods. For all entities, the ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the adoption of this ASU. There is expected to be no material impact on the financial statements due to the Company’s holding period of crypto assets being typically two days or less.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The standard is intended to benefit investors by providing more detailed income tax disclosures to assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Adoption of the standard will only impact the income tax disclosures and is not expected to be material to the consolidated financial statements.
| F-19 |
2. Fair Value Measurements
FASB ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods, including the market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
| Level 1: | Quoted prices for identical assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. | |
| Level 2: | Observable inputs other than Level 1, including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data. | |
| Level 3: | Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single-dealer quotes not corroborated by observable market data. |
The Company has various processes and controls in place to ensure that fair value is reasonably estimated. A model validation policy governs the use and control of valuation models used to estimate fair value. This policy requires review and approval of models, and periodic re-assessments of models to ensure that they are continuing to perform as designed. The Company performs due diligence procedures over third-party pricing service providers in order to support their use in the valuation process. Where market information is not available to support internal valuations, independent reviews of the valuations are performed, and any material exposures are escalated through a management review process.
While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. To the extent that the valuation method is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised in determining fair value is greatest for the financial instruments categorized in Level 3.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
During the nine months ended September 30, 2024, there were no changes to the Company’s valuation techniques that had, or are expected to have, a material impact on its condensed consolidated balance sheets or condensed consolidated statements of operations and comprehensive income.
The Company did not make any transfers between the levels of the fair value hierarchy during the nine months ended September 30, 2024 and December 31, 2023.
| F-20 |
Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis (such as goodwill, property and equipment, and crypto assets held); that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment).
3. Revenue
The table below presents revenue of the Company disaggregated by revenue source for the following periods.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Athena ATMs | $ | 66,918 | $ | 61,671 | $ | 214,402 | $ | 102,088 | ||||||||
| Athena Plus | 1,010 | 2,679 | 3,245 | 14,264 | ||||||||||||
| White label | 1,270 | 1,277 | 3,811 | 3,802 | ||||||||||||
| Ancillary and other | 208 | 25 | 279 | 62 | ||||||||||||
| $ | 69,406 | $ | 65,652 | $ | 221,737 | $ | 120,216 | |||||||||
The Company recognized $1,253 in revenue related to operating the white-labeled Bitcoin ATMs for three months ended September 30, 2024 and 2023 and $3,758 for the nine months ended September 30, 2024 and 2023. Revenue recognized related to services necessary to operate the ATMs were $17 and $24 for the three months ended September 30, 2024 and 2023 and $53 and $44 for the nine months ended September 30, 2024 and 2023.
The table below presents revenue disaggregated by geography based on sales location for the following periods.
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Revenue | ||||||||||||||||
| United States | $ | 67,330 | $ | 62,340 | $ | 215,139 | $ | 112,111 | ||||||||
| El Salvador | 2,006 | 3,232 | 6,385 | 7,843 | ||||||||||||
| International | 70 | 80 | 213 | 262 | ||||||||||||
| $ | 69,406 | $ | 65,652 | $ | 221,737 | $ | 120,216 | |||||||||
Contracts with government of El Salvador
In the third quarter of 2021, the Company installed and began operating 200 white-labeled Bitcoin ATMs in El Salvador, 11 white-labeled Bitcoin ATMs at El Salvador consulates in the U.S., 45 white-labeled Bitcoin ATMs in other U.S. locations and sold 950 point-of-sale (POS) terminals for local businesses in El Salvador to process transactions with Bitcoin to Ministerio de Hacienda (Department of Treasury) of El Salvador (“GOES”).
Additionally, we contracted to sell intellectual property in software, develop, and maintain a Bitcoin platform designed to support a GOES branded digital wallet. This is not part of the Company’s regular service offerings and was a one-time project performed on behalf of GOES. This was completed in 2021 but there was a contingency related to the Company acquiring the rights to the license to the intellectual property that was utilized to create the GOES branded digital wallet. The license acquisition was completed in 2022, which is when the Company recognized revenue for the consideration received of $4,000, which is included in ancillary and other above.
| F-21 |
As of September 30, 2024 and December 31, 2023, the cash received as advances from GOES was $1,031 and $7, respectively, presented as part of restricted cash held for customers on the condensed consolidated balance sheets. A corresponding liability to repay GOES for the advances is reflected within Liability for cash held for customers on the condensed consolidated balance sheets.
As of October 5, 2022, the Company and Chivo, Sociedad Anónima de Capital Variable, a wholly owned private company of the Government of El Salvador (“CHIVO”) signed a Master Services Agreement (“MSA”) and a Service Level Agreement (“SLA”) replacing the existing Master Services Agreement, Contracts and Athena Service Addendums 1 and 2 with the Department of Treasury of El Salvador with an effective date of July 1, 2022. The services, performance obligations, pricing and terms continue the services, performance obligations, pricing and terms outlined in the original Master Services Agreement, Contracts and Addendums through July 30, 2024, in accordance with the original MSA, Contracts and Addendums. In conjunction with the new MSA and SLA, the Company and CHIVO completed a financial settlement agreement secured by certain assets to reconcile reporting, finalize balances owed between the parties and conclude the original MSA, Contracts and Addendums between the Company and the Department of Treasury of El Salvador, which settlement was terminated as of April 2023 upon full satisfaction of all obligations thereunder. On December 20, 2024 a new three-year MSA and SLA with Chivo was signed effective December 1, 2024.
4. Accounts Receivable
Accounts receivable consist of the following as of September 30, 2024 and December 31, 2023 and 2022:
| September 30, 2024 | December 31, 2023 | December 31, 2022 | ||||||||||
| White-label fee receivable | $ | 1,069 | $ | 601 | $ | 85 | ||||||
| Others | 40 | 24 | 24 | |||||||||
| $ | 1,109 | $ | 625 | $ | 109 | |||||||
5. Crypto Assets Held
The Company held the following crypto assets as of September 30, 2024 and December 31, 2023:
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||
| Qty (1) | Average Rate | Amount | Qty (1) | Average Rate | Amount | |||||||||||||||||||
| Bitcoin | 7 | $ | 63,333 | $ | 422 | 9 | $ | 42,265 | $ | 399 | ||||||||||||||
| Tether | 359,498 | 1 | 359 | 22,356 | 1 | 22 | ||||||||||||||||||
| $ | 781 | $ | 421 | |||||||||||||||||||||
(1) Rounded off to the nearest whole number
| F-22 |
The table below shows the roll-forward of quantity and costs of various crypto assets traded by the Company.
| Bitcoin | All Others (2) | |||||||||||
| Qty | Cost | Cost | ||||||||||
| Nine months ended | ||||||||||||
| January 1, 2023 | 16 | $ | 290 | $ | 75 | |||||||
| Purchases | 3,838 | 93,504 | 2,803 | |||||||||
| Cost of sales | (3,676 | ) | (89,474 | ) | (2,043 | ) | ||||||
| Impairment on crypto assets | – | (342 | ) | – | ||||||||
| Crypto assets used for expenses | (165 | ) | (3,680 | ) | – | |||||||
| Crypto assets used for capital expenditure | (1 | ) | (29 | ) | – | |||||||
| Crypto assets used for other payments | – | – | (814 | ) | ||||||||
| Change in bitcoin held | (1 | ) | 13 | – | ||||||||
| September 30, 2023 (1) | 11 | $ | 282 | $ | 21 | |||||||
| Bitcoin | All Others (2) | |||||||||||
| Qty | Cost | Cost | ||||||||||
| Nine months ended | ||||||||||||
| January 1, 2024 | 9 | $ | 399 | $ | 22 | |||||||
| Purchases | 2,936 | 172,780 | 887 | |||||||||
| Cost of sales | (2,838 | ) | (165,373 | ) | (550 | ) | ||||||
| Impairment on crypto assets | – | (419 | ) | – | ||||||||
| Crypto assets used for expenses | (92 | ) | (6,784 | ) | – | |||||||
| Crypto assets used for capital expenditure | (8 | ) | (181 | ) | – | |||||||
| September 30, 2024 (1) | 7 | $ | 422 | $ | 359 | |||||||
(1) Rounded off to the nearest whole number
(2) All others include Bitcoin Cash, Ethereum, Litecoin, and Tether
6. Property and Equipment
Property and equipment consist of the following as of September 30, 2024 and December 31, 2023:
| September 30, 2024 |
December 31, 2023 |
|||||||
| ATM Equipment | $ | 14,804 | $ |
10,069 |
||||
| Computer equipment | 591 | 117 | ||||||
| Capitalized Software | 6,314 | 791 | ||||||
| Office equipment | 174 | 25 | ||||||
| 21,883 | 11,002 | |||||||
| Less accumulated depreciation and amortization | 7,409 | 4,190 | ||||||
| $ | 14,474 | $ | 6,812 | |||||
| F-23 |
Depreciation expense for the three months ended September 30, 2024 and 2023 was $1,322 and $358, respectively. Depreciation expense for the nine months ended September 30, 2024 and 2023 was $2,724 and $893 respectively. Amortization expense for the three months ended September 30, 2024 and 2023 was $131 and $167, respectively. Amortization expense for the nine months ended September 30, 2024 and 2023 was $495 and $638, respectively.
The Company entered into a non-binding Letter of Intent with Arley Lozano-Jaramillo (“Lozano”), a principal beneficial owner of Vakano Industries and XPay, both Colombian entities (collectively, “XPay”), for the purchase and sale of certain assets of XPay, primarily intellectual property assets, including the XPay Wallet (the precursor to the Chivo Wallet) and XPay POS software, to the Company. In September 2021, Lozano and the Company entered into a letter of intent to acquire assets of XPay which include certain technologies, ATMs, point-of-sale terminals in El Salvador, X-Pay POS system and other assets. The Company never entered into final agreements contemplated in the letter of intent.
On December 21, 2022, the Company sent formal notice to XPay canceling the non-binding letter of intent for the proposed transaction between the parties and confirming that the $1,595 paid to date and presented in previous periods under other advances in the condensed consolidated balance sheets represented payment in full for certain software, code and technology developments. The cost of the software is included in capitalized software as of December 31, 2022 and was being amortized straight-line over five years. As of December 31, 2023 this capitalized software has been fully impaired.
On December 31, 2023, the Company recorded a charge of $2,383 related to the impairment of capitalized software associated with the development of the XPay Wallet as mentioned in the previous section, and Ruru Wallet app. In order to determine that an impairment had occurred, the Company evaluated the costs required to upgrade the software to meet current technical standards in order to have feasible potential for generating revenue, adjusted for future uncertainties, and evaluated prevailing market preferences for self-custody solutions and concluded that the fair value of the capitalized software related to Xpay Wallet was $0.
During the second quarter of 2024, the Company entered into a Development Services Agreement for a software platform to use in connection with the operation of Bitcoin ATMs. The Company implemented and began to use the software platform in June 2024. The Company’s capitalized software development cost was $5,500 as of September 30, 2024. There was no impairment for the three and nine months ended September 30, 2024.
The table below presents property and equipment, net by geography.
| September 30, 2024 |
December 31, 2023 |
|||||||
| United States | $ | 13,879 | $ | 5,742 | ||||
| El Salvador | 595 | 1,070 | ||||||
| $ | 14,474 | $ | 6,812 | |||||
7. Operating Leases
The Company has entered into certain leases primarily for ATM retail spaces and ATM machines. Operating lease expense is recognized in
continuing operations by amortizing the amount recorded as an asset on a straight-line basis over the lease term. The operating lease
expense are presented consistently with cost of revenues in the consolidated statements of operations and comprehensive income. In determining
lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate
or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option
is reasonably certain to be exercised.
| F-24 |
Balance sheet information related to operating right-of-use assets and lease liabilities consists of the following:
| September 30 2024 | December 31, 2023 | |||||||
| Right-of-use assets – operating leases | $ | 21,249 | $ | 21,068 | ||||
| Operating lease liabilities, current portion | 8,721 | 7,205 | ||||||
| Operating lease liabilities, net of current portion | 12,528 | 13,863 | ||||||
| Total operating lease liabilities | $ | 21,249 | $ | 21,068 | ||||
Other supplemental information related to operating leases was as follows:
| September 30, 2024 | December 31, 2023 | |||||||
| Weighted-average remaining lease term (in years) | 2.80 | 2.94 | ||||||
| Weighted-average discount rate | 15% | 15% | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | 8,150 | $ | 4,473 | ||||
The discount rates used in measuring the lease liabilities was based on the Company’s hypothetical incremental borrowing rate, as the rate implicit in the leases were not readily determinable.
As of September 30, 2024, the Company’s operating leases have remaining lease terms of up to 5 years, some of which include optional renewals or terminations, which are considered in the Company’s assessments when such options are reasonably certain to be exercised. Any variable payments related to the lease will be recorded as lease expense when and as incurred. Variable payments are not based on an index or rate and relate to common area maintenance or ATM relocation expenses. As of September 30, 2024, the operating leases that the Company has signed but have not yet commenced are immaterial.
The components of operating lease cost recognized in the condensed consolidated financial statements were as follows (in thousands):
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Operating lease expense | $ | 2,892 | $ | 1,705 | $ | 8,150 | $ | 2,798 | ||||||||
| Short-term lease expense | 505 | 190 | 1,201 | 571 | ||||||||||||
| Variable lease expense | 114 | 24 | 341 | 40 | ||||||||||||
| Total lease expense | $ | 3,511 | $ | 1,919 | $ | 9,692 | $ | 3,409 | ||||||||
| F-25 |
The reconciliation of future lessee lease payments under noncancelable operating leases in which the Company has a lease liability, reflected in our condensed consolidated balance sheets as of September 30, 2024 is presented in the table below (in thousands):
| Operating Leases | ||||
| Remainder of 2024 | $ | 2,882 | ||
| 2025 | 10,892 | |||
| 2026 | 6,376 | |||
| 2027 | 3,505 | |||
| 2028 and thereafter | 2,470 | |||
| Total lease payments | $ | 26,125 | ||
| Less: Imputed interest | (4,876 | ) | ||
| Present value of lease liabilities | $ | 21,249 | ||
8. Finance Leases
On November 2, 2023, the Company entered into a finance lease with Taproot Acquisition Enterprises, LLC, in which the Company agreed to lease certain Bitcoin ATMs over a three-year term, with the expectation that the Company will take title of the Bitcoin ATMs prior to the end of the term. As a result of the anticipated transfer of ownership, this meets the definition of a Finance Lease under ASC 842.
Financing lease expense is comprised of both interest expense, which will be recognized using the effective interest method, and amortization of the right-of-use assets. These finance lease expenses are presented consistently with other interest expense and amortization or depreciation of similar assets. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.
Balance sheet information related to finance right-of-use assets and lease liabilities consists of the following (in thousands):
| September 30, 2024 | December 31, 2023 | |||||||
| Right-of-use assets – finance leases | $ | – | $ | 991 | ||||
| Finance lease liabilities, current portion | – | 1,075 | ||||||
| Total finance lease liabilities | $ | – | $ | 1,075 | ||||
Other supplemental information related to finance leases was as follows (in thousands):
| September 30, 2024 | December 31, 2023 | |||||||
| Weighted-average remaining lease term (in years) | – | 1.00 | ||||||
| Weighted-average discount rate | – | 15% | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from finance leases | $ | – | $ | – | ||||
| Financing cash flows from finance leases | $ | – | $ | – | ||||
The discount rates used in measuring the lease liabilities was based on the Company’s hypothetical incremental borrowing rate, as the rate implicit in the leases were not readily determinable.
| F-26 |
The components of finance lease cost recognized in the condensed consolidated financial statements were as follows:
| For the three months ended | For the nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Amortization of right-of-use-assets | $ | 87 | $ | – | $ | 262 | $ | – | ||||||||
| Interest on lease liabilities | 29 | – | 110 | – | ||||||||||||
| Total finance lease expense | $ | 116 | $ | – | $ | 372 | $ | – | ||||||||
9. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets, consist of the following as of September 30, 2024 and December 31, 2023:
| September 30, 2024 | December 31, 2023 | |||||||
| Prepaid expenses and other current assets: | ||||||||
| Prepaid expenses | $ | 569 | $ | 269 | ||||
| Prepaid taxes | 1,198 | 138 | ||||||
| Others | 14 | 18 | ||||||
| $ | 1,781 | $ | 425 | |||||
10. Accounts Payable, Accrued Expenses and Other Current Liabilities
Accounts payable and accrued expenses, and other current liabilities consist of the following as of September 30, 2024 and December 31, 2023:
| September 30, 2024 | December 31, 2023 | |||||||
| Accounts payable and accrued expenses: | ||||||||
| Accounts payable | $ | 6,416 | $ | 4,445 | ||||
| Accrued expenses | 2,897 | 1,508 | ||||||
| Interest payable | 74 | 74 | ||||||
| $ | 9,387 | $ | 6,027 | |||||
| Other current liabilities: | ||||||||
| Payroll liabilities | $ | 135 | $ | 63 | ||||
| Other payables | – | 25 | ||||||
| $ | 135 | $ | 88 | |||||
The December 31, 2023 results include accrual for bonuses based on Company performance objectives achieved during the said fiscal year which were paid on March 14, 2024. Performance bonuses based on management’s periodic review during 2024 are accrued monthly.
| F-27 |
11. Debt
Related Party
In 2017, the Company entered into several subordinated note agreements with shareholders of the Company’s common stock. The notes had a principal amount of $117 with maturity dates in 2021 and 2022. Interest as defined in the notes is 12% per annum. In the fourth quarter of 2023, the Company paid the final balance of $90. As of September 30, 2024, and December 31, 2023, the outstanding principal was $0.
On August 4, 2022, the Company completed a lending transaction with Mike Komaransky, the Company’s principal shareholder and former director, whereby the Company borrowed $500 from Mr. Komaransky pursuant to the terms of a secured promissory note and security agreement. The promissory note has an interest rate of 6% and the repayment of the principal amount and any accrued interest is secured by certain assets of the Company with respect to which Mr. Komaransky holds first priority lien and security interest. The terms of the secured promissory note and the security agreement were subsequently amended by the parties on January 17, 2023. Pursuant to the terms of the amended secured promissory note, the Company agreed to make monthly payments of $50 until the maturity date of the secured promissory note, which is on August 31, 2023. As of September 30, 2024 and December 31, 2023, the outstanding principal was $0.
As of May 15, 2023, the Company entered into a certain Senior Secured Loan Agreement, as amended (the “Loan Agreement”) and Senior Secured Revolving Credit Promissory Note (the “Revolving Credit Note”) with KGPLA Holdings LLC (“KGPLA”), an entity in which Mike Komaransky, a former director and principal shareholder of the Company has a controlling interest. The Revolving Credit Note allowed the Company to borrow up to $4,000 for the operations of its New Bitcoin ATM Machines, as defined in the Loan Agreement, with a maturity date of May 15, 2024. Revenue share fees for this agreement were calculated based on a percentage of the gross daily receipts generated from these machines and were recorded as part of interest expense in the condensed consolidated statements of operations and comprehensive income. In connection with the above loan transaction and issuance of Revolving Credit Note, the Company granted KGPLA a first priority lien and security interest in and to all of the Company’s assets, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien. The Company repaid the principal amount of $4,000 (together with any fees) on the Senior Secured Revolving Credit Promissory Note due May 15, 2024 with KGPLA, as of March 28, 2024. The debt was settled in full in accordance with the terms outlined in the Revolving Credit Note and was funded using cash reserves generated from the Company’s operating activities. The early payoff of this debt resulted in the elimination of revenue share fees. As of September 30, 2024 and December 31, 2023, the outstanding principal was $0 and $4,000, respectively.
Third Party
On May 30, 2017, the Company entered into a senior note agreement with Consolidated Trading Futures, LLC. The note provided for a principal amount of $1,490 secured against the Company’s cash in machines and held by service providers. Interest as defined in the note as 15% per annum with an original maturity date of May 31, 2022. During the second quarter of 2022, the maturity date was extended to May 31, 2023 pursuant to a joint agreement. The Company agreed to make a one-time payment in the amount of $200 and weekly payments in the amount of $25 towards the reduction of the principal amount of the loan. As of September 30, 2024 and December 31, 2023, the outstanding principal was $0.
On August 1, 2018, the Company entered into a promissory note with LoanMe, Inc. The promissory note provided for a principal amount of $100, with a final maturity date of August 1, 2028, with equal monthly installment payments of $2. Interest as defined in the promissory note is 24% per annum. On December 11, 2023, the Company extinguished the note with a final payment of $75. As of September 30, 2024 and December 31, 2023, the outstanding principal was $0.
On September 22, 2021, the Company entered into a borrowing arrangement with Banco Hipotecario secured against the Company’s assets in El Salvador. The promissory note provided for a principal amount of $1,500, with a final maturity date of 36 months after disbursal with equal monthly installment payments of $49 with a moratorium of 2 months. Interest as defined in the loan arrangement is 7.5% per annum. As of September 30, 2024 and December 31, 2023, the outstanding principal was $138 and $546, respectively.
| F-28 |
In December 2022 and December 2023, the Company entered into financing agreements with Capital Premium Financing, Inc. to pay the insurance premium on its commercial liability insurance. The annual interest rate was 20.53% and 17.65% per annum in 2023 and 2022, respectively, repayable in nine monthly installments beginning February 1 of the subsequent year. As of September 30, 2024 and December 31, 2023, the outstanding principal was $12 and $95, respectively.
On February 26, 2024, the Company entered into a financing agreement for $170 with National Partners PFco LLC to pay the insurance premium on its directors and officers insurance with an annual percentage rate of 8.45% per annum repayable in ten monthly installments beginning March 14, 2024. As of September 30, 2024, the outstanding principal was $54.
For third-party Debt, the principal payments due as of September 30, 2024 are as follows:
| Remainder of 2024 | $ | 204 |
12. Convertible debt
Related Party
On January 31, 2020, the Company entered into a convertible debenture agreement with KGPLA LLC, an entity in which Mike Komaransky, a former director and principal shareholder of the Company has controlling interest. The convertible debenture provided for a principal amount of $3,000, with a maturity date of January 31, 2025. Interest as defined by the agreement is 8% per annum. KGPLA, LLC has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of September 30, 2024 and December 31, 2023, the outstanding principal debenture amount of $3,000 was presented under Convertible debt, related party in the condensed consolidated balance sheets.
Third Party
On June 22, 2021 the Company authorized the issuance and sale of up to $5,000 in aggregate principal amount of convertible debentures. The convertible debentures (i) are unsecured, (ii) bear interest at the rate of 6% per annum, and (iii) are due two years from the date of issuance. The convertible debentures are convertible at any time at the option of the investor into shares of the Company’s common stock that is determined by dividing the amount to be converted by the lesser of (i) $0.10 per share or (ii) 25% less than the twenty trading day (20-trading day) volume weighted average price (“VWAP”) of the common stock-based on the trades reported by the OTC Pink Market operated by the OTC Markets Group, Inc. As of December 31, 2021, the Company received an amount of $4,985 toward subscription against this issue.
In December 2021, certain debenture holders exercised their right and gave an irrevocable notice to convert $220 of the convertible debt for 2,200,000 shares. As of March 31, 2022 additional debenture holders exercised their right and gave an irrevocable notice to convert $3,245 of the convertible debt. The Company issued a total of 34,650,000,000 shares for these conversions for the year ended December 31, 2022. The remaining unconverted debt of $1,520 was paid in full as of December 31, 2023. There was no outstanding convertible debt for this issuance for the period ended September 30, 2024.
Maturities on the Company’s convertible debt are as follows:
| 2024 | $ | – | ||
| 2025 | 3,000 | |||
| Total convertible debt payments | $ | 3,000 |
| F-29 |
13. Fair Value Measurements
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured at fair value on a recurring basis.
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Crypto assets held | $ | 781 | $ | – | $ | – | $ | 781 | $ | 421 | $ | – | $ | – | $ | 421 | ||||||||||||||||
| $ | 781 | $ | – | $ | – | $ | 781 | $ | 421 | $ | – | $ | – | $ | 421 | |||||||||||||||||
The Company did not make any transfers between the levels of the fair value hierarchy during the period ended September 30, 2024 and December 31, 2023.
The carrying amounts for cash equivalents, accounts receivable, accounts payable and accrued expenses, other current liabilities, and short-term debt approximate fair value due to the short maturity of those instruments.
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured at fair value on a non-recurring basis.
| September 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Restricted cash – cash held for customers | $ | 1,034 | $ | – | $ | – | $ | 1,034 | $ | 255 | $ | – | $ | – | $ | 255 | ||||||||||||||||
| $ | 1,034 | $ | – | $ | – | $ | 1,034 | $ | 255 | $ | – | $ | – | $ | 255 | |||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Convertible debt, related party | $ | – | $ | 3,000 | $ | – | $ | 3,000 | $ | – | $ | 3,000 | $ | – | $ | 3,000 | ||||||||||||||||
| $ | – | $ | 3,000 | $ | – | $ | 3,000 | $ | – | $ | 3,000 | $ | – | $ | 3,000 | |||||||||||||||||
The Company’s convertible debt is estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. This is a Level 3 input. The carrying amount of the convertible debt, related party was $3,000 as of September 30, 2024 and December 31, 2023 and approximates fair value. See Note 12 – Convertible Debt for additional information.
The Company’s non-financial assets, such as software, intangible assets, property and equipment, and crypto assets held are adjusted to fair value when an impairment charge is recognized. Such fair value measurements are based predominately on Level 3 inputs for the non-financial assets, excluding the crypto assets held. Fair value of crypto assets held are based on Level 1 inputs. The Company impaired software during the year ended December 31, 2023, as discussed in Note 6.
| F-30 |
14. Stock-Based Compensation
Stock Option Plan
The Company’s Board of Directors and its majority shareholders approved the 2021 Equity Compensation Plan (the “2021 Plan”) effective as of October 15, 2021. On February 28, 2023, in conjunction with a signed contractor service agreement, the Company issued a Restricted Stock Units Agreement granting 2,000,000 shares of common stock under the 2021 Plan.
Non-recourse loans
In January 2020, the Company allowed its employees with vested stock options to exercise with the use of a non-recourse loan agreement for the issuance of 119,139,461 shares of common stock. These loan agreements originally had a maturity date of 48 months from the date of exercise, which was extended by one year in December 2023 to 60 months. And increase of $35 to additional paid in capital was recorded as a result of this modification. The loans carry an interest rate of 1.69%. The loans are required to be consistent with the accounting for stock options, with the exercise price of the stock option being the principal and interest due on the loan.
The fair value of the non-recourse loans as of the grant date (January 15, 2020) was determined using the Black-Scholes option pricing model. The following assumptions were used in estimating the fair value of the non-recourse loans:
| Stock price | $ | 0.03 | |||
| Exercise price | $ | 0.01 | |||
| Expected life (years) | 4.0 | ||||
| Expected volatility | 78.3 | % | |||
| Annual dividend yield | 0.0 | % | |||
| Discount rate | 0.0 | % |
The Company elected, in accordance with FASB ASC 718, to deduct the increase in the exercise price (interest) from the risk-free interest rate, resulting in no discount rate.
The original fair value of the awards was $3,236, which was expensed in 2020.
15. Commitments and Contingencies
The Company, from time to time, might have claims against it incidental to the Company’s business including but not limited to tax demands and penalties. While the outcome of any of these matters cannot be predicted with certainty, management does not believe that the outcome will have a material adverse effect on the accompanying condensed consolidated financial statements.
16. Warrants
In 2017 Athena Bitcoin, Inc. issued warrants to purchase 202,350 shares of Athena Bitcoin, Inc.’s common stock for $14,005. The warrants provide for a right to purchase common stock in Athena Bitcoin, Inc., priced at $2.00 to $3.00 per share, at an average exercise price of $2.49 per share. The warrants were classified as equity. In January 2020, warrants to purchase 102,350 shares of Athena Bitcoin, Inc. common stock at an average exercise price of $2.00 per share were exercised.
The unexercised warrants to purchase 100,000 shares of Athena Bitcoin, Inc. common stock, at an exercise price of $3.00 per share, remain outstanding as of September 30, 2024 and December 31, 2023. The warrants will expire on May 30, 2025.
| 31 |
17. Related Party
Aside from the transactions discussed in other notes to these financial statements, the Company continues to carry a payables balance to Red Leaf Opportunities Fund LP, an entity in which the Company’s principal shareholder, former director and former Chief Executive Officer has a controlling interest in the General Partner, Red Leaf Advisors LLC, for previous purchases of crypto assets. The outstanding balance due to Red Leaf Opportunities Fund LP as of September 30, 2024 and December 31, 2023 was $407, and is recorded in accounts payable, related party in the Condensed Consolidated Balance Sheets.
The Company incurred cash logistics services of $1,429 and $757 for the three months ended September 30, 2024 and 2023 and $3,730 and $1,347 for the nine months ended September 30, 2024 and 2023 to Move On Security LLC as well as ATM conversion cost of $0 and $407 for the three months ended September 30, 2024 and 2023 and $0 and $670 for the nine months ended September 30, 2024 and 2023. The Chief Executive Officer and director of the Company has a 50% interest in Move On Security LLC. The Company recorded payables to Move On Security LLC, presented as part of Accounts payable, related party in the Condensed Consolidated Balance Sheets of $797 and $389 as of September 30, 2024 and December 31, 2023, respectively.
On February 7, 2024, the Company entered into a service agreement with Move On Tech Service, LLC to provide ATM services for the Company’s ATM operations in various states. Move On Tech Service, LLC is responsible for ATM management, periodic ATM maintenance, installation, and deinstallation. The Chief Executive Officer and director of the Company has a 50% interest in Move On Tech Service, LLC. During the three and nine months ended September 30, 2024, the Company incurred $1,136 and $2,921, respectively for related services. The Company recorded payables to Move On Tech Service LLC, presented as part of Accounts payable, related party in the Condensed Consolidated Balance Sheets of $416 as of September 30, 2024.
18. Fees on Virtual Vault Services
Virtual Vault is a term used in the Armored Car and Cash Transport industry to define a service provided by armored car services for assets considered property of the bank when the bank does not have a physical vault or location in a given state or location. The Fees for virtual vault services included in our income statement are for a currency availability service provided to the Company by its bank for making funds held in a virtual vault immediately available to the Company. Neither the term nor the service is related to virtual currency or crypto assets.
Fees on Virtual Vault Services for the three months ending September 30, 2024 and 2023, respectively, were $451 and $328 and for the nine months ending September 30, 2024 and 2023 were $1,557 and $557, respectively.
19. Income Taxes
The Company’s effective tax rate (“ETR”) for the three months ended September 30, 2024 and 2023 was 35.18% and 25.00%, respectively. The Company’s effective tax rate (“ETR”) for nine months ended September 30, 2024 and 2023 was 31.48% and 27.75%, respectively. The ETR of 35.18% for the three months ended September 30, 2024 and 31.48% for the nine months ended September 30, 2024 was higher than the U.S. statutory rate 21.0% due to state income taxes, valuation allowance on foreign tax credits deferred tax assets, and foreign withholding taxes.
| F-32 |
20. Net Earnings Per Share
The computation of net earnings per share is as follows:
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Basic net income per share: | ||||||||||||||||
| Numerator | ||||||||||||||||
| Net income | $ | 2,255 | $ | 5,927 | $ | 12,207 | $ | 8,179 | ||||||||
| Denominator | ||||||||||||||||
| Weighted-average shares of common stock: | 4,094,750,869 | 4,094,459,545 | 4,094,750,869 | 4,094,459,545 | ||||||||||||
| Less: Shares issued to non-recourse loan | (119,139,461 | ) | (119,139,461 | ) | (119,139,461 | ) | (119,139,461 | ) | ||||||||
| Weighted-average shares of common stock used to compute net income per share attributable to common stockholders, basic | 3,975,611,408 | 3,975,320,084 | 3,975,611,408 | 3,975,320,084 | ||||||||||||
| Net income per share attributable to common stockholders, basic | $ | 0.00057 | $ | 0.00149 | $ | 0.00307 | $ | 0.00206 | ||||||||
| Diluted net income per share: | ||||||||||||||||
| Numerator | ||||||||||||||||
| Net income, basic | $ | 2,255 | $ | 5,927 | $ | 12,207 | $ | 8,179 | ||||||||
| Add: Interest expense on convertible debt | 60 | 72 | 180 | $ | 236 | |||||||||||
| Net income, diluted | $ | 2,315 | $ | 5,999 | $ | 12,387 | $ | 8,415 | ||||||||
| Denominator | ||||||||||||||||
| Weighted-average shares of common stock used to compute net income per share attributable to common stockholders, basic | 3,975,611,408 | 3,975,320,084 | 3,975,611,408 | 3,975,320,084 | ||||||||||||
| Non-recourse loan issuance | 111,228,451 | 111,650,802 | 114,786,048 | 116,072,913 | ||||||||||||
| Weighted-average effect of potentially dilutive securities: Convertible Debt | 250,000,000 | 265,200,000 | 250,000,000 | 265,200,000 | ||||||||||||
| Unexercised warrants | 119,561,401 | 119,746,479 | 121,768,358 | 122,535,164 | ||||||||||||
| Weighted-average shares of common stock used to compute net income per share attributable to common stockholders, diluted | 4,456,401,260 | 4,471,917,365 | 4,462,165,814 | 4,479,128,161 | ||||||||||||
| Net income per share attributable to common stockholders, diluted | $ | 0.00052 | $ | 0.00134 | $ | 0.00278 | $ | 0.00188 |
There are no anti-dilutive securities for the three and nine months ended September 30, 2024 and 2023.
| F-33 |
21. Legal Proceedings
On September 8, 2022, Athena Bitcoin, Inc. (“Athena” or the “Company”) received from the Office of the Commissioner of Financial Institutions (“OCFI”), a “Final Resolution and Order to Cease and Desist” (“OC&D”), requiring to, among other matters, stop the operations and marketing of the Bitcoin automated teller machines (“kiosks”), that were operating in Puerto Rico. On September 12, 2022, Athena filed a Complaint for Declaratory Judgment and Permanent Injunction and a Petition for Preliminary Injunction before the Courts of the Commonwealth, Superior Part requesting that the determination and effects of the OC&D be stayed until final resolution of the case. On November 10, 2022, the Court dismissed the civil action with the interpretation that the controversy presented before it was not ripe for resolution by the Court. The Company sought a reversal of such determination before the Court of Appeals of the Commonwealth by a Motion Requesting a Stay of the determination and effects of the OC&D. On April 10, 2023, the Puerto Rico Court of Appeals issued a judgment unfavorable to Athena’s appeal. Athena determined not to pursue further redress against the OC&D that was issued by OCFI and with which it has been complied since September 2022. Athena implemented another option available under PR law that has permitted resumption of operations of the kiosks in Puerto Rico. The Court of Appeals is yet to issue the Mandate to return the case to the lower Court and to OCFI. Effective since September 5, 2024, upon Company completing a new application, OCFI issued Athena a license for money transmission, TM-177, and are in the process of restarting operating the kiosks under its brand.
Revenue from operations in Puerto Rico for the periods ended September 30, 2024 and December 31, 2023 were 0% of total revenue respectively.
On October 9, 2023, Arley Lozano-Jaramillo (“Lozano”), an individual, commenced proceedings against the Company by filing a complaint with the 11th Judicial Circuit Court for Miami-Dade County, Florida (the “Court”) which named Athena Bitcoin Global, a Nevada corporation as the defendant. Lozano, either individually or through the entities controlled by him (XPay, Vakano Industries) entered into certain non-binding letters of intent on July 13, 2021 and as of September 2021 (the second letter of intent was a draft and not signed by the parties) pursuant to which Lozano was a seller of certain assets and technology related to XPay Wallet, intellectual property regarding the AthenaPay POS System, XPay POS System and related technology (the “XPay Assets”) for the proposed purchase price of $3,000 and 270,000,000 shares of common stock of the Company (valued at $0.10 per share). The acquisition of the XPay Assets was subject to the execution of a definitive acquisition agreement. No such agreement was finalized nor entered into by the parties. The Company made payments to Lozano for a total amount of approximately $1,600 and Lozano transferred the ownership of XPay Assets to the Company. Lozano alleges breach of contract, promissory estoppel, unjust enrichment, fraud in the inducement and conversion. He asserts the claim for failure to compensate Lozano pursuant to the terms of the purchase price provided in the non-binding letter of intent (and the unsigned draft letter of intent), which includes remaining amount of the purchase price ($1,400) and 270,000,000 shares of the Company’s common stock. The plaintiff did not offer any evidence of a signed and binding acquisition agreement. The claim also seeks an award for legal and other costs relating to the proceeding.
The Company does not believe the allegations made against it are valid and intends to vigorously defend against them. Accordingly, the Company filed with the Court on February 9, 2024, the motion to dismiss Lozano’s complaint. The Court granted the Company’s motion in part and denied in part, dismissing two of the five causes of action. The Company proceeded to file its counter-complaint against Plaintiff who presented his answer on October 6, 2024. The range of potential loss related to the identified claim is between $0 and $1,400 and the issuance of 270,000,000 shares of common stock valued at $27,000, the amount of damages that Lozano is seeking in the lawsuit. The additional costs mentioned in the claim are not able to be estimated at this time. The Company does not believe that it is probable that a liability has been incurred as of September 30, 2024 and December 31, 2023 related to this lawsuit.
On July 16, 2024, Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), filed a Complaint against Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard, Douglas O. Carrillo, and Neil Hernandez, for damages for violation of a federal statute and other claims, filed at the US District Court for the Northern District of Illinois (the “Court”). On September 12, 2024, the parties reached a settlement agreement and release pursuant to which the complaint and other proceedings that were initiated at other forums, were dismissed and certain monetary and technological considerations were afforded between the parties.
| F-34 |
On September 9, 2024, S.M. on behalf of herself and all others (“S.M.”), an individual, filed a complaint that includes class action allegations, against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), Genesis Coin, Inc., and two other defendants, filed at the Common Pleas Court at Cuyahoga County, Ohio (the “Court”). The complaint against ABInc alleges negligence and violations to the Ohio Products Liability Act because of alleged elder financial scams involving cryptocurrency and the operation of kiosks. Plaintiff alleges the need for implementing effective and sufficient checks and procedures both at the kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond to what already ABInc has in place. The claim by plaintiff against ABInc is for an undetermined amount of compensation (which cannot exceed $5,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are not able to be estimated at this time, if any would be applicable.
On August 20, 2024, Keon Jackson (“Jackson”), an individual, commenced what was entitled as a “Class Action Complaint” against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), filed at the US District Court for the Northern District of Florida (the “Court”). The complaint alleges receipt of unwanted telemarketing text messages in contravention to federal and state statutes while seeking class certification status. An initial dispositive motion filed by ABInc was denied by the Court. Reconsideration of that determination was requested and remains pending. The claim by plaintiff is for the award of the statutory amounts as established in the corresponding acts which could be up to $1.5 per occurrence. In this case, Plaintiff alleges it happened to him a total of six (6) times after purportedly requesting messages to stop. The additional costs, if any, mentioned in the claim are not able to be estimated at this time.
On June 21, 2024, Digital Access, LLC, a Michigan limited liability company (“Digital Access”) and two additional co-defendants, filed a complaint against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), before the US District Court for the Eastern District of Michigan (the “Court”). The complaint alleges tortious interference with business relationships and business expectancy, statutory and common law conversions, trespass to chattels and injunctive relief against it. The case has been recently removed to the US District Court for the Northern District of Indiana. The amount claimed against ABInc is not less than $750. The Company does not believe that there is any merit to the allegations against it and intends to defend it vigorously.
22. Off-Balance Sheet Arrangements
In the normal course of business, the Company’s contract with the government of El Salvador for the operation of the Chivo branded ATMs obligates the Company to assume the risk of loss for funds used in the operation of the Chivo branded ATMs while those funds are in transit. The Company has contracted with licensed and insured cash logistics companies to securely transport these funds. The logistics companies’ insurance covers in full the value of the funds in transit however, in the event of a loss or destruction of the funds in transit, the Company could encounter a timing delay between insurance payment for lost funds and the date of actual loss. The amount of funds in transit varies based on multiple factors including but not limited to economic activity, seasonality, holiday and bank closure calendars. The amount of funds in transit as of September 30, 2024 and December 31, 2023, were $562 and $875, respectively.
23. Subsequent Events
The Company has evaluated subsequent events after the balance sheet date of September 30, 2024 through January 28, 2025 the date on which these Consolidated Financial Statements were available to be issued.
On October 30, 2024, the Company entered with Taproot, into an Equipment Financing Agreement (the “Agreement”) to purchase certain Bitcoin ATM kiosks (the “Equipment” units) listed in the Agreement.
On November 25, 2024, Karen Carew on behalf of herself and all others (“Carew”), an individual, filed a complaint that includes class action allegations, against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), its Chief Executive Officer, and other defendants, filed at the Superior Court of New Jersey Law Division, Monmouth County (the “Court”). The complaint against ABInc alleges negligence and violations to various New Jersey statutes such as possession of stolen property, Racketeer Influenced and Corrupt Organizations, negligence and consumer fraud. Plaintiff alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond to what already ABInc has in place. The claim by plaintiff against ABInc is for an undetermined amount of compensation (which cannot exceed $5,000,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are not able to be estimated at this time, if any would be applicable.
| F-35 |
CONSOLIDATED FINANCIAL STATEMENTS
Athena Bitcoin Global
For the years ended December 31, 2023 and 2022
Contents
Financial Statements
| F-36 |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Athena Bitcoin Global
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Athena Bitcoin Global (the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ FGMK, LLC
We have served as the Company’s auditor since 2024.
Chicago, Illinois
January 28, 2025
| F-37 |
Athena Bitcoin Global
Consolidated Balance Sheets
(in thousands, except number of shares)
| December 31, | December 31 | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 18,105 | $ | 2,766 | ||||
| Restricted cash held for customers | 255 | 1,107 | ||||||
| Crypto assets held | 421 | 365 | ||||||
| Accounts receivable | 625 | 109 | ||||||
| Prepaid expenses and other current assets | 425 | 523 | ||||||
| Total current assets | 19,831 | 4,870 | ||||||
| Property and equipment, net | 6,812 | 5,910 | ||||||
| Right of use assets – operating leases | 21,068 | 1,616 | ||||||
| Right of use assets – finance leases | 991 | – | ||||||
| Other noncurrent assets | 11 | 50 | ||||||
| Total assets | $ | 48,713 | $ | 12,446 | ||||
| Liabilities and stockholders’ equity (deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 6,027 | $ | 1,531 | ||||
| Accounts payable, related party | 796 | 465 | ||||||
| Liability for cash held for customers | 255 | 1,107 | ||||||
| Operating lease liabilities, current portion | 7,205 | 66 | ||||||
| Finance lease liabilities, current portion | 1,075 | – | ||||||
| Income tax payable | 349 | 693 | ||||||
| Long-term debt, current portion | 546 | 507 | ||||||
| Short-term debt | 95 | 614 | ||||||
| Note payable, related party | 4,000 | 490 | ||||||
| Convertible debt | – | 1,520 | ||||||
| Other current liabilities | 88 | 396 | ||||||
| Total current liabilities | $ | 20,436 | $ | 7,389 | ||||
See accompanying notes.
| F-38 |
Athena Bitcoin Global
Consolidated Balance Sheets (continued)
(in thousands, except number of shares)
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Long-term liabilities: | ||||||||
| Long-term debt, net of current portion | $ | – | $ | 610 | ||||
| Deferred tax liabilities | 396 | 30 | ||||||
| Operating lease liabilities, net of current portion | 13,863 | 1,550 | ||||||
| Convertible debt, related party | 3,000 | 3,000 | ||||||
| Total liabilities | 37,695 | 12,579 | ||||||
| Commitments and contingencies (Note 15) | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Preferred stock, $0.001 par value 5,000,000,000 shares authorized; no shares issued and outstanding as of December 31, 2023, and no shares authorized, issued and outstanding as of December 31, 2022 | – | – | ||||||
| Common stock, $0.001 par value 10,000,000,000 shares authorized; 4,094,459,545 shares issued and outstanding as of December 31, 2023 and $0.001 par value 4,409,605,000 shares authorized; 4,094,459,545 shares issued and outstanding as of December 31, 2022 | 4,094 | 4,094 | ||||||
| Additional paid in capital | 11,926 | 11,891 | ||||||
| Accumulated deficit | (4,747 | ) | (15,943 | ) | ||||
| Accumulated other comprehensive loss | (255 | ) | (175 | ) | ||||
| Total stockholders’ equity (deficit) | 11,018 | (133 | ) | |||||
| Total liabilities and stockholders’ equity (deficit) | $ | 48,713 | $ | 12,446 | ||||
See accompanying notes.
| F-39 |
Athena Bitcoin Global
Consolidated Statements of Operations and Comprehensive Income
(in thousands, except number of shares)
| For the year ended | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Revenues | $ | 191,807 | $ | 73,686 | ||||
| Cost of revenues | 162,624 | 59,643 | ||||||
| Gross profit | 29,183 | 14,043 | ||||||
| Operating expenses: | ||||||||
| Technology and development | 978 | 776 | ||||||
| General and administrative | 5,714 | 5,784 | ||||||
| Sales and marketing | 550 | 594 | ||||||
| Other operating expense | 428 | 59 | ||||||
| Total operating expenses | 7,670 | 7,213 | ||||||
| Income from operations | 21,513 | 6,830 | ||||||
| Impairment on capitalized software development | 2,383 | – | ||||||
| Interest expense | 2,380 | 685 | ||||||
| Fees on virtual vault services | 1,039 | 113 | ||||||
| Other expense | 25 | 138 | ||||||
| Income before income taxes | 15,686 | 5,894 | ||||||
| Income tax expense | 4,490 | 1,770 | ||||||
| Net income | $ | 11,196 | $ | 4,124 | ||||
| Basic earnings per share | $ | 0.00282 | $ | 0.00104 | ||||
| Diluted earnings per share | $ | 0.00256 | $ | 0.00100 | ||||
| Weighted average shares outstanding - Basic | 3,975,320,084 | 3,966,879,171 | ||||||
| Weighted average shares outstanding - Diluted | 4,463,674,048 | 4,474,859,071 | ||||||
| Comprehensive income | ||||||||
| Net income | $ | 11,196 | $ | 4,124 | ||||
| Foreign currency translation adjustment, net of tax | (80 | ) | 1 | |||||
| Comprehensive income | $ | 11,116 | $ | 4,125 | ||||
See accompanying notes.
| F-40 |
Athena Bitcoin Global
Consolidated Statements of Cash Flows
(in thousands)
| For the year ended | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Operating activities | ||||||||
| Net income | $ | 11,196 | $ | 4,124 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 2,199 | 1,670 | ||||||
| Impairment of crypto assets held | 440 | 973 | ||||||
| Impairment of capitalized software development | 2,383 | – | ||||||
| Realized loss on crypto assets | 14 | 32 | ||||||
| Crypto asset payments for expenses | 6,347 | 3,176 | ||||||
| Loss on disposal of property and equipment, net | 245 | – | ||||||
| Deferred income tax | 366 | 30 | ||||||
| Non-cash share-based compensation expense | 35 | – | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Crypto assets held | (8,136 | ) | (3,825 | ) | ||||
| Accounts receivable | (516 | ) | 1,422 | |||||
| Other advances | – | 845 | ||||||
| Advances received for revenue | – | (3,500 | ) | |||||
| Prepaid expenses and other assets | 136 | 934 | ||||||
| Liability for cash held for customers | (852 | ) | (2,564 | ) | ||||
| Accounts payable and other liabilities | 2,260 | 1,173 | ||||||
| Net cash provided by operating activities | 16,117 | 4,490 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (2,442 | ) | (4,610 | ) | ||||
| Net cash used in investing activities | (2,442 | ) | (4,610 | ) | ||||
| Financing activities | ||||||||
| Proceeds from debt | 4,160 | 549 | ||||||
| Repayment of debt | (3,268 | ) | (1,612 | ) | ||||
| Net cash provided by (used in) financing activities | 892 | (1,063 | ) | |||||
| Effect of exchange rate changed on cash and cash equivalents | (80 | ) | 1 | |||||
| Net increase (decrease) in cash and cash equivalents | 14,487 | (1,182 | ) | |||||
| Cash, cash equivalents and restricted cash, beginning of period | 3,873 | 5,055 | ||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 18,360 | $ | 3,873 | ||||
See accompanying notes.
| F-41 |
Athena Bitcoin Global
Consolidated Statements of Cash Flows (continued)
(in thousands)
| For the year ended | ||||||||
December 31, 2023 | December 31, 2022 | |||||||
| Cash, cash equivalents, and restricted cash consisted of the following: | ||||||||
| Cash and cash equivalents | $ | 18,105 | $ | 2,766 | ||||
| Restricted cash held for customers | 255 | 1,107 | ||||||
| Total cash, cash equivalents and restricted cash | $ | 18,360 | $ | 3,873 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | 406 | $ | 737 | ||||
| Cash paid for taxes | $ | 4,529 | $ | 1,123 | ||||
| Leased assets obtained in exchange for operating lease liabilities | $ | 19,796 | $ | 753 | ||||
| Leased assets obtained in exchange for finance lease liabilities | $ | 1,049 | $ | – | ||||
| Supplemental schedule of non-cash investing and financing activities | ||||||||
| Conversion of debt for common shares | $ | – | $ | 3,245 | ||||
| Property and equipment purchased in credit | $ | 3,236 | $ | – | ||||
| Crypto assets used to buy property and equipment | $ | 248 | $ | 121 | ||||
| Crypto assets used to pay interest | $ | 1,906 | $ | – | ||||
| Crypto assets used for other payments | $ | 1,031 | $ | – | ||||
See accompanying notes.
| F-42 |
Athena Bitcoin Global
Consolidated Statements of Stockholders’ Equity (Deficit)
(in thousands, except number of shares)
| Common Stock | Additional Paid-in | Accumulated | Accumulated Other Comprehensive | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Total | |||||||||||||||||||
| Balance, December 31, 2021 | 4,049,392,879 | $ | 4,049 | $ | 8,691 | $ | (20,067 | ) | $ | (176 | ) | $ | (7,503 | ) | ||||||||||
| Net income | – | – | – | 4,124 | – | 4,124 | ||||||||||||||||||
| Debt conversion | 45,066,666 | 45 | 3,200 | – | – | 3,245 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | 1 | 1 | ||||||||||||||||||
| Balance, December 31, 2022 | 4,094,459,545 | $ | 4,094 | $ | 11,891 | $ | (15,943 | ) | $ | (175 | ) | $ | (133 | ) | ||||||||||
| Net income | – | – | – | 11,196 | – | 11,196 | ||||||||||||||||||
| Foreign currency translation adjustment | – | – | – | – | (80 | ) | (80 | ) | ||||||||||||||||
| Extension of loans to employees | – | – | 35 | – | – | 35 | ||||||||||||||||||
| Balance, December 31, 2023 | 4,094,459,545 | $ | 4,094 | $ | 11,926 | $ | (4,747 | ) | $ | (255 | ) | $ | 11,018 | |||||||||||
See accompanying notes.
| F-43 |
Athena Bitcoin Global
Notes to Consolidated Financial Statements
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Athena Bitcoin Global (f.k.a. GamePlan, Inc.), a Nevada corporation, and its wholly owned subsidiary, Athena Bitcoin, Inc., a Delaware corporation (together referred to as “Athena Global” or “the Company”) is a provider of various crypto asset transaction platforms, including the operation of automated teller machines (“ATMs”) and personalized services (“Athena Plus”) for the purpose of selling and buying crypto assets, white-label operations and payment services. The Company’s network of Athena Bitcoin ATMs is active in twenty-nine states and the territory of Puerto Rico in the United States, and 4 countries in Central and South America as of December 31, 2023. The Company places its machines in convenience stores, shopping centers, and other easily accessible locations.
The Company has changed its name to Athena Bitcoin Global from GamePlan, Inc. in a filing with the Secretary of State of the State of Nevada effective as of April 15, 2021.
Athena Bitcoin Global was a “shell company” (as such term is defined in Rule 12b-2 under the Exchange Act) immediately before the completion of the transactions described below. Athena Bitcoin Global was incorporated in the state of Nevada in 1991 under the name “GamePlan, Inc.” for the sole purpose of merging with Sunbeam Solar, Inc., a Utah corporation, which merger occurred as of December 31, 1991. The Articles of Merger were filed in the state of Nevada pursuant to which the Company was the surviving entity following the merger. The Company was involved in various businesses, including, gaming and other consulting services, prior to becoming a company seeking acquisitions. The Company filed form 10-SB with the Securities and Exchange Commission in September 1999 thus becoming a reporting company under section 12(g) of the Securities and Exchange Act of 1934. The Company subsequently filed Form 15 in March 2015, terminating its reporting status.
On January 14, 2020, Athena Bitcoin Global (f.k.a. GamePlan, Inc.) entered into a Share Exchange Agreement (the “Agreement”), by and among the Company, Athena Bitcoin, Inc., a Delaware corporation (“Athena”) founded in 2015, and certain shareholders of Athena Bitcoin, Inc. The Agreement provides for the reorganization of Athena Bitcoin, Inc., with and into Athena Bitcoin Global (f.k.a. GamePlan, Inc.), resulting in Athena Bitcoin, Inc. becoming a wholly owned subsidiary of Athena Bitcoin Global upon the closing of the transaction. The agreement is for the exchange of 100% shares of the outstanding Common Stock of Athena Bitcoin, Inc., for 3,593,644,680 shares of Athena Bitcoin Global common stock (an exchange rate of 1,244.69 shares of Athena Bitcoin Global stock for each share of Athena Bitcoin, Inc. stock). The closing of the transaction occurred as of January 30, 2020.
In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805-10-55-12, because the former shareholders of Athena Bitcoin, Inc. acquired the majority (88%) of the voting rights of the Company and control of the Company’s board of directors and senior management of Athena Bitcoin, Inc. became management of the combined entity, the Company determined that the Share Exchange was a reverse acquisition.
As the Share Exchange is considered a reverse acquisition, in accordance with FASB ASC 805-40-45-2, for financial statement purposes Athena Bitcoin, Inc. is considered the accounting acquiror. Accordingly, the historical financial statements prior to the Share Exchange are those of Athena Bitcoin, Inc., except that the historical equity of Athena Bitcoin Global has been retroactively restated to reflect the number of shares received in the business combination at the exchange rate of 1,244.69 shares of Athena Bitcoin Global common stock for each share of Athena Bitcoin, Inc. common stock. The historical common stock carrying amount has been adjusted to reflect the revised par value of the outstanding stock and the corresponding offset was reflected in the additional paid-in capital. All share and per share information included in these financial statements have been adjusted to reflect the 1,244.69 to 1 share conversion.
| F-44 |
In 2018, the Company issued a series of instruments called “Simple Agreements for Future Tokens” (SAFTs) in exchange for investments in cash or crypto assets. The SAFTs entitled holders to receipt of tokens representing equity in the Company under certain pre-defined circumstances. These include a qualified financing event in which the Company raised $15,000 or more in a single transaction, a “corporate transaction” (sale of all or substantially all of the Company’s assets), or a dissolution. In connection with the Share Exchange, the SAFT Notes were converted into 1,653,425,404 shares of Athena Bitcoin, Inc. (which were then exchanged for Athena Bitcoin Global common stock). Additionally, warrants to purchase 115,888,490 shares of Athena Bitcoin, Inc.’s common stock were exercised for proceeds of $69. These shares were then exchanged for Athena Bitcoin Global common stock. Additionally, Swingbridge notes were converted into 419,078,082 shares of Athena Bitcoin, Inc’s common stock (which was then exchanged for Athena Bitcoin Global common stock). Lastly, 157,635,309 shares of Athena Bitcoin, Inc. were issued upon exercise of stock options (which was then exchanged for Athena Bitcoin Global common stock).
There were 4,079,815,704 shares of Athena Bitcoin Global’s common stock outstanding following the closing date of the transaction.
Athena Bitcoin Global subsequently purchased and cancelled 30,422,825 shares.
There were two debt conversions in fiscal year 2022 resulting in the issuance of 45,066,666 shares of common stock.
Athena Bitcoin Global has 4,094,459,545 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively and authorized capital of 10,000,000,000 and 4,409,605,000 shares as of December 31, 2023 and December 31, 2022, respectively.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Athena Bitcoin Global, Athena Bitcoin, Inc. and its wholly owned subsidiaries, Athena Bitcoin S. de R.L. de C.V., incorporated in Mexico; Athena Holdings Colombia SAS, incorporated in Colombia; Athena Holding Company S.R.L, incorporated in Argentina; Athena Holdings of PR LLC, incorporated in Puerto Rico; Athena Holdings El Salvador, S.A. de C.V., incorporated in El Salvador; and Athena Business Holdings Panama S.A. incorporated in Panama. All significant intercompany account balances and transactions have been eliminated in consolidation.
A summary of the Company’s significant accounting policies is as follows:
Basis of Presentation
The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Significant estimates and assumptions made by management are used for, but not limited to, the useful lives of property and equipment and impairment assessment for long-lived assets. These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
| F-45 |
Revenue Recognition
Revenue Recognition
The Company derives its recurring revenues primarily from three sources: (i) sale of crypto assets at Athena Bitcoin ATMs, (ii) customized investor trading services for the sale or purchase of crypto assets through our Athena Plus desk and (iii) white label operations in El Salvador. The Company also generates revenue from ancillary items, such as sale of intellectual property and maintenance of software. The Company adopted FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”), effective January 1, 2019, using the modified retrospective method. Under ASC 606 the Company recognizes revenue at the point of sale or over time of the service period for these products or services to our customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. The Company determines revenue recognition through the following five steps:
| · | Identification of the contract, or contracts, with a customer | ||
| · | Identification of the performance obligations in the contract | ||
| · | Determination of the transaction price | ||
| · | Allocation of the transaction price to the performance obligations in the contract | ||
| · | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied.
Judgment is required in determining whether we are the principal or the agent in transactions between customers. We evaluate the presentation of revenue on a gross or net basis based primarily on inventory risk (are we at risk for potentially fluctuations of the crypto asset price) and whether we control the crypto asset provided before it is transferred to the customer or whether we act as an agent by arranging for others to provide the crypto asset to the customer.
The Company enters into contracts that may include multiple performance obligations. The Company identifies the promises in the contract and assigns them to their appropriate performance obligation. These performance obligations may be part of a different revenue source and are listed separately below.
Athena Bitcoin ATM
The Company requires all users of the Athena Bitcoin ATM to agree to ATM Terms of Service. The ATM Terms of Service stipulate the terms and conditions of the transaction. The user, by inserting fiat currency and confirming that they agree to the transaction, is agreeing to the contract that governs the transaction. This contract meets all of the criteria to be a revenue contract under ASC 606.
The Company has a single performance obligation to provide a specific quantity of a crypto asset to the customer’s crypto wallet. We utilize a mark-up for crypto assets sold to the customer. Athena Bitcoin ATMs permit customers to purchase as little as one US dollar of Bitcoin. The Company considers itself the principal in this arrangement, as it controls the crypto asset prior to delivering, incurs inventory risk due to potential fluctuations in the market price of the crypto asset and has discretion in establishing the price of the crypto asset sold in the Athena Bitcoin ATM. Therefore, it records the gross cash received from the customer as the transaction price for the performance obligation.
Revenue is recognized at the point in time when the crypto asset is delivered to the customer’s crypto wallet. Delivery to the customer’s crypto wallet is governed by the crypto asset’s blockchain and typically less than an hour.
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Athena Plus
The Company requires all users of Athena Plus to agree to Athena Plus Terms of Service. The Athena Plus Terms of Service stipulate the terms and conditions of the transaction. The user, by wiring fiat currencies to the Company’s bank account, is agreeing to the contract that governs the transaction. This contract meets all of the criteria under ASC 606.
The Company has a single performance obligation to provide a specific quantity of a crypto asset to the customer’s crypto wallet. We utilize a mark-up for crypto assets sold to the customer. The minimum transaction is $10 (or equivalent value of local currency). The Company considers itself the principal in this arrangement, as it controls the crypto asset prior to delivering, incurs inventory risk due to potential fluctuations in the market price of the crypto asset and has discretion in establishing the price of the crypto asset sold. Therefore, it records the gross cash received from the customer as the transaction price for the performance obligation. The only exception for this is stable coins, which are considered financial assets. As such, the Company, in accordance with FASB ASC 860-20, Sale of Financial Assets, will recognize revenue net (markup) for any sale of stable coins.
Revenue is recognized at the point in time when the crypto asset is delivered to the customer’s crypto wallet. Delivery to the customer’s crypto wallet is governed by the crypto asset’s blockchain.
White-label Service
The Company entered into multiple contracts that govern the white-label service with the El Salvadoran government for ATMs located in El Salvador and in the United States. These contracts detail the obligations and rights of both parties, including pricing and meet all of the criteria under ASC 606. The contracts permit the customer to terminate the contract at any point or to adjust the number of ATMs that are in use without a substantive penalty. This results in each ATM and each service month for the ATM being considered a separate revenue contract per ASC 606.
The Company makes multiple promises to the customer. This includes installation as well as multiple promises for operating the ATMs on behalf of the customer. Installation is a separate performance obligation. This is due to the customer benefitting from the installation, the customer’s ability to utilize a third-party to perform the installation if desired, no significant modification or customization is part of the installation, no significant integration of installation with operating the ATMs and installation does not affect the operating of the ATMs performance obligation (discussed below). This results in installation services being capable of being distinct and distinct in the context of the contract.
The Company is responsible under the White Label Service for operating the ATMs on behalf of the customer over the month service term. The promises that are in the contract may vary each day, for instance performing cash logistics services, testing or repairing the machines. However, these services are highly integrated to provide a combined output (operating ATMs for the customer). These are not services that the Company offers separately and by providing them together, it ensures a cohesive and effective approach to operating the ATMs for the customer. This integrated approach is critical to the value that the Company is offering the customer. As such, given the interrelated nature of the service, this results in a single performance obligation.
This single performance obligation meets the definition of continuous service obligation due to the Company continuously managing operations of their ATMs. There is no defined number of services that are provided each month. The Company is required to provide the same service each month to operate the ATMs, pricing resets each month and customer does not make separate purchase decisions. Each fulfilment activity may have separate pricing but the approval for these services is considered perfunctory, as these activities are all necessary to ensure that the ATMs operate in accordance with the terms of the service agreement.
The Company evaluated if this meets the definition of a series. Each increment of the promised service to operate the machines (i.e., each day) is distinct in accordance with ASC 606. This is because the customer can benefit from each increment of service on its own (it is capable of being distinct) and each increment of service is separately identifiable because no day of service significantly modifies or customizes another, and no day of service significantly affects either the entity’s ability to fulfill another day of service or the benefit to the customer of another day of service. Therefore, the days are substantially the same and have the same pattern of transfer. Therefore, this meets the criteria to be considered part of a series.
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One of the promises included in operating the ATM performance obligation is providing Company owned ATMs to the customer. The Company elected the expedient in FASB ASC 842, Leases (“ASC 842”), which permits combining the lease and non-lease components together if the lease component has the same timing and pattern of transfer as the non-lease component and the lease component is an operating lease. Both of these conditions are met. Given that that the predominant obligation is the non-lease component (servicing the ATM), the Company, in accordance with ASC 842, will account for the performance obligation under the terms of ASC 606.
The Company generally charges a fixed fee for installation and a fixed fee each month for operating the ATMs. The fixed fees collected are allocated to the performance obligations based on an adjusted market assessment approach.
The Company charges the customer for services necessary to operate the ATMs, including repairs and cash logistics. The fees are included in the contract. The fees meet the definition of variable consideration, as it is dependent on the specific service performed, which is not known before each service term. The Company applies the variable consideration allocation exception, as noted in ASC 606-10-32-39(b). This is met due to the variable payment being specific to the Company transferring a specific service and the allocation is consistent with the allocation objective in ASC 606. As such, the Company recognizes the variable transaction fee when they perform the specific service to which it relates. The additional services and reimbursement of costs do not meet the definition of a material right, as this is not considered an option to acquire additional good or service but part of the existing contract. These services are considered perfunctory, as they are necessary for the Company to fulfill its performance obligation to operate the machines on behalf of the customer.
The Company is considered the principal, as it controls any third-party good or service before it is transferred to the customer.
For operating the ATM, revenue is recognized straight line over the requisite service period, which is one month. For installation, revenue is recognized at the point in time when installation is complete. The variable transaction fees are recognized in the month in which the Company has earned the fee.
Development of Chivo Ecosystem and Support
In 2021, the Company entered into a series of contracts to develop the Chivo Ecosystem for El Salvador. The Chivo Ecosystem is comprised of the Bitcoin Chivo Wallet and the Chivo Website. In order to develop the Chivo Ecosystem, the Company provided a license to intellectual property. The license is nonexclusive, non-sublicensable (except to representatives of the El Salvador government), royalty-free, fully paid-up, irrevocable, perpetual and a worldwide right. There are no exclusivity terms and no commitments. The license to the intellectual property was subject to completion of the asset acquisition of XPay. As of December 31, 2021, the Company had not completed the asset acquisition. This meets the definition of a contingency and results in the Company not meeting the criterion in ASC 606 as the Company cannot commit to performing their obligation. The other elements of a revenue contract, including identification of their rights to the services to be transferred, payment terms, commercial substance and collecting the consideration are all met. Due to the contingency, this results in the contracts not being a revenue contract under ASC 606 until the contingency is lifted. All consideration received until the contingency is lifted is a liability. The performance obligations for the contract were completed in 2021 and the Company received all consideration by December 31, 2021. This consideration received was accounted for as deferred revenue as of December 31, 2021.
The contingency was lifted in 2022 with the acquisition of the rights to utilize the license. As such, the Company recognized the revenue for the consideration received of $4,000, which is included in ancillary and other in Note 3.
Cost of Revenues
Cost of revenues consists primarily of expenses related to the acquisition of crypto assets (including the costs to purchase crypto assets from users in our ATMs and from third-party exchanges). The Company assigns the costs of crypto assets sold in its revenue transactions on a first-in, first-out basis.
Additionally, cost of revenues includes the costs of operating the ATMs from which some of the crypto assets are sold (including the associated rent expense, related incentives, ATM cash losses, software licensing fees for the ATMs, depreciation, insurance, and utilities), crypto asset impairment and fees paid to service the ATMs and transport cash to the banks.
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Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents include cash maintained at various financial institutions, cash in transit, and cash in ATMs owned and leased by the Company.
The Company maintains cash balances at various financial institutions. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation (FDIC) up to $250 per institution. The Company has deposits in excess of the FDIC-insured limit. The Company has not experienced any losses in such accounts and believes that it is not exposed to significant credit risk due to the financial position of the depository institutions, third party exchanges, or investment vehicles in which those deposits are held.
Cash in transit consists of cash that is picked up by armored truck companies from the Company’s ATMs but not yet deposited in the Company’s bank accounts. As of December 31, 2023 and December 31, 2022, the Company had cash in transit of $6,164 and $1,658, respectively. Management evaluates cash in transit based on outstanding cash deposits on cash picked up by the armored truck companies, historical cash deposits and cash that is lost during transit, which is immaterial. The armored truck companies maintain insurance over theft and losses.
Restricted Cash Held for Customers
Restricted cash held for customers consists of money on hand received from white-label customers for replenishment of ATMs.
Accounts Receivable
Accounts receivables are stated at the amount the Company expects to collect. In 2021 the Company adopted FASB ASC 326, Financial Instruments - Credit Losses. This methodology is referred to as the current expected credit loss (“CECL”) method and replaces the previous incurred loss methodology. The measurement of CECL applies to all financial assets measured at amortized cost, including receivables for revenue. The Company recognized no allowance for credit losses for December 31, 2023, 2022 and 2021, respectively utilizing the CECL methodology.
Leases
The Company determines if an arrangement is a lease at inception. The Company determines if an arrangement is a lease, or contains a lease, primarily by determining if the arrangement conveys to the Company the right to control or use an identified asset. The Company classifies its arrangements for ATM retail spaces as operating leases. The Company has classified certain arrangements for ATMs as finance leases. The Company does not have any significant arrangements where it is the lessor.
The Company elected to separate lease and non-lease components for arrangements where the Company is a lessee. The Company determined the relative standalone price of the separate lease components and non-lease components by utilizing observable information to estimate the standalone price of each component. The Company allocated the consideration on a relative standalone price basis to the separate lease components and the non-lease components of the contract.
Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. Operating lease expense is recognized on a straight-line basis over the lease term.
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Operating and finance lease right of use (“ROU”) assets and operating and finance lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The right of use assets are shown net of subsequent amortization. For purposes of calculating lease obligations under the standard, the Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company’s leases do not contain material residual value guarantees or material restrictive covenants. The discount rate used to measure a lease obligation should be the rate implicit in the lease; however, the Company’s leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term while finance lease ROU assets are amortized on a straight-line basis and interest expense is recorded over the lease term based on the incremental borrowing rate and the amount of lease liability outstanding during each month.
The operating and finance lease assets also include any initial direct costs and lease payments made prior to lease commencement and excludes lease incentives incurred.
Concentration of Credit Risk
The Company’s revenues, other than white-label services below, are generated primarily from ATM sales to customers located in the United States and Latin America. As the Company collects all amounts from these customers and holds $0 in accounts receivable from its ATM or over the counter customers, there is no credit risk associated with customer concentration for these customers.
The Company has revenues from white-label services in El Salvador and ancillary sales to customers where it provides services on customary credit terms, typically Net 30 or Net 60. As of December 31, 2023 and December 31, 2022, one customer, Ministerio de Hacienda (Department of Treasury) of El Salvador represents substantially all of the Company’s total accounts receivable balance.
No single customer is responsible for over 10% of revenue.
Property and Equipment, Net
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Equipment is depreciated over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful lives of improvements or the term of the related lease. Repairs and maintenance costs are expensed as incurred.
Following are the estimated useful lives by type:
| Computer equipment | Three years |
| ATM equipment | Three years |
| Office equipment | Six years |
| Capitalized software | Five years |
Capitalized software consists of costs related to the design, coding, testing and documentation of software, as well as salaries and compensation costs for employees, fees paid to third-party consultants who are directly involved in development efforts, and costs incurred for upgrades and enhancements to add functionality of the software. Other costs that do not meet the capitalization criteria are expensed as incurred. The criteria for capitalization include the completion of the preliminary project stage, demonstration of feasibility of the project and the ability to reliably estimate future economic benefits. Capitalized software is subject to periodic impairment tests to ensure that the carrying value of the asset is not overstated. If an impairment is identified, the carrying value of the capitalized software will be reduced to its recoverable amount.
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Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment in accordance with FASB ASC 360, Property, Plant and Equipment whenever events or changes in circumstances have indicated that an asset may not be recoverable. Management has determined an impairment of long-lived assets relating to crypto assets held as of December 31, 2023 and December 31 2022 as discussed in the next section. In addition, as of December 31, 2023 the Company recognized an impairment for its capitalized software cost of $2,383 as discussed in Note 6.
Crypto Assets Held
Crypto assets are considered indefinite-lived intangible assets under FASB ASC 350, Intangibles—Goodwill and are initially measured at cost and are not amortized. As intangible assets, the crypto assets held are initially recorded at cost and tested for impairment at the end of the month. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the crypto asset at the time its fair value is being measured in its principal market. The Company continuously assesses crypto assets for impairment.
The Company purchases Bitcoin, which is held in the Company’s hot wallets, on a just-in-time basis to facilitate sales to customers and mitigate exposure to volatility in Bitcoin prices. As of July 19, 2023, the Company only transacts in Bitcoin at its bitcoin automated teller machines (“BTMs”) in exchange for cash, on a predetermined markup at the time of the transaction. However, there may be multiple days between the purchase of the crypto asset and the sale of the crypto asset. The Company has determined that a decline in the quoted market price below the carrying value at any time during the assessed period is viewed as an impairment indicator because the cryptocurrencies are traded in active markets where there are observable prices. Therefore, the fair value is used to assess whether an impairment loss should be recorded. If the fair value of the cryptocurrency decreases below the initial cost basis or the carrying value during the assessed period, an impairment charge is recognized at that time in cost of revenue in the consolidated statements of operations and comprehensive income. After an impairment loss is recognized, the adjusted carrying amount of the cryptocurrency becomes its new accounting basis and this new cost basis will not be adjusted upward for any subsequent increase in fair value. For purposes of measuring impairment on its cryptocurrencies, the Company determines the fair value of its cryptocurrency on a non-recurring basis in accordance with FASB ASC 820, Fair Value Measurement, based on quoted (unadjusted) prices on active exchanges in the United States that the Company has determined is its principal market (Level 1 inputs). The Company assigns cost to transactions on a first-in, first-out basis. Gains on such assets are not recorded or recognized until their final disposition. For the years ended December 31, 2023 and 2022 the Company had impairment charges related to crypto assets held of $440 and $973, respectively.
When Bitcoin is sold to customers, the Company relieves the adjusted cost basis of the crypto asset, net of impairments, on a first-in, first-out basis within cost of revenue. The related cash flows from purchases and sales of cryptocurrencies are presented as cash flows from operating activities on the consolidated statements of cash flows.
Expenses Paid in Crypto Assets
The Company enters into agreements with certain vendors and service providers that provide us with the option to settle their invoices in crypto assets. The amount due is fixed and is denominated in USD. There are no payment terms that include conversion options, variable settlement features, or alternative settlement provisions contingent upon future events or market price fluctuations that could potentially give rise to embedded derivatives.
The Company considers the guidance in FASB ASC 350, FASB ASC 606, FASB ASC 610, and FASB ASC 845 when it evaluates the derecognition of its crypto assets paid to vendors in lieu of cash payments. In these transactions, we have been invoiced by a vendor and given the option to pay in USD or crypto assets, typically Bitcoin. The amount of Bitcoin is determined by the market wide and easily determined price in accordance with the guidance of FASB ASC 820, Fair Value Measurement. The Company records as an expense the USD value of the invoice and then considers the above references to determine the proper way to derecognize the intangible long-lived asset used as payment.
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We consider the scoping exceptions for each of those topics and conclude that that the scope of 610-20 most closely matched the facts of the transactions. ASC 610-20-15-2 states “nonfinancial assets within the scope of this Subtopic include intangible assets,” which is how the company treats crypto assets.
We evaluated two possibilities to exclude these transactions from the scope FASB ASC 845, Nonmonetary Transactions. The relevant exceptions to the scope of that Topic are as follows:
| 1. | The transfer of goods or services in a contract with a customer within the scope of ASC 606 in exchange for noncash consideration (ASC 845-10-15-4(j)) | |
| 2. | The transfer of a nonfinancial asset within the scope of ASC 610-20 in exchange for noncash consideration (ASC 845-10-15-4(k)) |
For these transactions, our usage of the crypto asset is as a payment instrument to a vendor, therefore our interpretation of (1) above is for ASC 606 not to apply. We interpret (2) above to apply when the Company pays a vendor (who is not a customer) with a crypto asset (nonfinancial asset) in lieu of paying that same vendor with fiat currency (USD). Therefore, we account for the derecognition of the crypto assets, in these transactions, under the guidance of ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets. This is the same guidance as in ASC 350-10-40-1, Transfer or Sale of Intangible Assets.
ASC 610-20-15-2 explicitly states the scope to include intangible assets. We treat crypto assets as intangible assets. We then apply the general principle of ASC 610-32-2 for recognizing the gain or loss for the difference between the amount of goods or services we receive (fair market value, per ASC 820 Level 2) and the cost of acquiring the crypto asset.
We record invoices from vendors in the appropriate expense category, in the correct time period in which services were provided, in USD and for vendors who elect to be paid in crypto assets, we transfer the crypto assets at market value at the time of transfer in line with ASC 820, Fair Value Measurement. We then recognize as a gain or loss, the difference between the current carrying value of the crypto asset, less impairment and its value at the time of transfer to cost of revenues in the consolidated statements of operations and comprehensive income.
For the years ended December 31, 2023 and December 31, 2022, the Company had losses related to the derecognition of crypto assets of $14 and $32, respectively.
Crypto Assets Held for Customers
Crypto assets held for customers represents the Company’s obligation to safeguard certain customers’ crypto assets in digital wallets on the Company’s platform from a prior service offering. The Company safeguards crypto assets for customers in digital wallets and portions of cryptographic keys necessary to access crypto assets on the Company’s platform. The Company safeguards these assets and/or keys and is obligated to safeguard them from loss, theft, or other misuse. The Company records customer crypto assets as well as corresponding customer crypto liabilities, in accordance with Staff Accounting Bulletin No. 121 (“SAB 121”).
The Company maintains a record of all customer assets in segregated digital wallets held by the Company as well as the private keys to the crypto assets, which are maintained on behalf of customers. For crypto assets where the Company does not maintain a private key or the ability to recover a customer’s private key, these balances are not recorded, as there is no related safeguarding obligation in accordance with SAB 121.
The Company records the assets and liabilities, on the initial recognition and at each reporting date, at the fair value of the crypto assets which it safeguards for its customers. The Company has committed to securely store all crypto assets and cryptographic keys (or portions thereof) it holds on behalf of customers, and the value of these assets have been recorded as customer crypto liabilities and corresponding customer crypto assets. As such, the Company may be liable to its customers for losses arising from theft or loss of private keys. The Company has no reason to believe it will incur any expense associated with such potential liability because it has established security around private key management to minimize the risk of theft or loss. The Company holds the customer crypto assets on a 1:1 basis. Any loss or theft would impact the measurement of the customer crypto assets. During the years ended December 31, 2023 and 2022, no material losses have been incurred in connection with customer crypto assets.
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Foreign Currency
The functional currency of our wholly owned subsidiaries is the currency of the primary economic environment in which the Company operates. Our foreign subsidiaries that utilize foreign currency as their functional currency translate such currency into U.S. dollars using (i) the exchange rate on the balance sheet dates for assets and liabilities, (ii) the average exchange rates prevailing during the period for revenues and expenses, and (iii) historical exchange rates for equity. Translation adjustments are included in comprehensive income in our consolidated statements of operations and comprehensive income. The amount of taxes allocated to translation adjustments was immaterial for the years ended December 31, 2023 and December 31, 2022.
Assets and liabilities of a subsidiary that are denominated in currencies other than the Company’s functional currency are re-measured into the functional currency. Transaction gains and losses related to exchange rate fluctuations on transactions denominated in a currency other than the functional currency of an entity are recorded within the Company’s consolidated statements of operations and comprehensive income as a component of other expense. The Company’s foreign currency transaction gains were $45 and $8 for the years ended December 31, 2023 and December 31, 2022, respectively.
Stock-Based Compensation Expense
The Company accounts for stock-based compensation according to the provisions of FASB ASC 718, Compensation - Stock Compensation, which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors, including employee stock options and non-vested stock awards, based on the fair values on the dates they are granted. The Company records the fair value of awards expected to vest as compensation expense on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.
The Company uses the Black-Scholes option pricing model for determining the estimated fair value for stock-based awards. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, which determine the fair value of stock-based awards, including the options expected term, expected volatility of the underlying stock, risk-free rate, and expected dividends. The expected volatility is based on the average historical volatility of certain comparable publicly traded companies within the Company’s industry. The expected term assumptions are based on the simplified method, due to insufficient historical exercise data and the limited period of time that the Company’s equity securities have been available for issuance. The risk-free interest rates are based on the U.S. Treasury yield in effect at the time of grant. The Company does not expect to pay dividends on common stock in the foreseeable future; therefore, it estimated the dividend yield to be 0%.
Technology and Development
Technology and development include non-capitalized costs incurred in operating, maintaining the Company’s network, website hosting, and technology infrastructure.
Warrants to Purchase Common Stock
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in the FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and FASB ASC 815, Derivatives and Hedging (“ASC 815”). Management’s assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether they meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period-end date while the warrants are outstanding.
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For issued or modified warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, they are recorded at their initial fair value on the date of issuance and subject to remeasurement each balance sheet date with changes in the estimated fair value of the warrants to be recognized as a non-cash gain or loss in the consolidated statements of operations and comprehensive income.
Income Taxes
Income taxes are accounted for under an asset and liability approach. This process involves calculating the temporary and permanent differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The temporary differences result in deferred tax assets and liabilities, which are recorded on the consolidated balance sheets in accordance with FASB ASC 740, Income Taxes (“ASC 740”), which established financial accounting and reporting standards for the effect of income taxes. The likelihood that its deferred tax assets will be recovered from future taxable income must be assessed and, to the extent that recovery is not likely, a valuation allowance is established. Changes in the valuation allowance in a period are recorded through the income tax provision in the consolidated statements of operations and comprehensive income.
The Company recognizes interest and penalties related to uncertain tax benefits on the income tax expense line in the accompanying consolidated statements of operations and comprehensive income. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheets.
ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an entity’s consolidated financial statements and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under ASC 740-10, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, ASC 740-10 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. As a result of the implementation of ASC 740-10, the Company does not have a liability for unrecognized income tax benefits.
Segment Reporting
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (the “CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The CODM reviews financial information presented on a global consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. While the Company does have revenue from multiple products and geographies, no measures of profitability by product or geography are available, so discrete financial information is not available for each such component. As such, the Company has determined that it operates as one operating segment and one reportable segment.
Earnings per share
Basic earnings per share is calculated by dividing net income by the number of weighted average common shares outstanding for the applicable period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average shares outstanding. Potentially dilutive shares, which are based on the weighted average shares of common stock underlying outstanding stock-based awards, warrants and convertible senior notes using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income per share of common stock attributable to common stockholders when their effect is dilutive.
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Loss Contingencies
Loss contingencies are accrued if the loss is probable and the amount of the loss can be reasonably estimated. Legal costs associated with potential loss contingencies are expensed as incurred.
Advertising
The Company expenses advertising costs as incurred. Advertising expense for the years ended December 31, 2023 and 2022 was $41 and $48, respectively.
Recently Adopted Accounting Pronouncements
On March 31, 2022, the SEC issued SAB 121, which sets out interpretive guidance from the staff of the SEC regarding the accounting for obligations to safeguard crypto assets that an entity holds for its platform users. The guidance requires an entity to recognize a liability for the obligation to safeguard the users’ assets, and recognize an associated asset for the crypto assets held for users. Both the liability and asset should be measured initially and subsequently at the fair value of the crypto assets being safeguarded. The guidance also requires additional disclosures related to the nature and amount of crypto assets that the entity is responsible for holding for its platform users, with separate disclosure for each significant crypto asset, and the vulnerabilities the entity has due to any concentration in such activities. The guidance in SAB 121 is effective for interim or annual periods ending after June 15, 2022, with retrospective application as of the beginning of the fiscal year to which the interim or annual period relates. For financial statements, the SAB 121 requires companies to include clear disclosure of the nature and amount of crypto-assets a company is responsible for holding for its platform users, with separate disclosure for each material crypto-asset, and the vulnerabilities of a business as a result of any concentration in those activities. Because crypto-asset protection liabilities and corresponding assets are measured at the fair value of the crypto-assets held for users of its platform, the Company is required to include information about fair value measurements. The Company has adopted this guidance for the presentation of its financial statements. There was no material effect in adopting this guidance.
Recently Issued Accounting Pronouncements
In October 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The new guidance is intended to align U.S. GAAP and SEC requirements while facilitating the application of U.S. GAAP for all entities. The effective date of ASU 2023-06 depends on (1) whether an entity is already subject to the SEC’s current disclosure requirements and (2) whether and, if so, when the SEC removed related requirements from its regulations. For entities that are already subject to the SEC’s current disclosure requirements, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If the SEC has not removed the related requirements from its regulations by June 30, 2027, the amendments made by ASU 2023-06 will be removed from the Codification and will not become effective for any entity. The Company is currently evaluating the impact of this standard on the consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items in interim and annual periods and expands the ASC 280 disclosure requirements for interim periods. The ASU also explicitly requires public entities with a single reportable segment to provide all segment disclosures under ASC 280, including the new disclosures under the ASU. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements.
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On December 13, 2023, the FASB issued ASU 2023-08, Intangibles – Goodwill and Other – Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets, which addresses the accounting and disclosure requirements for certain crypto assets. The new guidance requires entities to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. When adopting the standard, entities are required to record a cumulative-effect adjustment to retained earnings as of the beginning of the annual period of adoption. Retrospective restatement would not be required or allowed for prior periods. For all entities, the ASU’s amendments are effective for fiscal years beginning after December 15, 2024, including interim periods within those years. Early adoption is permitted. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. The Company is currently evaluating the adoption of this ASU. There is expected to be no material impact on the financial statements due to the Company’s holding period of crypto assets being typically two days or less.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the effective tax rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The standard is intended to benefit investors by providing more detailed income tax disclosures to assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Adoption of the standard will only impact the income tax disclosures and is not expected to be material to the consolidated financial statements.
2. Fair Value Measurements
FASB ASC 820, Fair Value Measurement, establishes a three-level valuation hierarchy for disclosure of fair value measurements. Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods, including the market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed in one of the following three categories:
| Level 1: | Quoted prices for identical assets and liabilities traded in active exchange markets, such as the New York Stock Exchange. | |
| Level 2: | Observable inputs other than Level 1, including quoted prices for similar assets or liabilities, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data. Level 2 also includes derivative contracts whose value is determined using a pricing model with observable market inputs or can be derived principally from or corroborated by observable market data. | |
| Level 3: | Unobservable inputs supported by little or no market activity for financial instruments whose value is determined using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation; also includes observable inputs for nonbinding single-dealer quotes not corroborated by observable market data. |
The Company has various processes and controls in place to ensure that fair value is reasonably estimated. A model validation policy governs the use and control of valuation models used to estimate fair value. This policy requires review and approval of models, and periodic re-assessments of models to ensure that they are continuing to perform as designed. The Company performs due diligence procedures over third-party pricing service providers in order to support their use in the valuation process. Where market information is not available to support internal valuations, independent reviews of the valuations are performed, and any material exposures are escalated through a management review process.
| F-56 |
While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. To the extent that the valuation method is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. The degree of judgment exercised in determining fair value is greatest for the financial instruments categorized in Level 3.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.
During the year ended December 31, 2023, there were no changes to the Company’s valuation techniques that had, or are expected to have, a material impact on its consolidated financial position or results of operations.
The Company did not make any transfers between the levels of the fair value hierarchy during the years ended December 31, 2023 and 2022.
Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets and liabilities are measured at fair value on a nonrecurring basis (such as software, property and equipment, and crypto assets held); that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (e.g., when there is evidence of impairment).
3. Revenue
The table below presents revenue of the Company disaggregated by revenue source for the years ended December 31, 2023 and 2022 as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Athena Bitcoin ATMs | $ | 171,399 | $ | 45,340 | ||||
| Athena Plus | 15,267 | 16,528 | ||||||
| White-label Service | 5,071 | 5,011 | ||||||
| Ancillary and other | 70 | 6,807 | ||||||
| $ | 191,807 | $ | 73,686 | |||||
The Company recognized $5,053 and $5,004 in revenue related to operating the white-labeled Bitcoin ATMs and recognized $18 and $7 in revenue related to services necessary to operate the ATMs for the years ended December 31, 2023 and 2022, respectively.
The table below presents revenue disaggregated by geography based on sales location for the years ended December 31, 2023 and 2022 as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Revenue | ||||||||
| United States | $ | 181,556 | $ | 55,796 | ||||
| El Salvador | 9,881 | 17,562 | ||||||
| International | 370 | 328 | ||||||
| $ | 191,807 | $ | 73,686 | |||||
| F-57 |
Contracts with government of El Salvador
In the third quarter of 2021, the Company installed and began operating 200 white-labeled Bitcoin ATMs in El Salvador, 10 white-labeled Bitcoin ATMs at El Salvador consulates in the U.S., 45 white-labeled Bitcoin ATMs in other U.S. locations and sold 950 point-of-sale (POS) terminals for local businesses in El Salvador to process transactions with Bitcoin to Ministerio de Hacienda (Department of Treasury) of El Salvador (“GOES”).
Additionally, we contracted to sell intellectual property in software, develop, and maintain a Bitcoin platform designed to support a GOES branded digital wallet. This is not part of the Company’s regular service offerings and was a one-time project performed on behalf of GOES. This was completed in 2021 but there was a contingency related to the Company acquiring the rights to the license to the intellectual property that was utilized to create the GOES branded digital wallet. The license acquisition was completed in 2022, which is when the Company recognized revenue for the consideration received of $4,000 which is included in ancillary and other above.
From time to time, the Company receives money from GOES to facilitate replenishment of cash in the ATMs that we provide and operate for them. As of December 31, 2023 and December 31, 2022, the cash received as advances from GOES was $7 and $1,107, respectively, presented as part of restricted cash held for customers on the consolidated balance sheets. A corresponding liability to repay GOES for the advances is reflected within liability for cash held for customers on the consolidated balance sheets.
As of October 5, 2022, the Company and Chivo, Sociedad Anónima de Capital Variable, a wholly owned private company of the Government of El Salvador (“CHIVO”) signed a Master Services Agreement (“MSA”) and a Service Level Agreement (“SLA”) replacing the existing Master Services Agreement, Contracts and Athena Service Addendums 1 and 2 with the Department of Treasury of El Salvador with an effective date of July 1, 2022. The services, performance obligations, pricing and terms continue the services, performance obligations, pricing and terms outlined in the original Master Services Agreement, Contracts and Addendums through July 30, 2024, in accordance with the original MSA, Contracts and Addendums. In conjunction with the new MSA and SLA, the Company and CHIVO completed a financial settlement agreement secured by certain assets to reconcile reporting, finalize balances owed between the parties and conclude the original MSA, Contracts and Addendums between the Company and the Department of Treasury of El Salvador, as of April 2023 the Company satisfied all obligations under the settlement. On December 20, 2024 a new three-year MSA and SLA with Chivo was signed effective December 1, 2024.
4. Accounts Receivable
Accounts receivable consists of the following as of December 31, 2023, 2022 and 2021:
| December 31, 2023 | December 31, 2022 | December 31, 2021 | ||||||||||
| White-label fee receivable | $ | 601 | $ | 85 | $ | 1,094 | ||||||
| Others | 24 | 24 | 437 | |||||||||
| $ | 625 | $ | 109 | $ | 1,531 | |||||||
| F-58 |
5. Crypto Assets Held
The Company held the following crypto assets as of December 31, 2023 and December 31, 2022:
| December 31, 2023 |
December 31, 2022 |
|||||||||||||||||||||||
| Qty (1) | Average Rate | Amount (thousands) | Qty (1) | Average Rate | Amount (thousands) | |||||||||||||||||||
| Bitcoin | 9 | $ |
42,265 |
$ |
399 |
16 | $ | 18,069 | $ | 290 | ||||||||||||||
| Litecoin | – | – | – | 125 | 66 | 8 | ||||||||||||||||||
| Ethereum | – | – | – | 17 | 1,130 | 19 | ||||||||||||||||||
| Bitcoin Cash | – | – | – | 26 | 97 | 2 | ||||||||||||||||||
| Tether | 22,356 | 1 | 22 | 45,502 | 1 | 46 | ||||||||||||||||||
| $ | 421 | $ | 365 | |||||||||||||||||||||
(1) Rounded off to the nearest whole number
The table below shows the roll-forward of quantity and costs of various crypto assets traded by the Company.
| Bitcoin | All Others (2) | |||||||||||
| Qty | Cost | Cost | ||||||||||
| January 1, 2022 | 17 | $ | 796 | $ | 46 | |||||||
| Purchases | 2,018 | 47,198 | 6,205 | |||||||||
| Cost of sales | (1,897 | ) | (43,658 | ) | (5,817 | ) | ||||||
| Crypto assets used for expenses | (115 | ) | (2,891 | ) | (285 | ) | ||||||
| Crypto assets used for capital expenditure | (3 | ) | (121 | ) | – | |||||||
| Impairment on crypto assets | – | (899 | ) | (74 | ) | |||||||
| Change in bitcoin held on behalf of certain customers | (4 | ) | (135 | ) | – | |||||||
| December 31, 2022 (1) | 16 | $ | 290 | $ | 75 | |||||||
| January 1, 2023 | 16 | $ | 290 | $ | 75 | |||||||
| Purchases | 5,163 | 152,046 | 2,155 | |||||||||
| Cost of sales | (4,942 | ) | (144,691 | ) | (1,391 | ) | ||||||
| Impairment on crypto assets | – | (436 | ) | (4 | ) | |||||||
| Crypto assets used for expenses | (204 | ) | (6,347 | ) | – | |||||||
| Crypto assets used for capital expenditure | (12 | ) | (248 | ) | – | |||||||
| Crypto assets used for other payments | (6 | ) | (218 | ) | (813 | ) | ||||||
| Change in bitcoin held on behalf of certain customers | (6 | ) | 3 | – | ||||||||
| December 31, 2023 (1) | 9 | $ | 399 | $ | 22 | |||||||
(1) Rounded off to the nearest whole number
(2) All others include Bitcoin Cash, Bitcoin SV, Ethereum, Litecoin, and Tether
| F-59 |
6. Property and Equipment
Property and equipment consist of the following as of December 31, 2023 and December 31, 2022:
| December 31, 2023 | December 31, 2022 | |||||||
| ATM Equipment | $ | 10,069 | $ | 4,975 | ||||
| Capitalized software | 791 | 3,745 | ||||||
| Computer equipment | 117 | 111 | ||||||
| Office equipment | 25 | 22 | ||||||
| 11,002 | 8,853 | |||||||
| Less accumulated depreciation and amortization | (4,190 | ) | (2,943 | ) | ||||
| $ | 6,812 | $ | 5,910 | |||||
Depreciation expense for the years ended December 31, 2023 and 2022 was $1,479 and $1,422 respectively. Amortization expense for the years ended December 31, 2023 and 2022 was $720 and $248, respectively.
The Company entered into a non-binding Letter of Intent with Arley Lozano-Jaramillo (“Lozano”), a principal beneficial owner of Vakano Industries and XPay, both Colombian entities (collectively, “XPay”), for the purchase and sale of certain assets of XPay, primarily intellectual property assets, including the XPay Wallet (the precursor to the Chivo Wallet) and XPay POS software, to the Company. In September 2021, Lozano and the Company entered into a letter of intent to acquire assets of XPay which include certain technologies, ATMs, point-of-sale terminals in El Salvador, X-Pay POS system and other assets. The Company never entered into final agreements contemplated in the letter of intent.
On December 21, 2022, the Company sent formal notice to XPay canceling the non-binding letter of intent for the proposed transaction between the parties and confirming that the $1,595 paid to date and presented in previous periods under other advances in the consolidated balance sheets represented payment in full for certain software, code and technology developments. The cost of the software is included in capitalized software as of December 31, 2022 and was being amortized straight-line over five years. As of December 31, 2023 this capitalized software has been fully impaired.
On December 31, 2023, the Company recorded a charge of $2,383 related to the impairment of capitalized software associated with the development of the XPay Wallet as mentioned in the previous section, and Ruru Wallet app. In order to determine that an impairment had occurred, the Company evaluated the costs required to upgrade the software to meet current technical standards in order to have feasible potential for generating revenue, adjusted for future uncertainties, and evaluated prevailing market preferences for self-custody solutions and concluded that the fair value of the capitalized software related to Xpay Wallet was $0.
The table below presents property and equipment, net by geography.
| December 31, 2023 | December 31, 2022 | |||||||
| United States | $ | 5,742 | $ | 4,194 | ||||
| El Salvador | 1,070 | 1,716 | ||||||
| $ | 6,812 | $ | 5,910 | |||||
| F-60 |
7. Operating Leases
The Company has entered into certain leases primarily for ATM retail spaces and ATM machines. Operating lease expense is recognized in continuing operations by amortizing the amount recorded as an asset on a straight-line basis over the lease term. The operating lease expense are presented consistently with cost of revenues in the consolidated statements of operations and comprehensive income. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.
Balance sheet information related to operating right-of-use assets and lease liabilities consists of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Right-of-use assets – operating leases | $ | 21,068 | $ | 1,616 | ||||
| Operating lease liabilities, current portion | 7,205 | 66 | ||||||
| Operating lease liabilities, net of current portion | 13,863 | 1,550 | ||||||
| Total operating lease liabilities | $ | 21,068 | $ | 1,616 | ||||
Other supplemental information related to operating leases was as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Weighted-average remaining lease term (in years) | 2.94 | 3.59 | ||||||
| Weighted-average discount rate | 15% | 15% | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | $ | 4,473 | $ | 870 | ||||
The discount rates used in measuring the lease liabilities was based on the Company’s hypothetical incremental borrowing rate, as the rate implicit in the leases were not readily determinable.
As of December 31, 2023, the Company’s operating leases have remaining lease terms of up to 5 years, some of which include optional renewals or terminations, which are considered in the Company’s assessments when such options are reasonably certain to be exercised. Any variable payments related to the lease will be recorded as lease expense when and as incurred. Variable payments are not based on an index or rate and relate to common area maintenance or ATM relocation expenses. As of December 31, 2023, the operating leases that the Company has signed but have not yet commenced are immaterial.
The components of lease cost recognized in the consolidated financial statements were as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Operating lease cost | $ | 4,473 | $ | 870 | ||||
| Short term lease cost | 761 | 605 | ||||||
| Variable lease cost | 468 | – | ||||||
| Total lease cost | $ | 5,702 | $ | 1,475 | ||||
| F-61 |
The reconciliation of future lessee lease payments under noncancelable operating leases in which the Company has a lease liability, reflected in our consolidated balance sheet as of December 31, 2023 is presented in the table below:
| Operating Leases | ||||
| 2024 | $ | 10,099 | ||
| 2025 | 9,194 | |||
| 2026 | 4,692 | |||
| 2027 | 2,007 | |||
| 2028 | 1,097 | |||
| Total lease payments | $ | 27,089 | ||
| Less: Imputed interest | (6,021 | ) | ||
| Present value of lease liabilities | $ | 21,068 | ||
8. Finance Leases
On November 2, 2023, the Company entered into a finance lease with Taproot Acquisition Enterprises, LLC, in which the Company agreed to lease certain Bitcoin ATMs over a three year term, with the expectation that the Company will take title of the Bitcoin ATMs prior to the end of the term. As a result of the anticipated transfer of ownership, this meets the definition of a Finance Lease under ASC 842.
Financing lease expense is comprised of both interest expense, which will be recognized using the effective interest method, and amortization of the right-of-use assets. These finance lease expenses are presented consistently with other interest expense and amortization or depreciation of similar assets. In determining lease asset values, the Company considers fixed and variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination, or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised.
Balance sheet information related to finance right-of-use assets and lease liabilities consists of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Right-of-use assets – finance leases | $ | 991 | $ | – | ||||
| Finance lease liabilities, current portion | 1,075 | – | ||||||
| Total finance lease liabilities | $ | 1,075 | $ | – | ||||
Other supplemental information related to finance leases was as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Weighted-average remaining lease term (in years) | 1.00 | – | ||||||
| Weighted-average discount rate | 15% | – | ||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from finance leases | $ | – | $ | – | ||||
| Financing cash flows from finance leases | $ | – | $ | – | ||||
The discount rates used in measuring the lease liabilities was based on the Company’s hypothetical incremental borrowing rate, as the rate implicit in the leases were not readily determinable.
| F-62 |
The components of finance lease cost recognized in the consolidated financial statements were as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Amortization of lease assets | $ | 58 | $ | – | ||||
| Interest on lease liabilities | 26 | – | ||||||
| Total finance lease costs | $ | 84 | $ | – | ||||
The reconciliation of future lessee lease payments under noncancelable finance leases in which the Company has a lease liability, reflected in our consolidated balance sheet as of December 31, 2023 is presented in the table below (in thousands):
| Finance Leases | ||||
| 2024 | $ | 1,150 | ||
| 2025 | – | |||
| 2026 | – | |||
| 2027 | – | |||
| 2028 | – | |||
| Total lease payments | $ | 1,150 | ||
| Less: Imputed interest | (75 | ) | ||
| Present value of lease liabilities | $ | 1,075 | ||
9. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets, consist of the following as of December 31, 2023 and December 31, 2022:
| December 31, 2023 | December 31, 2022 | |||||||
| Prepaid expenses and other current assets: | ||||||||
| Prepaid expenses | $ | 269 | $ | 388 | ||||
| Prepaid taxes | 138 | 124 | ||||||
| Others | 18 | 11 | ||||||
| $ | 425 | $ | 523 | |||||
| F-63 |
10. Accounts Payable, Accrued Expenses and Other Current Liabilities
Accounts payable and accrued expenses, and other current liabilities consist of the following as of December 31, 2023 and December 31, 2022:
| December 31, 2023 | December 31, 2022 | |||||||
| Accounts payable and accrued expenses: | ||||||||
| Accounts payable | $ | 4,445 | $ | 1,401 | ||||
| Accrued expenses | 1,508 | 45 | ||||||
| Interest payable | 74 | 85 | ||||||
| $ | 6,027 | $ | 1,531 | |||||
| Other current liabilities: | ||||||||
| Payroll liabilities | $ | 63 | $ | 39 | ||||
| Foreign local taxes payable | – | 200 | ||||||
| Uncertain tax position | – | 106 | ||||||
| Other payable | 25 | 51 | ||||||
| $ | 88 | $ | 396 | |||||
The December 31, 2023 results include accrual for bonuses based on Company performance objectives achieved during the said fiscal year which were paid on March 14, 2024. Performance bonuses based on management’s periodic review during 2024 are accrued monthly.
11. Debt
Related Party
In 2017, the Company entered into several subordinated note agreements with shareholders of the Company’s common stock. The notes had a principal amount of $117 with maturity dates in 2021 and 2022. Interest as defined in the notes is 12% per annum. As of December 31, 2023, and December 31, 2022, the outstanding principal was $0 and $90, respectively.
On August 4, 2022, the Company completed a lending transaction with Mike Komaransky, the Company’s principal shareholder and former director, whereby the Company borrowed $500 from Mr. Komaransky pursuant to the terms of a secured promissory note and security agreement. The promissory note has an interest rate of 6% and the repayment of the principal amount and any accrued interest is secured by certain assets of the Company with respect to which Mr. Komaransky holds first priority lien and security interest. The terms of the secured promissory note and the security agreement were subsequently amended by the parties on January 17, 2023. Pursuant to the terms of the amended secured promissory note, the Company agreed to make monthly payments of $50 until the maturity date of the secured promissory note, which is on August 31, 2023. As of December 31, 2023, and December 31, 2022, the outstanding principal was $0 and $400, respectively.
| F-64 |
As of May 15, 2023, the Company entered into a certain Senior Secured Loan Agreement, as amended (the “Loan Agreement”) and Senior Secured Revolving Credit Promissory Note (the “Revolving Credit Note”) with KGPLA Holdings LLC (“KGPLA”), an entity in which Mike Komaransky, a former director and principal shareholder of the Company has a controlling interest. The Revolving Credit Note allows the Company to borrow up to $4,000 for the operations of its New Bitcoin ATM Machines, as defined in the Loan Agreement, with a maturity date of May 15, 2024. Revenue share fees for this agreement are calculated based on a percentage of the gross daily receipts generated from these machines and are recorded as part of interest expense in the consolidated statements of operations and comprehensive income. As of December 31, 2023 the outstanding principal of the Revolving Credit Note was $4,000. In connection with the above loan transaction and issuance of Revolving Credit Note, the Company granted KGPLA a first priority lien and security interest in and to all of the Company’s assets, except for property previously pledged to Banco Hipotecario, and with respect to such assets, the Company granted the Lender a second priority lien.
For related party debt, the principal payments due as of December 31, 2023 are as follows:
| 2024 | $ | 4,000 |
Third-Party
On May 30, 2017, the Company entered into a senior note agreement with Consolidated Trading Futures, LLC. The note provided for a principal amount of $1,490 secured against the Company’s cash in machines and held by service providers. Interest as defined in the note as 15% per annum with an original maturity date of May 31, 2022. During the second quarter of 2022, the maturity date was extended to May 31, 2023 pursuant to a joint agreement. The Company agreed to make a one-time payment in the amount of $200 and weekly payments in the amount of $25 towards the reduction of the principal amount of the loan. As of December 31, 2023, and December 31, 2022, the outstanding principal was $0 and $565, respectively.
On August 1, 2018, the Company entered into a promissory note with LoanMe, Inc. The promissory note provided for a principal amount of $100, with a final maturity date of August 1, 2028, with equal monthly installment payments of $2. Interest as defined in the promissory note is 24% per annum. On December 11, 2024, the Company extinguished the note with a final payment of $75. As of December 31, 2023 and December 31, 2022, the outstanding principal was $0 and $80, respectively.
On September 22, 2021, the Company entered into a borrowing arrangement with Banco Hipotecario secured against the Company’s assets in El Salvador. The promissory note provided for a principal amount of $1,500, with a final maturity date of 36 months after disbursal with equal monthly installment payments of $47 with a moratorium of 2 months. Interest as defined in the loan arrangement is 7.5% per annum. December 31, 2023, and December 31, 2022, the outstanding principal was $546 and $1,037, respectively.
In December 2022 and December 2023, the Company entered into financing agreements with Capital Premium Financing, Inc. to pay the insurance premium on its commercial liability insurance. The annual interest rate was 20.53% and 17.65% per annum in 2023 and 2022, respectively, repayable in nine monthly installments beginning February 1 of the subsequent year. As of December 31, 2023 and December 31, 2022, the outstanding principal was $95 and $49, respectively.
For third-party Debt, the principal payments due as of December 31, 2023 are as follows:
| 2024 | $ | 641 |
Deferred financing costs are amortized using the effective interest method. Amortization of deferred financing costs for the years ended December 31, 2023 and 2022 was $0 and $2, respectively. Deferred financing costs had a carrying value of $0 on December 31, 2023 and 2022. These discounts are recorded as a reduction of debt on the consolidated balance sheets.
| F-65 |
12. Convertible debt
Related Party
On January 31, 2020, the Company entered into a convertible debenture agreement with KGPLA LLC, an entity in which Mike Komaransky, a former director and principal shareholder of the Company has controlling interest. The convertible debenture provided for a principal amount of $3,000, with a maturity date of January 31, 2025. Interest as defined by the agreement is 8% per annum. KGPLA, LLC has the option to convert the outstanding principal and accrued interest balance into common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. The convertible debenture was amended and restated as of May 15, 2023 and became a secured, and not general unsecured, obligation of the Company, on par with the notes issued pursuant to the Senior Secured Loan Agreement entered into as of the same date. As of December 31, 2023 and December 31, 2022, the outstanding principal debenture amount of $3,000 was presented under convertible debt, related party in the consolidated balance sheets.
Third-Party
On January 31, 2020, the Company entered into a convertible debenture agreement with Swingbridge Crypto III, LLC. The convertible debenture provided for a principal amount of $125, with a maturity date of January 31, 2025. Interest as defined by the agreement is 8% per annum. On August 26, 2021, Swingbridge Crypto III, LLC gave notice to convert the outstanding principal of $125 as per the terms of the debentures since the Company secured major financing consequent to issuance of 6% Convertible Debentures as described below. This amount is included in Shares to be issued in the consolidated statements of stockholders’ deficit as of December 31, 2021. The Company issued 10,416,666 shares to convert the outstanding principal amount on February 18, 2022. This debt conversion is included in the increase of capital units in the consolidated statements of stockholder’s equity (deficit) for the year ended December 31, 2022.
On June 22, 2021 the Company authorized the issuance and sale of up to $5,000 in aggregate principal amount of convertible debentures. The convertible debentures (i) are unsecured, (ii) bear interest at the rate of 6% per annum, and (iii) are due two years from the date of issuance. The convertible debentures are convertible at any time at the option of the investor into shares of the Company’s common stock that is determined by dividing the amount to be converted by the lesser of (i) $0.10 per share or (ii) 25% less than the twenty trading day (20-trading day) volume weighted average price (“VWAP”) of the common stock-based on the trades reported by the OTC Pink Market operated by the OTC Markets Group, Inc. As of December 31, 2021, the Company received an amount of $4,985 toward subscription against this issue.
As of March 31, 2022 additional debenture holders exercised their right and gave an irrevocable notice to convert $3,245 of the convertible debt. The Company issued a total of 34,650,000 shares to convert the outstanding principal for the year ended December 31, 2022. The outstanding amount of the convertible debt is $0 on December 31, 2023 and $1,520 on December 31, 2022.
Maturities on the Company’s convertible debt are as follows:
| 2024 | $ | – | ||
| 2025 | 3,000 | |||
| Total convertible debt payments | $ | 3,000 |
| F-66 |
13. Fair Value Measurements
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured at fair value on a recurring basis.
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Crypto assets held | $ | 421 | – | – | $ | 421 | $ | 365 | – | – | $ | 365 | ||||||||||||||||||||
| $ | 421 | $ | – | $ | – | $ | 421 | $ | 365 | $ | – | $ | – | $ | 365 | |||||||||||||||||
The Company did not make any transfers between the levels of the fair value hierarchy during the years ended December 31, 2023 and December 31, 2022.
The carrying amounts for cash equivalents, accounts receivable, accounts payable and accrued expenses, other current liabilities, and short-term debt approximate fair value due to the short maturity of those instruments.
The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured at fair value on a non-recurring basis.
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Restricted cash – cash held for customers | 255 | – | – | 255 | 1,107 | – | – | 1,107 | ||||||||||||||||||||||||
| $ | 255 | $ | – | $ | – | $ | 255 | $ | 1,107 | $ | – | $ | – | $ | 1,107 | |||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Convertible debt, related party | – | 3,000 | – | 3,000 | – | 3,000 | – | 3,000 | ||||||||||||||||||||||||
| $ | – | $ | 3,000 | $ | – | $ | 3,000 | $ | – | $ | 3,000 | $ | – | $ | 3,000 | |||||||||||||||||
The Company’s long-term debt are estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. This is a Level 3 input. The carrying amount of the long-term debt was $0 and $610 as of December 31, 2023 and 2022, respectively and approximates fair value. See Note 11 – Debt for additional information.
The Company’s convertible debt is estimated using discounted cash flow analyses, based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements. This is a Level 3 input. The carrying amount of the convertible debt, related party was $3,000 as of December 31, 2023 and 2022. See Note 12 – Convertible Debt for additional information.
The Company’s non-financial assets, such as software, intangible assets, property and equipment, and crypto assets held are adjusted to fair value when an impairment charge is recognized. Such fair value measurements are based predominately on Level 3 inputs for the non-financial assets, excluding the crypto assets held. Fair value of crypto assets held are based on Level 1 inputs. The Company impaired software during the year ended December 31, 2023, as discussed in Note 6.
| F-67 |
14. Stock-Based Compensation
Stock Option Plan
The Company’s Board of Directors and its majority shareholders approved the 2021 Equity Compensation Plan (the “2021 Plan”) effective as of October 15, 2021. On February 28, 2023, in conjunction with a signed contractor service agreement, the Company issued a Restricted Stock Units Agreement granting 2,000,000 shares of common stock under the 2021 Plan.
Non-recourse loans
In January 2020, the Company allowed its employees with vested stock options to exercise with the use of a non-recourse loan agreement for the issuance of 119,139,461 shares of common stock. These loan agreements originally had a maturity date of 48 months from the date of exercise, which was extended by one year in December 2023 to 60 months. An increase of $35 to additional paid in capital was recorded as a result of this modification. The loans carry an interest rate of 1.69%. The loans are required to be consistent with the accounting for stock options, with the exercise price of the stock option being the principal and interest due on the loan.
The fair value of the non-recourse loans as of the grant date (January 15, 2020) was determined using the Black-Scholes option pricing model. The following assumptions were used in estimating the fair value of the non-recourse loans:
| Stock price | $ | 0.03 | |||
| Exercise price | $ | 0.01 | |||
| Expected life (years) | 4.0 | ||||
| Expected volatility | 78.3 | % | |||
| Annual dividend yield | 0.00 | % | |||
| Discount rate | 0.00 | % |
The Company elected, in accordance with FASB ASC 718, to deduct the increase in the exercise price (interest) from the risk-free interest rate, resulting in no discount rate.
The original fair value of the awards was $3,236, which was expensed in 2020.
15. Commitments and Contingencies
The Company, from time to time, might have claims against it incidental to the Company’s business including but not limited to tax demands and penalties. While the outcome of any of these matters cannot be predicted with certainty, management does not believe that the outcome will have a material adverse effect on the accompanying consolidated financial statements.
16. Warrants
In 2017 Athena Bitcoin, Inc. issued warrants to purchase 202,350 shares of Athena Bitcoin, Inc.’s common stock for $14,005. The warrants provide for a right to purchase common stock in Athena Bitcoin, Inc., priced at $2.00 to $3.00 per share, at an average exercise price of $2.49 per share. The warrants were classified as equity. In January 2020, warrants to purchase 102,350 shares of Athena Bitcoin, Inc. common stock at an average exercise price of $2.00 per share were exercised.
The unexercised warrants to purchase 100,000 shares of Athena Bitcoin, Inc. common stock, at an exercise price of $3.00 per share, remain outstanding as of December 31, 2023 and December 31, 2022. The warrants will expire on May 30, 2025.
| F-68 |
17. Related Party
Aside from the transactions discussed in other notes to these financial statements, the Company continues to carry a payables balance to Red Leaf Opportunities Fund LP, an entity in which the Company’s principal shareholder, former director and former Chief Executive Officer has a controlling interest in the General Partner, Red Leaf Advisors LLC, for previous purchases of crypto assets. The outstanding balance due to Red Leaf Opportunities Fund LP as of December 31, 2023 and December 31, 2022 was $407, and is recorded in accounts payable, related party in the consolidated balance sheets.
During the years ended December 31, 2023 and December 31, 2022 Company incurred cash logistics services of $2,096 and $718 and ATM conversion cost of $1,149 and $0, respectively, to Swift Trust, LLC and subsequently Move On Security LLC. The Chief Executive Officer and director of the Company has a controlling interest in Swift Trust, LLC and has a 50% interest in Move On Security LLC. The Company recorded payables to Move On Security LLC, presented as part of Accounts payable, related party in the consolidated balance sheets of $389 and $58 as of December 31, 2023 and December 31, 2022, respectively.
18. Fees on Virtual Vault Services
Virtual Vault is a term used in the Armored Car and Cash Transport industry to define a service provided by armored car services for assets considered property of the bank when the bank does not have a physical vault or location in a given state or location. The Fees for virtual vault services included in our consolidated statements of operations and comprehensive income are for a currency availability service provided to the Company by its bank for making funds held in a virtual vault immediately available to the Company. Neither the term nor the service is related to virtual currency or crypto assets.
Fees on virtual vault services for the years ending December 31, 2023 and December 31, 2022 was $1,039 and $113 respectively.
19. Income Taxes
Income before income taxes for the years ended December 31, 2023 and December 31, 2022 was attributable to the following regions:
| December 31, 2023 | December 31, 2022 | |||||||
| Domestic | $ | 16,641 | $ | 4,801 | ||||
| Foreign | (955 | ) | 1,093 | |||||
| $ | 15,686 | $ | 5,894 | |||||
Provision for income taxes for the years ended December 31, 2023 and December 31, 2022 consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Current: | ||||||||
| Federal tax on income | $ | 2,291 | $ | 1,044 | ||||
| State and local, net of federal benefit | 988 | 189 | ||||||
| Foreign | 845 | 507 | ||||||
| Total current | 4,124 | 1,740 | ||||||
| Deferred: | ||||||||
| Federal tax on income | $ | 430 | $ | 38 | ||||
| State and local, net of federal benefit | (64 | ) | (8 | ) | ||||
| Total deferred | 366 | 30 | ||||||
| Total provision for income taxes | $ | 4,490 | $ | 1,770 | ||||
| F-69 |
A reconciliation of the statutory income tax rates and the effective tax rate are as follows:
| December 31, 2023 | December 31, 2022 | |||||||
| Statutory U.S. federal rate | 21.0 | % | 21.0 | % | ||||
| Income tax on jurisdiction other than statutory | (0.5 | ) | 1.7 | |||||
| State income tax, net of federal benefit | 5.2 | 2.8 | ||||||
| Foreign withholding taxes | (0.2 | ) | 1.6 | |||||
| Valuation allowance | 4.7 | (2.3 | ) | |||||
| Uncertain tax positions | (0.7 | ) | (1.1 | ) | ||||
| Prior year true-ups (state and federal) | (0.5 | ) | 2.3 | |||||
| Other | (0.4 | ) | 4.0 | |||||
| 28.6 | % | 30.0 | % | |||||
The Company’s effective tax rate (“ETR”) for the years ended December 31, 2023 and 2022 was 28.6% and 30.00%, respectively. The ETR for the year ended December 31, 2023 of 28.6% was higher than the U.S. statutory rate of 21.0% was due (i) primarily to foreign income tax expense (ii) state income tax expense, and (iii) valuation allowance on foreign tax credit deferred tax assets.
The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and deferred tax liabilities consist of:
| December 31, 2023 | December 31, 2022 | |||||||
| Deferred tax asset: | ||||||||
| Foreign tax credit | $ | 1,615 | $ | 1,320 | ||||
| Net operating loss carryforward | 2 | 44 | ||||||
| Lease liability | 5,595 | 684 | ||||||
| Gross deferred tax assets | 7,212 | 2,048 | ||||||
| Deferred tax liability: | ||||||||
| Depreciation and amortization | (634 | ) | (433 | ) | ||||
| Right of use asset | (5,595 | ) | (684 | ) | ||||
| Gross deferred tax liability | (6,229 | ) | (1,117 | ) | ||||
| Less: valuation allowance | (1,379 | ) | (961 | ) | ||||
| Total net deferred tax liabilities | $ | (396 | ) | $ | (30 | ) | ||
The Company has determined that its right-of-use assets are true tax leases and has appropriately accounted for the related income tax benefits.
| F-70 |
A valuation allowance of $1,379 and $961 was recorded against the Company’s net deferred tax asset balance as of December 31, 2023 and December 31, 2022, respectively. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. On the basis of this evaluation, portion of the deferred tax asset in 2023 is not more likely not to be realized. The valuation allowance included allowances related to foreign tax credits. As of December 31, 2023 and 2022, the Company has no federal loss carryforwards available to offset federal taxable income, and $67 and $850, respectively of state loss carryforwards available to offset future state taxable income. As of December 31, 2023 and 2022, the Company also has carryforwards available for credits from taxes paid in foreign jurisdictions of $1,615 and $1,320, respectively.
Activity related to the Company’s uncertain tax positions consisted of the following:
| December 31, 2023 | December 31, 2022 | |||||||
| Balance, beginning of year | $ | 106 | $ | 173 | ||||
| Increase to tax positions taken during the current year | – | 8 | ||||||
| Decrease to tax positions taken during the prior year | (106 | ) | (75 | ) | ||||
| Balance, end of year | $ | – | $ | 106 | ||||
The decrease in tax positions taken during the current and prior year relate to positions taken on the Company’s convertible debt instruments. The Company is otherwise currently unaware of any uncertain tax positions that could result in significant additional payments, accruals, or other material deviation in this estimate over the next year.
Major tax jurisdictions are the United States and El Salvador. All of the tax years will remain open three and four years for examination by the Federal and state tax authorities, respectively, from the date of filling of the income tax returns. There are no tax audits in process with any tax authority.
| F-71 |
20. Net Earnings Per Share
The computation of net earnings per share is as follows:
| December 31, 2023 | December 31, 2022 | |||||||
Basic net earnings per share: | ||||||||
| Numerator | ||||||||
| Net income | $ | 11,196 | $ | 4,124 | ||||
| Denominator | ||||||||
| Weighted-average shares of common stock used to compute net earnings per share attributable to common stockholders, basic | 4,094,459,545 | 4,086,018,632 | ||||||
| Less: Non-recourse loan shares | (119,139,461 | ) | (119,139,461 | ) | ||||
| Adjusted weighted-average shares of common stock used to compute net earnings per share attributable to common stockholders, basic | 3,975,320,084 | 3,966,879,171 | ||||||
| Net earnings per share attributable to common stockholders, basic | $ | 0.00282 | $ | 0.00104 | ||||
Diluted net earnings per share: | ||||||||
| Numerator | ||||||||
| Net income, basic | $ | 11,196 | $ | 4,124 | ||||
| Add: Interest expense on convertible debt | 240 | 363 | ||||||
| Net income, diluted | $ | 11,436 | $ | 4,487 | ||||
| Denominator | ||||||||
| Adjusted weighted-average shares of common stock used to compute net earnings per share attributable to common stockholders, basic | 3,975,320,084 | 3,966,879,171 | ||||||
| Non-recourse loan issuance | 115,914,498 | 118,633,380 | ||||||
| Weighted-average effect of potentially dilutive securities: convertible debt | 250,000,000 | 265,200,000 | ||||||
| Unexercised warrants | 122,439,466 | 124,146,520 | ||||||
| Weighted-average shares of common stock used to compute net earnings per share attributable to common stockholders, diluted | 4,463,674,048 | 4,474,859,071 | ||||||
| Net earnings per share attributable to common stockholders, diluted | $ | 0.00256 | $ | 0.00100 |
There are no anti-dilutive securities for the years ended December 31, 2023 and 2022.
| F-72 |
21. Legal Proceedings
On September 8, 2022, Athena Bitcoin, Inc. (“Athena” or the “Company”) received from the Office of the Commissioner of Financial Institutions (“OCFI”), a “Final Resolution and Order to Cease and Desist” (“OC&D”), requiring to, among other matters, stop the operations and marketing of the BTMs that were operating in Puerto Rico. On September 12, 2022, Athena filed a Complaint for Declaratory Judgment and Permanent Injunction, accompanied by a Petition for Preliminary Injunction before the Courts of the Commonwealth, Superior Part requesting that the determination and effects of the OC&D be stayed until final resolution of the case. On November 10, 2022, the Court dismissed the civil action with the interpretation that the controversy presented before it was not ripe for resolution by the Court. The Company will seek to have this determination reconsidered by the Superior Part. If the Superior Part affirms its previous determination, Athena plans to seek a reversal of such determination before the Court of Appeals of the Commonwealth accompanied by a Motion Requesting a Stay of the determination and effects of the OC&D.
On April 10, 2023 the Puerto Rico Court of Appeals issued a judgment unfavorable to Athena’s appeal. Athena has determined it will not pursue further redress against the Order to Cease and Desist that was issued by the Office of the Commissioner of Financial Institutions and with which it has been complying since September 2022. Athena has considered and implemented another option available under PR law that has permitted resumption of operations of the Bitcoin ATMs in Puerto Rico.
Revenue from operations in Puerto Rico for the years ended December 31, 2023 and 2022 accounted for approximately 0% and 3% of total revenue, respectively.
On October 9, 2023, Lozano commenced proceedings against the Company by filing a complaint with the 11th Judicial Circuit Court for Miami-Dade County, Florida which named the Company as the defendant. Lozano, either individually or through the entities controlled by him (XPay, Vakano Industries) entered into certain non-binding letters of intent on July 13, 2021 and as of September 2021 (the second letter of intent was a draft and not signed by the parties) pursuant to which Lozano was a seller of certain assets and technology related to XPay Wallet, intellectual property regarding the AthenaPay POS System, XPay POS System and related technology (the “XPay Assets”) for the proposed purchase price of $3,000 and 270,000,000 shares of common stock of the Company (valued at $0.10 per share). The acquisition of the XPay Assets was subject to the execution of a definitive acquisition agreement. No such agreement was finalized nor entered into by the parties. The Company made payments to Lozano for a total amount of approximately $1,600 to obtain ownership of XPay Assets. Refer to Note 6. Lozano alleges breach of contract, promissory estoppel, unjust enrichment, fraud in the inducement and conversion. He asserts the claim for failure to compensate Lozano pursuant to the terms of the purchase price provided in the non-binding letter of intent (and the unsigned draft letter of intent), which includes remaining amount of the purchase price ($1,400) and 270,000,000 shares of the Company’s common stock. The plaintiff did not offer any evidence of a signed and binding acquisition agreement. The claim also seeks an award for legal and other costs relating to the proceeding.
The Company does not believe the allegations made against it are valid and intends to vigorously defend against them. The range of potential loss related to the identified claim is between $0 and $1,400 and the issuance of 270,000,000 shares of common stock valued at $27,000, the amount of damages that Lozano is seeking in the lawsuit. The additional costs mentioned in the claim are not able to be estimated at this time. The Company does not believe that it is probable that a liability has been incurred as of December 31, 2023 related to this lawsuit.
22. Off-Balance Sheet Arrangements
In the normal course of business, the Company’s contract with the government of El Salvador for the operation of the Chivo branded ATMs obligates the Company to assume the risk of loss for funds used in the operation of the Chivo branded ATMs while those funds are in transit. The Company has contracted with licensed and insured cash logistics companies to securely transport these funds. The logistics companies’ insurance covers in full the value of the funds in transit however, in the event of a loss or destruction of the funds in transit, the Company could encounter a timing delay between insurance payment for lost funds and the date of actual loss. The amount of funds in transit varies based on multiple factors including but not limited to economic activity, seasonality, holiday and bank closure calendars. The amount of funds in transit as of December 31, 2023, and December 31, 2022, were $875 and $278, respectively.
| F-73 |
23. Subsequent Events
The Company has evaluated subsequent events after the balance sheet date of December 31, 2023 through January 28, 2025 the date on which these consolidated financial statements were available to be issued.
On February 26, 2024, the Company entered into a financing agreement for $170 with National Partners PFco LLC to pay the insurance premium on its directors and officers insurance with an annual percentage rate of 8.45% per annum repayable in ten monthly installments beginning March 14, 2024. On October 11, 2024 the Company updated its policy and entered into a new $171 finance agreement with National Partners PFco LLC with an annual percentage rate of 7.95%, with ten monthly installments beginning November 11, 2024.
On March 28, 2024, the Company executed the payoff of its outstanding $4,000 debt obligation under the Revolving Credit Note with a maturity date of May 15, 2024 with KGPLA. The debt was settled in full in accordance with the terms outlined in the Revolving Credit Note and was funded using cash reserves generated from the Company’s operating activities. The early payoff of this debt resulted in the elimination of revenue share fees.
As of June 19, 2024, Athena Bitcoin, Inc., the Company’s wholly-owned subsidiary entered into a Development Services Agreement with PSBC, LLC., a Delaware Limited Liability Company for a software platform to use in connection with the operation of Bitcoin ATMs. As of June 30, 2024 the Company recognized the capitalized software cost $5,500 under property and equipment, net in its condensed consolidated balance sheets and recognized a corresponding liability. The obligation will be terminated upon completion of the required payments listed in the Development Service Agreement, on their respective applicable terms.
On June 21, 2024, Digital Access, LLC, a Michigan limited liability company (“Digital Access”) and two additional co-defendants, filed a complaint against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), before the US District Court for the Eastern District of Michigan (the “Court”). The complaint alleges tortious interference with business relationships and business expectancy, statutory and common law conversions, trespass to chattels and injunctive relief against it. The case has been recently removed to the US District Court for the Northern District of Indiana. The amount claimed against ABInc is not less than $750. The Company does not believe that there is any merit to the allegations against it and intends to defend it vigorously.
On July 16, 2024, Athena Bitcoin, Inc., filed a Complaint against Genesis Coin, Inc., Bitcoin ATM, LLC, ATM OPS, Inc., Kiosk Distributors, Inc., Andrew C. Barnard, Douglas O. Carrillo, and Neil Hernandez, for damages for violation of a federal statute and other claims, filed at the US District Court for the Northern District of Illinois (the “Court”). On September 12, 2024, the parties reached a settlement agreement and release pursuant to which the complaint and other proceedings that were initiated at other forums were dismissed, and certain monetary and technological considerations were afforded between the parties.
On August 20, 2024, Keon Jackson (“Jackson”), an individual, commenced what was entitled as a “Class Action Complaint” against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), filed at the US District Court for the Northern District of Florida (the “Court”). The complaint alleges receipt of unwanted telemarketing text messages in contravention to federal and state statutes while seeking class certification status. An initial dispositive motion filed by ABInc was denied by the Court. Reconsideration of that determination was requested and remains pending. The claim by plaintiff is for the award of the statutory amounts as established in the corresponding acts which could be up to $1.5 per occurrence. In this case, Plaintiff alleges it happened to him a total of six (6) times after purportedly requesting messages to stop. The additional costs, if any, mentioned in the claim are not able to be estimated at this time.
| F-74 |
On September 9, 2024, S.M. on behalf of herself and all others (“S.M.”), an individual, filed a complaint that includes class action allegations, against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), Genesis Coin, Inc., and two other defendants, filed at the Common Pleas Court at Cuyahoga County, Ohio (the “Court”). The complaint against ABInc alleges negligence and violations to the Ohio Products Liability Act because of alleged elder financial scams involving cryptocurrency and the operation of kiosks. Plaintiff alleges the need for implementing effective and sufficient checks and procedures both at the kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond to what already ABInc has in place. The claim by plaintiff against ABInc is for an undetermined amount of compensation (which cannot exceed $5,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are not able to be estimated at this time, if any would be applicable.
On September 19, 2024, the Company and Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“Taproot”), entered into that certain Omnibus Equipment Refinancing Agreement providing for the refinance of the Company’s outstanding payables,
On October 30, 2024, the Company entered with Taproot, into an Equipment Financing Agreement (the “Agreement”) to purchase certain Bitcoin ATM kiosks (the “Equipment” units) listed in the Agreement.
On November 25, 2024, Karen Carew on behalf of herself and all others (“Carew”), an individual, filed a complaint that includes class action allegations, against Athena Bitcoin, Inc., a Delaware corporation (“ABInc”), its Chief Executive Officer, and other defendants, filed at the Superior Court of New Jersey Law Division, Monmouth County (the “Court”). The complaint against ABInc alleges negligence and violations to various New Jersey statutes such as possession of stolen property, Racketeer Influenced and Corrupt Organizations, negligence and consumer fraud. Plaintiff alleges the need for implementing effective and sufficient checks and procedures both at the Bitcoin ATM kiosks and other internal procedures in order to intervene, prevent, mitigate, or deter the use of the kiosks in elderly scams, beyond to what already ABInc has in place. The claim by plaintiff against ABInc is for an undetermined amount of compensation (which cannot exceed $5,000,000 under the Class Action Fairness Act of 2005) as well as injunctive relief. The additional costs mentioned in the claim are not able to be estimated at this time, if any would be applicable.
| F-75 |
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by the Company in connection with the issuance and distribution of the securities being registered hereunder. All amounts are estimates except the SEC registration fee.
| SEC registration fees | $ | 113,283 | ||
| Printing expenses | $ | 14,817 | ||
| Accounting fees and expenses | $ | 25,000 | ||
| Legal fees and expenses | $ | 303,026 | ||
| Miscellaneous | $ | 42,000 | ||
| Total | $ | 498,126 |
Item 14. Indemnification of Directors and Officers.
We are a Nevada corporation, and accordingly, we are subject to the corporate laws under the Nevada Revised Statutes. Article Ten of our Amended and Restated Articles of Incorporation, Article V of our by-laws and the Nevada Revised Statutes, contain indemnification provisions.
Our Amended and Restated Articles of Incorporation provides that we will indemnify, in accordance with our by-laws and to the fullest extent permitted by the Nevada Revised Statutes or any other applicable laws, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, including an action by or in the right of the corporation, by reason of such person acting as a director or officer of the corporation or any of its subsidiaries against any liability or expense actually and reasonably incurred by such person. We will be required to indemnify an officer or director in connection with an action, suit or proceedings initiated by such person only if (i) such action, suit or proceeding was authorized by the Board and (ii) the indemnification does not relate to any liability arising under Section 16(b) of the Exchange Act, as amended, or rules or regulations promulgated thereunder. Such indemnification is not exclusive of any other right to indemnification provided by law or otherwise. Indemnification shall include payment by us of expenses in defending an action or proceeding in advance of final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay such payment if it’s ultimately determined that such person is not entitled to indemnification.
All members of our Board of Directors are additionally subject to the protections offered by the Indemnification Agreement by and between the Company and each of the directors. We do not carry director and officer liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. Please read “Item 17. Undertakings” for more information on the SEC’s position regarding such indemnification provisions.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
| II-1 |
Item 15. Recent Sales of Unregistered Securities.
On June 22, 2021, the Company commenced its private offering of up to $5,000,000 of 6% Convertible Debentures to accredited investors only as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act. The maturity date on the 6% Convertible Debentures is two years after the date of issuance. The investor has an option to convert the principal amount of the Debenture into shares of common stock of the Company at a certain conversion – see Description of Capital Stock. The Company sold a total of $4,985,000 of the 6% Convertible Debentures to 75 accredited investors. The proceeds of the private placement are for working capital and operations of the Company. The Company closed the private placement in September, 2021. Neither 6% Convertible Debentures nor the shares of common stock convertible upon the conversion of the 6% Convertible Debentures, have been registered under the Securities Act, and have been issued in reliance upon an exemption from registration provided by Section 4(a)(2) and 4(a)(5) under the Securities Act and Regulation D promulgated thereunder and bear a Rule 144 restrictive legend.
Effective as of January 30, 2020, GamePlan, Inc., a Nevada corporation entered into a share exchange agreement dated as of January 14, 2020 (the “Share Exchange Agreement”) with Athena Bitcoin, Inc., a Delaware corporation and certain Athena Bitcoin shareholders. In accordance with the terms and provisions of the Share Exchange Agreement, the Company acquired Athena Bitcoin in exchange for 3,593.644.680 newly issued “restricted” shares of common voting stock of the Company to the Athena Bitcoin shareholders on a pro rata basis for the purpose of effecting a tax-free reorganization pursuant to sections 351, 354 and 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended. Pursuant to the terms of the Share Exchange Agreement, each 1 share of common stock of Athena Bitcoin has been exchanged for 1,244.69 shares of the Company’s common stock. The shares of common stock issued to the Athena Bitcoin shareholders in connection with the Share Exchange (3,593.644.680) were issued with a Rule 144 restrictive legend. The shares issued in the Share Exchange were not registered under the Securities Act, in reliance upon an exemption from registration provided by Section 4(a)(2) and/or 4(a)(5) under the Securities Act and Regulation D promulgated thereunder.
On January 31, 2020 immediately following the closing of the Share Exchange transaction, the Company closed a private placement of its 8% Convertible Debentures in the total amount of $3,125,000 (the “8% Convertible Debentures”). The closing of the private placement was subject to the closing of the Share Exchange transaction by the Company which occurred on January 30, 2020. There were two purchasers of the 8% Convertible Debentures: KGPLA, LLC, an entity in which a director of the Company and the Company’s beneficial owner of 41% has ownership interest ($3,000,000 principal amount of Convertible Debenture) and Swingbridge Crypto III, LLC ($125,000 principal amount of 8% Convertible Debenture), an affiliate of the Company – see Note 11 to the Financial Statements. Both purchasers were accredited investors as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act. The 8% Convertible Debentures have a maturity date of January 31, 2025 and bear interest at 8% per annum. The purchasers have an option to convert the outstanding principal and accrued interest amount of their respective 8% Convertible Debentures into shares of common stock of the Company at the lower of $0.012 per share or 20% discount to the next major financing or change in control. Based upon the conversion ratio, the 8% Convertible Debentures can be converted to up to 260,416,667 shares of common stock. In connection with the 8% Convertible Debentures private placement, the purchasers acquired certain registration and voting rights – see Description of Securities and Management sections. Neither the 8% Convertible Debenture nor the shares of common stock convertible upon the conversion of the 8% Convertible Debentures, have been registered under the Securities Act, and have been issued in reliance upon an exemption from registration provided by Section 4(a)(2) and 4(a)(5) under the Securities Act and Regulation D promulgated thereunder and bear a Rule 144 restrictive legend.
On December 24, 2018, the Company issued 45,210,500 shares of common stock to Robert Berry and 45,210,500 shares of common stock to Jon Jenkins, former officers and directors of the Company pursuant to the agreement for cancellation of debt owed to Mr. Berry valued at $1,500,000, with Dempsey Mork, the Company’s officer, director and majority shareholder. On the same date, Mr. Mork was issued 230,000,000 shares of common stock of the Company for payment of state corporate fees, transfer agent and other outstanding fees of the Company and his services rendered to the Company, in the name of Magellan Capital Partners, which is an entity controlled by Mr. Mork. All shares issued pursuant to the above transactions were not registered under the Securities Act, in reliance upon an exemption from registration provided by Section 4(a)(2) and/or 4(a)(5) under the Securities Act and Regulation D promulgated thereunder and had a Rule 144 restrictive legend.
| II-2 |
The sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) and/or Section 4(a)(5) of the Securities Act and Regulation D promulgated thereunder, as transactions by an issuer not involving any public offering. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions. None of the foregoing transactions involved any underwriters, underwriting discounts or commissions or any public offering, and the registrant believes each transaction was exempt from the registration requirements of the Securities Act as stated above.
All recipients of the foregoing transactions either received adequate information about the registrant or had access, through their relationships with the registrant, to such information. Furthermore, the registrant affixed appropriate legends to the share certificates and instruments issued in each foregoing transaction setting forth that the securities had not been registered and the applicable restrictions on transfer.
Item 16. Exhibits and Financial Statement Schedules.
| II-3 |
| II-4 |
____________________
| * | Filed herewith |
| ** | To be filed by amendment |
| † | Certain confidential portions of this Exhibit were omitted by means of marking such portions with brackets (“[***]”) because the identified confidential portions (i) are not material and (ii) the Company customarily and actually treats that information as private or confidential. |
| # | Certain information has been redacted from the exhibit pursuant to Regulation S-K(a)(6), as the disclosure of such information would constitute a clearly unwarranted invasion of personal privacy. |
| (1) | Incorporated by reference to Form DRS filed May 5, 2021 |
| (2) | Incorporated by reference to Form DRS/A filed August 16, 2021 |
| (3) | Incorporated by reference to Form DRS/A filed December 3, 2021 |
| (4) | Incorporated by reference to Form S-1 filed February 10, 2022 |
| (5) | Incorporated by reference to Form S-1/A filed March 17, 2022 |
| (6) | Incorporated by reference to Form S-1/A filed May 16, 2022 |
| (7) | Incorporated by reference to Form S-1/A filed June 24, 2022 |
| (8) | Incorporated by reference to Form S-1/A filed November 13, 2023 |
| (9) | Incorporated by reference to Form S-1/A filed January 12, 2024 |
| (10) | Incorporated by reference to Form 10-KSB filed April 2, 2001 |
| (11) | Incorporated by reference to Form 8-K filed April 3, 2014 |
| (b) | Financial Statement Schedule |
All schedules have been omitted because the required information is included in the consolidated financial statements or the note thereto or is not applicable or required.
| II-5 |
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
| (1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act; | ||
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | ||
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | |
| (4) | That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. | |
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; | ||
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; | ||
| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and | ||
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
| II-6 |
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
| (1) | For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. | |
| (2) | For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
| II-7 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in Miami, State of Florida, on the 11th day of February, 2025.
| ATHENA BITCOIN GLOBAL | ||
| By: | /s/ Matias Goldenhörn | |
| Matias Goldenhörn | ||
| Chief Executive Officer and Director (Principal Executive Officer) | ||
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose individual signature appears below hereby authorizes and appoints Matias Goldenhorn his or her true and lawful attorney-in-fact, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments including pre and post effective amendments to this registration statement on Form S-1, any subsequent registration statement for the same offering which may be filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and pre or post-effective amendments thereto, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his or her substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities held and on the dates indicated.
| Signature | Title | Date | ||
| /s/ Matias Goldenhörn | Chief Executive Officer and Director | February 11, 2025 | ||
| Matias Goldenhörn | (Principal Executive Officer & Principal Financial and Accounting Officer) | |||
| /s/ Omar Jimenez | Chief Financial Officer and Director | February 11, 2025 | ||
| Omar Jimenez | (Principal Financial and Accounting Officer) | |||
| /s/ Carlos Carreno | Chief Operating Officer and Director | February 11, 2025 | ||
| Carlos Carreno | ||||
| /s/ Jason Lu | Director | February 11, 2025 | ||
| Jason Lu | ||||
| /s/ Renata Szkoda | Director | February 11, 2025 | ||
| Renata Szkoda |
| S-1 |
Exhibit 10.43
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
EQUIPMENT FINANCING AGREEMENT
THIS EQUIPMENT FINANCING AGREEMENT (this “Agreement”) is entered into as of December 31st, 2023 (the “Effective Date”) by and between Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“Seller”), and Athena Bitcoin, Inc. a Delaware corporation (“Purchaser”). Buyer and Seller are sometimes referred to herein as the Party or Parties.
R E C I T A L S:
WHEREAS, Seller owns certain automated teller machines listed on Exhibit A hereto (collectively the “Equipment” and individually, each a “Unit”); and
WHEREAS, Purchaser desires to purchase the Equipment and Seller desires to Sell the Equipment to Purchaser, all on the terms and conditions contained herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser to amend the original Sublease as follows:
1. Purchase of Equipment.
a. Subject to the terms and conditions contained herein, Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase from Seller, the Equipment free and clear of any and all liens, pledges, encumbrances, charges or other security interests of any kind (“Liens”). The purchase price of the Equipment shall be U.S. $[***] (the “Purchase Price”). The Purchase Price shall be made in accordance with the following schedule:
| i. | $ [***] per month for three months, beginning on January 30, 2024 and concluding on March 31, 2024; |
| ii. | $ [***] per month for the next three months, beginning on April 30, 2024 and concluding on June 30, 2024; and |
| iii. | $ [***] per month for the next six months, beginning on July 31, 2024 and concluding on December 31, 2024. |
Purchaser’s Failure to make any of the above payments within five days of the due date shall be deemed an Event of Default and all payments then due and owning shall accelerate.
b. The closing of the transactions contemplated hereby (the “Closing”) shall take place on the date hereof (the “Closing Date”) or on such other date as the parties hereto shall mutually agree. At the Closing, (i) Purchaser shall deliver to Seller the Purchase Price, by wire transfer or delivery of other immediately available funds to an account designated by Seller prior to Closing, and (ii) Seller shall deliver to Purchaser (A) the bill of sale in the form attached hereto as Exhibit B, duly executed by Seller, and such other instruments of assignment as Purchase may reasonably request.
2.Equipment Location and Inspection. Purchaser represents and warrants that it is in possession and control of the Equipment and acknowledges receipt of same; that it has had an opportunity to inspect the Equipment prior to the Closing and accepts and approves the conditions of such Equipment.
| 1 |
3.Representations and Warranties of Seller. Seller represents and warrants to Purchaser that the statements contained in this Section 3 are correct and complete as of the date hereof.
a. Seller is a private company, duly organized, validly existing and in good standing under the laws of the State of Delaware.
b. Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing, the Members and Manager of Seller have duly authorized the execution, delivery, and performance of this Agreement by Seller. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions.
c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of the corporate charter of Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound. Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement.
d. Seller has good and marketable title to the Equipment, free and clear of any Liens or restriction on transfer. Except for the representations contained in this Agreement, Seller is selling the Equipment on an “As Is” basis.
4. Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that the statements contained in this Section 4 are correct and complete as of the date hereof.
a. Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.
b. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions.
c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of the corporate charter of Purchaser or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Purchaser is a party or by which it is bound. Purchaser need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement.
4. Indemnity. Seller shall defend, indemnify and hold Purchaser, its shareholders, directors employees, agents and representatives harmless from and against any and all claims, demands, causes of actions, regulatory actions, damages, suits, costs of remediation or other costs and expenses arising out of, related to or resulting from any breach of any representation, warranty or covenant of Seller contained herein.
| 2 |
5. Assignment. This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party; provided, however, that Purchaser may assign any or all of its rights and interests hereunder to one or more of its affiliates.
6. Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties hereto. No waiver by any party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant.
7. Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida. Each of the parties hereto submits to the non-exclusive jurisdiction of any state or federal court sitting in Miami, Florida, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court.
8. Notice. All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) one (1) business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one (1) business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) three (3) business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:
| If to Seller: | Taproot Acquisition Enterprises, LLC | |
| P.O. Box 192135 | ||
| Miami Beach, Florida 33193 | ||
| Attention: Jordan Mirch | ||
| Email: XXXXXXXX [***] | ||
| If to Purchaser : | Athena Bitcoin, Inc. | |
| c/o Matias Goldenhorn – CEO & President | ||
| 800 NW 7th Avenue | ||
| Miami, FL 33136 | ||
| Email: matias@athenabitcoin.com |
9. Severability. If any provision of this Agreement or portion thereof should be declared invalid for any reason, the invalid provision or portion hereof shall be deemed omitted and the remaining terms shall nevertheless be carried into effect.
10. Counterparts. This Agreement may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
| 3 |
11. Further Assurances. The parties hereto shall execute such further documents, and perform such further acts, as may be necessary to, in the event of a Closing, transfer and convey the Equipment to Buyer, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby.
12. Entire Agreement. This Agreement (including the documents and exhibits referred to herein) constitutes the entire agreement between the parties and supersedes any prior understandings, agreements, or representations by or between the parties, written or oral, to the extent they relate in any way to the subject matter hereof.
13. Taxes. All transfer, documentary, sales, use, stamp, registration and other such taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be born by the responsible party.
14. Costs and Attorney’s Fees. In the event either party brings an action to enforce the terms of this Agreement, the non-prevailing party in such action shall pay to the prevailing party the prevailing party’s costs and expenses, including reasonable attorneys’ fees, incurred in connection with such enforcement action.
[SIGNATURE PAGE TO FOLLOW]
| 4 |
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Lease as of the date first above written.
Seller:
Taproot Acquisition Enterprises, LLC
By: /s/ Jordan Mirch
Name: Jordan Mirch
Title: Manager
PURCHASER:
Athena Bitcoin, Inc.
By: /s/ Matias Goldenhorn
Name: Matias Goldenhorn
Title: CEO & President
| 5 |
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL
EXHIBIT A
| [***] |
| 6 |
EXHIBIT B
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT (this “Instrument”), dated as of the 31st day of December, 2023, is made and delivered pursuant to, and subject to the terms of, that certain Equipment Purchase Agreement (the “Agreement”) dated as of the date hereof, by and between Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“Seller”), and Athena Bitcoin, Inc. a Delaware corporation (“Purchaser”), relating to the purchase and sale of the equipment set forth in the Agreement. The terms of the Agreement are incorporated herein by reference, and capitalized terms not otherwise defined in this Instrument shall have the meanings given to such terms in the Agreement.
W I T N E S S E T H:
WHEREAS, Purchaser has the right to acquire the Equipment from Seller under the Agreement; and
WHEREAS, Purchaser and Seller now desire to evidence and effectuate the transfer and conveyance of the Equipment to Purchaser.
NOW THEREFORE, subject to the terms and conditions of the Agreement and for the consideration set forth therein, Buyer and Seller hereby agree as follows:
1. Assignment and Sale. Seller does hereby sell, convey, transfer, assign and deliver to Buyer the Equipment, free and clear of any Liens, and Purchaser hereby accepts from Seller the Equipment.
2. Further Documents and Instruments. From time to time, as and when reasonably requested by Purchaser, Seller shall execute and deliver, or cause to be executed and delivered, all such documents and instruments as Purchaser or its successors and permitted assigns may reasonably deem necessary or desirable to sell, transfer, convey and assign more effectively to Purchaser the Equipment being transferred hereby.
3. Successors and Assigns. This Instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
4. Inconsistencies. To the extent that any provision of this Instrument is inconsistent or conflicts with the Agreement, the provisions of the Agreement shall control.
5. Amendments. No amendment of any provision of this Instrument shall be valid unless the same shall be in writing and signed by Seller and Purchaser.
6. Severability. If any provision of this Instrument or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
7. Counterparts. This Instrument may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy) and all such counterparts taken together shall constitute one and the same Instrument.
8. Notices. All notices, requests, demands, claims and other communications hereunder shall be delivered to the parties as provided in the Agreement.
9. Governing Law. This Instrument shall be governed by and construed in accordance with the internal laws of the State of Florida applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of laws principles of such State.
[SIGNATURE PAGE TO FOLLOW]
| 7 |
IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Lease as of the date first above written.
Seller:
Taproot Acquisition Enterprises, LLC
By: /s/ Jordan Mirch
Name: Jordan Mirch
Title: Manager
PURCHASER:
Athena Bitcoin, Inc.
By: /s/ Matias Goldenhorn
Name: Matias Goldenhorn
Title: CEO & President
| 8 |
Exhibit 10.44
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
EQUIPMENT FINANCING AGREEMENT
THIS EQUIPMENT FINANCING AGREEMENT (this “Agreement”) is entered into as of February 22nd, 2024 (the “Effective Date”) by and between Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“Seller”), and Athena Bitcoin, Inc. a Delaware corporation (“Purchaser”). Buyer and Seller are sometimes referred to herein as the Party or Parties.
R E C I T A L S:
WHEREAS, Seller owns certain automated teller machines listed on Exhibit A hereto (collectively the “Equipment” and individually, each a “Unit”); and
WHEREAS, Purchaser desires to purchase the Equipment and Seller desires to Sell the Equipment to Purchaser, all on the terms and conditions contained herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser to amend the original Sublease as follows:
1. Purchase of Equipment.
a. Subject to the terms and conditions contained herein, Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall purchase from Seller, the Equipment free and clear of any and all liens, pledges, encumbrances, charges or other security interests of any kind (“Liens”). The purchase price of the Equipment shall be U.S. $[***] (the “Purchase Price”). The Purchase Price shall be made in accordance with the following schedule:
| i. | $[***] upon execution of this Agreement; and |
| ii. | $[***] per month, beginning on March 1, 2024, and continuing for ten months thereafter, with each payment being due on the first of each subsequent month, with the final payment being due on December 1, 2024. |
Purchaser’s Failure to make any of the above payments within five days of the due date shall be deemed an Event of Default and all payments then due and owning shall accelerate and accrue interest at a default rate of fifteen (15%) percent.
b. The closing of the transactions contemplated hereby (the “Closing”) shall take place on the date hereof (the “Closing Date”) or on such other date as the parties hereto shall mutually agree. At the Closing, (i) Purchaser shall deliver to Seller the Purchase Price, by wire transfer or delivery of other immediately available funds to an account designated by Seller prior to Closing, and (ii) Seller shall deliver to Purchaser (A) the bill of sale in the form attached hereto as Exhibit B, duly executed by Seller, and such other instruments of assignment as Purchase may reasonably request.
2.Equipment Location and Inspection. Purchaser represents and warrants that it is in possession and control of the Equipment and acknowledges receipt of same; that it has had an opportunity to inspect the Equipment prior to the Closing and accepts and approves the conditions of such Equipment.
| 1 |
3.Representations and Warranties of Seller. Seller represents and warrants to Purchaser that the statements contained in this Section 3 are correct and complete as of the date hereof.
a. Seller is a private company, duly organized, validly existing and in good standing under the laws of the State of Delaware.
b. Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder. Without limiting the generality of the foregoing, the Members and Manager of Seller have duly authorized the execution, delivery, and performance of this Agreement by Seller. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions.
c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of the corporate charter of Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound. Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement.
d. Seller has good and marketable title to the Equipment, free and clear of any Liens or restriction on transfer. Except for the representations contained in this Agreement, Seller is selling the Equipment on an “As Is” basis.
4. Representations and Warranties of Purchaser. Purchaser represents and warrants to Seller that the statements contained in this Section 4 are correct and complete as of the date hereof.
a. Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.
b. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions.
c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of the corporate charter of Purchaser or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Purchaser is a party or by which it is bound. Purchaser need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement.
4. Indemnity. Seller shall defend, indemnify and hold Purchaser, its shareholders, directors employees, agents and representatives harmless from and against any and all claims, demands, causes of actions, regulatory actions, damages, suits, costs of remediation or other costs and expenses arising out of, related to or resulting from any breach of any representation, warranty or covenant of Seller contained herein.
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5. Assignment. This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party; provided, however, that Purchaser may assign any or all of its rights and interests hereunder to one or more of its affiliates.
6. Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties hereto. No waiver by any party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant.
7. Governing Law/Venue. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida. Each of the parties hereto submits to the non-exclusive jurisdiction of any state or federal court sitting in Miami, Florida, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court.
8. Notice. All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) one (1) business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one (1) business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) three (3) business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below:
| If to Seller: | Taproot Acquisition Enterprises, LLC | |
| P.O. Box 192135 | ||
| Miami Beach, Florida 33193 | ||
| Attention: Jordan Mirch | ||
| Email: XXXXXX [***] | ||
| If to Purchaser : | Athena Bitcoin, Inc. | |
| c/o Matias Goldenhorn – CEO & President | ||
| 800 NW 7th Avenue | ||
| Miami, FL 33136 | ||
| Email: matias@athenabitcoin.com |
9. Severability. If any provision of this Agreement or portion thereof should be declared invalid for any reason, the invalid provision or portion hereof shall be deemed omitted and the remaining terms shall nevertheless be carried into effect.
10. Counterparts. This Agreement may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy), each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. THE REDACTED TERMS HAVE BEEN MARKED WITH THREE ASTERISKS [***]
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11. Further Assurances. The parties hereto shall execute such further documents, and perform such further acts, as may be necessary to, in the event of a Closing, transfer and convey the Equipment to Buyer, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby.
12. Entire Agreement. This Agreement (including the documents and exhibits referred to herein) constitutes the entire agreement between the parties and supersedes any prior understandings, agreements, or representations by or between the parties, written or oral, to the extent they relate in any way to the subject matter hereof.
13. Taxes. All transfer, documentary, sales, use, stamp, registration and other such taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be born by the responsible party.
14. Costs and Attorney’s Fees. In the event either party brings an action to enforce the terms of this Agreement, the non-prevailing party in such action shall pay to the prevailing party the prevailing party’s costs and expenses, including reasonable attorneys’ fees, incurred in connection with such enforcement action.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Lease as of the date first above written.
Seller:
Taproot Acquisition Enterprises, LLC
By: /s/ Jordan Mirch
Name: Jordan Mirch
Title: Manager
PURCHASER:
Athena Bitcoin, Inc.
By: /s/ Matias Goldenhorn
Name: Matias Goldenhorn
Title: CEO & President
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
EXHIBIT A
| [***] |
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EXHIBIT B
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT (this “Instrument”), dated as of the 22nd day of February, 2024, is made and delivered pursuant to, and subject to the terms of, that certain Equipment Purchase Agreement (the “Agreement”) dated as of the date hereof, by and between Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“Seller”), and Athena Bitcoin, Inc. a Delaware corporation (“Purchaser”), relating to the purchase and sale of the equipment set forth in the Agreement. The terms of the Agreement are incorporated herein by reference, and capitalized terms not otherwise defined in this Instrument shall have the meanings given to such terms in the Agreement.
W I T N E S S E T H:
WHEREAS, Purchaser has the right to acquire the Equipment from Seller under the Agreement; and
WHEREAS, Purchaser and Seller now desire to evidence and effectuate the transfer and conveyance of the Equipment to Purchaser.
NOW THEREFORE, subject to the terms and conditions of the Agreement and for the consideration set forth therein, Buyer and Seller hereby agree as follows:
1. Assignment and Sale. Seller does hereby sell, convey, transfer, assign and deliver to Buyer the Equipment, free and clear of any Liens, and Purchaser hereby accepts from Seller the Equipment.
2. Further Documents and Instruments. From time to time, as and when reasonably requested by Purchaser, Seller shall execute and deliver, or cause to be executed and delivered, all such documents and instruments as Purchaser or its successors and permitted assigns may reasonably deem necessary or desirable to sell, transfer, convey and assign more effectively to Purchaser the Equipment being transferred hereby.
3. Successors and Assigns. This Instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
4. Inconsistencies. To the extent that any provision of this Instrument is inconsistent or conflicts with the Agreement, the provisions of the Agreement shall control.
5. Amendments. No amendment of any provision of this Instrument shall be valid unless the same shall be in writing and signed by Seller and Purchaser.
6. Severability. If any provision of this Instrument or the application of any such provision to any person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof.
7. Counterparts. This Instrument may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy) and all such counterparts taken together shall constitute one and the same Instrument.
8. Notices. All notices, requests, demands, claims and other communications hereunder shall be delivered to the parties as provided in the Agreement.
9. Governing Law. This Instrument shall be governed by and construed in accordance with the internal laws of the State of Florida applicable to agreements made and to be performed entirely within such State, without regard to the conflicts of laws principles of such State.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the undersigned have executed this First Amendment to Lease as of the date first above written.
Seller:
Taproot Acquisition Enterprises, LLC
By: /s/ Jordan Mirch
Name: Jordan Mirch
Title: Manager
PURCHASER:
Athena Bitcoin, Inc.
By: /s/ Matias Goldenhorn
Name: Matias Goldenhorn
Title: CEO & President
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Exhibit 10.48
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
MASTER SERVICES AGREEMENT
This Master Services Agreement (this "MSA") is hereby entered into by Athena Bitcoin Global, a corporation organized and existing under the laws of Nevada, USA, Athena Bitcoin Inc., a corporation organized and existing under the laws of Delaware, USA, and Athena Bitcoin Holdings of El Salvador SA DE CV, a Salvadorian corporation (Athena Bitcoin Global, Athena Bitcoin Inc., and Athena Bitcoin Holdings of El Salvador SA DE CV collectively referred to as the "Company"), Chivo, Sociedad Anonima de Capital Variable ("Republic") and, solely for the purposes of Sections 10 and 11.15, Matias A. Goldenhorn (“Authorized Representative”), and is effective as of July 1, 2022 ("MSA Effective Date"). In this MSA, Company and Republic are each referred to as a "Party" or collectively as the "Parties". Capitalized terms that are not defined in the body or exhibits of this MSA have the meanings set forth in Exhibit A (Definitions).
| 1. | MSA. |
1.1 Service Level Agreements. The Republic and/or any of its Entities may procure services from Company and/or any of its Affiliates by executing a service level agreement, in addition to this MSA, in the form attached hereto as Exhibit C (an "SLA"), which will describe specific services that the Company Entities will provide to the Republic Entities (the "Services") and will set forth terms applicable to such Services. The SLA shall form an independent agreement binding on each of the Republic Entities and Company Entities that execute it. By executing an SLA, the applicable Republic Entities and Company Entities agree to the terms of the SLA and the terms in this MSA.
1.2 Application of MSA to SLA. When interpreting the terms of this MSA with respect to the SLA, (i) references to "Company", "Republic", and "Party" will be construed as references to the Company Entities and the Republic Entities that signed the SLA, except where the context indicates otherwise, (ii) references to "Services" will be construed as references to the Services described in the SLA, and (iii) references to an "SLA" will refer to the terms of both the SLA and the terms of this MSA as applicable to the SLA. If there is a conflict between the terms of the SLA and this MSA, the SLA will control.
1.3 Responsibility for Entities. Company will be jointly and severally liable for all the acts and omissions of each Party that is part of the Company.
| 2. | SERVICES. |
With respect to the Services set forth in the SLA, Company will provide the Services and perform as follows:
2.1 Provision of Services. Company will provide the Services in accordance with (i) the terms of the SLA and (ii) Applicable Law. The Services will include all ancillary services required for Company to provide the Services to Republic, including all those that are inherent, necessary, or customary to provide the Services. Company will only use personnel who are suitably skilled, experienced, and qualified to provide the Services.
2.2 Development and Integration. Company will provide (i) continuous maintenance and necessary repairs for the Republic's automated teller machines that accept and distribute Bitcoin cryptocurrency (any such machine, the "Republic ATM''), and (ii) maintenance, support, and software updates and corrections in relation to the Republic ATMs, in accordance with the SLA and the other requirements that Republic may provide to Company from time to time. Company will provide Republic with the Technology required for Republic to use or make available the Services for the Republic ATMs as contemplated in the SLA. Company will provide a dedicated integration and development team and all development resources necessary to fully integrate and develop the Services.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
2.3 Performance Standards. Company will use its best efforts to perform the Services. All Services will be performed by Company in a workmanlike manner and, in any event, no less than with that degree of skill and care that Company uses when performing the same or similar services to its other customers (e.g., at least the same degree of accuracy, quality, completeness, timeliness, and responsiveness).
2.4 Reporting and Monthly Deposits. Company will provide Republic with accurate and complete reports, in a form and format specified by Republic, at the end of each calendar month. [***]
| 2.5 | Relationship Management. |
2.5.1 As part of the Services, Company will make available personnel (the "Republic RM Team") who will provide Republic with support services and other administrative, operational, technical, and partner support, as reasonably requested by Republic. The Republic RM Team will be dedicated to Republic and adequate in number. The Republic RM Team will be available for regular, periodic meetings as reasonably determined by Republic to discuss the Services generally. [***]
2.5.2 Republic may request weekly reconciliation and reporting reviews and business and operations reviews to discuss any specific issues that arise in connection with the Services. The regular, periodic meetings may be held in person, by videoconference, or other format reasonably agreed by the Parties. Company may replace any member of the Republic RM Team by providing Republic with written notice (including via email) of such replacement. From time to time, Republic may raise concerns or issues regarding the Services to Company, and Company will make available its executives who have the decision making power to address the concerns or issues raised.
2.6 Service Providers. Company will obtain Republic's prior written consent, or a waiver of such consent in writing, before using a Service Provider in connection with the SLA. Company will use its best commercially reasonable efforts to obtain a written agreement with each Service Provider that enables Company to comply with its obligations under the SLA, and such written agreement must not contradict or be inconsistent with the terms of the MSA and SLA. Except as set forth in this Section 2.6, Company will not use a Service Provider. The acts and omissions of a Service Provider will be treated as the acts and omissions of Company, and Company will be responsible and liable for the acts and omissions of its Service Providers.
2.7 User Communications. Company will not, and will cause its Affiliates to not, communicate or otherwise contact any User in connection with the Services without Republic's prior written consent (including via email).
2.8 Continued Performance. Company acknowledges that the timely and complete performance of its obligations under this MSA and the SLA is critical to the business and operations of Republic and that time is of the essence, and Company will provide the Services and perform its obligations accordingly. Except if prohibited by Applicable Law, during any dispute resolution proceedings involving the SLA, whether informal or formal, Company will continue to provide the Services in accordance with the SLA (and waives any right to suspend, delay, or otherwise diminish performance), and Republic may continue to exercise its rights in accordance with the SLA. Any limitation on the amount or nature of damages in the SLA will be ineffective to limit the Company’s liability for injury caused to Republic by reason of breach of the foregoing prohibitions. Company hereby waives the defense of the adequacy of monetary damages in the context of an action by Republic for equitable enforcement of this Section 2.8.
2.9 Company Policies and Procedures. If the SLA requires Company to perform the Services in accordance with Company's policies or procedures, Company will ensure that such policies or procedures do not conflict with its obligations under the SLA. If there is a conflict between any Company policy or procedure, and the SLA, the SLA will control.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
| 3. | INTELLECTUAL PROPERTY. |
3.1 Assignment of Intellectual Property. Company hereby assigns to Republic, Company's entire right, title, and interest in and to any Intellectual Property Rights, hereafter made or conceived solely or jointly by Company or its Affiliates while working for or on behalf of Republic pursuant to the terms of the MSA or the SLA, which relate to the “Foreground IP”. Company shall disclose all Foreground IP promptly to Republic. Company shall, upon request of Republic, promptly execute a specific assignment of title to Republic or its Entities and take all other actions reasonably necessary to enable Republic to secure for itself all Foreground IP in El Salvador, the United States or any other country. It shall be conclusively presumed that any patent applications relating to the Republic ATM, which Company may file within one year after termination of this MSA, shall belong to Republic, and Company hereby irrevocably assigns the same to Republic or its designated Entity, as having been conceived or reduced to practice during the term of this MSA.
3.2 Works of Authorship. All Foreground IP that are writings or works of authorship, including, without limitation, program codes or documentation, produced or authored by Company or its Affiliates in the course of performing services for Republic, together with any associated copyrights, are works made for hire and the exclusive property of Republic. To the extent that any writings or works of authorship may not, by operation of law, be works made for hire, Company hereby irrevocably assigns Republic all ownership of and all rights of copyright in, such items, and Republic shall have the right to obtain and hold in its own name, rights of copyright, copyright registrations, and similar protections which may be available in such works. Company shall give Republic or its designees all assistance reasonably required to perfect such rights.
3.3 License to Services and Company Technology. With respect to the SLA, Company hereby grants to Republic and its Entities a non-exclusive, non-sublicensable (except to Representatives of a Republic Entity), royalty-free, fully paid-up, irrevocable, perpetual, worldwide right and license to (i) access and use of the Services [***]; and (ii) use, evaluate, test, install, integrate, modify, reproduce, and distribute the Company Technology in connection with using the Services and integrating the Services for the Republic ATMs.
3.4 License to Republic Technology. With respect to the SLA, Republic hereby grants to the Company a non-exclusive, non-sublicensable (except to Service Providers approved pursuant to Section 2.6), non-transferable, royalty-free, fully paid-up, worldwide right and license, during the SLA Term, to use, evaluate, test, install, integrate, modify, and reproduce (i) the Republic Technology provided to Company in connection with the SLA and (ii) the Foreground IP, in each case, solely as required for Company to perform its obligations under the SLA.
3.5 License to Technology in Foreground IP. Republic hereby grants to Company a non-exclusive, non-transferable, royalty-free, fully paid-up, perpetual, worldwide right and license, to use, evaluate, test, install, integrate, modify, and reproduce all Technology in the Foreground IP (excluding the use of the compiled binaries of the Bitcoin Chivo Wallet) for any purpose, including for use in products or services provided by Company to third parties. [***]
3.6 Non-Exclusivity; No Commitments. The Parties and their Affiliates acknowledge and agree that the terms of this MSA and the SLA, the Services, and the relationship between the Parties and their respective Affiliates, do not impose any obligations of exclusivity on either Party or its Affiliates. Republic and its Affiliates are under no obligation to (i) enter into the SLA, (ii) guarantee a minimum number of Users who will use the Services, or (iii) provide a minimum volume of transactions processed through the Services or a minimum amount of fees, amounts paid, or revenues in connection with the Services.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
3.7 Republic Entities and Third Parties. Any Republic Entity may perform any of Republic's obligations, grant any approvals required by Republic, and exercise all rights and all licenses granted to Republic under the SLA. Republic may designate a Representative to receive, on its behalf, any information, communications, reports, or other materials to be provided by Company to Republic pursuant to the SLA. Republic may engage its Representatives to perform its obligations under the SLA. The acts and omissions of a Representative in performing Republic's obligations under the SLA will be treated as the acts and omissions of Republic under the SLA.
3.8 Further Assurances. If for any reason, Republic is unable to secure Company's signature on any document needed to apply for, perfect, or otherwise acquire title to the Intellectual Property Rights granted to it under this Section 3, or to enforce such rights, Company hereby designates Republic as Company's attorney-in-fact and agent, solely and exclusively to act for and on Company's behalf to execute and file such documents with the same legal force and effect as if executed by Company and for no other purpose.
| 4. | DATA; DATA SECURITY. |
4.1 Data Use, Disclosure and Retention. Notwithstanding anything to the contrary in Section 3, Company will only use data related to Republic and any intellectual property of Republic solely as required to provide the Services to Republic as required under this MSA, the SLA, or, as applicable, to comply with any Governmental Authority. Company shall secure and protect such data from misuse and unauthorized access and implement and maintain security (including, operation, technical, and physical controls), data management, human resource management, asset protection and incident response standards, processes, and protocols of an appropriate level and strength to reasonably protect such data. Company shall use all reasonable efforts to ensure that Republic's data will not be subject to any loss, theft, unauthorized use or access, damage, or other loss of value.
4.2 Management of Data and Data Security. Company will secure and protect the Services from misuse and unauthorized access and implement security, data management, and incident response protocols in accordance with industry best practices and comply with the terms of Exhibit B (Data Security Program).
4.3 Business Continuity and Disaster Recovery. Company will maintain a business continuity and disaster recovery plan that complies with industry best practices and that enables Company to perform its obligations under the SLA in accordance with the terms thereof without any interruption (the "BCDR Plan"). Company will maintain multiple data centers in different geographic locations and will ensure that all core components of the Company Technology, and all data repositories used to provide the Services, are located in multiple and redundant data centers. Upon Republic's request, Company will provide Republic with a copy of the BCDR Plan. Company will test the BCDR Plan no less than once annually and will provide Republic with a copy of the test results no later than thirty (30) days following the completion of such test, including a detailed description of any material deficiencies, and Company's plan and schedule for curing such deficiencies. If there is a business interruption or disaster, Company will activate and comply with its BCDR Plan.
| 5. | FEES AND INVOICES. |
5.1 Service Fees. Company shall invoice Republic on a monthly basis in the total amount of the fees incurred by Company in connection with providing the Services to Republic (the "Service Fees"). Republic shall submit payment with respect to any invoice via wire transfer to the Company account listed on such invoice within ten (10) days of receipt of such invoice. [***]
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5.2 Service Fee Disputes. If Republic disputes any amounts in connection with the Services (e.g., amounts owed, paid, or transferred to Company or charged, reimbursed, collected, invoiced, withheld, or transferred by Company), Republic may provide Company written notice (including via email) of such dispute (a "Notice of Dispute"). Each Notice of Dispute will include sufficient detail for the Company to investigate the dispute and Republic may withhold payment of the disputed amounts in good faith. Once Republic has given Company sufficient detail about the dispute, within ten (10) days of such receipt, Company will use commercially reasonable efforts to resolve the issue and communicate its position in writing to Republic. If the Parties are unable to resolve a dispute within thirty (30) days of Company's receipt of the Notice of Dispute, at the request of either Party, the dispute will be promptly escalated to senior personnel of each Party for resolution. If Republic does not provide a Notice of Dispute with respect to any amounts in connection with the Services, Republic does not waive its right to dispute such amounts at a later date, even if it has paid the amount charged or accepted the amount reimbursed.
5.3 Taxes. The fees set forth in this MSA and the SLA not include any sales, withhold and use taxes, duties, and charges of any kind imposed by any federal, state, local or international governmental authority ("Taxes") on amounts payable by Republic under this MSA and the SLA. The Republic will provide to Company any withhold tax certificate derived from the services rendered within ten (10) days of receipt of monthly invoice.
5.4 Books and Records; Audit. Company will keep and maintain consistently applied, complete and accurate books, records and other documentation, that are, in each case, audited by a reputable and duly licensed audit firm, in connection with the Services, including for all financial transactions, and will retain such books, records and other documentation for a period of no less than ten (10) years following the expiration or termination of the SLA or for such longer period as may be required under Applicable Law (the "Audit Period"). During the Audit Period, upon providing reasonably advanced written notice (including via email) to Company, Republic may audit, or may direct a third-party auditing firm to audit such books and records during normal business hours. Company will cooperate with Republic or such auditing firm in conducting any such audit.
| 6. | TERM AND TERMINATION RIGHTS. |
6.1 Term. This MSA commences on this MSA Effective Date and, unless otherwise terminated pursuant to the terms of this MSA, continues through July 30, 2024 (the "MSA Term").
6.2 Service Level Agreement Term. The SLA commences on the effective date set forth in the SLA and, unless the SLA is terminated, continues for the period of time set forth in the SLA, or if no period of time is set forth, for the period of time coterminous with this MSA (such period of time and any applicable Phase-Out Period, the "SLA Term"). If the SLA Term continues beyond the expiration of the MSA Term, the MSA Term of this MSA will be extended until such time that the SLA expires or is terminated, solely with respect to the Services provided under that SLA. The termination of a specific SLA will not terminate this MSA or any other SLA. Notwithstanding the foregoing, upon termination of this MSA by Republic, the SLA will terminate.
6.3 Termination for Cause. Either Party to this MSA or the SLA may terminate this MSA or the SLA (as the case may be) by providing written notice to the other Party, if the other Party commits a material breach of this MSA or the SLA (as the case may be) that (i) is not capable of cure, or (ii) is capable of cure but that the other Party fails to cure within thirty (30) days after receipt of written notice from the other Party of such breach.
6.4 Termination for Financial Insolvency. Republic or any Republic Entity that is a party to the SLA, at its sole discretion, may terminate this MSA or the SLA (as the case may be) by providing Company with written notice, if Company (i) becomes insolvent, undergoes a dissolution, or ceases its business operations, or any petition is filed or other steps are taken for its bankruptcy, liquidation, receivership, administration, examinership, dissolution, or other similar action, or (ii) commences negotiations or enters into an agreement with all or any class of its creditors in relation to any assignment for the benefit of such creditors, the rescheduling of any of its debts, and/or any compromise or other arrangement with any of its creditors.
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6.5 Termination Due to a New Regulatory Requirement. If a Governmental Authority enacts or issues an Applicable Law that conflicts with any term of the SLA (a "Regulatory Requirement"), the Parties will discuss an amendment to the SLA to modify the SLA as required to comply with such Regulatory Requirement. While the Parties are discussing such amendment, if, due to the Regulatory Requirement, Company is unable to perform an obligation under the SLA, then prior to not performing such obligation, Company will inform Republic of the obligation it is unable to perform and will use commercially reasonable efforts to continue to try to perform such obligation in a manner that does not diminish or degrade the functionality of the Services or the User experience (if applicable). If the Parties cannot agree upon the amendment, then upon written notice to Company, Republic may, at its sole discretion, terminate the portion of the SLA affected by the Regulatory Requirement (if practicable) or terminate the SLA in its entirety. Notwithstanding the above, the amendment provision of this Section 6.5 shall not be triggered by any actions of Republic or its Entities.
6.6 Additional Termination. Republic may terminate this MSA or the SLA at any time and for any reason by providing the Company with at least thirty (30) days' prior written notice.
6.7 Not Exclusive Remedy. Termination of this MSA or the SLA is not an exclusive remedy, and the exercise by any Party of any remedy under this MSA or the SLA will be without prejudice to any other remedy it may have under this MSA, the SLA, Applicable Law, or otherwise.
6.8 Phase-Out Period/Transition Support. If the SLA expires or is terminated for any reason, Republic may elect to have the Services continue for a period of six (6) months, or such other agreed upon period, starting from the date of termination of the SLA (the "Phase-Out Period"); provided, however, that the Phase-Out Period shall not extend after July 30, 2024. During the Phase-Out Period, Republic may continue to exercise its rights under the SLA, and Company will: (i) continue to operate and provide the Company Technology and Services, and continue to perform its other obligations under the SLA, (ii) cooperate, in a manner that minimizes disruption to Republic and Users, with any transition of the Services to an alternative service provider selected by Republic in its sole discretion, (iii) permit Republic to have full access to all personnel necessary to transition Services to such alternative service provider, and (iv) perform any other actions that are necessary and proper to ensure the transition of the provision of the Services to such alternative service provider.
6.9 Migration of Data. Upon the expiration or termination of the SLA, or otherwise upon Republic's request, Company will provide Republic all Data that is necessary for an alternative service provider, selected by Republic in its sole discretion, to provide the Services (or substantially similar services). All such Data will be provided in a form and format selected by Republic and shall be Republic Data.
6.10 Return/Destruction of Confidential Information. Upon the expiration or termination of this MSA or the SLA (as the case may be) (and any Phase-Out Period), Company will cause its Affiliates and its and their Representatives to, return or destroy all copies of Republic's and its Entities' respective Confidential Information possessed by or within the control of Company or its Affiliates or their Representatives in connection with this MSA or the SLA (as the case may be). Notwithstanding the foregoing, Company may retain Republic's Confidential Information if it is required to be retained (i) to comply with Applicable Law, or (ii) to comply with its obligations under this MSA or the SLA due to an obligation that survives the expiration or termination of this MSA and the SLA. All such retained Confidential Information will (a) only be retained for so long as required and (b) still be subject to the use, disclosure, data security, and other restrictions and obligations in this MSA and the SLA (as applicable).
6.11 Survival. The following Sections and Exhibits will survive any expiration or termination of this MSA or the SLA: Section 1 (MSA), Section 2.6 (Service Providers), Section 2.7 Communications), Section 3.6 (Non-Exclusivity; No Commitments), Section 4.2 (Management of Data and Data Security), including Exhibit B (Data Security Program), Section 5.4 (Books and Records; Audit), Section 6.7 (Not Exclusive Remedy), Section 6.8 (Phase-Out Period), Section 6.9 (Migration of Data), Section 6.10 (Return/Destruction of Information and Data), Section 6.11 (Survival), Section 6.12 (Effect of Termination), Section 8 (Disclaimers; Limitation of Liability), Section 9 (Indemnification and Performance Bond), Section 10 (Confidentiality), Section 11 (General), Exhibit A (Definitions), in addition to any Sections and Exhibits that are otherwise designated as surviving.
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6.12 Effect of Termination. Termination or expiration of the SLA will not affect a Party's respective rights, obligations, and remedies under the SLA with respect to transactions submitted by a User or Republic before the date of termination or expiration (including any chargebacks or reversals related thereto), or with respect to a Party's right to collect for fees of any transaction or service provided.
| 7. | REPRESENTATIONS, WARRANTIES AND COVENANTS. |
7.1 1 Mutual. Each Party to this MSA and the SLA represents and warrants that: (i) it has and will retain, the full right, power, and authority to enter into this MSA or the SLA; (ii) it has been duly authorized to do so by all required governmental, corporate or similar action; (iii) when executed and delivered by such Party, this MSA or the SLA will be legally binding upon and enforceable against such Party, and this MSA or the SLA will not conflict with any agreement, instrument, or understanding, oral or written, to which such Party is a party or by which it may be bound; and (iv) as of the date such Party executed this MSA or the SLA, there are no proceedings pending or, to its knowledge, threatened or reasonably anticipated that would challenge or that may have a material adverse effect on its performance under this MSA or the SLA.
7.2 Company. Company represents, warrants, and covenants that:
7.2.1 Company Organization. Company is duly organized, validly existing, and in good standing as a corporation or other entity as represented in this MSA or the SLA under the laws and regulations of its jurisdiction of incorporation, organization, or chartering.
7.2.2 Company Property.
7.2.2.1 The Company Technology, Company Data, and the Services, and the use of them as contemplated under each applicable SLA, do not and will not infringe, violate, or misappropriate the Intellectual Property Rights of any Entity anywhere in the world.
7.2.2.2 The Company Technology is and will be sufficient to enable the Services, including to operate them for the Republic ATMs and enable the use of the Services by Users or Republic, as contemplated under the SLA.
7.2.3 Open Source Software. No portion of the Company Technology is or will be subject to any open source or other license that when used with the Republic ATMs or Republic's Technology as contemplated by each applicable SLA, will require any software associated with the Republic ATMs or Republic's Technology to be disclosed or distributed in source code form, licensed for the making of derivative works, or freely redistributable.
7.2.4 No Harmful Material or Disruption. The Company Technology and the Services do not and will not contain or cause any viruses, worms, time bombs, Trojan horses or other harmful, malicious or destructive code to be installed on or introduced into the software for the Republic ATMs or Republic's Technology. Company and its Service Providers will not engage in any act or fail to take any act that could or does result in the disablement, interference, or impairment, in whole or in part, any part of the Republic ATMs or Republic's Technology.
7.2.5 Applicable Rights and Licenses. Company has, and each of the Service Providers has, obtained and possesses, and will maintain at all times, all authorizations, permissions, consents, rights, licenses, agreements, permits, approvals, registrations, orders, declarations, filings, and the like, that are required under Applicable Law or by a Governmental Authority, and/or that are necessary (i) to provide the Services and perform its obligations, and (ii) for the Services to be made available and used as contemplated under each applicable SLA.
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7.2.6 Compliance with Applicable Law. Company's and each Service Providers' performance of its obligations under this MSA and the SLA, and the Services, are and will at all times be in compliance with Applicable Law. Company will promptly notify Republic of any actual or expected changes in Applicable Law that would reasonably be expected to affect the Services or the use of the Services as contemplated.
7.2.7 Protection of Reputation. Company and each Service Provider will take no action that is intended to, or would reasonably be expected to, harm Republic or its reputation or which reasonably would be expected to lead to unwanted or unfavorable publicity to Republic.
7.2.8 Access to Bitcoin and Private Keys. If the Services include private key management, custodial services or relate in any manner to access control restrictions of the Bitcoin Chivo Wallet or to a User’s bitcoin, then Company and each Service Provider will provide, at all times, Republic with access to the bitcoin in the Bitcoin Chivo Wallet.
7.3 Anti-Corruption. Company, on behalf of itself, its Affiliates, its Service Providers, and each of their Representatives, represents, warrants and covenants that they have not engaged in and covenants that they will refrain from offering, promising, paying, giving, authorizing the paying or giving of, soliciting, or accepting money or Anything of Value, directly or indirectly, to or from (i) any Government Official to (a) influence any act or decision of a Government Official in his or her official capacity, (b) induce a Government Official to use his or her influence with a government or instrumentality thereof, or (c) otherwise secure any improper advantage; or (ii) any Entity in any manner that would constitute bribery or an illegal kickback, or would otherwise violate applicable anti-corruption laws. Company will immediately report to Republic any breach of this Section 7.3. As used in this Section 7.3, "Anything of Value" includes cash or a cash equivalent (including "grease," "expediting" or facilitation payments), discounts, rebates, gifts, meals, entertainment, hospitality, use of materials, facilities or equipment, transportation, lodging, or promise of future employment. As used in this Section 7.3, "Government Official" refers to any official or employee of any multinational, national, regional, or local government in any country, including any official or employee of any government department, agency, commission, or division; any official or employee of any government-owned or government-controlled enterprise; any official or employee of any public educational, scientific, or research institution; any political party or official or employee of a political party; any candidate for public office; any official or employee of a public international organization; and any Entity acting on behalf of or any relatives, family, or household members of any of those listed above.
7.4 Anti-Money Laundering. Company, on behalf of itself, its Affiliates, its Service Providers, and each of their Representatives, represents, warrants and covenants that they will comply with all applicable laws and regulations aimed at preventing, detecting, and reporting money laundering and suspicious transactions and will take all necessary and appropriate steps, consistent with Applicable Law and generally accepted industry standards set forth by the Financial Action Task Force ("FATF"), to (i) obtain, verify, and retain information with regard to User identification and source of funds, (ii) maintain records of all User transactions, (iii) file reports with applicable Governmental Authorities, and (iv) block account access and terminate transactions that are, or are reasonably suspected to be, in contravention of Applicable Law and generally accepted industry standards set forth by the FATF. Company will immediately report to Republic any breach of this Section 7.4.
| 8. | DISCLAIMERS. |
8.1 Warranty Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS MSA OR THE SLA, NEITHER PARTY TO THIS MSA OR THE SLA MAKES ANY REPRESENTATIONS OR WARRANTIES, AND ALL OF THE PARTIES HEREBY EXPRESSLY DISCLAIM, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, STATUTORY OR OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND IMPLIED WARRANTIES OF NON-INFRINGEMENT AND THOSE ARISING FROM THE COURSE OF DEALING OR PERFORMANCE, USAGE OR TRADE PRACTICES.
8.2 Damages Disclaimer. EXCEPT WITH RESPECT TO (I) A BREACH OF SECTION 2.8 (CONTINUED PERFORMANCE), (II) ANY OBLIGATIONS UNDER SECTION 9 (INDEMNIFICATION AND PERFORMANCE BOND), (III) A BREACH OF ANY OBLIGATIONS OR RESTRICTIONS REGARDING DATA USE OR SECURITY OR REGARDING CONFIDENTIAL INFORMATION, INCLUDING SECTION 4 (DATA; DATA SECURITY) AND SECTION 10 (CONFIDENTIALITY), (IV) A BREACH OF SECTION 7.2.8 (ACCESS TO BITCOIN AND PRIVATE KEYS), (V) A PARTY'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD, OR FRAUDULENT MISREPRESENTATION, OR (VI) DEATH OR BODILY INJURY CAUSED BY A PARTY, TO THE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER PARTY TO THIS MSA OR THE SLA WILL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS (DIRECT OR INDIRECT), OF ANY KIND IN CONNECTION WITH THE TERMS OR THE BREACH OF THE TERMS OR SUBJECT MATTER OF THIS MSA OR THE SLA, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
| 9. | INDEMNIFICATION. |
9.1 Company Indemnification. Company agrees to indemnify, defend, and hold harmless Republic and its Entities, and their respective employees, officers, directors, and other representatives (collectively, the "Republic Indemnified Parties") from and against any and all losses, costs, expenses (including reasonable legal fees and expenses such as for attorneys, experts, and consultants, and reasonable out-of-pocket costs, and interest), penalties, fines, judgments, settlements, damages (of all types including special damages), or liabilities (collectively, "Losses"), suffered or incurred by any of them in connection with any claim, cause of action, or other legal assertion, brought or threatened to be brought by a third party, or any investigation, examination, or proceeding of a Governmental Authority, or any request by a third party for reimbursement or compensation (each a "Claim"), where such Claim arises out of or alleges any of the following: (i) any acts or omissions of Company or a Service Provider that constitute a breach of Section 7 (Representations and Warranties) or any other representations or warranties made under this MSA or the SLA; (ii) Company or a Service Provider's failure to pay any withholding Taxes, social security, unemployment or disability insurance or similar items in connection with compensation received by Company pursuant to this MSA or the SLA; [***]
10. CONFIDENTIALITY.
10.1 Definition and Exclusions.
10.1.1 Definition of CI. A Party (each a "Disclosing Party") may disclose information, directly or indirectly, to the other Party (each a "Receiving Party"), and such information will be deemed to be "Confidential Information" if when it is disclosed, regardless of the form or medium (whether in writing, verbally, electronically, or otherwise), (i) it is designated as confidential by the Disclosing Party, or (ii) it should reasonably be understood by the Receiving Party, given the nature of the information or the circumstances surrounding its disclosure, to be confidential. Confidential Information includes information such as product designs, product plans, software, Technology, financial information, marketing plans, business opportunities, pricing information, information regarding customers or users, inventions, and know-how. The terms of this MSA and the SLA will be treated as Confidential Information. Notwithstanding the foregoing, all Republic Technology, Republic Data and information comprising or concerning the Republic ATMs or Republic's or its Entities' use of the Services, including Usage Information, will be deemed to be Republic's Confidential Information. Notwithstanding anything to the contrary, Personal Data will not be deemed to be Confidential Information under this MSA or the SLA and the use, disclosure, and retention thereof will be governed by other provisions under this MSA and the SLA.
10.1.2 Exclusion for Government Business. In the case of Republic as the Receiving Party, the obligations under this MSA and the SLA with respect to Confidential Information, including the restrictions on use and disclosure in Section 10.2, do not apply to information that is desirable to use or disclose to third parties in conjunction with the performance of official government business.
10.2 Use and Disclosure of CI. A Receiving Party will only use the Confidential Information of a Disclosing Party as required to perform its obligations and exercise its rights under this MSA or the SLA, provided that, subject to the requirements of Section 10.3, a Receiving Party may disclose the existence of this MSA or the SLA and their respective key terms pursuant to a securities filing to a Governmental Authority. [***]
10.3 Disclosures to Governmental Authorities. If a Governmental Authority requires a Receiving Party to disclose the Confidential Information of a Disclosing Party, the Receiving Party will (i) immediately notify the Disclosing Party after learning of the existence or likely existence of such requirement (unless prohibited by Applicable Law); [***]
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
10.4 Feedback. A Party or any one of its Affiliates may, but is not required to, provide the other Party or its Affiliates, suggestions, comments, ideas, or know-how, in any form, that are related to the other Party's or its Affiliates' respective products, services, or Technology ("Feedback"). Any such Feedback will be considered Confidential Information. Neither Party nor any of their respective Affiliates will have any obligation to provide compensation for any use of Residuals or Feedback. Nothing in this Section 10.4, will be deemed to license any patents or transfer any Intellectual Property Rights from a Party or its Affiliates to the other Party or its Affiliates. Notwithstanding anything to the contrary, this Section 10.4 does not govern the use and disclosure of Personal Data.
10.5 Residuals. Notwithstanding anything to the contrary in this MSA regarding Confidential Information, neither Party not its Affiliates (including its employees, subcontractors, consultants, Service Providers, and agents) shall be prohibited or enjoined from utilizing general knowledge, skills and experience, concepts, know-how and techniques retained in the unaided memory of an individual and acquired as a result of such individual’s authorized access to the other Party’s Confidential Information during the course of the performance or receipt of the Services (“Residuals”) provided that none of such Residuals include any trade secrets of the other Party.
| 11. | GENERAL. |
11.1 Governing Law; Jurisdiction; Venue. The MSA and SLA shall be governed by and construed in accordance with the internal laws of the state of New York, without giving effect to any choice or conflict of law provision or rule (whether of the state of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the state of New York. [***]
11.2 Assignment. This MSA and the SLA will each bind and inure to the benefit of each of its respective Parties and their permitted successors and assigns. Company and its Affiliates will not, in whole or in part, assign this MSA or the SLA (as the case may be), without the prior written consent of Republic, which shall not be unreasonably withheld or delayed. For the purposes of this Section 11.2, a change of control of Company will be deemed to be an assignment, and if Company undergoes a change of control without the consent of Republic, such change of control will be deemed to be a material breach of this Section 11.2. Republic may assign this MSA or the SLA (including assigning its rights and licenses and delegating its obligations) to any of its Entities. Except as expressly authorized under this Section 11.2, any attempt to transfer or assign this MSA or the SLA will be null and void.
11.3Notices. Except as otherwise expressly set forth in this MSA or the SLA, any notice required under this MSA or the SLA will be in writing delivered to the applicable address below and will be deemed given: (i) upon receipt when delivered personally; (ii) two (2) days (other than weekends or public holidays) after it is sent if sent by certified or registered mail (return receipt requested); or (iii) one (1) day (other than weekends or public holidays) after it is sent if by next day delivery by a major commercial delivery service. Any notice provided to Athena Bitcoin Global shall be deemed effectively provided to Company inclusive of all Parties included in the definition of “Company.”
| Republic: | Company: | |
| Chivo, Sociedad An6nima de Capital Variable | Athena Bitcoin Inc. | |
| Attn: Legal Representative | Attn: Chief Executive Officer | |
| Boulevard del Hipodromo | 221 W. Wacker Dr. | |
| Local 8, #243, Century Tower | Ste. #900B | |
| Sergio Viera de Mello | Chicago, IL., 60606, USA | |
| San Salvador, El Salvador | ||
| With a copy to: | ||
| Pratin Vallabhaneni | ||
| White & Case LLP | ||
| 1221 Avenue of the America | ||
| New York, NY 10036 |
11.4 Amendments. No supplement, modification, or amendment of this MSA or the SLA will be binding unless executed in writing by a duly authorized signatory of each Party. A valid amendment of this MSA will be deemed to automatically amend and will be binding upon Party that is a signatory to the SLA.
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11.5 Waivers. No waiver will be implied from conduct or failure to enforce or exercise rights under this MSA or the SLA, nor will any waiver be effective, unless in writing signed by a duly authorized signatory on behalf of the Party claimed to have waived such rights.
11.6 No Publicity by Company. Company and its Affiliates will not engage in any promotions, publicity, marketing, or make any other public statement relating to the Services as used in connection with the Republic ATMs or its relationship with Republic or Users (including regarding the existence and terms of this MSA or the SLA), unless Company has obtained Republic's prior written consent, which shall not be unreasonably withheld. For the purposes of this Section 11.6, public statements include press releases, written or oral statements made to the media, blogs, trade organizations, publications, websites, or any other public audience. Notwithstanding anything to the contrary in this MSA, the SLA or otherwise, Republic and its Entities may publicly disclose information about the Services, including with reference to Company.
11.7 Insurance. During the MSA Term, Company shall, at its own expense, maintain and carry insurance in full force and effect with financially sound and reputable insurers, that includes, but is not limited to, commercial general liability with limits no less than an amount deemed reasonably satisfactory by Republic which policy will include contractual liability coverage insuring the activities of Company under this MSA. Upon Republic's request, Company shall provide Republic with a certificate of insurance from Company's insurer evidencing the insurance coverage specified in this MSA. The certificate of insurance shall name Republic as an additional insured. Company shall provide Republic with sixty (60) days' advance written notice in the event of a cancellation or material change in Company's insurance policy.
11.8 Entire Agreement. This MSA (including all exhibits) is the complete and exclusive statement of the mutual understanding of the Parties, and supersedes and cancels all previous written and oral agreements and communications, relating to the subject matter of this MSA. The SLA (including any exhibits), is the complete and exclusive statement of the mutual understanding of the Parties with respect to the Services provided thereunder, and supersedes and cancels all previous written and oral agreements and communications, relating to the subject matter of the SLA.
11.9 Independent Contractors. The Parties are independent contractors. There is no relationship of partnership, joint venture, employment, franchise or agency created between the Parties. Company will be solely responsible and liable for any compensation due any of its employees, agents, or contractors and employment-related Taxes, insurance premiums or other employment benefits required to be provided to its employees, agents, or subcontractors under Applicable Law. Company and its employees, agents or subcontractors will not be eligible for any benefits from Republic (including vacation or illness payments, stock awards, bonus plans, health insurance or retirement benefits) normally provided by Republic to its employees.
11.10 Remedies. Unless expressly set forth otherwise in this MSA or the SLA, any and all remedies expressly conferred upon a Party are cumulative with and not exclusive of any other remedy conferred by this MSA or the SLA or by law on that Party, and the exercise of any one remedy does not preclude the exercise of any other available remedy.
11.11 Counterparts. This MSA and the SLA may be executed in one or more counterparts, each of which will be considered an original, but all of which together will constitute one agreement.
11.12 Severability. Any provision of this MSA or the SLA that is invalid, prohibited, or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction.
11.13 Third-Party Rights. Except as expressly set forth in this MSA or the SLA, any party that is not a Party to this MSA will not have any rights as a third-party beneficiary to enforce any term of this MSA.
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11.14 Construction. Captions are for convenience only and do not constitute a limitation of the terms hereof. The singular includes the plural, and the plural includes the singular. References to "herein," "hereunder," "hereinabove," or like words will refer to this MSA or the SLA as a whole and not to any particular section, subsection, or clause contained in this MSA or the SLA. The terms "include" and "including" are not limiting. Reference to any agreement or document includes any permitted modifications, supplements, amendments and replacements thereto. References to "day" refer to a calendar day, unless otherwise expressly stated.
11.15 Authorized Representative. Authorized Representative represents and warrants that he is an authorized representative of each of Athena Bitcoin Holdings El Salvador SA DE CV, Athena Bitcoin, Inc., Athena Bitcoin Global and has the full authorization and authority to execute this Agreement. Authorized Representative represents and warrants that he has had the opportunity to consult legal counsel prior to executing this Agreement.
[SIGNATURE PAGE FOLLOWS]
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By signing below, each Park acknowledges that is has read, and agrees to, all the terms of the MSA.
| Chivo, Sociedad Anonima de Capital Variable | Athena Bitcoin Global |
| By: /s/ Raymond I. Villalta | By: /s/ Matias Goldenhorn |
| Name: Raymond I. Villalta | Name: Matias Goldenhorn |
| Title: Representante Legal | Title: CEO |
| Athena Holdings El Salvador SA DE CV | Athena Bitcoin, Inc. |
| By: /s/ Carlos Rivas | By: /s/ Matias Goldenhorn |
| Name: CARLOS RIVAS | Name: Matias A. Goldenhorn |
| Title: LEGAL REPRESENTATIVE | Title: CEO |
| Matias A. Goldenhorn | |
| By:_______________________________ |
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EXHIBIT A
DEFINITIONS
"Affiliate" means, with respect to a specified Entity, any other Entity that directly or indirectly controls, is controlled by, or is under common control with such specified Entity. For the purposes of this definition, "control" means the possession, directly or indirectly, of the power to independently direct or cause the direction of the management and policies of an Entity, whether through ownership of more than fifty percent (50%) of the stock or other equity interests entitled to vote for representation on its Board of Directors, or body performing similar functions, by contract or otherwise.
"Applicable Law" means, with respect to a specified Entity, each of the following, whether existing now or in the future, including any updates thereto, that are applicable to such Entity: (i) the rules, requirements, or operational and technical standards of any relevant self-regulatory organization having jurisdiction or oversight over the Services, including the PCI DSS; and (ii) all laws, treaties, rules, regulations, regulatory guidance, directives, policies, orders, or determinations of, or mandatory written direction from or agreements with, any Governmental Authority, including trade control laws, export laws, sanctions regulations, statutes, or regulations, relating to stored value, money transmission, unclaimed property, payment processing, telecommunications, unfair or deceptive trade practices or acts, anti-corruption, trade compliance, anti-money laundering, terrorist financing, "know your customer," privacy, or data security.
"Bitcoin Chivo Wallet" means that certain bitcoin wallet, including the application that Republic will make available for Android, iOS, and other operating systems, offered, now or in the future, to Users.
"Bitcoin Digital Platform" means the digital platform based on blockchain technology, including all features, services and products that Republic or its Entities make available to the citizens of El Salvador through hardware, software, APis, websites or other interfaces of any type, whether presently existing or later developed, that are developed or marketed, in whole or in part, by or for any of them, or that relate to the Bitcoin Chivo Wallet.
"Company Data" means any data that Company provides, makes available, or uses in connection with the Services.
"Company Entities" means Company or its Affiliates that have signed the SLA.
"Company Technology" means Technology that Company provides, makes available, or uses in connection with the Services.
"Confidential Information" has the meaning set forth in Section 10 of this MSA.
"Data" means Company Data, Republic Data, Personal Data and, with respect to the SLA, any other data expressly included as "Data" in the SLA.
"Data Breach" means (i) any unauthorized access to or use of Republic Data or Personal Data resulting from Company's or a Service Provider's breach of the data security obligations set forth in this MSA or the SLA (as the case may be), including those in Section 4 of this MSA, or (ii) Company's or a Service Provider's misuse of or unauthorized access to Republic Data or Personal Data (e.g., as a result of a breach of any data use obligations or restrictions).
"Data Security Program" means Exhibit B of this MSA.
''Disclosing Party'' has the meaning set forth in Section 10.1 of this MSA.
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"Entity" means an individual, corporation, firm, limited liability company, partnership, joint venture, trust, unincorporated organization, estate, association, Governmental Authority, or other entity or organization, whether or not a legal entity.
"Feedback" has the meaning set forth in Section 10.4 of this MSA.
"Foreground IP" means the Bitcoin Chivo Wallet and the website developed by the Company for accessing the Bitcoin Chivo Wallet.
"Governmental Authority" means any duly authorized federal, national, supranational, inter governmental, state, provincial, local, or other government, governmental, regulatory, or administrative authority, self-regulatory authority, governmental agency, bureau, office or commission, or any court, tribunal, or judicial or arbitral body, of competent jurisdiction.
"Intellectual Property Rights" means any and all right, title, and interest in and to any and all trade secrets, patents, copyrights, service marks, trademarks, know-how, inventions, techniques, processes, devices, discoveries or improvements, trade names, rights in trade dress and packaging, moral rights, and similar rights of any type, including any applications, continuations or other registrations with respect to any of the foregoing, under the laws or regulations of any foreign or domestic governmental, regulatory, or judicial authority.
"Losses" has the meaning set forth in Section 9.1 of this MSA.
"MSA Term" has the meaning set forth in Section 6.1 of this MSA.
"Party" or "Parties" have the meaning set forth in Section 1.2 of this MSA.
"Personal Data" means any information from, about, or that can be associated with any household, individual consumer, or any other legal person (human or non-human), including any Users, employees, and contingent workers, or that otherwise is regarded as personal data or personal information under Applicable Law, including any financial data, transaction data or other data or information related to the usage of the Republic ATMs collected by or on behalf of Company from Users of any Services.
"Phase-Out Period" has the meaning set forth in Section 6.8 of this MSA.
"Receiving Party" has the meaning set forth in Section 10.1 of this MSA.
"Representative" means, with respect to a specified Entity, any of its directors, officers, employees, agents, consultants, contractors, subcontractors, service providers, advisors, accountants, attorneys, or other representatives. For clarity, Company's Representatives includes its Service Providers.
"Republic" has the meaning set forth in Section 1.2 of this MSA.
"Republic Claims" has the meaning set forth in Section 9.1 of this MSA.
"Republic Data" means (i) all data collected by, stored in, used by, or circulated in or through the Bitcoin Digital Platform, (ii) all data relating to Republic's and Users' use of the Services, and (iii) any other data as specified as Republic in the SLA.
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"Republic Entity" means Republic or its Affiliates that have signed the SLA.
"Republic Indemnified Parties" has the meaning set forth in Section 9.1 of this MSA.
"Republic Technology" means Technology that Republic provides to Company in connection with the Services. For clarity, Republic Technology does not include Republic Data.
"Residuals" has the meaning set forth in Section 10.4 of this MSA.
"Service Fees" has the meaning set forth in Section 5.1 of this MSA.
"Service Provider" means, any Entity, other than a Company employee, who performs any of Company's obligations under the SLA or who provides, directly or indirectly, any product or service to, on behalf of, or for the benefit of Company (including all other third parties downstream of any such Entity who are performing obligations or providing products or services in connection with the SLA).
"Services" has the meaning set forth in Section 1.1 this MSA. "SLA" has the meaning set forth in Section 1.1 of this MSA. "SLA Term" has the meaning set forth in Section 6.1 of this MSA. "Taxes" has the meaning set forth in Section 5.3 of this MSA.
"Technology" means application programming interfaces, software development kits, software (including object and source code), applications, technical integrations, payment processing platforms, blockchain technology and any derivative technology thereof or technology necessary to use or access blockchain technology, equipment, information technology infrastructure, systems, other technology, and any updates or modifications to, and documentation (e.g., instructional materials) related to, any of the foregoing.
"Usage Information" means any data that is based on, generated or created from, or information about, the use of the Services by Republic or its Affiliates or Users (e.g., the number of transactions or the amounts of transactions).
"Users" means any user who has taken an action to use (e.g., initiated the signup process), or who is using, any Services made available pursuant to the SLA for the Republic ATMs.
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EXHIBIT B
DATA SECURITY PROGRAM
Company will maintain a comprehensive written information security program that includes technical, physical, and administrative/organizational safeguards designed to (i) ensure the security and confidentiality of Republic Data and Personal Data, (ii) protect against any anticipated threats or hazards to the security and integrity of Republic Data and of Personal Data, (iii) protect against any actual or suspected unauthorized processing, loss, or acquisition of any Republic Data and any Personal Data, and (iv) ensure the proper disposal of Republic Data and Personal Data. Company will ensure that such program satisfies all of the requirements set forth in this Exhibit B and that Company complies with all such requirements, as well as any other written information security policies, procedures, and guidelines that are applicable to the Services. As used in this Exhibit B, the terms "systems", "information systems", and the like, include all information technology systems and all other Technology. Capitalized terms used but not defined in this Exhibit B will have the meanings set forth in the MSA.
1. Network Segmentation. Company's systems that host Republic Data or Personal Data will be segmented from the Internet by actively managed network access controls that will restrict traffic to the minimum required for proper operation of those systems. Company's systems will also segment the Republic Data and Personal Data from other data, either via separate systems or logical segmentation.
2. Data Storage. Company will store all Republic Data and Personal Data in a manner that enables Company to comply with its obligations under the SLA, including its obligations that require it to be able to identify Republic Data or Personal Data such as those regarding Data Breach Incident notifications and data destruction.
3. Personnel Screening. Company must limit access to Republic Data and Personal Data by Company's employees and Service Providers based on their respective job function and on a need-to know basis. Company will cause all of Company's employees with access to Republic Data and Personal Data to undergo, at a minimum, background screening for criminal history and, in the case of financial related support services, financial risk, unless otherwise restricted by Applicable Law. A Company employee's or a Service Provider's access to Republic's or its Affiliates' respective systems must be revoked at the time that such employee or Service Provider no longer needs access to such systems to facilitate Company's provision of the Services.
4. User Authentication. Company will use multiple factor authentication protocols/methods to access Republic Data or Personal Data. All passwords used by Company in connection with Republic Data and Personal Data must meet or exceed Republic's length, complexity, and age requirements. Company will not use, and will prohibit the use of, shared credentials, with respect to accessing Republic's or its Affiliates' respective systems, or Republic Data or Personal Data residing on other systems.
5. Logging and Monitoring. Company must ensure that it has a process to monitor its systems and networks. This must include monitoring of the environment for external threat actors and internal abuse by Representatives. The process must include steps to follow-up on suspicious activity and investigate potential security breaches. With respect to the SLA, during the SLA Term and for ninety (90) days thereafter, Company must ensure that relevant log data is available for analysis by Republic should the need for such information arise as part of Republic's own incident response process.
6. Vulnerability Management and Application Security. Company will (i) operate systems to discover vulnerabilities on systems that protect Republic Data and Personal Data or connectivity and will remediate these vulnerabilities within a reasonable timeframe not to exceed ninety (90) days from discovery, and (ii) conduct regular security assessments of any code that Company owns or controls, and will remediate any vulnerabilities found during these assessments within a reasonable timeframe not to exceed ninety (90) days from discovery.
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7. Encryption.
7.1 Encryption in Transit. Company will ensure that all access to Republic Data and Personal Data is protected by Transport Layer Security, IPSec, or equivalent protocols. Company will only use encryption algorithms and protocols that comply with industry best practices and that are approved in the then-current version of the National Institute of Standards and Technology Special Publication 800-52. An alternative algorithm or protocol may only be used upon Republic's prior written consent.
7.2 Encryption at Rest. All Republic Data and Personal Data at rest in persistent storage (such as spinning disk, SSD, and flash drive or other removable media) must be encrypted. The granularity of encryption will be commensurate with the use case and risks of this data (for example, on a single-user system, whole-disk encryption will meet the requirement, but on a multi-tenant system with registered data, field-level encryption is required).
8. PCI Compliance. If Company stores, accesses, or processes any Payment Card information in connection with the Services, Company represents and warrants that it will, and each of the Service Providers will, (i) at all times comply with and will have a program to assure its continued compliance with the Payment Card Industry Data Security Standards ("PCI DSS") published by the PCI Security Standards Council, as the PCI DSS may be amended, supplemented, or replaced from time to time; (ii) report in writing to Republic, at least annually, proof of such compliance with the PCI DSS, as determined by a Qualified Security Assessor (QSA); and (iii) promptly report in writing to Republic upon becoming aware of Company's or a Service Provider's non-compliance or likely non-compliance with PCI DSS for any reason.
9. Cooperation with Republic Security Investigations. Company agrees to fully cooperate with Republic in security investigations, except to the extent prohibited by Applicable Law. Company will provide any and all logs surrounding the systems that are under investigation using the following requirements:
| • | Logging of the systems and network should include details about the access and actions of the users, errors, events, etc. across all its information systems. | |
| • | These logs must be protected and not removed or modified by unauthorized Entities. | |
| • | Ninety (90) days of relevant log data must be readily available - with historic data securely warehoused separately - for analysis by Republic should the need for such information arise. | |
| • | All systems administrator logs and user logs should be registered, regardless of the privileges any system administrator or user has. | |
| • | All systems should be configured with the same time and date; Network Time Protocol (NTP) for clock synchronization is required. |
Except when prohibited by Applicable Law, upon Company having knowledge that a Company employee or other Representative of Company has violated any of the data use or data security obligations or restrictions in the SLA or has caused Company to violate any agreement between Company and Republic, Company will provide Republic information regarding such violation.
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10. Security Reports and Assessments.
10.1 Security Report.
Within one hundred eighty (180) days of the effective date of the SLA; and within ten (10) days of each anniversary thereof (or as may otherwise be reasonably requested by Republic), Company will deliver to Republic a report prepared (no more than one (1) year prior to such date) by an audit firm and such report must describe Company's systems and security controls implemented and used at the locations involved in Company's provision of the Services governed by the SLA (such report, the "Security Report"). The third-party auditor must be a widely-used and reputable auditor in the financial services industry in the applicable jurisdiction and with respect to the United States must be a national major auditing firm. The Security Report must be a SOC 2 Type II report that has been prepared in accordance with the American Institute of Certified Public Accountants' Trust Service Principles/Criteria (including security, availability, processing integrity, confidentiality, and privacy). Where a SOC 2 Type II report cannot be procured or where it is not a common report in the applicable jurisdiction, Company may provide a mutually agreed upon widely accepted equivalent (e.g., a SOC2 Type I report during an initial period). Company will use its best commercially reasonable efforts to cause each Service Provider to also provide Republic a Security Report in accordance with the foregoing requirements.
10.2 Security Assessment.
If Company or a Service Provider fails to comply with the Security Report obligations set forth above in Section 10.1 (Security Report), then, at any time, Republic will have a right to perform a security assessment (as set forth in this Section 10.2) on Company or such Service Provider. During any period of time in which Republic has the right to perform a security assessment on Company or a Service Provider, upon five (5) days' advanced written notice (except in emergency situations, where as much notice as reasonably practicable will be given), Company will permit, or will cause the Service Provider to permit, Republic or its designated Representative to review and access Company's or the Service Provider's (as applicable) books, records, third-party audit and examination reports, systems, facilities, controls, processes, procedures, and information regarding: (i) the use, processing, storage, treatment, and security of data, including Republic Data and Personal Data; (ii) the management of employees and Service Providers, including with respect to the foregoing obligations in Section 3 (Personnel Screening); and (iii) in the event of a Data Breach Incident (as defined in Section 12 (Data Breach) below), to locate the source and scope of the breach and provide Republic with any material information related to Republic, its Affiliates, Users, Republic Data, or Personal Data, with respect to such Data Breach Incident (any such review and access, a "Security Assessment"). Any such Security Assessment will be conducted during normal business hours and in a manner designed to cause minimal disruption to Company's or the Service Provider's (as applicable) ordinary business activities. For purposes of this provision, an emergency situation will include any situation posing imminent risk of harm or damage (as determined by Republic) to Republic's or its Affiliates' respective systems or data, including the systems underlying Republic ATMs, Republic Data, or Personal Data, or any situation that could expose Republic or its Affiliates to legal, financial, or business liability, or cause Republic or its Affiliates to violate any Applicable Law.
10.3 Correction of Non-Compliance.
If a Security Assessment or Security Report reveals any non-compliance by Company or a Service Provider of its obligations under or in connection with the SLA, Company will promptly remedy, or cause the Service Provider to promptly remedy, such non-compliance at its sole expense, and Republic or its designated Representative may perform, upon Republic's notice to Company, at any time, subsequent Security Assessments to verify the sufficiency of such remedial efforts and ongoing compliance with such obligations. Company will be responsible for, and promptly reimburse Republic for, the cost of any Security Assessment that reveals non-compliance by Company or any Service Provider.
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11. Incident Response. Company must ensure an incident response ("IR") program is in place following industry best practices. The process should include steps to follow-up on suspicious activity and investigate potential or actual security breaches in line with the following:
| • | Detection. An initial assessment and triage of any suspicious activity or other suspected incident must be conducted within twelve (12) hours of detection. An initial incident report - quantifying and categorizing the incident - must be drafted for information technology personnel or information security officers and shared with Republic no more than seventy-two (72) hours after detection for analysis. | |
| • | Analysis (active IR required). A complete assessment and triage of the incident, including containment, eradication, evidence preservation, and initial recovery must be conducted. | |
| • | Recovery (no active IR required). The final collection of evidence, analysis and forensic investigation, including remediation and full recovery, must be conducted. A full incident report must be shared with Republic within twenty-four (24) hours of the termination of this phase. | |
| • | Post-incident (actions). Once the incident is adequately handled, the IR team must issue a 'post mortem' report detailing the cause and cost of the incident and the steps the organization should take to prevent future incidents. |
12. Data Breach. If Company becomes aware of any unauthorized access to or misuse of Republic Data or Personal Data or Company's or a Service Provider's Technology that stores or has access to Republic Data or Personal Data (a "Data Breach Incident"), Company will: (i) immediately notify Republic of such Data Breach Incident (which, in any case, may not occur more than seventy two (72) hours after becoming aware that such Data Breach Incident may have occurred), and (ii) will work with Republic's security staff to contain, mitigate, and resolve the Data Breach Incident in accordance with the IR protocols set forth in this Exhibit. Such notice will describe when and where the Data Breach Incident occurred, the effect on Republic, its Affiliates, the Users, Republic Data, and Personal Data, and Company's planned corrective action in response to the Data Breach Incident.
13. Destruction of Data. With respect to the SLA, Company will destroy Republic Data and Personal Data within its possession or control upon the later of the time that (i) that such Republic Data or Personal Data (as applicable) is no longer required for Company to perform its obligations under the SLA (including any obligations that survive expiration or termination of the SLA), or (ii) Company no longer needs to retain such Republic Data or Personal Data (as applicable) to comply with Applicable Law. For clarity, in the case of (i) or (ii), Company will only retain the minimum amount of Republic Data or Personal Data (as applicable) required for Company to perform its obligations or comply with Applicable Law (as applicable) and for only so long as required. Company will, (a) destroy such data, and any derivative works thereof, within a reasonable period not to exceed ninety (90) days from such time set forth in the foregoing (i) or (ii), (b) use industry best practices to ensure that the data cannot be recovered, and (c) certify in writing to Republic that it has met the foregoing obligations. Upon Republic's request, Company will destroy all Republic Data or Personal Data specified by Republic, including as required for Republic to comply with Applicable Law (e.g., Republic's requirement under Applicable Law to delete Personal Data in response to a User's request). Company will cause the Service Providers to comply with the foregoing data deletion requirements with respect to any Republic Data or Personal Data within their possession or control.
14. Service Providers. Company will use reasonable best efforts to cause all Service Providers to comply with (i) all data use, disclosure, and retention rights and restrictions, and data security obligations, that apply to Company under the SLA, and (ii) comply with the obligations set forth in this Exhibit B as if each such Service Provider was Company hereunder, including with respect to, each such Service Provider's personnel, systems, and networks, and the Republic Data and Personal Data it possesses, controls, or can otherwise access in connection with the SLA.
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EXHIBIT C
FORM OF SERVICE LEVEL AGREEMENT
Attached
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Exhibit 10.49
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
SERVICE LEVEL AGREEMENT
This Service Level Agreement, dated as of July 1st, 2022 (the "Effective Date"), by and among Athena Bitcoin Inc., a corporation organized and existing under the laws of Delaware, USA, Athena Bitcoin Global, a corporation organized and existing under the laws of Nevada, USA, Athena Bitcoin Holdings of El Salvador, S.A. de C.V., a Salvadorian corporation (Athena Bitcoin Inc., Athena Bitcoin Global, and Athena Bitcoin Holdings of El Salvador S.A. de C.V., are collectively referred to as "Athena") and Chivo, Sociedad An6nima de Capital Variable, a Salvadorian corporation ("Chivo") (the "SLA"), defines the service levels that Athena will provide Chivo in respect of the maintenance and support of the Core ATM Services (as defined below). For the avoidance of doubt, Athena will provide such maintenance and support services only to Chivo, and Chivo will be solely responsible for all support interactions with End Users. Capitalized terms not otherwise defined in this SLA will have the meanings ascribed to them in the Master Services Agreement, dated as of July 1st, 2022, by and between Athena and the Republica de El Salvador (the "MSA").
Unless otherwise provided in the MSA, this Service Level Agreement sets forth Chivo's sole and exclusive remedies, and Athena's sole and exclusive obligations, for any unavailability, non performance, or other failure by Athena to provide the Core ATM Services.
| 1. | Definitions. |
Capitalized terms not otherwise defined herein shall have the meanings ascribed to such term in this Section 1.
"Core ATM Services" means the services provided by Athena that enables Users to use the Republic ATMs to deposit, sell, buy, and withdraw the Bitcoin cryptocurrency, as further detailed in Annex A attached hereto. The Core ATM Services shall include ATM operations in the United States and in the Republic of El Salvador, customer service, maintenance services, and meetings with Chivo, and any other related services communicated by Chivo to Athena.
"Incident" means any reproducible problem, failure or other error in any currently-supported Republic ATMs that causes (i) any failure of the Republic ATMs to operate in conformance with the Chivo's specifications or (ii) any failure of the Republic ATMs which causes data loss, data corruption, abnormal termination, lockup or hang. Incidents do not include any issues caused by any failure in Chivo's software or systems.
"Incident Tracking System" means an application provided via a web application to Chivo by Athena for the purpose of reporting, discussing, and tracking Incidents and Incident resolutions. The Incident Tracking System will provide Chivo with access to an online dashboard for monitoring service availability.
"Maintenance Downtime" means the period for which the Republic ATMs will be unavailable for maintenance every six (6) months or when Athena support team detect a malfunction. Chivo will be notified at least forty-two (48) hours in advance of any Maintenance Downtime expected to last more than one (1) hour (except for emergency maintenance, in which case Athena will provide Chivo with advance notice to the extent reasonably possible).
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
"Order" means any transaction undertaken on the Republic ATMs, including the deposit, buy, sell, and withdrawal of Bitcoin cryptocurrency.
"Order Success Rate" means the percentage result of (total Orders - invalid Orders) / total Orders.
"Permanent Fix" means the full resolution of an Incident. It is measured from the time the status of the Incident support ticket is marked "In Progress" by the Athena support team until the time that Athena has resolved the Incident and communicated "the resolution to Chivo (including by marking it as "Resolved" in the Incident Tracking System).
"Response Time" is the time it takes to acknowledge an Incident in a non-automated way. It is measured from the time a support ticket is created until the time that Chivo is advised their problem has been received via email and the Incident marked "In Progress" in the Incident Tracking System.
"Temporary Fix" means the commercially reasonable efforts Athena will use following the initial response to resolve or provide a workaround to each Incident within the applicable windows set forth below, taking into account the complexity of the Incident and the impact of the Incident on Chivo.
| 2. | Availability; Service Credits for System Outages. |
| 2.1 | Core ATM Services. |
2.1.1 Except as provided below, Athena will make the Core ATM Services available 99% of the time ("Availability"), excluding approved Maintenance Downtime.
2.1.2 If requested by Chivo, Athena will provide assistance to Users contacting Chivo service via in writing with issues or problems related to the Republic ATMs guaranteeing that all Services will be performed in a workmanlike manner and, in any event, no less than with that degree of skill and care that Athena uses when performing the same or similar services to its other customers (e.g., at least the same degree of accuracy, quality, completeness, timeliness, and responsiveness).
| 2.2 | Order Success Rate. Athena will achieve an Order Success Rate of [***]% per month. |
2.3 Exclusions. The following shall be excluded from the calculations of Availability and Order Success Rate as set forth in Section 2.2: (i) temporary interruptions of the Core ATM Services or the Republic ATMs due to Maintenance Downtime, provided that Athena shall make best efforts to provide Chivo with notice two (2) days prior to such Maintenance Downtime; (ii) factors outside Athena's reasonable control, including, but not limited to, natural disaster, war, acts of terrorism, riots, government action, or a network or device failure external to Athena's data centers; [***]
2.4 Data. Athena will secure and protect the Core ATM Services from misuse and unauthorized access and implement security, data management, and incident response protocols in accordance with industry best practices and comply with the terms of Exhibit B of the MSA. Notwithstanding anything to the contrary in Exhibit B of the MSA [***].
| 3. | Term, Termination, and Remedies. |
3.1 Term. This SLA shall become effective as of the Effective Date, and, unless otherwise terminated pursuant to the terms of this SLA, continues through July 30, 2024
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
| 3.2 | Termination. |
3.2.1 Chivo shall have the right to terminate the SLA upon thirty (30) days' notice to Athena, provided Chivo provides Athena written notice within (30) days after the "Termination Event" below has occurred and provided that such termination shall become effective on a date specified by Chivo [***]
3.2.2 As used herein, a "Termination Event" shall mean (a) six (6) consecutive Failed Months; (b) a complete network failure of the Republic ATM due to situations under Athena responsibility; or (c) three (3) not consecutive written notices of miss delivery of order success rate.
3.3 Remedies. Chivo and Athena agree that upon the occurrence of a Failed Month or Termination Event, Chivo's exclusive remedy shall be to choose among one of the following: terminate the SLA as contemplated in Section 3.2.
| 4. | Incident Response Time. |
4.1 Incident Identification and Reporting. If Chivo believes an Incident exists, Chivo will conduct the initial analysis and troubleshooting of each Incident and use commercially reasonable efforts to resolve the Incident before escalating to Athena.
[***]
4.2 Incident Resolution. Following Athena's acknowledgement to Chivo of the Incident, Athena and Chivo will cooperate to enable Athena to reproduce or see sufficient evidence of the Incident in order to confirm that such Incident is being caused by the Republic ATMs. Upon Athena confirming the reported behavior, Athena will assign a severity level in accordance with the below table. If after assignment of a severity level [***]
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties have executed this SLA through their duly authorized officers as of the Effective Date.
| Chivo Sociedad Anonima de Capital Variable | |
| By: /s/ Raymond I. Villalta | |
| Name: Raymond I. Villalta | |
| Title: CEO/ Representante Legal | |
| Athena Bitcoin Inc. | |
| By: /s/ Matias Goldenhorn | |
| Name: Matias Goldenhorn | |
| Title: CEO | |
| Athena Bitcoin Global | |
| By: /s/ Matias Goldenhorn | |
| Name: Matias Goldenhorn | |
| Title: CEO | |
| Athena Bitcoin El Salvador, S.A. de C.V | |
| By: /s/ Carlos Rivas | |
| Name: CARLOS RIVAS | |
| Title: LEGAL REPRESENTATIVE |
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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[***]”. SUCH IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
Annex A
[***]
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Exhibit 10.70
ACKNOWLEDGMENT OF PAYMENT, SATISFACTION AND PARTIAL TERMINATION
This ACKNOWLEDGMENT OF PAYMENT, SATISFACTION AND PARTIAL TERMINATION (this “Acknowledgement”) is made as of March 29, 2024 (the “Effective Date”) by and between KGPLA HOLDINGS LLC (the “Lender”) and ATHENA BITCOIN GLOBAL (the “Borrower”, and together with the Lender, each a “Party” and, collectively, the “Parties”), in connection with that certain Senior Secured Loan Agreement dated as of May 15, 2023, by and among, on the one hand, the Borrower, ATHENA BITCOIN, INC., ATHENA HOLDINGS EL SALVADOR SA DE CV and, on the other hand, the Lender, its successors and/or assigns (the “Loan Agreement”). Capitalized terms used but not otherwise defined herein have the meanings set forth in the Loan Agreement.
Pursuant to Section 2.05 of the Loan Agreement, the Borrower has the right to prepay the term loan and Revolving Credit Loans advanced to the Borrower by the Lender under Article II of the Loan Agreement (the “Term and Revolving Loans”), in whole or in part, at any time without penalty.
The Lender acknowledges that, as of March 28, 2024, the Borrower has repaid in full and satisfied all of its Obligations under the Loan Agreement in respect of the Term and Revolving Loans, including repayment of principal, accrued interest and fees outstanding and due to the Lender in respect of the Term and Revolving Loans, including under that certain Term Loan Note dated May 15, 2023 in the original amount of US$65,000.00 made by the Borrower in favor of the Lender and that certain Senior Secured Revolving Credit Promissory Note in the original amount of US$4,000,000.00 made by the Borrower in favor of the Lender (collectively, the “Payoff”).
For clarity, the Payoff relates only to the Term and Revolving Loans, and not to that certain Amended and Restated Secured Convertible Debenture dated May 15, 2023 in the original principal amount of US$3,000,000.00 in favor of the Lender (the “Debenture”) as contemplated under the Loan Agreement.
As a result of the Payoff, and pursuant to the terms of the Loan Agreement, the obligations and rights of the Parties under the Loan Agreement in respect of the Term and Revolving Loans as of the Effective Date are terminated, and neither of the Parties shall have any further obligation or commitment to the other Party in respect thereof, other than any such obligation or commitment which expressly or by its nature shall survive the Payoff. For clarity, the Lender shall have no further obligation to make any Revolving Credit Loans to the Borrower.
Notwithstanding anything to the contrary in this Acknowledgment, nothing herein will be construed as a termination of the Loan Agreement, the terms of which shall remain in full force in effect other than as modified by this Acknowledgment, which shall remain in full force and effect by its terms, together with the Security Documents, until such time that the Borrower pays and satisfies fully the Debenture. As such the Parties acknowledge and agree that the Debenture and the Securities Documents, and the liens granted and recorded thereunder, will remain in full force and effect until repayment in full and satisfaction of all obligations to the Lender in respect of the Debenture.
This Acknowledgment may be executed in one or more counterparts and through electronic means, each of which together will constitute one in the same document, and may be delivered electronically. This Acknowledgment is governed by and must be construed in accordance with the laws of the State of Florida, regardless of conflicts of law principles. Any dispute arising out of or related to this Acknowledgment shall be exclusively resolved in accordance with Sections 8.09 and 8.10 of the Loan Agreement.
[Signature Page Follows]
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[Signature Page to Acknowledgment of Payment, Satisfaction and Partial Termination]
IN WITNESS WHEREOF, the Parties have caused this Acknowledgment to be executed and delivered as of the Effective Date:
| LENDER: | |
KGPLA HOLDINGS LLC | |
| By: /s/ Jason Lu | |
| Name: Jason Lu | |
| Title: Manager | |
| BORROWER: | |
| ATHENA BITCOIN GLOBAL | |
| By: /s/ Matias Goldenhorn | |
| Name: Matias Goldenhorn | |
| Title: CEO | |
| 2 |
Exhibit 10.71
INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into as of May 27 , 2024 (the “ Effective Date ”) by and between, on the one hand, Athena Bitcoin Global, a Nevada corporation (“ Athena Bitcoin ”), jointly and severally with its wholly - owned subsidiary, Athena Bitcoin, Inc . , a Delaware corporation (“ Athena ”) (collectively, the “ Company ”), and the undersigned individual (“ Indemnitee ”) . The Company and Indemnitee are sometimes hereinafter referred to individually as a “ Party ” and, collectively, as the “ Parties ” . RECITALS WHEREAS, highly competent persons have become more reluctant to serve companies as managers, officers and/or directors, or in other capacities, unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the company . WHEREAS, the boards of directors of both of Athena Bitcoin and Athena (collectively, the “ Board ”) have determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities . Although the furnishing of such insurance has been a customary and widespread practice among U . S . - based companies and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions . At the same time, managers, directors, officers, and other persons in service to companies or business enterprises are being increasingly subjected to expensive and time - consuming litigation relating to, among other things, matters that traditionally would have been brought only against the Company or business enterprise itself . The operative governing documents and agreements of both Athena Bitcoin and Athena (collectively, the “ Governance Documents ”) expressly provide that the indemnification provisions set forth therein are not exclusive, and thereby contemplate that contracts may be entered into between the Company and members of the Board, officers and other persons with respect to indemnification . WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons . WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company's shareholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future . WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified . WHEREAS, this Agreement is a supplement to and in furtherance of the Governance Documents and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder . WHEREAS, Indemnitee does not regard the protection available under the Governance Documents and insurance as adequate in the present circumstances and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee to serve in such capacity . Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified . NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a manager, officer and/or director from and after the Effective Date, the Parties agree as follows : Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4 1 9528182 - 3
2 9528182 - 3 1. Indemnity of Indemnitee . The Company (jointly and several, as Athena Bitcoin and Athena, for all purposes of this Agreement and under applicable law) hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time . In furtherance of the foregoing indemnification, and without limiting the generality thereof . (a) Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company . Pursuant to this Section 1 (a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee, or on Indemnitee’s behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful . (b) Indemnitee shall b e entitled to the rights of indemnification provided in this Section 1 (b) if, by reason of Indemnitee’s Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company . Pursuant to this Section 1 (b) , Indemnitee shall b e indemnified against all Ex p en s e s actually and reasonably incurred by the Indemnitee, or o n the Indemnitee’s behalf, in connection with s u ch Proceeding if the Indemnitee acted in g ood faith and in a manner the Indemnitee reasonably believed to b e in or not o p posed to the best interests of the Company ; provided , ho w eve r , if applicable law so provides, no indemnification against su c h Ex p en s es shall be made in respect of a n y claim, issue or matter in such Proc e ed i ng as to which Indemnitee shall ha v e been adjudged to be liable to the Company unless a nd to the extent that the Court of Chancery of the State of Delaware shall determine that su c h indemnification may be made . (c) Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith . If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter . For purposes of this Section 1 (c) and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter . (d) If (i) Indemnitee is or was affiliated with one or more venture capital, family office or other funds that has invested in the Company (an “ Appointing Member ”), and (ii) the Appointing Member is, or is threatened to be made, a party to or a participant in any Proceeding relating to or arising by reason of Appointing Member's position as a direct or indirect economic interest holder of, or lender to, the Company, or Appointing Member's appointment of or affiliation with Indemnitee or any other director, including, without limitation, any alleged misappropriation of a Company asset or corporate opportunity, any claim of misappropriation or infringement of intellectual property relating to the Company, any alleged false or misleading statement or omission made by the Company (or on its behalf) or its employees or agents, or any allegation of inappropriate control or influence over the Company or its Board members, officers, equity holders or debt holders, then the Appointing Member will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee, and the terms of this Agreement as they relate to procedures for indemnification of Indemnitee and advancement of Expenses shall apply to any such indemnification of Appointing Member . 2. Additional Indemnity . In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 , the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
3 9528182 - 3 the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee . The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 ) to be unlawful . 3. Contribution . (a) Whether or not the indemnification provided in Sections 1 and 2 is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee . The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee . (b) Without diminishing or impairing the obligations of the Company set forth in Section 3 (a) , if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such action, suit or proceeding arose ; provided , however , that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered . The relative fault of the Company and all managers, officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive . (c) The Company hereby agrees to indemnify and hold Indemnitee fully harmless from any claims of contribution which may be brought by managers, officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee . (d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect : (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding ; and/or (ii) the relative fault of the Company (and its managers, directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s) . 4. Indemnification for Expenses of a Witness . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
4 9528182 - 3 indemnified against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. 5. Advancement of Expenses . Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty ( 30 ) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding . Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses . Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free . 6. Procedures and Presumptions for Determination of Entitlement to Indemnification . It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under applicable law and public policy of the State of Delaware . Accordingly, the Parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement : (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Chief Ececutive Officer of the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification . The Chief Executive Officer of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification, or if it is the CEO seeking indemnification hereunder, then advise the Board in writing directly . Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company . (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6 (a), a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four ( 4 ) methods, which shall be at the election of the Board : ( 1 ) by a majority vote of the disinterested directors, even though less than a quorum ; ( 2 ) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum ; ( 3 ) if there are no disinterested directors or if the disinterested directors so direct, by independent legal counsel in a written opinion to the Board, a copy of which shall be delivered to the Indemnitee ; or ( 4 ) if so directed by the Board, by the members of the Company . For purposes hereof, disinterested directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee . (c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6 (b), the Independent Counsel shall be selected as provided in this Section 6 (c) . The Independent Counsel shall be selected by the Board . Indemnitee may, within ten ( 10 ) days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection ; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of Independent Counsel as defined in Section 13 , and the objection shall set forth with particularity the factual basis of such assertion . Absent a proper and timely objection, the person so selected shall act as Independent Counsel . If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit . If, within twenty ( 20 ) days after submission by Indemnitee of a written request for indemnification pursuant to Section 6 (a), no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, 5 9528182 - 3 objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6 (b) . The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6 (b) , and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6 (c) , regardless of the manner in which such Independent Counsel was selected or appointed . (d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement . Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence . Neither the failure of the Company (including by its directors or independent legal counsel) to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including by its directors or independent legal counsel) that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct . (e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise . In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement . Whether or not the foregoing provisions of this Section 6 (e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company . Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence . (f) If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty ( 60 ) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law ; provided , however , that such 60 - day period may be extended for a reasonable time, not to exceed an additional thirty ( 30 ) days, if the person, persons or entity making such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto ; and provided , further , that the foregoing provisions of this Section 6 (g) shall not apply if the determination of entitlement to indemnification is to be made by the members of the Company pursuant to Section 6 (b) and if (A) within fifteen ( 15 ) days after receipt by the Company of the request for such determination, the Board or the Disinterested Directors, if appropriate, resolve to submit such determination to the members of the Company for their consideration at an annual meeting thereof to be held within seventy - five ( 75 ) days after such receipt and such determination is made thereat, or (B) a special meeting of the members of the Company is called within fifteen ( 15 ) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty ( 60 ) days after having been so called and such determination is made thereat . (g) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination . Any Independent Counsel, director or member of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement . Any costs or Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
6 9528182 - 3 persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom . (h) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty . In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding . Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence . (i) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful . 7. Remedies of Indemnitee . (a) In the event that (i) a determination is made pursuant to Section 6 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 , (iii) no determination of entitlement to indemnification is made pursuant to Section 6 (b) within ninety ( 90 ) days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten ( 10 ) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten ( 10 ) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 , Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification . Indemnitee shall commence such proceeding seeking an adjudication within one hundred and eighty ( 180 ) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7 (a) . The Company shall not oppose Indemnitee’s right to seek any such adjudication . (b) In the event that a determination shall have been made pursuant to Section 6 (b) that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6 (b) . (c) If a determination shall have been made pursuant to Section 6 (b) that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7 , absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law . (d) In the event that Indemnitee, pursuant to this Section 7 , seeks a judicial adjudication of Indemnitee’s rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on Indemnitee’s behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 ) actually and reasonably incurred by Indemnitee in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery . (e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
7 9528182 - 3 enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement . The Company shall indemnify Indemnitee against any and all Expenses and, if requested by Indemnitee, shall (within ten ( 10 ) days after receipt by the Company of a written request therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be . (f) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding . 8. Non - Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation . (a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Governance Documents, any other agreement, an approval of the members of the Company, a resolution of the Board, or otherwise . No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal . To the extent that a change in the applicable law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under applicable law, the Governance Documents and this Agreement, it is the intent of the Parties that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change . No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise . The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy . (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or fiduciaries of the Company or of any other company, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies . If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has directors' and officers' liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies . The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies . (c) The Company hereby agrees : (i) that it is the indemnitor of first resort ( i . e . , its obligations to Indemnitee are primary) ; and (ii) that it shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all Expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Governance Documents (or any other agreement between the Company and Indemnitee) . (d) Except as provided in Section 8 (c), in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights . (e) Except as provided in Section 8 (c) , the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise . Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
8 9528182 - 3 (f) Except as provided in Section 8 (c) , the Company's obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company as a manager, director, officer, employee or agent of any other company, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from such other company, partnership, joint venture, trust, employee benefit plan or other enterprise . 9. Exception to Right of Indemnification . Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee : (a) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision, provided, that the foregoing shall not affect the rights of Indemnitee as set forth in Section 8 (c) ; or (b) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16 (b) of the Securities Exchange Act of 1934 , as amended, or similar provisions of state statutory law or common law ; or (c) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation or (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law . 10. Duration of Agreement . All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is a manager, officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise), and shall continue for the applicable statute of limitations period(s) related to any claims brought after the term of service, even if claim has not yet been paid, and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 ) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement . This Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives . 11. Security . To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral . Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee . 12. Enforcement . (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company . (b) This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the Parties with respect to the subject matter hereof . Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
9 9528182 - 3 (c) The Company shall not seek from a court, or agree to, a "bar order" which would have the effect of prohibiting or limiting the Indemnitee's rights to receive advancement of expenses under this Agreement . 13. Definitions . For purposes of this Agreement: (a) “ Corporate Status ” describes the status of a person who is or was a manager, director, officer, employee, agent or fiduciary of the Company or of any other company, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company . (b) “ Disinterested Director ” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee . (c) “ Enterprise ” shall mean the Company and any other company, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary . (d) “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding . Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent . Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee . (e) “ Independent Counsel ” means a law firm, or a member of a law firm, that is experienced in matters of company law and neither presently is, nor in the past five ( 5 ) years has been, retained to represent : (i) the Company or Indemnitee in any matter material to either such Party (other than with respect to matters concerning Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder . Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement . The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto . (f) “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of Indemnitee’s Corporate Status, by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting in Indemnitee’s Corporate Status ; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement ; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 to enforce Indemnitee’s rights under this Agreement . 14. Severability . The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision . Further, the invalidity or unenforceability of any provision hereof as to either Indemnitee or Appointing Member shall in no way affect the validity or enforceability of any provision Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
10 9528182 - 3 hereof as to the other . Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws . In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict . 15. Modification and Waiver . No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the Parties . No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver . 16. Notice By Indemnitee . Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder . The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company . 17. Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given : (a) upon personal delivery to the Party to be notified ; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day ; (c) five ( 5 ) days after having been sent by registered or certified mail, return receipt requested, postage prepaid ; or (d) one ( 1 ) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt . All communications shall be sent : If to Indemnitee, at the address provided by Indemnitee in the Company’s records. If to the Company, at the address provided by the Company’s records, attention: Matias Goldenhorn, CEO; or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be. 18. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument . Counterparts may be delivered via facsimile, electronic mail (including . pdf or any electronic signature complying with the U . S . federal ESIGN Act of 2000 , e . g . , www . docusign . com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes . 19. Construction . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof . References to “sections” are references to sections of this Agreement unless otherwise specifically stated . 20. Governing Law and Consent to Jurisdiction . This Agreement and the legal relations among the Parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to any conflict of laws rules . The Company and Indemnitee hereby irrevocably and unconditionally : (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the federal and state courts in and for Miami - Dade County, Florida, located in Miami, Florida (the “ Florida Court ”), and not in any other state or federal court in the United States of America or any court in any other country; (ii) consent to submit to the exclusive jurisdiction of the Florida Court for purposes of any action or proceeding arising out of or in connection with this Agreement; (iv) waive any objection to the laying of venue of any such action or proceeding in the Florida Court; and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Florida Court has been brought in an improper or inconvenient forum. Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
11 9528182 - 3 [Signature Page Follows] Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4
[Signature page to Indemnification Agreement] IN WITNESS WHEREOF, the Parties have executed this Indemnification Agreement on and as of the Effective Date. COMPANY: Athena Bitcoin Global, a Nevada corporation By: Name: Matias Goldenhorn Title: CEO Athena Bitcoin, Inc., a Delaware corporation By: Name: Matias Goldenhorn Title: CEO INDEMNITEE: Name: Eyal Segal Docusign Envelope ID: DABDD80D - 87B0 - 40B0 - B0F9 - A0B9B781E6C4 12 9528182 - 3
Exhibit 10.72
OMNIBUS EQUIPMENT REFINANCING AGREEMENT THIS EQUIPMENT FINANCING AGREEMENT (this “ Agreement ”) is entered into as of September 19 th, 2024 (the “ Effective Date ”) by and between Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“ Seller ”), and Athena Bitcoin, Inc . a Delaware corporation (“ Purchaser ”) . Buyer and Seller are sometimes referred to herein as the Party or Parties . R E C I T A L S : WHEREAS, on November 2 , 2023 , Seller and Purchaser entered into that certain Equipment Financing Agreement whereby Seller agreed to sell and Purchaser agreed to purchase certain automated teller machines from Seller (collectively the “ Equipment ” and individual, each a “ Unit ”) (such agreement referred to herein as the “ November 2 Agreement ”) . WHEREAS, on December 31 , 2023 , Seller and Purchaser entered into that certain Equipment Financing Agreement whereby Seller agreed to sell and Purchaser agreed to purchase Equipment from Seller (such agreement referred to herein as the “ December 31 Agreement ”) . WHEREAS, on February 23 , 2024 , Seller and Purchaser entered into that certain Equipment Financing Agreement whereby Seller agreed to sell and Purchaser agreed to purchase certain Equipment from Seller (such agreement referred to herein as the “ February 23 Agreement ”) . The November 2 Agreement, December 31 Agreement and the February 23 Agreement are collectively referred to herein as the “ Equipment Finance Agreements ” . WHEREAS, as of the Effective Date Purchaser owes Seller : i) Five Hundred, Seventy - Two Thousand, Nine - Hundred Forty Five and 66 / 100 ( $ 572 , 945 . 66 ) Dollars pursuant to the November 2 Agreement ; ii) One Million, Three Hundred Sixty - Six Six Thousand, Six Hundred Sixty - Six Dollars and 68 / 100 ( $ 1 , 366 , 666 . 68 . ) Dollars pursuant to the December 31 Agreement ; and iii) One Hundred, Eighty Thousand and 00 / 100 ( $ 180 , 000 . 00 ) Dollars pursuant to February 23 Agreement . WHEREAS, the Parties agree and acknowledge that Purchaser owes Seller for the Equipment : Two Million, One Hundred, Nineteen Thousand, Six Hundred Twelve and 34 / 100 ( $ 2 , 119 , 612 . 34 ) Dollars (the “ Outstanding Balance ”) . WHEREAS, the Parties desire to refinance Seller’s payment obligations under the Equipment Finance Agreements all on the terms and conditions contained herein . AGREEMENT: NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree to the following payment terms : 1. Purchaser Payment Obligations . a. On the effective date, Purchaser shall pay to Seller One Million, One Hundred Fifty - Seven Thousand, Nine Hundred Thirty - Eight and 43 / 100 ( $ 1 , 157 , 938 . 43 ) Dollars via wire transfer to an account designated by Seller . b. Beginning on September 23 , 2024 , and each week thereafter, Purchaser shall pay to Seller Twenty - Thousand ( $ 20 , 000 . 00 ) Dollars per week, for a period of 48 weeks, with each payment being due on the Monday of each such week, until the Outstanding Balance is paid in full . Such weekly payments shall be made to Seller via wire transfer to an account designated by Seller . Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183 PFS:009730.0005.3377350.1
2 PFS:009730.0005.3377350.1 2. Equipment Location and Inspection . Purchaser represents and warrants that it is in possession and control of the Equipment and acknowledges receipt of same ; that it has had an opportunity to inspect the Equipment prior to the Closing and accepts and approves the conditions of such Equipment . It is further clarified for the November 2 Agreement and December 31 Agreement that the Equipment is as listed in Schedule A of this Agreement . 3. Representations and Warranties of Seller . Seller represents and warrants to Purchaser that the statements contained in this Section 3 are correct and complete as of the date hereof . a. Seller is a private company, duly organized, validly existing and in good standing under the laws of the State of Delaware . b. Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder . Without limiting the generality of the foregoing, the Members and Manager of Seller have duly authorized the execution, delivery, and performance of this Agreement by Seller . This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions . c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of the corporate charter of Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound . Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement . d. Seller has previously represented that it had good and marketable title to the Equipment and each Unit of the Equipment Finance Agreements, free and clear of any Liens or restriction on transfer . Except for the representations contained in this Agreement, Seller has sold to Purchaser the Equipment on an “As Is” basis. 4. Representations and Warranties of Purchaser . Purchaser represents and warrants to Seller that the statements contained in this Section 4 are correct and complete as of the date hereof . a. Purchaser is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware . b. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder . This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions . c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of the corporate charter of Purchaser or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
3 PFS:009730.0005.3377350.1 Purchaser is a party or by which it is bound . Purchaser need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the parties hereto to consummate the transactions contemplated by this Agreement . 4. Event of Default by Purchaser . The Purchaser shall, at Seller’s option, be in default under this Agreement upon the happening of any of the following events or conditions (each, an “ Event of Default ”) : (a) the failure by the Purchaser to perform any of its obligations under this Agreement ; (b) falsity or inaccuracy in any material respect or material breach by the Purchaser of any written warranty, representation or statement made or furnished to Seller by or on behalf of the Purchaser ; (c) the entry of any judgment against the Purchaser placing a lien against or the making of any levy, seizure or attachment of or on the Equipment that could (in Seller’s sole discretion) have a material adverse effect on the financial condition of the Purchaser or the ability of the Purchaser to perform its obligations ; or (d) any willful act of Purchaser which causes the failure of Seller to have a perfected first priority security interest in the Equipment ; or (e) evidence received by Seller that the Purchaser may have directly or indirectly been engaged in any type of illegal activity which, in Seller’s discretion, might result in the forfeiture of any property of the Purchaser to any governmental entity, federal, state or local, provided, that, upon the occurrence of any of the foregoing, such event or condition shall not be considered an Event of Default unless and until Seller provides notice to Purchaser of its occurrence, and such Event of Default is not cured by Purchaser within ten ( 10 ) days thereafter . 5. Remedies . Upon the occurrence of any such Event of Default and at any time thereafter, Seller may declare all of the payments owed for the Equipment secured hereby immediately due and payable, accrue annual interest at a default rate of fifteen ( 15 % ) percent of any outstanding balance and shall have, in addition to any remedies provided herein or by any applicable law or in equity, all the remedies of a secured party under the UCC . Seller’s remedies include, but are not limited to, the right to (a) peaceably by its own means or with judicial assistance enter the Purchaser’s premises, or wherever such Equipment may be and take possession of the Equipment without prior notice to the Purchaser or the opportunity for a hearing, and (b) require the Purchaser to assemble the Equipment and make it available to Seller at a place designated by Seller . Unless the Equipment is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Seller will give the Purchaser reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made . The requirements of commercially reasonable notice shall be met if such notice is sent to the Purchaser at least ten ( 10 ) days before the time of the intended sale or disposition . Expenses of retaking, holding, preparing for disposition, disposing or the like shall include Seller’s reasonable attorneys’ fees and legal expenses, incurred or expended by Seller to enforce any payment due it under this Agreement either as against the Purchaser, or in the prosecution or defense of any action, or concerning any matter growing out of or connection with the subject matter of this Agreement and the Equipment pledged hereunder . The Purchaser waives all relief from all appraisement or exemption laws now in force or hereafter enacted . Seller’s rights under this Section 5 shall lapse upon Purchaser’s full satisfaction of the Outstanding Balance 6. Indemnity . The Parties shall defend, indemnify and hold the other, its shareholders, directors, employees, agents and representatives harmless from and against any and all claims, demands, causes of actions, regulatory actions, damages, suits, costs of remediation or other costs and expenses arising out of, related to or resulting from any breach of any representation, warranty or covenant of either Party contained herein . 7. Assignment . This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns . No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party ; provided, however, that Purchaser may assign any or all of its rights and interests hereunder to one or more of its affiliates . Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
8. Amendments and Waivers . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties hereto . No waiver by any party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant . 9. No Waiver ; Cumulative Remedies . The failure of Seller to enforce any one or more of the terms or conditions of this Agreement will not be deemed a waiver of such terms or conditions or limit the right to enforce any term and condition . All rights and remedies provided are cumulative and are not exclusive of any rights or remedies provided by law . 10. Governing Law/Venue . This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida . Each of the parties hereto submits to the non - exclusive jurisdiction of any state or federal court sitting in Miami, Florida, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court . 11. Notice . All notices, requests, demands, claims, and other communications hereunder shall be in writing . Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) one ( 1 ) business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one ( 1 ) business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) three ( 3 ) business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below : If to Seller: Taproot Acquisition Enterprises, LLC P.O. Box 192135 Miami Beach, Florida 33193 Attention: Jordan Mirch Email: jmirch@williammgt.com If to Purchaser: Athena Bitcoin, Inc. c/o Matias Goldenhorn – CEO & President 1 SE 3 rd Avenue – Ste 2740 Miami, FL 33131 Email: matias@athenabitcoin.c om With a copy that shall not constitute notice, to: legal@athenabitcoin.com 12. Severability . If any provision of this Agreement or portion thereof should be declared invalid for any reason, the invalid provision or portion hereof shall be deemed omitted and the remaining terms shall nevertheless be carried into effect . 13. Counterparts . This Agreement may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy), each of which shall be deemed an original but all of which together shall constitute one and the same instrument . 4 PFS:009730.0005.3377350.1 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
5 PFS:009730.0005.3377350.1 14. Further Assurances . The parties hereto shall execute such further documents, and perform such further acts, as may be necessary to, in the event of a Closing, transfer and convey the Equipment to Buyer, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby . 15. Entire Agreement . This Agreement (including the documents and exhibits referred to herein) constitutes the entire agreement between the parties and supersedes any prior understandings, agreements, or representations by or between the parties, written or oral, to the extent they relate in any way to the subject matter hereof . 16. Taxes . All transfer, documentary, sales, use, stamp, registration and other such taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be born by the responsible party . 17. Ratification ; Conflict . Except as amended by this Agreement, the Equipment Purchase Agreements and the terms and provisions contained therein remain unmodified and in full force and effect and the parties ratify and confirm the terms of the Equipment Purchase Agreements, as amended by this Agreement . If there is any conflict between the terms and provisions of this Agreement and the terms and provisions of the each or all of the Equipment Purchase Agreement, the terms and provisions of this Agreement shall govern . 18. Costs and Attorney’s Fees . In the event either party brings an action to enforce the terms of this Agreement, the non - prevailing party in such action shall pay to the prevailing party the prevailing party’s costs and expenses, including reasonable attorneys’ fees, incurred in connection with such enforcement action . [SINGATURE PAGE TO FOLLOW] Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
IN WITNESS WHEREOF, the undersigned have executed this Equipment Purchase Agreement as of the date first above written. SELLER: Taproot Acquisition Enterprises, LLC By: Name: Jordan Mirch Title: Manager PURCHASER: Athena Bitcoin, Inc. By: Name: Matias Goldenhorn Title: CEO & President Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183 6 PFS:009730.0005.3377350.1
7 PFS:009730.0005.3377350.1 SCHEDULE A November 2 Agreement Serial TYKA002887 TYKA002227 TYKA000167 TYKA002927 TYKA002228 TYKA000172 TYKA002928 TYKA002229 TYKA000336 TYKA002933 TYKA002230 TYKA000887 TYKA002938 TYKA002235 TYKA000936 TYKA002941 TYKA002236 TYKA001149 TYKA003084 TYKA002238 TYKA001208 TYKA003141 TYKA002239 TYKA001210 TYKA003149 TYKA002254 TYKA001211 TYKA003151 TYKA002255 TYKA001572 TYKA003153 TYKA002259 TYKA001615 TYKA003154 TYKA002262 TYKA001616 TYKA003157 TYKA002272 TYKA001714 TYKA003158 TYKA002306 TYKA001735 TYKA003168 TYKA002309 TYKA001757 TYKA003485 TYKA002314 TYKA001801 TYKA003488 TYKA002317 TYKA001825 TYKA003544 TYKA002329 TYKA001829 TYKA003547 TYKA002331 TYKA001834 TYKA003552 TYKA002333 TYKA001838 TYKA003553 TYKA002337 TYKA001860 TYKA003555 TYKA002346 TYKA001866 TYKA003556 TYKA002356 TYKA001905 TYKA003557 TYKA002413 TYKA001940 TYKA003558 TYKA002451 TYKA001948 TYKA003568 TYKA002453 TYKA001956 TYKA003578 TYKA002544 TYKA001962 TYKA003601 TYKA002545 TYKA002039 TYKA003616 TYKA002546 TYKA002041 TYKA003684 TYKA002547 TYKA002046 TYKA003685 TYKA002554 TYKA002053 TYKA003686 TYKA002555 TYKA002062 TYKA003687 TYKA002691 TYKA002068 TYKA003689 TYKA002773 TYKA002069 TYKA003693 TYKA002776 TYKA002117 TYKA003701 TYKA002817 TYKA002145 TYKA003704 TYKA002821 TYKA002225 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
TYKV045922 TYKV073520 2 TYKV140463 PFS:009730.0005.3377350.1 TYKV057867 TYKV060282 TYKA003707 TYKV002853 TYKV097384 TYKA003712 TYKV073106 TYKV013137 TYKA003713 TYKV030088 TYKV075452 TYKA003716 TYKV070553 TYKV071657 TYKA003720 TYKV096694 TYKV046009 TYKA003722 TYKA004461 TYKV079316 TYKA003729 TYKV045139 TYKA004463 TYKA003730 TYKV140562 TYKV058833 TYKA003731 TYKV095176 TYKV031219 TYKA003735 TYKV057936 TYKV095866 TYKA003736 TYKV078902 TYKV034612 TYKA003737 TYKV079454 TYKV002758 TYKA003740 TYKV070346 TYKV032524 TYKA004045 TYKV062559 TYKV002870 TYKV032959 TYKV046618 TYKV094210 TYKV080765 TYKV033568 TYKV071243 TYKA004996 TYKV080144 TYKV073451 TYKV080489 TYKV062766 TYKV057729 TYKV140188 TYKV072692 TYKV070277 TYKA011102 TYKV002894 TYKV045226 TYKV140430 TYKV033220 TYKV061731 TYKV059523 TYKV140221 TYKV032785 TYKV080075 TYKV080558 TYKV061179 TYKV071795 TYKV140012 TYKV140045 TYKV002748 TYKV073934 TYKV034264 TYKV080627 TYKV071519 TYKV140507 TYKV044095 TYKV002768 TYKV078074 TYKV140353 TYKA011094 TYKA004464 TYKV080282 TYKV061317 TYKV140419 TYKV002831 TYKV044704 TYKV080006 TYKV013921 TYKV096349 TYKV076487 TYKV076625 TYKV140166 TYKV002737 TYKV079868 TYKV071105 TYKA004317 TYKV002845 TYKV064353 TYKV017746 TYKV080351 TYKV002834 TYKV062490 TYKV070829 TYKV064836 TYKV064215 TYKA004278 TYKV059109 TYKV032089 TYKV033655 TYKV064008 TYKA004293 TYKV063663 TYKV057660 TYKV060006 TYKA006252 TYKV077936 TYKV047749 TYKV046096 TYKV044617 TYKV059316 TYKV093934 TYKV047575 TYKV063870 TYKV094969 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
TYKV071381 TYKV063387 3 TYKV079661 PFS:009730.0005.3377350.1 TYKV078143 TYKV059868 TYKV044878 TYKV047314 TYKV058143 TYKA005047 TYKV094279 TYKV094900 TYKV058557 TYKV096763 TYKV061938 TYKV002734 TYKV070001 TYKV002735 TYKA004468 TYKV058005 TYKV071726 TYKV045400 TYKA004469 TYKV064629 TYKV071450 TYKV140254 TYKV045835 TYKV073796 TYKV140298 TYKV048184 TYKV093727 TYKV002844 TYKV073313 TYKV095728 TYKV140144 TYKA004481 TYKV002731 TYKV033046 TYKA005018 TYKV073658 TYKA011107 TYKV002836 TYKV002730 TYKV002762 TYKV002761 TYKV002746 TYKV096418 TYKV002745 TYKV080420 TYKV063318 TYKA005841 TYKV070208 TYKV002865 TYKV072830 TYKV078350 TYKV002757 TYKV033829 TYKV095521 TYKV059730 TYKV070760 TYKV062283 TYKV064284 TYKA011071 TYKV070967 TYKA011065 TYKV080696 TYKV071036 TYKV002841 TYKV002855 TYKV065181 TYKV063525 TYKV096211 TYKA004997 TYKV058419 TYKV062214 TYKV060213 TYKV058695 TYKA005003 TYKV140023 TYKV070139 TYKA004308 TYKV060351 TYKV062352 TYKV060075 TYKV078281 TYKA011075 TYKV002877 TYKA011073 TYKV031480 TYKV072968 TYKV078695 TYKV058350 TYKV094693 TYKV077867 TYKV047923 TYKV080213 TYKV002839 TYKV014166 TYKV070415 TYKV077660 TYKV074072 TYKV030175 TYKV081041 TYKV060627 TYKV140441 TYKV012745 TYKV061800 TYKV047836 TYKA006297 TYKV002764 TYKV002840 TYKV002881 TYKV047227 TYKV079247 TYKV078557 TYKV077591 TYKV080972 TYKV074693 TYKA011067 TYKV071588 TYKV002767 TYKV012941 TYKV002750 TYKV002724 TYKV002747 TYKV064422 TYKA004295 TYKV064077 TYKV075176 TYKV002907 TYKV079040 TYKV047662 TYKV080903 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
TYKV095107 TYKV002843 4 TYKV032176 PFS:009730.0005.3377350.1 TYKV096556 TYKV058074 TYKV078005 TYKV076970 TYKV097177 TYKV094072 TYKV002770 TYKV061593 TYKV072209 TYKV048097 TYKV030610 TYKV078971 TYKV095797 TYKV078764 TYKV140155 TYKV044791 TYKV046531 TYKV046270 TYKV059040 TYKV062145 TYKV059247 TYKV077453 TYKV071174 TYKV058488 TYKV031045 TYKA011081 TYKV044530 TYKV013627 TYKV081110 TYKV097039 TYKV002739 TYKV140551 TYKV140584 TYKV063111 TYKA006263 TYKV030697 TYKV002852 TYKV078833 TYKV060903 TYKV057798 TYKV002726 TYKV075245 TYKV077729 TYKV140089 TYKV140287 TYKV078626 TYKV002723 TYKA011070 TYKA004453 TYKV140177 TYKV060765 TYKV062973 TYKV079385 TYKV057591 TYKV094831 TYKV002751 TYKV061386 TYKV080834 TYKA006292 TYKV140540 TYKV063249 TYKV062697 TYKA004134 TYKV061455 TYKV072002 TYKA005837 TYKV002850 TYKV061869 TYKV044443 TYKV034090 TYKV140364 TYKV077798 TYKV061110 TYKA005007 TYKV044356 TYKV140243 TYKV002729 TYKV062628 TYKV046444 TYKV002744 TYKV096004 TYKV060420 TYKV014509 TYKV002835 TYKV030784 TYKV058764 TYKV014901 TYKV002766 TYKA006294 TYKV063456 TYKV002879 TYKV140375 TYKV076142 TYKV096832 TYKV013235 TYKV002727 TYKV014264 TYKV045052 TYKV079109 TYKV074555 TYKV048271 TYKV060834 TYKV002837 TYKV057453 TYKV140034 TYKA004456 TYKV059661 TYKV013284 TYKV140111 TYKA006278 TYKA004264 TYKV075935 TYKV095038 TYKV062076 TYKV063732 TYKV058902 TYKV093865 TYKV058971 TYKV140001 TYKV058281 TYKV033481 TYKV048010 TYKV075590 TYKV002878 TYKV064767 TYKV060972 TYKV140452 TYKA011058 TYKV002867 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
5 PFS:009730.0005.3377350.1 TYKV002736 TYKV070898 TYKV002868 TYKV002741 TYKA004465 TYKV062007 TYKV002849 TYKV002738 TYKV079730 TYKV002871 TYKV140265 TYKV047053 TYKV002919 TYKV073589 TYKV079178 TYKV030871 TYKV030001 TYKV070070 TYKA011089 TYKV053037 TYKV140199 TYKV044269 TYKV064560 TYKV002875 TYKV046183 TYKV046792 TYKV072761 TYKV059178 TYKV012990 TYKA004321 TYKV060489 TYKV057522 TYKV140309 TYKV062904 TYKV002728 TYKA006293 TYKV002842 TYKV071864 TYKV062835 TYKV078212 TYKV078419 TYKV047140 TYKV070484 TYKV079799 TYKA005042 TYKV072899 TYKA006289 TYKV140529 TYKV078488 TYKA006291 TYKV075107 TYKV097108 TYKV059937 TYKV045661 TYKV140056 TYKA004113 TYKV074279 TYKV140133 TYKA004296 TYKA011088 TYKV140474 TYKA005817 TYKV002732 December 31 Agreement Serial TYKA004390 TYKA004177 TYKA004091 TYKA004391 TYKA004179 TYKA004121 TYKA004427 TYKA004180 TYKA004145 TYKA004428 TYKA004183 TYKA004153 TYKA004431 TYKA004187 TYKA004155 TYKA004434 TYKA004190 TYKA004156 TYKA004437 TYKA004225 TYKA004157 TYKA004442 TYKA004258 TYKA004159 TYKA004450 TYKA004269 TYKA004164 TYKA004452 TYKA004274 TYKA004165 TYKA004472 TYKA004292 TYKA004166 TYKA004476 TYKA004368 TYKA004167 TYKA004604 TYKA004369 TYKA004170 TYKA004608 TYKA004371 TYKA004171 TYKA004615 TYKA004373 TYKA004174 TYKV028342 TYKA004389 TYKA004176 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
TYKA003340 TYKA010030 2 TYKA003727 PFS:009730.0005.3377350.1 TYKV028146 TYKA014431 TYKA010012 TYKV001219 TYKA005017 TYKA010513 TYKA014313 TYKA010397 TYKA048913 TYKA011505 TYKA014328 TYKA004137 TYKA004836 TYKA022955 TYKA014352 TYKA004886 TYKV026480 TYKA015396 TYKA010588 TYKV002641 TYKA029185 TYKV001226 TYKV002095 TYKV002800 TYKV025941 TYKA011310 TYKA013367 TYKV002569 TYKA014326 TYKA004457 TYKV002789 TYKA014473 TYKV002598 TYKA003911 TYKA005562 TYKA010026 TYKV002051 TYKA012260 TYKV002608 TYKV057669 TYKV027215 TYKA000676 TYKA014358 TYKV002640 TYKA003766 TYKA012855 TYKV027509 TYKV028048 TYKA022549 TYKV002776 TYKA003993 TYKV001222 TYKV026529 TYKA003308 TYKV002659 TYKA003170 TYKA004028 TYKV002779 TYKV001244 TYKV002605 TYKA014888 TYKA013150 TYKA003607 TYKA009209 TYKA013618 TYKA015425 TYKV002126 TYKA028023 TYKV023929 TYKV002621 TYKA015406 TYKA004890 TYKV002826 TYKA035695 TYKV002618 TYKA003076 TYKV002782 TYKV002657 TYKA011516 TYKA012302 TYKA013148 TYKV026676 TYKA013130 TYKA004047 TYKA010003 TYKA007682 TYKV002815 TYKA005509 TYKA002852 TYKA009988 TYKA014353 TYKA013098 TYKA015419 TYKA004372 TYKV093520 TYKA048353 TYKA015401 TYKV002801 TYKA015412 TYKV070208 TYKV002823 TYKA014321 TYKV070967 TYKA012618 TYKA014877 TYKV022745 TYKV002622 TYKA013062 TYKV001215 TYKA009918 TYKA003500 TYKV001227 TYKV002820 TYKA001090 TYKA011742 TYKA013070 TYKA008771 TYKA009708 TYKV001224 TYKA022633 TYKA012105 TYKV002653 TYKA003965 TYKA012291 TYKA005045 TYKA029087 TYKV027313 TYKV002085 TYKV071657 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
3 PFS:009730.0005.3377350.1 TYKA003277 TYKA003293 TYKV002635 TYKA014333 TYKV002643 TYKV002649 TYKV002084 TYKV002033 TYKA014329 TYKV002609 TYKA003705 TYKV002633 TYKV002035 TYKA014346 TYKV002617 TYKV001225 TYKV002775 TYKV002806 TYKV002644 TYKA048209 TYKA012641 TYKV002123 TYKV002568 TYKV002119 TYKA004395 TYKA014319 TYKA022913 TYKV028489 TYKA010007 TYKA013343 TYKV078005 TYKA022983 TYKA011481 TYKA004049 TYKV027166 TYKV002822 TYKA009990 TYKA012114 TYKV002778 TYKV002821 TYKA012645 TYKV002799 TYKV001262 TYKA014463 TYKA023179 TYKV001228 TYKA014356 TYKV078557 TYKA003298 TYKV026235 TYKV002811 TYKV002597 TYKV002814 TYKA012375 TYKV002034 TYKA006374 TYKV016227 TYKA012684 TYKV002561 TYKA005673 TYKA003075 TYKV002788 TYKA004162 TYKA013577 TYKA005021 TYKA014331 TYKA012598 TYKA023081 TYKA003236 TYKA011287 TYKA029437 TYKA012211 TYKV002787 TYKV028440 TYKA014338 TYKA015435 TYKV002825 TYKA011328 TYKV002638 TYKA014471 TYKA012268 TYKV027607 TYKA014332 TYKA011767 TYKA009981 TYKA005657 TYKV028293 TYKA012272 TYKA014355 TYKA048449 TYKV062628 TYKV028391 TYKA013376 TYKV026137 TYKA015421 TYKA023011 TYKA012223 TYKV001237 TYKA008269 TYKA013077 TYKV002562 TYKV002077 TYKA014312 TYKA014899 TYKV002836 TYKA003336 TYKV028244 TYKV072830 TYKV079109 TYKA005029 TYKV002090 TYKA012404 TYKV027901 TYKV150375 TYKA029073 TYKA013643 TYKA004308 TYKA012107 TYKA029269 TYKV001206 TYKA015433 TYKV002583 TYKA022647 TYKV093865 TYKA004921 TYKA069881 TYKV026578 TYKA013075 TYKA022675 TYKA015420 TYKA003156 TYKA010013 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
4 PFS:009730.0005.3377350.1 TYKA014339 TYKV002627 TYKV002079 TYKV140111 TYKV002593 TYKA012120 TYKA002044 TYKA003800 TYKA003333 TYKV002586 TYKA005875 TYKV002032 TYKA005399 TYKV002817 TYKA012981 TYKV001251 TYKA006048 TYKA003329 TYKA013162 TYKA002791 TYKA006370 TYKA004038 TYKA004043 TYKA004147 TYKA028009 TYKA011248 TYKA012853 TYKA014427 TYKA003457 TYKA033483 TYKA012118 TYKV002795 TYKA014447 TYKA008374 TYKV002807 TYKV002575 TYKA009730 TYKV002587 TYKA005510 TYKA028639 TYKV002784 TYKV078764 TYKV002040 TYKV002066 TYKA048993 TYKA002856 TYKV002816 TYKA013066 TYKA014470 TYKA013067 TYKV002783 TYKV001235 TYKA003115 TYKA008720 TYKV026970 TYKA005674 TYKA002794 TYKA033049 TYKA029451 TYKA170562 TYKV002637 TYKA048849 TYKA013152 TYKA014876 TYKA033301 TYKA001733 TYKV012217 TYKV001263 TYKV002630 TYKV027999 TYKV026872 TYKA003801 TYKA033278 TYKA013058 TYKV002818 TYKV002812 TYKA013163 TYKV002020 TYKA028653 TYKV028195 TYKV002048 TYKA028121 TYKV026382 TYKV025252 TYKV001470 TYKV002591 TYKA014465 TYKA003861 TYKA012131 TYKA012221 TYKA002634 TYKA014309 TYKV002790 TYKV002112 TYKV027264 TYKA005561 TYKA026039 TYKA004376 TYKV016472 TYKV002796 TYKA003908 TYKA014822 TYKV002096 TYKV002625 TYKV002100 TYKV001497 TYKV026725 TYKV002592 TYKV002797 TYKV002639 TYKV026088 TYKA002815 TYKV026186 TYKA013570 TYKV000787 TYKV002612 TYKA006055 TYKV079799 TYKV001241 TYKA014345 TYKA007640 TYKA014325 TYKA004055 TYKA007856 TYKA012204 TYKV027754 TYKA007663 TYKA014446 TYKA022661 TYKA006587 TYKV002667 TYKA013579 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
5 PFS:009730.0005.3377350.1 TYKA011089 TYKA002886 TYKA007978 TYKA012234 TYKA002931 TYKA007657 TYKA014323 TYKA002940 TYKA008001 TYKA014361 TYKA003162 TYKA007651 TYKA014443 TYKA003332 TYKA008193 TYKA033427 TYKA003466 TYKA006760 TYKV002808 TYKA003614 TYKA006738 TYKV002842 TYKA003937 TYKA007582 TYKV026627 TYKA004020 TYKA010011 TYKV027362 TYKA004101 TYKA014322 TYKA014350 TYKA004277 TYKA014330 TYKA003285 TYKA004320 TYKV001231 TYKA004271 TYKA004624 TYKV002805 TYKA006057 TYKA004772 TYKV030871 TYKA008616 TYKA004893 TYKA000051 TYKA008628 TYKA005669 TYKA000318 TYKA014336 TYKA009744 TYKA001209 TYKA014344 TYKA009975 TYKA002355 TYKA009976 TYKA002505 Docusign Envelope ID: 27B98560 - CE22 - 4ECD - 904F - 6BA03BAA8183
Exhibit 10.73
DEVELOPMENT SERVICES AGREEMENT This Development Services Agreement (the “ Agreement ”) is entered into and effective nunc pro tunc as of June 19 , 2024 (the “ Effective Date ”) by and between Athena Bitcoin, Inc . , a Delaware Corporation (“ Company ”), and PSBC, LLC, a Delaware Limited Liability Company (“ Developer ”) . WHEREAS, Company owns and/or operates one or more networks of Bitcoin ATMs; WHEREAS, Company desires to retain Developer to develop a Bitcoin ATM software platform for Developer’s ownership and use in connection with the operation of Bitcoin ATMs (the “ Product ”) ; and WHEREAS, Developer is willing to develop the Product for Company, pursuant to the terms and conditions of this Agreement ; NOW, THEREFORE, in consideration of the relationship between the parties, the mutual covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows : 1. Definitions . The following terms shall have the following meanings: 1. “ Affiliate ” means with respect to any Person, any other Person controlling, controlled by or under common control with such first Person . The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise . 2. “ Confidential Information ” shall mean any information disclosed by either Company or Developer to the other party, either directly or indirectly, in writing, orally or by inspection of tangible objects (including, without limitation, research, product plans, products, services, software, know - how, ideas, inventions (whether or not patentable), processes, designs, drawings, engineering, hardware configuration information, marketing or financial documents, customer information and other technical, business or financial information), which is designated as “Confidential,” “Proprietary” or some similar designation or which should reasonably be understood to be confidential by the recipient at the time of disclosure . Confidential Information may also include information disclosed to Company or Developer by third parties . Notwithstanding the foregoing, Confidential Information will not include any information which (a) is publicly known and made generally available in the public domain prior to the time of disclosure by Company or Developer ; (b) is made generally available through no wrongful act of the disclosing party or others who were under confidentiality obligations as to the item or items involved ; (c) is already in the possession of the receiving party at the time of its disclosure by the disclosing party ; or (d) is independently developed by a party without reference to the other party’s Confidential Information . 3. “ Deliverables ” shall mean the items to be delivered by Developer to Company in connection with any Development Task, as set forth in the applicable Statement of Work. 4. “ Development Schedule ” shall mean the schedule for completion of the Development Task, as set forth in the applicable Statement of Work. 5. “ Development Task ” shall mean the development work to be performed by Developer pursuant to this Agreement and the Statement of Work. 6. “ Emergency ” shall mean any situation that significantly impacts the Company’s ability to continue its operations, including but not limited to the bankruptcy or insolvency of Developer, DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9 PFS:009868.0003.3325190.1
PFS:009868.0003.3325190.1 termination of Developer’s business, or a material or prolonged failure to meet the requirements established in this Agreement. 7. “ Intellectual Property Rights ” shall mean all : (a) copyright, invention, patents, and rights in trademarks, designs, know - how and confidential information (whether registered or not) ; (b) applications for registration and the right to apply for registration for any of these rights ; and (c) all other intellectual property rights and equivalents or similar forms of protection existing anywhere in the world . 8. “ New Technology ” shall mean tangible results and items arising out of or constituting the results of the Development Task, which shall include the Deliverables, Source Code, infrastructure, programmers’ documentation, specifications, and other design documentation, as well as all works made specifically and for the sole benefit of Company . New Technology shall not include any and all Source Code, programmers’ documentation, specifications, and other design documentation, intellectual property, copyrights, patents as well as all derivative works and modifications thereof, developed prior to the date of this Agreement or conceived or made on or after the effective date of this Agreement for third parties who are not a party to this Agreement . 9. “ Open Source Code ” means any software that is distributed under “open source” or “free software” terms, including any software distributed under the GPL, LGPL, Mozilla License, Apache License, Common Public License, BSD license or similar terms and including any software distributed with any license term or condition that : (a) requires or could require, or conditions or could condition, the use or distribution of such software on the disclosure, licensing or distribution of any source code for any portion of such software or any derivative work of such software ; or (b) otherwise imposes or could impose any limitation, restriction or condition on the right or ability of the licensee of such software to use or distribute such software or any derivative work of such software . 10. “ Source Code ” shall mean the human - readable or other preferred version of software, instructions, scripts and the like, and that, when compiled, becomes an object code version of such software . 11. “ Specifications ” shall mean the technical and other specifications for the Deliverables and Development Task, as set forth in the applicable Statement of Work . 12. “ Statement of Work ” or “ Statements of Work ” shall mean the statement of work attached hereto as Exhibit A , and any additional statements of work executed by the parties and identifying this Agreement . 13. “ Task Description ” shall mean a description o f the development work to be performed by Developer, a s se t forth in the applicable Statement of Work . 2. Development, Delivery and Acceptance . 1. Development . (a) Developer shall provide such development services with regard to each Development Task, and shall deliver the Deliverables, pursuant to the Statement of Work of Exhibit A hereto, and any additional Statements of Work as may be agreed to between Company and Developer in writing . Unless otherwise expressly stated in a specific Statement of Work, the provisions of this Agreement shall govern each Statement of Work . (b) All development work shall be at Developer’s sole expense, except as set forth in Section 5 below or as may otherwise be specified in an applicable Statement of Work. 2 DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
determining authorship of any copyright in the New Technology. If for any reason the New Technology, or any 3 PFS:009868.0003.3325190.1 (c) Developer certifies that Developer has no outstanding agreement or obligation that is in conflict with any of the provisions of this Agreement, or that would preclude Developer from complying with the provisions hereof, and further certifies that Developer will not enter into any such conflicting agreement during the term of this Agreement . (d) Developer may only subcontract any of the services contemplated by this Agreement to a third party with the prior written consent of Company . (e) Developer and Company shall each provide assistance as reasonably requested by the other to facilitate Developer’s creation of Deliverables and Company’s evaluation and testing of Deliverables developed and delivered by Developer under any Statement of Work . 2. Delivery and Acceptance . (a) Developer shall use its best commercial efforts to complete the Development Task, and to deliver to Company all applicable Deliverables, in accordance with the Development Schedule . (b) Upon delivery to Company any Deliverable, Company shall evaluate such Deliverable for conformity to the Task Description and Specifications . Company shall use reasonable efforts to provide Developer, within sixty ( 60 ) days after delivery of such Deliverable, with written acceptance thereof, or a statement of defects to be corrected . Developer shall promptly correct such defects and return the corrected Deliverable for retesting and reevaluation, at no additional charge, and Company shall use all reasonable efforts to provide Developer, within 30 days after such redelivery, with written acceptance or a statement of defects . 3. Changes . Company reserves the right to make such changes in the Development Tasks, Deliverables and Specifications as may be necessary or desirable, and Developer will use its best commercial efforts to implement any such changes at no additional cost to Company and without delaying the delivery of the Deliverables . In the event that the proposed change will, in the reasonable opinion of Developer, require additional costs or a delay the delivery of the Deliverables, then Company, in its sole discretion, may elect to withdraw its proposed change or require Developer to deliver the Deliverables with the proposed change, subject to the delay and/or additional expense . 3. Ownership, Licensing, and Limitations on Use . 1. Ownership . Effective immediately upon execution of this Agreement and subject only to Section 5 . 2 below, Developer hereby irrevocably transfers, conveys and assigns to Company without reservation and in perpetuity all right, title, and interest in the New Technology, including Intellectual Property Rights to such New Technology in all countries . Company shall have the exclusive right to apply for or register patents, copyrights, and such other proprietary protections as it wishes related to the New Technology . Developer agrees to execute such documents, render such assistance, and take such other action as Company may reasonably request, at Company’s expense, to apply for, register, perfect, confirm, and protect Company’s rights in the New Technology . Without limiting the foregoing, Company shall have the exclusive right to commercialize, prepare and sell products based upon, sublicense, prepare derivative works from, and otherwise use and exploit the New Technology . 2. Work for Hire . Effective immediately upon execution of this Agreement, the New Technology shall be deemed a “work made for hire” as that term is defined under Section 101 of the U . S . Copyright Act, and Company shall be considered the person for whom the work was prepared for the purpose of DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
4 PFS:009868.0003.3325190.1 portion thereof, is determined not to be a “work made for hire” under U . S . law o r the law o f any other jurisdiction, Effective immediately upon Developer’s execution of this Agreement, Developer hereby assigns and agrees to execute anytime thereafter such written instruments and do such other ac ts a s may be necessary in the opinion of Company to assign, to Company, without additional compensation, all of Developer’s right title and interest in and to such New Technology and any and all other creations, inventions, ideas, designs, copyrightable materials, trademarks, and other technology and rights (and any related improvements or modifications), whether or not subject to patent or copyright protection that are conceived or developed by Developer, alone or with others, in connection with the Development Tasks, whether or not conceived or developed during regular business hours . 3. Patents, Copyrights, Trademarks . Developer shall not seek patent, copyright, trademark, registered design or other protection for any rights in the New Technology, or in any way communicate to any third party the nature of or details relating to any such manufacture or work, but shall promptly communicate all information regarding the same to Company . Company shall own all Intellectual Property Rights in and to the New Technology, including, without limitations, inventions, discoveries, trademarks, service marks, trade dress, trade secrets, know how, names or ideas, whether or not patentable or subject to other forms of protection, made, created, developed, written or conceived by Developer during the entire period of Developer’s work for Company . 4. Licenses . Company shall obtain all rights under this Agreement in any designs, inventions, discoveries, improvements, computer programs, tools and utilities and other works of authorship conceived or made by Developer related to the New Technology or the Product but excluding any designs, inventions, discoveries, improvements, computer programs, tools and utilities and other works of authorship conceived or made by Developer before or after the effective date of this Agreement for third parties who are not a party to this Agreement, with the exception of the New Technology and the Product (“ Pre - Existing Technology ”) . Nothing in this Agreement shall be construed a s a transfer or sale of rights except for the New Technology . Notwithstanding anything in this Agreement to the contrary, Developer hereby grants to Company and its Affiliates a nonexclusive, perpetual, irrevocable, royalty - free, f u ll y paid - up, worldwide right and license to make, have made, modify, use, distribute, sell, sublicense and otherwise exploit any Pre - Existing Technology that may be included or embodied in the Deliverables, solely as part of or in connection with the New Technology, including improvements thereto . Furthermore, any other then - outstanding licenses offered by the Developer a t the time of this Agreement shall immediately accrue to the benefit of Company rather than Developer . 5. Waiver of Moral Rights . Developer hereby waives any and all moral rights, including any right to identification of authorship or limitation on subsequent modification, that Developer (or its employees, agents or consultants) has or may have in any New Technology . 4. Developer Representations, Warranties, and Indemnities 1. Developer represents and warrants on a continuing basis: (a) Ownership . Developer has and will have the right and power to make the assignments and other rights granted to Company pursuant to this Agreement and any Statements of Work . (b) Independent Work . Except for New Technology that is in the public domain, the New Technology will have been independently created by Developer’s employees or agents and use of the New Technology and Pre - Existing Technology by Company as contemplated herein will not depend on the acquisition of rights from any third party . (c) No Infringement . Neither the New Technology nor the Pre - Existing Technology, nor the exercise by Company of any of the rights granted under this Agreement, will infringe or violate the rights of third parties, including, without limitation, property, contractual, employment, trade secrets, proprietary information and non - disclosure rights, or any trademark, copyright, patent or other Intellectual Property Rights, DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
5 PFS:009868.0003.3325190.1 and be free of any liens, encumbrances or other similar claims . Moreover, no software, materials or technologies licensed by Developer are the subject of any pending or threatened claim or litigation of any nature, including, without limitation, any claim or litigation alleging a violation or infringement of any third party’s proprietary or Intellectual Property Rights . (d) Product Warranty . For a period o f forty - eight ( 48 ) months following the delivery date of the Product design (“ Warranty Period ”), or any change, improvement, or enhancement thereto, that the Product will materially conform to its written requirements and specifications . Developer shall, a t its expense, make all corrections and modifications requested by Company to correct any failures to comply with this warranty which may be discovered in the Product design and reported to Developer during such Warranty Period, and shall promptly deliver corrected versions to Company a s soon a s practicable after such notice . Developer shall make available to Company, at Company’s request and at no additional charge to Company, ongoing technical assistance during the Warranty Period . (d) Open Source . No Open Source Code will be used in, incorporated or integrated into, or bundled with the New Technology without Company’s prior written consent, except in each case for any software whose terms : (i) do not condition the use or distribution of such software on the disclosure, licensing, or distribution of the source code of the software, or any portion thereof, or (ii) otherwise materially limits Company’s freedom to seek full compensation in connection with marketing, licensing, or distributing the software, including, without limitation, products in which the software is embedded . If any such software becomes subject to any open source license agreement a s a result of intermingling or integration by Developer of Company’s proprietary code with any Open Source Code, Developer will notify Company within five ( 5 ) business days of such intermingling or integration . (e) Employees . Unless otherwise expressly agreed to by Company in writing, the Development Tasks will be performed by an employee of Developer . Developer shall pay all necessary employment - related taxes required by applicable laws and regulations . Developer also agrees to report employees’ income and withhold all required taxes f r om such income, as may be required by applicable laws and regulations . Developer will not be entitled to receive any vacation or illness payments, or to participate in any plans, arrangements, or distributions by Company pertaining to any bonus, stock option, profit sharing, insurance or similar benefits for Company’s employees . In addition, Developer agrees that it will provide for workers’ compensation, unemployment, and all other coverage required under applicable local, state or federal laws . Finally, Developer shall a l s o ensure that all of its employees (and authorized subcontractors, if applicable) have acknowledged in writing their understanding of and acceptance of the provisions relating to work for hire and ownership of intellectual property rights in Section 3 and the Confidential Information provisions in Section 7 of this Agreement . (f) Compliance with Specifications . All Development Tasks shall materially comply with the Specifications, descriptions, and representations, including, without limitation, representations as to performance capabilities, completeness, configurations, and functions in each applicable Statement of Work . (g) Professional and Workman - Like . The Development Tasks will be performed in a timely and professional manner by qualified professional personnel and shall conform to the standards generally observed in the industry for similar services and to the Specifications stated in the applicable Statement of Work . (h) Compliance with Laws . Developer shall, at its own expense, comply with all laws, rules and regulations, and assume all liabilities or obligations imposed by such laws, rules and regulations, with respect to Developer’s performance of the Development Tasks . (i) Licenses . Developer represents and warrants that it can grant the licenses to Company in accordance with the terms set forth in this Agreement . DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
6 PFS:009868.0003.3325190.1 (j) No Breach . Developer represents and warrants that Developer’s performance of all the terms of this Agreement does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by Developer in confidence or in trust prior to the execution this Agreement, and Developer will not disclose to Company, or induce Company to use, any confidential or proprietary information or material belonging to any previous employer or others . 4 . 2 Indemnity . Developer shall defend, indemnify and hold Company, its parent company and affiliates, its members, officers, directors, agents, employees, shareholders and assigns (the “ Indemnified Parties ”) harmless from and against any and all claims, demands, suits, causes of action, losses, penalties, obligations, damages, liabilities, costs and expenses (including but not limited to attorney’s fees) incurred by the Indemnified Parties related to, caused by, arising from or on account of (i) Developer’s failure to comply with any covenant, provision or agreement, including without limitation as a result of any breach or alleged breach of any of the representations and/or warranties described in Section 4 . 1 of this Agreement, or (ii) any actual or alleged infringement (including contributory infringement), misappropriation or other violation of any third party’s patents, copyrights, trade secret rights, trademarks or other Intellectual Property Rights of any nature in any jurisdiction, resulting from the use of the New Technology and/or the Pre - Existing Technology . DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
7 PFS:009868.0003.3325190.1 5. Payment; Release of Source Code . 5 . 1 Payment . In consideration of the duties and obligations of Developer and the rights granted to Company pursuant to this Agreement and the Statements of Work, Company shall paydown towards the agreed upon amount to Developer based upon ATM transactions for using the Product . Such advance payments shall be paid by Company on an ongoing basis until a maximum payment amount of Five Million, Five Hundred Thousand U . S . Dollars ( $ 5 , 500 , 000 USD) (the “ Payment Amount ”) is paid to Developer . All advance payments shall be paid in Bitcoin, and the amount of U . S . dollars paid for each transaction shall be calculated at the time of each transaction and according to the then - current CoinDesk Bitcoin Price Index (XBX) . For each ATM transaction, the advance payments payable to Developer until the full Payment Amount is reached shall be: · One percent (1%) of U.S. ATM transactions using the Product, excluding any Chivo ATM transaction; and · Zero point three five percent (0.35%) of Salvadoran or Chivo ATM transactions using the Product. Developer understands and acknowledges that, as the sole source of the payments it receives from Company pursuant to this Agreement is based upon advance payments from the usage of the Product in ATM transactions, Company makes no warranty that the full Payment Amount, or any specific payment amounts, will be received by Developer pursuant to this Agreement . 2. Release of Source Code . Developer shall, as security for the Payment Amount, hold the Source Code in an escrow account, which shall be released, along with such infrastructure access for the Product, to the Company upon Developer having received one - half (½) of the total Payment Amount . The Source Code release shall include build instructions, build scripts, databases, and all other tools or documentation necessary or desirable to create a working Product from the Source Code . Should Developer fail to provide the services required herein such that doing so would interrupt Company’s operations, then Company would be hereby granted the unrestricted use to the Source Code . The released Source Code shall be updated in a similar manner as the initial Release, and done so on a regular basis and, additionally, at the direction of Company . 1. In the case of an Emergency of failure to provide any services required herein, Developer shall release the Source Code to Company upon the occurrence of any of the following trigger events: · Developer files for bankruptcy or insolvency. · Developer ceases operations or discontinues the support of the software. · Developer fails to meet agreed - upon terms of this Agreement. · A personal emergency of principal for Developer or its subcontractors. · The occurrence of any other event that, in the reasonable judgment of the Company, constitutes an Emergency. 7. Confidentiality . DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
8 PFS:009868.0003.3325190.1 1. Restrictions on Disclosure and Use . Developer and Company agree to keep all Confidential Information in strict confidence . Developer and Company each agree that during and after the term of this Agreement they will not use any Confidential Information except in accordance with the provisions of and for the purposes of this Agreement, and that they will not disclose, copy or otherwise reproduce any Confidential Information to any third party without the prior written consent of the disclosing party . Developer and Company each further agrees that they shall safeguard the Confidential Information from disclosure and use commercially reasonable efforts to ensure non - disclosure, which efforts shall be commensurate with those they use to protect the confidentiality of their own confidential information . In the event that the receiving party becomes compelled by law or order of court or administrative body to disclose any Confidential Information of the disclosing party, the receiving party shall be entitled to disclose such Confidential Information, provided that (a) receiving party provides the disclosing party with prompt prior written notice of such requirements to allow the disclosing party to take any necessary action to safeguard the Confidential Information, including without limitation the issuance of a protective order, and (b) if required to do so, the receiving party shall furnish only that portion of the Confidential Information which is legally required to be disclosed and shall exercises commercially reasonable efforts to obtain assurances that the Confidential Information will be treated in confidence . The provisions of this Section 7 shall survive any termination of this Agreement . 2. Duty to Notify . Each party agrees to notify the other promptly in the event of any breach of its security under conditions in which it would appear that the Confidential Information is prejudiced or exposed to loss . Receiving party shall, upon request of the disclosing party, take all other reasonable steps necessary to recover any compromised Confidential Information disclosed to or placed in the possession of receiving party by virtue of this Agreement . The cost of taking such steps shall be borne solely by receiving party . 3. Irreparable Harm . Each party acknowledges that any breach of any of its obligations with respect to confidentiality or use of Confidential Information hereunder is likely to cause or threaten irreparable harm to the other party, and, accordingly, agrees that in such event disclosing party shall be entitled to seek equitable relief to protect its interest therein, including but not limited to preliminary and permanent injunctive relief, without posting a bond, as well as money damages . 4. Return of Confidential Information . Upon the request of either party and, in any event, when this Agreement has expired or terminated, the other party will promptly return to that party or destroy (a) all Confidential Information in receiving party’s possession or control and (b) all analyses, studies, or other materials, or part thereof, that were created by receiving party that are based on or contain Confidential Information of the other . 5. Duration of Confidentiality Obligations . A receiving party’s obligations with respect to Confidential Information under this Section 7 shall continue from the date of initial disclosure of any Confidential Information until five ( 5 ) years thereafter ; except that a receiving party’s confidentiality obligations with respect to any Confidential Information that constitutes a trade secre t under the federal Defend Trade Secrets Act of 2016 , 18 U . S . C . Chapter 90 , the Illinois Trade Secrets Act, 765 ILCS 1065 / 1 et seq . , or other applicable law shall remain for s o long a s such Confidential Information remains a trade sec r e t under applicable law 8. Term . This Agreement shall commence on the Effective Date and continue until all of the obligations of the parties have been performed in accordance to this Agreement and the Statement of Work or until earlier terminated as provided in this Agreement . Provided that Company may at any time prior to delivery of the Deliverables, terminate this Agreement for any reason, or no reason, upon thirty ( 30 ) days written notice to Developer . 9. General Provisions . DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
9 PFS:009868.0003.3325190.1 1. Assignment ; Successors . This Agreement is for the personal services of Developer and may not be assigned by Developer without the prior written authorization of Company . Company may freely assign its rights and obligations under this Agreement . This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties, their successors and their permitted assigns . 2. Governing Law ; Jurisdiction and Venue ; Arbitration . This Agreement shall be construed in conformity with the laws of the state of Illinois, without regard to conflict of law provisions . The parties agree that any dispute or controversy between them concerning this Agreement, or the breach thereof, shall be submitted to arbitration in Miami - Dade County, Florida, before a single arbitrator of the American Arbitration Assocation (“AAA”) . The arbitrator shall be selected by application of the rules of the AAA, or by mutual agreement of the parties, except that such arbitrator shall be an attorney admitted to practice law in Florida . No party to this Agreement will challenge the jurisdiction or venue provisions as provided in this Section . Nothing contained herein shall prevent the party from seeking, obtaining, and enforcing injunctive relief in any court of competent jurisdiction . The prevailing parties in any dispute in connection with this Agreement shall be entitled to recover from the non - prevailing parties all costs and expenses, including, without limitation, reasonable attorneys’ fees, incurred by the prevailing parties in connection with any such dispute . The foregoing notwithstanding, no arbitration shall be required should Developer stop providing services prior to the Release of the Source Code . Both parties agree that such a situation would lead to irreparable harm to Company for each day of service outage, that no relative harm would come to Developer, that it is in the public interest, and Company would win on the merits . 3. Counterparts . This Agreement may be executed via electronic signature and in counterparts, each of which shall be an original, but all of which shall constitute one and the same instrument . 4. Headings . The headings, titles and subtitles herein are inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof . 5. Entire Understanding . This Agreement and each Statement of Work hereunder, together with the Grant Agreement and the Operating Agreement, constitutes the entire understanding among the parties as to its subject matter, and supersedes any prior understanding and/or written or oral agreements among them with respect to its subject matter . 6. Severability . If any one or more of the provisions or parts of a provision contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect in any jurisdiction, such invalidity, illegality or unenforceability shall not affect (a) any other provision or part of a provision of this Agreement nor (b) this Agreement’s validity, legality and enforceability in any other jurisdiction, but this Agreement shall be reformed and construed in any such jurisdiction as if such invalid or illegal or unenforceable provision or part of a provision had never been contained herein and such provision or part shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted in such jurisdiction . [Signature Page Follows] DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9
SIGNATURE PAGE TO DEVELOPMENT SERVICES AGREEMENT IN WITNESS WHEREOF, the parties have executed this Development Services Agreement effective on the date first set forth above. ATHENA BITCOIN, INC. (“Company”) PSBC, LLC (“Developer”) By: Printed Name: Matias Goldenhorn Title: CEO By: Printed Name: Jordan Mirch Title: CEO (Managing Member) DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9 PFS:009868.0003.3325190.1
EXHIBIT A STATEMENT OF WORK Development Tasks and Deliverables : Developer shall perform the following : · Development of a Bitcoin ATM software platform (the “ Product ”). · Creation of platform infrastructure including servers within Amazon Web Services (AWS). · Data migration of machine data, customer data, and transaction data from existing software platforms into the new platform. · Assist Company in a pilot launch of new platform with a small number of machines. · Perform full conversion of existing machines to the new platform. · Provide training and onboarding of Company employees and/or contractors in the operation and use of new platform. Specifications : The Product shall include a graphic user interface and all associated text shall be capable of being presented to the user in both the English and Salvadoran Spanish languages . The Product shall be compatible with a t least the following Bitcoin ATM machines : · Genmega Universal Kiosk 1 · Genmega Universal Kiosk 2 · American Kiosk · General Bytes Development Schedule : Developer shall deliver the Product to Company on or by June 18 2024 . Acceptance Testing : Prior to the pilot launch, Company shall be entitled to perform acceptance testing for up to sixty ( 60 ) days following receipt of the Product . Developer shall provide reasonable cooperation to Company in its performance of acceptance testing, and shall promptly address any errors or deficiencies identified by Company during acceptance testing . Support Services: For a period of twelve (12) months commencing with the pilot launch, Developer shall provide the following additional services: · Management of platform infrastructure including servers and integrations. · Technical and operational support of the platform. · Additional feature development as may be required by Company. · User service training for comprehensive understanding of the Source Code and any other Deliverables and as part of the Development Task. IN WITNESS WHEREOF, the parties have executed this Statement of Work to be incorporated by reference into that certain Development Services Agreement dated June 18, 2024. ATHENA BITCOIN, INC. PSBC, LLC By: Printed Name: Matias Goldenhorn Title: CEO By: Printed Name: Jordan Mirch Title: CEO (Managing Member) DocuSign Envelope ID: 036A0986 - F860 - 4070 - 8D0F - F6EC9537AFB9 PFS:009868.0003.3325190.1
Exhibit 10.74
PFS:009730.0005.3399201.1 MANAGED SERVICES TERMINATION AGREEMENT This MANAGED SERVICES TERMINATION AGREEMENT (this “Agreement”) dated as of this 23 rd day of October, 2024 (the “Effective Date”), is by and between William Mgt, LLC an Illinois Limited Liability Company (the “ Provider ”) on the one hand and Athena Bitcoin, Inc . a Delaware corporation ( “ Company ”) . Each may be referred to herein as a “Party” or collectively as “Parties” . RECITALS WHEREAS, Provider has been providing Company with Bitcoin Kiosks (the “ Kiosks ”) management services, which such services included assisting in identifying merchant locations for Company, installation of Kiosks at certain merchant locations, maintaining and storing an inventory of the Kiosks and assisting with management of merchant customer service, among other services requested by Company of Provider from time to time (collectively the “ Management Services ”) pursuant to the Client Services Agreement between the Parties executed on April 26 , 2024 (the “ Management Services Agreement ”) . WHEREAS, Company has been : i) paying Provider for the Management Services ; and ii) providing Provider with office space within the Company’s offices to create efficiencies and collaboration in Providers delivery of the Management Services to Company . WHEREAS, the Parties desire to terminate their Management Services agreement. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Incorporation of the Recitals . The above recitals are hereby incorporated in and made a part of this Agreement as if set forth herein . 2. Termination . Upon the Effective Date, Provider shall: a. Cease providing any Management Services to the Company ; b. Work with Company to assist transition of its employees that were dedicated to Company in providing the Management Services to full - time employment with Company . The aforementioned notwithstanding, Company agrees it will not hire or otherwise solicit or seek to employ or engage in any capacity, Carolina Rios, who will remain with Provider following the Effective Date ; and c. Provider shall begin vacating the Company’s office space, with such move out date to be completed within ninety ( 90 ) days of the Effective Date . 3. Post Termination Obligations . Following the Effective Date, Provider shall have no further obligations to provide Management Services to the Company and Company shall have no obligation to make payment pursuant to the Management Services Agreement . Provided however, Company may seek assistance from Provider in transitioning the services from Provider to Company and Provider shall assist Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
Athena Bitcoin, Inc . /Athena Bitcoin Global c/o Matias Goldenhorn – CEO & President 1 SE 3 rd Avenue – Ste 2740 Miami, FL 33131 Email : matias@athenabitcoin . com 2 PFS:009730.0005.3399201.1 Company in such post termination transition services . Ninety days following the Effective Date, Provider’s obligation to cooperate with Company in the transitioning of its services shall lapse and Provider shall have no further obligations to provide such services to Company under the Management Services Agreement, absent an amendment to this Agreement pursuant to Section 5 below . 4. Assignment . This Agreement shall be binding upon and inure to the benefit of the parties named herein and their respective successors and permitted assigns . No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other party . 5. Amendments and Waivers . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the parties hereto . No waiver by any party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant . 6. No Waiver ; Cumulative Remedies . The failure of either party to enforce any one or more of the terms or conditions of this Agreement will not be deemed a waiver of such terms or conditions or limit the right to enforce any term and condition . All rights and remedies provided are cumulative and are not exclusive of any rights or remedies provided by law . 7. Governing Law/Venue . This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida . Each of the parties hereto submits to the non - exclusive jurisdiction of any state or federal court sitting in Miami, Florida, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court . 8. Notice . All notices, requests, demands, claims, and other communications hereunder shall be in writing . Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) one ( 1 ) business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one ( 1 ) business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) three ( 3 ) business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below : If to Provider: William Mgt., LLC P.O. Box 192135 Miami Beach, Florida 33193 Attention: Jordan Mirch Email: jmirch@williammgt.com If to Company: Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
3 PFS:009730.0005.3399201.1 9. With a copy that shall not constitute notice, to: legal@athenabitcoin.com Severability . If any provision of this Agreement or portion thereof should be declared invalid for any reason, the invalid provision or portion hereof shall be deemed omitted and the remaining terms shall nevertheless be carried into effect. 10. Counterparts . This Agreement may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy), each of which shall be deemed an original but all of which together shall constitute one and the same instrument . 11. Further Assurances . The parties hereto shall execute such further documents, and perform such further acts, as may be necessary to effectuate the terms of this Agreement, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby . 12. Entire Agreement . This Agreement (including the documents and exhibits referred to herein) constitutes the entire agreement between the parties and supersedes any prior understandings, agreements, or representations by or between the parties, written or oral, to the extent they relate in any way to the subject matter hereof . 13. Waiver of Conflict of Interest . In connection with the preparation of this Agreement, each of the Parties acknowledges and agrees that (a) PFS has acted as legal counsel to the Company and Provider in the preparation of this Agreement, (b) the Parties have been advised by PFS that their respective interests may be opposed to one another, and (c) they have each been advised to retain separate legal counsel . Notwithstanding the foregoing, the Parties desire that PFS represent the Company and Provider, have retained separate counsel or have knowingly waived their right to do so and jointly and severally forever waive any claim that representation of the Company and Provider by PFS constitutes a conflict of interest which has or may result in any of them suffering damages, losses or other injuries from the transactions contemplated by this Agreement . 14. Taxes . All transfer, documentary, sales, use, stamp, registration and other such taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be born by the responsible party . 15. Costs and Attorney’s Fees . In the event either party brings an action to enforce the terms of this Agreement, the non - prevailing party in such action shall pay to the prevailing party the prevailing party’s costs and expenses, including reasonable attorneys’ fees, incurred in connection with such enforcement action . [SIGNATURE PAGE TO FOLLOW] Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3399201.1 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. PROVIDER: William Mgt, LLC By: Name: Jordan Mirch Title: Manager COMPANY: Athena Bitcoin, Inc. By: Name: Matias Goldenhorn Title: CEO & President Athena Bitcoin Global By: Name: Matias Goldenhorn Title: CEO Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3399202.1 FIRST AMENDMENT TO INTERCREDITOR AGREEMENT This First Amendment to the Intercreditor Agreement (the “ Amendment ”) is made and entered into as of October 23 , 2024 by and between KGPLA Holdings, LLC, a Delaware limited liability company (“ KGPLA ”), Taproot Acquisition Enterprises, LLC (“ Taproot ”), a Delaware limited liability company and Athena Bitcoin Global, a Nevada Corporation (“ Athena ”) . KGPLA, Taproot and Athena may be referred to herein as “ Party ” or collectively as “ Parties ” . RECITALS A. The Parties entered into that certain Intercreditor Agreement dated November 1 , 2023 (the “ Agreement ”) whereby KGPLA, agreed to a limited subordination of its first priority security position on collateral of Athena to Taproot, to assist in the facilitation of Athena’s acquisition of Bitcoin ATM Machines (“Bitcoin ATMs” or “Kiosks”) from Taproot . B. Taproot desires to sell to Athena, and Athena desires to purchase from Taproot certain additional Kiosks in which Taproot desires to maintain a first priority security interest in such Kiosks . C. In order to facilitate the sale by Taproot of additional Kiosks to Athena, the Parties desire to amend the Agreement to consent and permit Taproot to attach a first priority security interest to such Kiosks . D. Thus, the Parties desire to amend the Agreement upon the terms and conditions contained herein. TERMS NOW, THEREFORE, in consideration of the terms, conditions and covenants contained in the Agreement and in this Amendment, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows : 1. Incorporation of Recitals . The Parties agree and acknowledge that the Recitals are incorporated herein and a material consideration of this Amendment . 2. Amendments and Agreements . a. The Parties agree that the definition of “Equipment Loan Agreement” as defined in the "Re” line of the Agreement is hereby deleted in its entirety and replaced with the following : “i) the Equipment Financing Agreement dated November 2 , 2023 by and between Taproot and Athena (referred to herein individually as the “ November 2 Agreement”) ; and (ii) the Equipment Financing Agreement dated October 23 , 2024 by and between Taproot and Athena (referred to herein individually as the “ October 23 Agreement ” . b. The Parties agree that the definition of “Borrower” as defined in the second sentence of the Agreement, is hereby amended to include, Athena Bitcoin, Inc . in its capacity as a Purchaser under the November 2 Agreement and the October 23 Agreement . c. The Parties agree that the definition of “Equipment Loan Obligations” is hereby deleted in its entirety and replaced with the following: Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3399202.1 “means the Borrower’s obligation under : i) the Equipment Financing Agreement dated November 2 , 2023 , to make payment of the Base Payment to the Equipment Lender, solely with respect to the Schedule A Equipment, and such other covenants the Borrower must comply with until the occurrence of the First Payment Completion under the Equipment Loan Agreement ; and ii) that certain Equipment Financing Agreement dated October 23 , 2024 , to make payment of Purchaser’s Payment Obligations pursuant to section 2 of the Equipment Financing Agreement and such other covenants Borrower must comply with under such agreement and any subsequent amendments thereto . The Parties agree that the definition of “Taproot Equipment Collateral” is hereby deleted in its entirety and replaced with the following : d. “means the Bitcoin ATM machines that : i) Borrower purchases from the Equipment Lender pursuant to the Equipment Loan Agreement, as specifically listed on Exhibit A and Exhibit B ; and ii) Borrower purchases from Taproot pursuant to the Equipment Financing Agreement, as specifically listed on Schedule A thereto and as amended from time to time . For clarity, such collateral does not include (i) Cash Collateral ; or (ii) any other property or assets of the Borrower . e. The Parties agree that the definition of “Base Payment” is hereby deleted in its entirety and replaced with the following: “shall have the meaning given such term in the November 2 Agreement”. f. The Parties hereby agree to add the following definitions: “ Purchaser’s Payment Obligations ” shall have the meaning given such term in the October 23 Agreement. Miscellaneous . 3. a. This Amendment, together with the Agreement, constitutes the entire agreement between the parties and supersedes all prior or contemporaneous discussions, negotiations, representations, warranties, or agreements relating to the subject matter hereof . In the event of any inconsistency or conflict between this Amendment and the Agreement, this Amendment shall govern . b. Except as specifically amended by this Amendment, the Agreement shall remain in full force and effect. c. This Amendment may be executed simultaneously in any number of counterparts, each of which will be deemed an original but all of which will together constitute one and the same agreement . This Amendment may be delivered by fax or . pdf file . d. Capitalized terms used herein but not defined herein shall have the meaning ascribed to such terms in the Agreement. [ signature page follows ] Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3399202.1 SENIOR LENDER: KGPLA Holdings, LLC Jason Lu, its Manager EQUIPMENT LENDER: Taproot Acquisition Enterprises, LLC Jordan Mirch, its Manager BORROWER: Athena Bitcoin Global Matias Goldenhorn, its CEO and President Athena Bitcoin, Inc. Matias Goldenhorn, its CEO and President Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3404248.1 EQUIPMENT FINANCING AGREEMENT THIS EQUIPMENT FINANCING AGREEMENT (this “ Agreement ”) is entered into as of October 30 , 2024 (the “ Effective Date ”) by and between Taproot Acquisition Enterprises, LLC, a Delaware limited liability company (“ Seller ”) on the one hand, and Athena Bitcoin, Inc . a Delaware corporation (collectively the “ Purchaser ”) . Purchaser and Seller are sometimes referred to herein as the “Party” or “ Parties . ” R E C I T A L S : WHEREAS, Seller owns certain Bitcoin ATM Kiosks listed on Schedule A hereto (collectively the “ Equipment ” and individually, each a “ Unit ”) ; WHEREAS, pursuant to the following agreements between the parties : Equipment Financing Agreement dated November 2 , 2023 (“ Purchase Agreement 1 ”), Equipment Financing Agreement dated December 31 , 2023 (“ Purchase Agreement 2 ”), Equipment Financing Agreement dated February 23 , 2024 (“ Purchase Agreement 3 ”), Equipment Financing Agreement dated May 4 , 2024 (“ Purchase Agreement 4 , ” and hereinafter, Purchase Agreement 1 , Purchase Agreement 2 , Purchase Agreement 3 , and Purchase Agreement 4 , shall be collectively referred to as the “ Prior Purchase Agreements ”), and the Omnibus Equipment Financing Agreement dated September 19 , 2024 (“ Omnibus Agreement ”), Seller has supplied Purchaser with equipment for use in its business operations ; WHEREAS, Seller has placed the Equipment in various retail establishments pursuant to an agreement between Seller and the operator of such retail establishment (each a “ Merchant Agreement ” and collectively the “ Merchant Agreements ” ) ; WHEREAS, Seller will cooperate with Purchaser to assign the Merchant Agreements to Purchaser pursuant to an assignment and assumption agreement in the form attached hereto as Exhibit B ; and WHEREAS, Purchaser and Seller desire to amend and supersede the Prior Purchase Agreements, formalize and document a framework for Seller to be able to supply future Units to Purchaser, allow for the assignment and assumption of the Merchant Agreements, and document Purchaser’s obligation to pay for such Units, all on the terms and conditions contained herein : AGREEMENT: NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser agree as follows : 1. Purchase of Installed Equipment . Each Unit subject to this Agreement, including the installed and active Units listed on Schedule A attached hereto, shall be sold, assigned, transferred and conveyed from Seller to Purchaser, free and clear of any and all liens, pledges, encumbrances, charges or other security interest of any kind as of the Effective Date . The purchase price for each Unit which is installed and activated shall be Seven Thousand Two Hundred Dollars ( $ 7 , 200 . 00 ), per Unit (the “ Unit Purchase Price ”), to be paid as provided in Section 2 (a) below, subject to the conditions herein . The aforementioned notwithstanding, Seller’s title to the Equipment shall be subject to Seller’s first priority security interest . a. Purchase of Equipment for El Salvador . Purchaser is purchasing 110 Units from Seller for use in Purchaser’s El Salvador operations (collectively the “ El Salvador Units ” and individually the “ El Salvador Unit ”) which shall be listed on an appended Schedule A following the Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
a. Purchaser’s payment obligations for the Equipment shall be as follows: i. Purchaser shall pay to Seller, Three Million Dollars ( $ 3 , 000 , 000 . 00 ) in four ( 4 ) equal monthly installments of Seven Hundred and Fifty Thousand Dollars ( $ 750 , 000 . 00 ) with the first payment being made on or before October 31 , 2024 , and the final payment being made on or before January 31 , 2025 (the “ Down Payment ”) . ii. Beginning on the Effective Date, in addition to the Down Payment, Purchaser shall pay Seller on a weekly basis, eight - tenths of one percent ( 0 . 8 % ) of Purchaser’s revenue derived from the sale of Bitcoin in each location Purchaser maintains a Unit in the continental United States operating as an Athena Bitcoin unit (the “ Payment Amount ”) until the earlier of (i) the expiration of the Term of this Agreement, or (ii) the total amount payable under this Agreement totals the aggregate of all Units sold to Purchaser which have not been rejected or returned in accordance with this 2 delivery, installation and activation of the El Salvador Units to El Salvador, which shall be sold, assigned, transferred and conveyed from Seller to Purchaser for the Unit Purchase Price . Provided however, that in the event Purchaser elects to pay for an El Salvador Unit in full at the time of purchase, such El Salvador Unit purchase price shall be reduced to Five Thousand Dollars ( $ 5 , 000 . 00 ), per unit . The Purchaser’s payment obligations for any such new Units shall be completed pursuant to Section 2 (a) . b. Purchase of Additional Units . Pursuant to this Agreement, Purchaser shall have the right, but not the obligation to purchase additional Units from Seller as they become available (“ Additional Units ”), and in doing so, will amend the Schedule A to reflect the purchase of such Additional Units . Additional Units shall be considered sold pursuant to this Agreement effective upon : (i) Seller issuing a purchase order to Purchaser reflecting the number of Additional Units being sold along with an amended Schedule A to the email address listed for Purchaser in Section 20 (notices) ; (ii) Purchaser responding to such email acknowledging and confirming such amendment ; and (iii) written notice that Purchaser has accepted installation of the additional Unit, provided that if Purchaser has not provided written notice of such acceptance within ten ( 10 ) business days of such installation (or otherwise raised a dispute with respect to a particular Unit) then such installation shall be deemed accepted . Any Additional Unit sold from Seller to Purchaser pursuant to this Agreement will be sold at a purchase price of Seven Thousand, Two Hundred Dollars ( $ 7 , 200 . 00 ) per Unit (“ Additional Unit Purchase Price ”) and such sale will be deemed effective upon formal acceptance . The Purchaser’s payment obligations for any such new Units shall be completed pursuant to Section 2 (b) . c. Title . Title to each Unit will automatically transfer when Purchaser accepts delivery of a purchase order from Seller, duly executed by Seller . d. Audit Rights . The Parties agree that Purchaser shall have the right upon thirty ( 30 ) days’ notice to audit such books, records and accounts as it may reasonably request access to, so as to confirm that the Equipment listed on Exhibit A match with the Equipment transferred to Purchaser in accordance with this Agreement . Seller will maintain all such books, records and accounts for at least twenty - four ( 24 ) months after the transfer of such Equipment . Should Purchaser identify any discrepancy, the Parties will discuss in good faith amending the Exhibit A to accurately reflect the Units transferred . 2. Purchaser’s Payment Obligation . Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
b. Purchaser’s payment obligations for the Additional Units shall be as follows: i. Purchaser shall pay the Additional Unit Purchase Price for each Additional Unit ordered by Purchaser within thirty days of the Additional Units being deemed sold pursuant to Section 1 (b) . c. Additional Payment . Purchaser, its successor or assigns, during the Term, and only during this Term, shall pay to Seller an additional one - half of one percent ( 0 . 5 % ) of Purchaser’s revenue derived from the sale of Bitcoin in each location Purchaser maintains a Unit in the continental United States operating as an Athena Bitcoin unit (the “ Additional Payment ”), subject to the conditions in Section 2 (c)(iii) below . This Section 2 (c) amends and supersedes any other payment obligation of Purchaser contained in any of the Prior Purchase Agreements . For clarification, after the Effective Date of this Agreement, Purchaser, its affiliates or assigns, shall have no further obligations to make payment of any kind to Seller relating to or arising from the Prior Purchase Agreements, unless otherwise stated in the Omnibus Agreement . i. In the event Purchaser satisfies its payment obligations pursuant to Sections 2 (a) and 2 (b) above prior to the end of the Term, Purchaser shall have the option, in its sole discretion, to buy - out the Additional Payment obligation (the “ Buy - Out Option ”) . The Buy - Out Option price shall be determined by (i) Purchaser’s monthly revenue average as determined from Purchaser’s revenue derived from the sale of Bitcoin in every location Purchaser maintains in the continental United States operating as Athena Bitcoin over the prior 12 months divided by 12 (the “ Monthly Average ”) ; (ii) and multiplying the Monthly Average by the number of months remaining in the Term, multiplied by one - half of one percent ( 0 . 5 % ) (the ” Buy - Out Option Price ”) . For purposes of determining the number of months remaining on the Term, if Purchaser has satisfied its payment obligations pursuant to Section 2 (b) in the middle of a month, the Buy - Out Price will be prorated based on the number of days remaining in such month . Purchaser shall exercise its Buy - Out Option by providing Seller with ten ( 10 ) business days written notice of its intent 3 Agreement (“ Aggregate Equipment Purchase Price ”) . The aforementioned notwithstanding, during the Term, Purchaser’s minimum monthly payment obligation of the Payment Amount will be One - Hundred, Twenty - Five Thousand ( $ 125 , 000 . 00 ) Dollars (the “ Minimum Payment Amount ”) such that in no month will the Payment Amount to Seller be less than the Minimum Payment Amount . If on the last day of any month during the Term the Payment Amount is less than the Minimum Payment Amount, then Purchaser shall pay to Seller the difference between the Payment Amount and the Minimum Payment Amount, with such payment being made no later than the fifth day following of the following month . 1 . The Parties acknowledge and agree that Purchaser has previously paid as an advance to Seller, Two Hundred Fifty - Seven Thousand, Four Hundred, Eighty - One and 83 / 100 Dollars ( $ 257 , 481 . 83 ) to be applied against the Aggregate Equipment Purchase Price . iii. Upon the expiration of the Term, Purchaser shall owe and be obligated to pay to Seller, the then outstanding balance on all Equipment subject to this Agreement and any amendments hereto . Failure by Purchaser to pay the outstanding balance on the thirty - six - month anniversary of the Effective Date shall be a Purchaser Event of Default pursuant to Section 7 below . Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
to exercise the Buy - Out Option with such Buy - Out Option Price (as defined herein) being paid to Seller on the tenth business day following the exercised notice (the “ Buy - Out Option Payment Date ”) . Contemporaneously with Purchaser’s exercise of the Buy - Out Option, Purchaser will present to Seller its calculations in support of the Buy - Out Option Price . Thereafter, Seller will have three ( 3 ) business days to object and provide its own calculation of the Buy - Out Option Price . If Seller objects to the Buy - Out Option Price, the Buy - Out Payment Date shall be extended by ten ( 10 ) business days and the Parties will submit each calculation to a non - interested, third - party neutral with a Certified Public Accountant license to review and determine the correct Buy - Out Option Price, with such determination being binding upon the Parties . Upon the issuance of such third - party neutral’s determination, Purchaser shall have five ( 5 ) business days thereafter to pay the Buy - Out Option Price to Seller . It shall be a Purchaser Event of Default pursuant to Section 7 below, in the event Purchaser fails to pay the Buy - Out Option Price on the Buy - Out Option Payment Date . ii. Purchaser’s obligations hereunder shall be joint and several. iii. For the purposes of Section 2 (c), the sale of Bitcoin from “Athena Bitcoin units” from which the Additional Payment will be derived includes sales made by Purchaser, its affiliates, and by those arising from asset acquisition transactions that are sourced and negotiated by Seller . Provided, that Athena Bitcoin unit sales made after the Effective Date that arise from any of Purchaser’s subsequent mergers and acquisitions with or of other entities, or asset acquisition transactions which are not sourced and negotiated by Seller, are not included in the Additional Payment calculation . 3. Purchaser Right to Return Units . In addition to all other rights and remedies set forth in this Agreement, Purchaser shall have the right upon ten ( 10 ) business days’ notice to Seller, at its sole election, return any Unit which Purchaser believes or has reason to believe, is subject to a dispute regarding its ownership in the event Seller does not cure such dispute regarding ownership prior to the notice period herein lapsing . Should Purchaser exercise such right, Seller shall credit the Unit price against any other amounts owed under this Agreement . Such Unit shall be available for repurchase once Purchaser has determined that Seller has clear and merchantable title . The aforementioned notwithstanding, Purchaser may not exercise this right in Section 3 with respect to Units acquired by Seller from SandP Solutions, LLC . 4. Purchase Money Security Interest . As collateral security for the payment of the purchase price of the Equipment and performance in full of all the obligations of the Purchaser under this Agreement, the Purchaser hereby pledges and grants to the Seller, a lien on and first priority security interest in and to all of the right, title and interest of the Purchaser in, to and under the Equipment listed on Schedule A, and as amended from time to time, wherever located, and whether now existing or hereafter arising or acquired from time to time, and in all accessions thereto and replacements or modifications thereof, as well as proceeds (including insurance proceeds) of the foregoing . The security interest granted under this provision constitutes a purchase - money security interest under Article 9 of the Florida Uniform Commercial Code . 5. Term . The term of this agreement will be thirty - six ( 36 ) months from the Effective Date (the “ Term ”), with any outstanding payment obligation pursuant to Section 2 being due and owing on the conclusion of the thirty - sixth month following the Effective Date . 6. Covenants . The following covenants of Purchaser and Seller shall apply until the Unit Purchase price for each Unit subject to this Agreement and any amendment hereto, has been paid in full . 4 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
iv . Further Assurances . Purchaser agrees to execute and deliver from time to time upon reasonable request of Seller such other instruments of assignment, conveyance and transfer and take such other action as Seller may reasonably request for the purpose of perfecting, continuing, amending, protecting or further evidencing the arrangements contemplated hereby or to enable Seller to exercise and enforce its rights and remedies hereunder . Purchaser will, at Purchaser's expense, upon each request of Seller (i) authorize Seller to file, from time to time, financing statements or other records in such public offices as Seller may require, together with continuation statements thereof and amendments thereto, containing, among other things, (a) a description of the Equipment as Seller may require, and (b) Purchaser's federal taxpayer identification number and/or state organizational number, if any, and any other identifying information as Seller may require, and (ii) comply with every other requirement deemed necessary by Seller for the perfection of its security interest in the Equipment . Without diminishing or impairing any of Purchaser's obligations hereunder, a photographic, electronic or other reproduction of this Agreement shall be sufficient as a financing statement . b. Seller Covenants: i. During the Term of this Agreement, Seller will use reasonable efforts to assist the Purchaser in growing its business which shall include but not be limited to the following : procure new locations for the Purchaser’s Bitcoin units, promote and 5 a. Purchaser Covenants: i. Inspection . Purchaser will at all times keep accurate and complete records of the Equipment based on what was provided to it by Seller . Upon providing notice to Purchaser at least one ( 1 ) business day in advance, Seller and its agents shall have at its sole cost and expense, the right at all reasonable times to examine and inspect the Equipment and to make extracts from the books and records related to the Schedule A Equipment, and at its sole cost and expense to examine, appraise and protect the Schedule A Equipment . ii. No Transfer or Encumbrance . During the Term of this Agreement, Purchaser agrees that it will not, without in each case obtaining Seller’s prior written consent, (i) sell, lease, transfer or otherwise dispose of all or any part of the Equipment listed on Schedule A or any amendment thereto or license any of the Equipment on Schedule A or any amendment thereto except as otherwise permitted herein, or (ii) encumber the Equipment on Schedule A or any amendment thereto, including, but not limited to, through adverse claims, assignments, attachments, leases, mortgages, security interests, or other liens of any kind or nature (the “ Encumbrances ”) except those in favor of Seller and those consented to in writing by Seller (the “ Permitted Encumbrances ”) . iii. Preservation of the Equipment ; Risk of Loss . Purchaser will at its sole cost and expense maintain the Equipment in good condition and repair, except for ordinary wear and tear or other intentional damages caused by a third party, and in no event in better condition than as of the date transfer to Purchaser . Purchaser will promptly pay all taxes, levies and all costs of repair, maintenance and preservation . Purchaser bears the risk of loss of the Equipment . Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
a. Purchaser Default . The Purchaser shall, at Seller’s option, be in default under this Agreement upon the happening of any of the following events or conditions (each, an “Purchaser Event of Default ”) : (a) the failure by the Purchaser to perform any of its obligations under this Agreement ; (b) falsity or inaccuracy in any material respect or material breach by the Purchaser of any written warranty, representation or statement made or furnished to Seller by or on behalf of the Purchaser ; (c) the entry of any judgment against the Purchaser placing a lien against or the making of any levy, seizure or attachment of or on the Equipment that could (in Seller’s reasonable sole discretion) have a material adverse effect on the financial condition of the Purchaser or the ability of the Purchaser to perform its obligations ; or (d) any willful act of Purchaser which causes the failure of Seller to have a perfected first priority security interest in the Equipment ; or (e) evidence received by Seller that the Purchaser may have directly or indirectly been engaged in any type of illegal activity which, in Seller’s reasonable discretion, might result in the forfeiture of any property of the Purchaser by any governmental entity, federal, state or local, provided, that, upon the occurrence of any of the foregoing, such event or condition shall not be considered a Purchaser Event of Default unless and until Seller provides notice to Purchaser of its occurrence, and such Purchaser Event of Default is not cured by Purchaser within ten ( 10 ) business days thereafter . Purchaser may cure a Purchaser Event of Default pursuant to Section 7 (e) if within fifteen ( 15 ) days of being notified from Seller of a potential forfeiture of a Unit it pays to Seller the Unit Purchase Price for such Unit or Units that are subject to forfeiture . The above notwithstanding, it will not be an event of default if Purchaser is unable to operate in a particular jurisdiction due to changes in licensing requirements at the local, municipal or state level . Provided however, that Purchaser’s inability to operate in a particular jurisdiction will not limit, modify or alter Purchaser’s payment obligations in Section 2 above . b. Events of Default by Seller . The Seller shall, at Purchaser’s option, be in default under this Agreement upon the happening of any of the following events or conditions (each, an “Seller Event of Default”) : (a) the failure by the Seller to perform any of its obligations under this Agreement ; (b) falsity or inaccuracy in any material respect or material breach by the Seller of any written warranty, representation or statement made or furnished to Purchaser by or on behalf of the Seller ; (c) the entry of any judgment against the Seller placing a lien against or the making of any levy, seizure or attachment of or on the Equipment that could (in Purchaser’s reasonable sole discretion) have a material adverse 6 market the Purchaser’s business, and related services, and support the Purchaser’s revenue growth and improve its current operations . Provided that Seller’s failure to perform its obligations under this Section 6 (b) shall not be deemed a Seller Default . ii. Seller will at its cost, within ten (10) days of notice, discharge or bond any lien filed by any person or entity in relation to the Equipment. iii. Seller agrees to execute and deliver from time to time upon reasonable request of Purchaser such other instruments of assignment, conveyance and transfer and take such other action as Purchaser may reasonably request for the purpose of perfecting, continuing, amending, protecting or further evidencing the arrangements contemplated hereby or to enable Purchaser to exercise and enforce its rights and remedies hereunder and to take title to such Equipment . 7. Events of Default . Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
a. Seller Remedies . Upon the occurrence of any such Purchaser Event of Default and at any time thereafter, Seller may declare all of the payments owed for the Equipment secured hereby, and any amendment hereto, immediately due and payable and shall have, in addition to any remedies provided herein or by any applicable law or in equity, all the remedies of a secured party under the UCC . Seller’s remedies include, but are not limited to, the right to (a) peaceably by its own means or with judicial assistance enter the Purchaser’s premises, or wherever such Equipment may be and take possession of the Equipment without prior notice to the Purchaser or the opportunity for a hearing, and (b) require the Purchaser to assemble the Equipment and make it available to Seller at a place designated by Seller . Expenses of retaking, holding, preparing for disposition, disposing or the Equipment shall include Seller’s reasonable attorneys’ fees and legal expenses, incurred or expended by Seller to enforce any payment due it under this Agreement either as against the Purchaser, or in the prosecution or defense of any action, or concerning any matter growing out of or connection with the subject matter of this Agreement and the Equipment pledged hereunder . Seller’s rights under this Section 8 shall lapse upon Purchaser’s full satisfaction of its payment obligations under Section 2 (a) above . b. Buyer Remedies . Upon the occurrence of any such Seller Event of Default and at any time thereafter, Purchaser may pursue any remedies provided herein or by any applicable law or in equity . If the Seller Event of Default is due to a reach of Section 6 (b)(ii) Purchaser’s remedies shall include, but are not limited to, the right to step - in on Sellers behalf and at Seller’s sole cost and expense, including attorney’s fees, to discharge or bond any lien, claim, or charge filed by any person or entity in relation to the Equipment and take any other action necessary to ensure clean and marketable title . Expenses include Purchaser’s reasonable attorneys’ fees and legal expenses, incurred or expended by Purchaser to enforce any payment due it under this Agreement either as against the Seller, or in the prosecution or defense of any action, or concerning any matter growing out of or connection with the subject matter of this Agreement and the Equipment . 9 . Assignment and Assumption of Merchant Agreements . Within ninety days ( 90 ), of the execution of this Agreement, and from time to time as Additional Units are purchased, the Parties will use best efforts to enter into the Assignment and Assumption Agreement attached hereto as Exhibit B, which will have as a schedule, each of the Merchant Agreements being assumed by Purchaser . For clarification purposes only, Purchaser acknowledges that there are Merchant Agreements which can only be assigned 7 effect on the financial condition of the Purchaser or the ability of the Seller to perform its obligations ; or (d) any willful act of Seller which causes the failure of Purchaser to have clean and marketable title in the Equipment ; or (e) evidence received by Purchaser that the Seller may have directly or indirectly been engaged in any type of illegal activity which, in Purchaser’s reasonable discretion, might result in the forfeiture of any property of the Purchaser or Seller by any governmental entity, federal, state or local, provided, that, upon the occurrence of any of the foregoing, such event or condition shall not be considered a Seller Event of Default unless and until Purchaser provides notice to Seller of its occurrence, and such Seller Event of Default is not cured by Seller within ten ( 10 ) business days thereafter . Seller may cure a Seller Event of Default pursuant to Section 7 (e) if within fifteen ( 15 ) days of being notified from Purchaser of a potential forfeiture of a Unit it pays to Purchaser the Unit Purchase Price for such Unit or Units that are subject to forfeiture or replaces such Unit or Units with a Unit or Units that is not subject to potential forfeiture . 8. Remedies . Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
with prior consent of the merchant and that Seller is making no representation to the assignability of such Merchant Agreements. 10. Representations and Warranties of Seller . Seller represents and warrants to Purchaser that the statements contained in this Section 10 are correct and complete as of the date hereof. a. Seller is a private limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware . b. Seller has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder . Without limiting the generality of the foregoing, the Members and Manager of Seller have duly authorized the execution, delivery, and performance of this Agreement by Seller . This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms and conditions . c. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Seller is subject or any provision of the corporate charter of Seller or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Seller is a party or by which it is bound . Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the Parties hereto to consummate the transactions contemplated by this Agreement . d. No Violation of Law ; Litigation . It is not in violation of any applicable law, which violations, individually or in the aggregate, would affect performance of any of its obligations under this Agreement . There are no proceedings by or before any court, governmental authority, or dispute resolution body now pending or to its actual knowledge threatened against it which, if adversely determined, could reasonably be expected to have a material adverse effect on its financial condition or right or ability to perform its obligations under this Agreement . This section excludes Seller’s lawsuit pending and active with SandP Solutions, LLC . e. Seller has good and marketable title and ownership, free and clear of all liens, encumbrances, claims, charges, restrictions on transfer, to all Equipment, documentation, materials, software and all other items required for the intended use of the Equipment . Except for the representations contained in this Agreement, Seller is selling the Equipment on an “As Is” basis. 11. Representations and Warranties of Purchaser . Purchaser represents and warrants to Seller that the statements contained in this Section 11 are correct and complete as of the date hereof. a. Athena Bitcoin, Inc . , is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and is a wholly owned subsidiary of Athena Bitcoin Global, a Nevada corporation and a publicly listed company on otc markets . b. Purchaser has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder . This Agreement constitutes the valid and legally binding obligation of Purchaser, enforceable in accordance with its terms and conditions . 8 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
c . Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i) violate any statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which Purchaser is subject or any provision of the corporate charter of Purchaser or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice or consent under any agreement, contract, lease, license, instrument, or other arrangement to which Purchaser is a party or by which it is bound . Purchaser need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, government or governmental agency in order for the Parties hereto to consummate the transactions contemplated by this Agreement . 12. Seller’s Indemnity . Purchaser shall defend, indemnify and hold harmless Seller and its affiliates, and their respective employees, officers, directors, shareholders and agents (collectively, the “ Seller’s Indemnities ”) from and against any and all losses, liabilities, penalties, fines, damages, expenses (including reasonable attorney’s fees), causes of action, suits or claims of every kind and irrespective of the theory upon which based (collectively, “ Losses ”) relating to or arising from (i) permanent loss and/or damage to the Equipment ; and (ii) any third party claims brought against Seller which are the result of the Purchaser’s breach of this agreement, gross negligence or willful misconduct, except to the extent caused by Seller’s gross negligence or willful misconduct . This Section 12 shall survive termination of this Agreement . 13. Purchaser’s Indemnity . Seller shall defend, indemnify and hold harmless Purchaser, its successors and assigns, and their respective employees, officers, directors, shareholders and agents (collectively, the “ Purchaser’s Indemnities ”) from and against any and all Losses relating to or resulting from (i) the Equipment, including without limitation, Seller’s lack of title to any of the Equipment free and clear of any and all liens or encumbrances ; (ii) permanent loss and/or damage to the Equipment prior to the date of transfer to Purchaser ; (iii) any third party claims brought against Purchaser which are the result of the Seller’s title to the Equipment, including but not limited to Seller’s breach of this Agreement, except to the extent caused by Seller’s gross negligence or willful misconduct . This Section 13 shall survive termination of this Agreement . a. In the event a claim is asserted against Purchaser arising from Seller’s actions with respect to title to a Unit or improper installation of a Unit by Seller at a merchant location then Purchaser may, at its sole election : (i) remove such Unit from the disputed location and place such Unit at a different location ; (ii) return such Unit to Seller and deduct the Unit Purchase Price for such Unit from the total balance owed to Seller ; or (iii) request a new Unit from Seller to replace such Unit where there is a dispute regarding clear title to such Unit . 14. Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns . No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party ; provided, however, that Seller or Purchaser may assign any or all of its rights and interests hereunder to one or more of its affiliates . 15. Amendments and Waivers . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Parties hereto . No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default, 9 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant 16. Exclusivity; Non - competition; Non - disparagement . a. For Seventy Eight ( 78 ) months following the Effective Date, Seller, its principals and affiliates, including William Mgt . LLC and Jordan Mirch (the “ Seller Parties ”), agree to exclusively promote, market and sell Units to Purchaser, its successors, assigns and affiliates . b. For Seventy Eight ( 78 ) months following the Effective Date, and other than Purchaser’s business, and pre - existing agreements as of the Effective Date, Seller Parties shall not participate as an owner, manager, employee, investor, contractor or consultant in any business that is competitive or a competitor to Purchaser’s business as it is as of the Effective Date . c. For Seventy Eight ( 78 ) months following the Effective Date, Seller further agrees not to directly or indirectly, in any communications with any person or entity, make any derogatory, disparaging, critical and/or negative statement whether oral, written or otherwise, against or about Purchaser . 17. Participation in Purchaser’s Equity Compensation Plan . In consideration for the rights and obligations of Seller hereunder, Purchaser acknowledges and agrees that Seller will be eligible to participate in Purchaser’s Equity Compensation Plan, following the completion of Purchaser's S - 1 process and applicable laws and regulations . 18. Amendments to Prior Purchase Agreements . In consideration for the rights and obligations of both Parties hereunder, the Parties wish to amend certain sections of the Prior Purchase Agreements and the Omnibus Agreement as follows : a. Prior Purchase Agreements . The Parties acknowledge that each Exhibit A contained in the Prior Purchase Agreements are incorrect and do not accurately capture the prior units sold . The Parties wish to amend each Exhibit A . i. Each of the Prior Purchase Agreements Exhibit A is hereby amended and replaced with the specific Exhibit A attached on Schedule B to this Agreement. 19. No Waiver ; Cumulative Remedies . The failure of Seller or Purchaser to enforce any one or more of the terms or conditions of this Agreement will not be deemed a waiver of such terms or conditions or limit the right to enforce any term and condition . All rights and remedies provided are cumulative and are not exclusive of any rights or remedies provided by law . 20. Governing Law/Venue . This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida without giving effect to any choice or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Florida . Each of the Parties hereto submits to the non - exclusive jurisdiction of any state or federal court sitting in Miami, Florida, in any action or proceeding arising out of or relating to this Agreement and agrees that all claims in respect of the action or proceeding may be heard and determined in any such court . 21. Notice . All notices, requests, demands, claims, and other communications hereunder shall be in writing . Any notice, request, demand, claim, or other communication hereunder shall be deemed duly 10 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
given (i) when delivered personally to the recipient, (ii) one ( 1 ) business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) one ( 1 ) business day after being sent to the recipient by facsimile transmission or electronic mail, or (iv) three ( 3 ) business days after being mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended recipient as set forth below : If to Seller: Taproot Acquisition Enterprises, LLC P.O. Box 192135 Miami Beach, Florida 33193 Attention: Jordan Mirch Email: jmirch@williammgt.com If to Purchaser: Athena Bitcoin, Inc. c/o Matias Goldenhorn – CEO & President 1 SE 3 rd Avenue – Ste 2740 Miami, FL 33131 Email: matias@athenabitcoin.com 22. With a copy that shall not constitute notice, to: legal@athenabitcoin.com Severability . If any provision of this Agreement or portion thereof should be declared invalid for any reason, the invalid provision or portion hereof shall be deemed omitted and the remaining terms shall nevertheless be carried into effect. 23. Counterparts . This Agreement may be executed in one or more counterparts (including by means of facsimile or electronic PDF copy), each of which shall be deemed an original but all of which together shall constitute one and the same instrument . 24. Further Assurances . The Parties hereto shall execute such further documents, and perform such further acts, as may be necessary to, transfer and convey the Equipment to Purchaser, on the terms herein contained, and to otherwise comply with the terms of this Agreement and consummate the transactions contemplated hereby . Seller has entered into certain merchant agreements for the placement of Units at merchant locations that have been sold to Purchaser and the Parties desire to have such merchant agreements assigned to Purchaser . The Parties agree to work in good faith to have such merchant agreements assigned to Purchaser . 25. Entire Agreement . This Agreement (including the documents and exhibits referred to herein) constitutes the entire agreement between the Parties and supersedes any and all prior understandings, agreements, or representations by or between the Parties, written or oral, to the extent they relate in any way to the subject matter hereof including, but not limited to the Prior Purchase Agreements 26. Interpretation . The headings of Articles and Sections in this Agreement are provided for convenience of reference only and will not affect the meaning of this Agreement . All Schedules and Exhibits to this Agreement are incorporated by reference . All words used in this Agreement will be construed to be of such gender or number as the circumstances require . Unless otherwise expressly provided, the words “include,” “includes” and “including” shall be interpreted to mean “including without limitation . ” A reference to a document, law, code, contract, agreement, or this Agreement, includes a reference to that document, code, contract, or agreement as periodically amended, supplemented, replaced, or restated . The Parties shall act 11 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
iv . will promptly notify the Disclosing Party if it becomes aware of any use, disclosure of or unauthorized written, verbal or visual access to any of the Confidential Information of Disclosing Party in violation of this Agreement . b . If the Receiving Party is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any Confidential Information, the Receiving Party shall provide : (i) written notice of such requirement to the Disclosing Party within five business days so the Disclosing Party may seek, at its sole cost, a protective order or other remedy or waive compliance with the confidentiality provisions of this Agreement ; and (ii) reasonable assistance, at the Disclosing Party’s sole cost, in opposing such disclosure or seeking a protective order or other limitations 12 reasonably and in accordance with the principles of good faith and fair dealing in the performance of this Agreement. 27. Confidentiality . “Confidential Information” means all, or any part of, and originals or copies of, any information (technical and non - technical), documents, data, records, computer programs, software, inventions, discoveries, designs, promotional ideas, customer information, financial information, practices, processes, methods, techniques, trade secrets, products, the terms of any proposed agreement between the Parties, and/or research (in each case, in any form or media, whether electronic, paper or oral) received by the Receiving Party from the Disclosing Party or its representatives, which is so designated either in writing or by oral communication . Confidential Information shall be deemed to include all notes, analyses, compilations, and other material prepared by the Receiving Party containing any Confidential Information . Confidential Information shall not include information that : (i) is now or becomes publicly available through no breach on the part of the Receiving Party or another person’s confidentiality obligations ; (ii) the Receiving Party can demonstrate it had lawfully in its possession prior to disclosure without any obligation of confidentiality ; (iii) is independently developed by the Receiving Party without access to or the use of any Confidential Information of the Disclosing Party as evidenced by written documentation ; or (iv) the Receiving Party lawfully obtains from a third party who has the right to transfer and disclose it . a. The party that receives Confidential Information (the “ Receiving Party ”) of the Disclosing Party: i. will not disclose or otherwise make available such Confidential Information to any third party, whether by written, verbal or visual means, without the Disclosing Party’s prior written consent ; however, the Receiving Party may disclose the Confidential Information to its officers, employees, consultants, legal advisors, market advisors, trustees, and any others who have a “need to know,” who have been apprised of this restriction, and who are themselves bound by nondisclosure obligations at least as restrictive as those set forth in this Section ; ii. will hold the Confidential Information in confidence and use the same degree of care it uses to keep its own similar information confidential, but in no event shall it use less than a reasonable degree of care ; iii. use such Confidential Information only to perform its obligations or exercise of its rights or remedies under the Agreement; and Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
13 on disclosure . After providing such notice and assistance, if the Receiving Party remains required by law to disclose any Confidential Information, the Receiving Party shall disclose no more than that portion of the Confidential Information which, on the advice of the Receiving Party’s legal counsel, the Receiving Party is legally required to disclose and, upon the Disclosing Party’s request, shall use commercially reasonable efforts to obtain assurances from the applicable court or agency that such Confidential Information will be afforded confidential treatment . c. Nothing in this Agreement shall prevent either Party from using any general methodologies or know - how known by such Party prior to the Disclosing Party’s disclosures under this Agreement and that are contained in the unaided memory of such Party’s personnel provided that in doing so it is not in breach of its obligations of confidentiality under this Section . d. The provisions of this Section 27 shall survive the term of this Agreement and shall continue through the term of the Processing Agreement, except in the case of Confidential Information that is a trade secrets within the meaning of applicable law, which shall survive for so long as such Confidential Information remains a trade secret . e. The Receiving Party shall be responsible for any breach of this Section 27 caused by any of its representatives . On the expiration of this Agreement, the Receiving Party shall, promptly return or destroy all Confidential Information and copies thereof that it has received under this Agreement . f. No Trading . The Recipient acknowledges and is aware of the restrictions imposed by the United States Federal Securities Laws and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company . The Receiver hereby agrees that, while in possession of such material nonpublic information, it shall not purchase or sell any publicly traded securities of Athena Bitcoin Global, communicate such information to any third party, take any other action with respect to Athena Bitcoin Global, in violation of such Laws, or cause or encourage any third party to do any of the foregoing . This Agreement and the Parties’ obligations hereunder shall terminate and be of no further force or effect at the conclusion of the Term, subject to the securities law, as may be applicable . g. The Parties acknowledge and agree that any violation of this Section 27 will cause substantial and irreparable injury to the Disclosing Party and that money damages as a remedy at law for any breach of the provisions of this Section 27 will be inadequate . 28. Taxes . All transfer, documentary, sales, use, stamp, registration and other such taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with the consummation of the transactions contemplated by this Agreement shall be borne by the responsible Party . 29. Costs and Attorney’s Fees . In the event either Party brings an action to enforce the terms of this Agreement, the non - prevailing Party in such action shall pay to the prevailing Party the prevailing Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
14 Party’s costs and expenses, including reasonable attorneys’ fees, incurred in connection with such enforcement action. [SIGNATURE PAGE TO FOLLOW] Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written. SELLER: Taproot Acquisition Enterprises, LLC By: Name: Jordan Mirch Title: Manager PURCHASER: Athena Bitcoin, Inc. By: Name: Matias Goldenhorn Title: CEO & President Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
Schedule A Equipment Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
152626 152010 152070 151954 151896 151845 151788 151580 152627 152012 152071 151955 151897 151846 151790 151581 152631 152013 152074 151958 151898 151848 151792 151582 152632 152014 152075 151959 151900 151849 151794 151583 152633 152015 152077 151960 151901 151850 151795 151590 152635 152016 152078 151961 151902 151852 151796 151592 152637 152017 152079 151962 151903 151853 151797 151595 152638 152018 152080 151963 151904 151854 151799 151614 152639 152019 152081 151965 151905 151855 151801 151615 156119 152020 152083 151966 151907 151856 151802 151616 156134 152021 152085 151968 151909 151857 151803 151617 156474 152023 152086 151969 151910 151858 151804 151618 156475 152024 152099 151970 151911 151859 151805 151619 156476 152025 152573 151971 151912 151860 151808 151620 156478 152027 152574 151972 151913 151861 151809 151636 156479 152028 152575 151973 151914 151862 151810 151655 156480 152029 152576 151975 151916 151863 151811 151661 156481 152030 152577 151976 151917 151864 151812 151662 156482 152032 152580 151977 151918 151865 151813 151663 156483 152034 152581 151978 151919 151866 151814 151670 156492 152036 152583 151980 151920 151867 151816 151671 156494 152037 152586 151981 151924 151869 151820 151676 156498 152039 152587 151982 151926 151870 151821 151677 KI - 10001 152042 152589 151983 151927 151872 151822 151678 KI - 10002 152044 152591 151984 151928 151873 151823 151682 KI - 10009 152045 152592 151985 151930 151875 151824 151687 KI - 10010 152047 152595 151986 151931 151876 151825 151689 KI - 10014 152048 152597 151987 151932 151877 151827 151691 KI - 10015 152049 152598 151990 151933 151878 151829 151692 KI - 10018 152050 152600 151992 151934 151879 151830 151695 KI - 10022 152051 152601 151993 151936 151880 151831 151696 KI - 10023 152052 152602 151994 151938 151883 151832 151698 KI - 10028 152053 152603 151996 151939 151884 151833 151729 KI - 10029 152054 152604 151997 151940 151885 151834 151730 KI - 10030 152056 152605 151998 151941 151886 151835 151731 KI - 99999 152057 152606 151999 151942 151888 151836 151734 TYKA000047 152059 152608 152000 151943 151889 151837 151735 TYKA000072 152061 152610 152004 151944 151890 151838 151758 TYKA000087 152062 152611 152005 151945 151891 151839 151782 TYKA000118 152064 152613 152006 151948 151892 151840 151784 TYKA000147 152066 152614 152007 151949 151893 151841 151785 TYKA000151 152067 152616 152008 151951 151894 151843 151786 TYKA000152 152068 152617 152009 151952 151895 151844 151787 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKA 000162 TYKA 003572 TYKA 001109 TYKA 000165 TYKA 003575 TYKA 001113 TYKA 000216 TYKA 003581 TYKA 001173 TYKA 000230 TYKA 003592 TYKA 001316 TYKA 000235 TYKA 003594 TYKA 001338 TYKA 000246 TYKA 003609 TYKA 001350 TYKA 000249 TYKA 003620 TYKA 001351 TYKA 000251 TYKA 003802 TYKA 001354 TYKA 000257 TYKA 004011 TYKA 001424 TYKA 000258 TYKA 004018 TYKA 001471 TYKA 000305 TYKA 004063 TYKA 001497 TYKA 000311 TYKA 004079 TYKA 001510 TYKA 000331 TYKA 004150 TYKA 001744 TYKA 000337 TYKA 004152 TYKA 001859 TYKA 000437 TYKA 004163 TYKA 001958 TYKA 000472 TYKA 004175 TYKA 001969 TYKA 000490 TYKA 004239 TYKA 001973 TYKA 000590 TYKA 004283 TYKA 001982 TYKA 000604 TYKA 004333 TYKA 001990 TYKA 000606 TYKA 004370 TYKA 002009 TYKA 000632 TYKA 004388 TYKA 002010 TYKA 000633 TYKA 004403 TYKA 002059 TYKA 000640 TYKA 004459 TYKA 002253 TYKA 000641 TYKA 004517 TYKA 002261 TYKA 000712 TYKA 004529 TYKA 002323 TYKA 000713 TYKA 004619 TYKA 002353 TYKA 000726 TYKA 004621 TYKA 002358 TYKA 000728 TYKA 004635 TYKA 002448 TYKA 000760 TYKA 004640 TYKA 002510 TYKA 000770 TYKA 004650 TYKA 002559 TYKA 000813 TYKA 004651 TYKA 002772 TYKA 000819 TYKA 004652 TYKA 002860 TYKA 000874 TYKA 004653 TYKA 002865 TYKA 000911 TYKA 004705 TYKA 002945 TYKA 000921 TYKA 004706 TYKA 002983 TYKA 000950 TYKA 004709 TYKA 003147 TYKA 000964 TYKA 004710 TYKA 003166 TYKA 001038 TYKA 004713 TYKA 003308 TYKA 001049 TYKA 004715 TYKA 003324 TYKA 001050 TYKA 004716 TYKA 003400 TYKA 001057 TYKA 004717 TYKA 003412 TYKA 001062 TYKA 004719 TYKA 003504 TYKA 001084 TYKA 004721 TYKA 003550 TYKA 005909 TYKA 004722 TYKA 006480 TYKA 006728 TYKA 007275 TYKA 006029 TYKA 004725 TYKA 006481 TYKA 006765 TYKA 007276 TYKA 006060 TYKA 004729 TYKA 006484 TYKA 006766 TYKA 007277 TYKA 006063 TYKA 004731 TYKA 006485 TYKA 006768 TYKA 007278 TYKA 006072 TYKA 004734 TYKA 006486 TYKA 006769 TYKA 007280 TYKA 006074 TYKA 004740 TYKA 006491 TYKA 006770 TYKA 007282 TYKA 006075 TYKA 004755 TYKA 006492 TYKA 006773 TYKA 007284 TYKA 006137 TYKA 004756 TYKA 006493 TYKA 006774 TYKA 007287 TYKA 006139 TYKA 004757 TYKA 006496 TYKA 006776 TYKA 007289 TYKA 006254 TYKA 004759 TYKA 006500 TYKA 006777 TYKA 007291 TYKA 006257 TYKA 004764 TYKA 006502 TYKA 006778 TYKA 007292 TYKA 006259 TYKA 004768 TYKA 006503 TYKA 006780 TYKA 007369 TYKA 006264 TYKA 004769 TYKA 006534 TYKA 006782 TYKA 007371 TYKA 006265 TYKA 004771 TYKA 006536 TYKA 006783 TYKA 007392 TYKA 006266 TYKA 004819 TYKA 006537 TYKA 006791 TYKA 007400 TYKA 006270 TYKA 004902 TYKA 006538 TYKA 006792 TYKA 007446 TYKA 006271 TYKA 004956 TYKA 006541 TYKA 006793 TYKA 007526 TYKA 006277 TYKA 004959 TYKA 006545 TYKA 006794 TYKA 007535 TYKA 006279 TYKA 004964 TYKA 006547 TYKA 006809 TYKA 007551 TYKA 006280 TYKA 004966 TYKA 006551 TYKA 006837 TYKA 007557 TYKA 006283 TYKA 004973 TYKA 006552 TYKA 007044 TYKA 007558 TYKA 006288 TYKA 004982 TYKA 006553 TYKA 007045 TYKA 007559 TYKA 006296 TYKA 005161 TYKA 006556 TYKA 007050 TYKA 007560 TYKA 006368 TYKA 005162 TYKA 006562 TYKA 007052 TYKA 007562 TYKA 006376 TYKA 005223 TYKA 006564 TYKA 007057 TYKA 007568 TYKA 006377 TYKA 005224 TYKA 006565 TYKA 007064 TYKA 007572 TYKA 006382 TYKA 005226 TYKA 006569 TYKA 007154 TYKA 007573 TYKA 006383 TYKA 005228 TYKA 006570 TYKA 007166 TYKA 007575 TYKA 006386 TYKA 005229 TYKA 006573 TYKA 007239 TYKA 007579 TYKA 006389 TYKA 005230 TYKA 006575 TYKA 007246 TYKA 007589 TYKA 006390 TYKA 005233 TYKA 006577 TYKA 007247 TYKA 007600 TYKA 006391 TYKA 005234 TYKA 006579 TYKA 007251 TYKA 007604 TYKA 006392 TYKA 005236 TYKA 006582 TYKA 007253 TYKA 007715 TYKA 006398 TYKA 005238 TYKA 006584 TYKA 007255 TYKA 007724 TYKA 006399 TYKA 005240 TYKA 006588 TYKA 007257 TYKA 007925 TYKA 006402 TYKA 005241 TYKA 006590 TYKA 007258 TYKA 007977 TYKA 006406 TYKA 005243 TYKA 006599 TYKA 007259 TYKA 008136 TYKA 006408 TYKA 005245 TYKA 006607 TYKA 007260 TYKA 008140 TYKA 006409 TYKA 005246 TYKA 006608 TYKA 007264 TYKA 008141 TYKA 006410 TYKA 005247 TYKA 006609 TYKA 007270 TYKA 008142 TYKA 006414 TYKA 005281 TYKA 006649 TYKA 007271 TYKA 008146 TYKA 006417 TYKA 005283 TYKA 006709 TYKA 007272 TYKA 008147 TYKA 006477 TYKA 005284 TYKA 006727 TYKA 007274 TYKA 008150 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKA 008267 TYKA 008612 TYKA 008850 TYKA 008268 TYKA 008618 TYKA 008853 TYKA 008353 TYKA 008620 TYKA 008855 TYKA 008357 TYKA 008623 TYKA 008860 TYKA 008358 TYKA 008635 TYKA 008863 TYKA 008361 TYKA 008636 TYKA 008866 TYKA 008364 TYKA 008639 TYKA 008867 TYKA 008368 TYKA 008651 TYKA 008870 TYKA 008369 TYKA 008658 TYKA 008875 TYKA 008371 TYKA 008725 TYKA 008876 TYKA 008372 TYKA 008726 TYKA 008878 TYKA 008375 TYKA 008733 TYKA 008879 TYKA 008376 TYKA 008737 TYKA 008880 TYKA 008377 TYKA 008741 TYKA 008881 TYKA 008378 TYKA 008743 TYKA 008882 TYKA 008409 TYKA 008745 TYKA 008884 TYKA 008411 TYKA 008746 TYKA 008887 TYKA 008413 TYKA 008748 TYKA 008888 TYKA 008420 TYKA 008752 TYKA 008889 TYKA 008425 TYKA 008753 TYKA 008952 TYKA 008567 TYKA 008754 TYKA 008966 TYKA 008570 TYKA 008755 TYKA 008982 TYKA 008571 TYKA 008756 TYKA 008987 TYKA 008575 TYKA 008759 TYKA 009002 TYKA 008576 TYKA 008761 TYKA 009068 TYKA 008577 TYKA 008763 TYKA 009090 TYKA 008579 TYKA 008765 TYKA 009093 TYKA 008581 TYKA 008768 TYKA 009101 TYKA 008584 TYKA 008769 TYKA 009178 TYKA 008589 TYKA 008773 TYKA 009181 TYKA 008591 TYKA 008774 TYKA 009184 TYKA 008592 TYKA 008775 TYKA 009192 TYKA 008594 TYKA 008834 TYKA 009193 TYKA 008595 TYKA 008835 TYKA 009195 TYKA 008596 TYKA 008837 TYKA 009196 TYKA 008599 TYKA 008839 TYKA 009200 TYKA 008600 TYKA 008840 TYKA 009204 TYKA 008602 TYKA 008841 TYKA 009205 TYKA 008603 TYKA 008842 TYKA 009208 TYKA 008604 TYKA 008843 TYKA 009217 TYKA 008605 TYKA 008847 TYKA 009222 TYKA 008606 TYKA 008848 TYKA 009224 TYKA 008609 TYKA 008849 TYKA 009226 TYKA 009227 TYKA 005285 TYKA 009710 TYKA 012644 TYKA 008176 TYKA 009358 TYKA 005286 TYKA 009711 TYKA 012854 TYKA 008177 TYKA 009369 TYKA 005287 TYKA 009712 TYKA 012941 TYKA 008178 TYKA 009370 TYKA 005288 TYKA 009713 TYKA 012944 TYKA 008181 TYKA 009375 TYKA 005289 TYKA 009715 TYKA 012977 TYKA 008182 TYKA 009376 TYKA 005290 TYKA 009716 TYKA 013059 TYKA 008184 TYKA 009377 TYKA 005291 TYKA 009722 TYKA 013084 TYKA 008186 TYKA 009632 TYKA 005292 TYKA 009724 TYKA 013126 TYKA 008188 TYKA 009633 TYKA 005293 TYKA 009726 TYKA 013128 TYKA 008189 TYKA 009634 TYKA 005294 TYKA 009728 TYKA 013284 TYKA 008190 TYKA 009638 TYKA 005301 TYKA 009729 TYKA 013647 TYKA 008191 TYKA 009639 TYKA 005302 TYKA 009742 TYKA 014357 TYKA 008192 TYKA 009640 TYKA 005304 TYKA 009745 TYKA 015204 TYKA 008195 TYKA 009644 TYKA 005305 TYKA 009929 TYKA 055137 TYKA 008196 TYKA 009645 TYKA 005306 TYKA 009965 TYKA 090213 TYKA 008197 TYKA 009647 TYKA 005452 TYKA 009999 TYKA 090328 TYKA 008198 TYKA 009648 TYKA 005453 TYKA 010002 TYKV 000076 TYKA 008201 TYKA 009649 TYKA 005456 TYKA 010178 TYKV 000080 TYKA 008202 TYKA 009650 TYKA 005457 TYKA 010374 TYKV 000100 TYKA 008204 TYKA 009651 TYKA 005458 TYKA 010392 TYKV 000103 TYKA 008206 TYKA 009655 TYKA 005459 TYKA 010409 TYKV 000356 TYKA 008208 TYKA 009657 TYKA 005461 TYKA 010423 TYKV 000360 TYKA 008211 TYKA 009659 TYKA 005462 TYKA 010428 TYKV 000361 TYKA 008213 TYKA 009661 TYKA 005463 TYKA 010503 TYKV 000374 TYKA 008219 TYKA 009664 TYKA 005505 TYKA 010528 TYKV 000376 TYKA 008224 TYKA 009665 TYKA 005652 TYKA 010550 TYKV 000509 TYKA 008225 TYKA 009666 TYKA 005653 TYKA 010570 TYKV 000512 TYKA 008226 TYKA 009667 TYKA 005655 TYKA 010595 TYKV 000513 TYKA 008227 TYKA 009668 TYKA 005656 TYKA 010717 TYKV 000514 TYKA 008230 TYKA 009672 TYKA 005659 TYKA 010753 TYKV 000516 TYKA 008233 TYKA 009676 TYKA 005661 TYKA 011230 TYKV 000523 TYKA 008235 TYKA 009677 TYKA 005665 TYKA 011233 TYKV 000526 TYKA 008236 TYKA 009679 TYKA 005666 TYKA 011235 TYKV 000527 TYKA 008237 TYKA 009680 TYKA 005668 TYKA 011236 TYKV 000566 TYKA 008239 TYKA 009686 TYKA 005670 TYKA 011237 TYKV 000567 TYKA 008240 TYKA 009690 TYKA 005671 TYKA 011239 TYKV 000568 TYKA 008243 TYKA 009691 TYKA 005675 TYKA 011240 TYKV 000569 TYKA 008244 TYKA 009692 TYKA 005676 TYKA 011241 TYKV 000570 TYKA 008247 TYKA 009702 TYKA 005677 TYKA 011244 TYKV 000572 TYKA 008248 TYKA 009703 TYKA 005678 TYKA 011250 TYKV 000574 TYKA 008256 TYKA 009705 TYKA 005709 TYKA 011251 TYKV 000575 TYKA 008258 TYKA 009706 TYKA 005856 TYKA 011257 TYKV 000576 TYKA 008263 TYKA 009707 TYKA 005898 TYKA 011261 TYKV 000577 TYKA 008266 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKA 011267 TYKV 000578 TYKV 001175 TYKA 011271 TYKV 000580 TYKV 001180 TYKA 011311 TYKV 000583 TYKV 001182 TYKA 011401 TYKV 000587 TYKV 001184 TYKA 011408 TYKV 000590 TYKV 001186 TYKA 011410 TYKV 000593 TYKV 001195 TYKA 011412 TYKV 000594 TYKV 001197 TYKA 011426 TYKV 000595 TYKV 001203 TYKA 011429 TYKV 000597 TYKV 001205 TYKA 011438 TYKV 000600 TYKV 001207 TYKA 011439 TYKV 000602 TYKV 001208 TYKA 011440 TYKV 000604 TYKV 001212 TYKA 011444 TYKV 000605 TYKV 001214 TYKA 011447 TYKV 000606 TYKV 001232 TYKA 011450 TYKV 000608 TYKV 001233 TYKA 011470 TYKV 000609 TYKV 001242 TYKA 011503 TYKV 000610 TYKV 001256 TYKA 011514 TYKV 000611 TYKV 001330 TYKA 011562 TYKV 000612 TYKV 001336 TYKA 011568 TYKV 000613 TYKV 001346 TYKA 012027 TYKV 000615 TYKV 001360 TYKA 012030 TYKV 000790 TYKV 001366 TYKA 012035 TYKV 000792 TYKV 001368 TYKA 012036 TYKV 000796 TYKV 001369 TYKA 012037 TYKV 000797 TYKV 001371 TYKA 012048 TYKV 000798 TYKV 001394 TYKA 012056 TYKV 000810 TYKV 001427 TYKA 012058 TYKV 000814 TYKV 001429 TYKA 012060 TYKV 000822 TYKV 001432 TYKA 012067 TYKV 000826 TYKV 001445 TYKA 012077 TYKV 000828 TYKV 001446 TYKA 012080 TYKV 000890 TYKV 001450 TYKA 012101 TYKV 000906 TYKV 001451 TYKA 012103 TYKV 000926 TYKV 001453 TYKA 012104 TYKV 000936 TYKV 001455 TYKA 012121 TYKV 001011 TYKV 001462 TYKA 012133 TYKV 001156 TYKV 001463 TYKA 012172 TYKV 001157 TYKV 001465 TYKA 012202 TYKV 001161 TYKV 001477 TYKA 012230 TYKV 001165 TYKV 001523 TYKA 012231 TYKV 001169 TYKV 001528 TYKA 012237 TYKV 001170 TYKV 001529 TYKA 012296 TYKV 001174 TYKV 001745 TYKV 001865 TYKV 023292 TYKV 063801 TYKV 003001 TYKV 150309 TYKV 001905 TYKV 023341 TYKV 074141 TYKV 003004 TYKV 150320 TYKV 002030 TYKV 023390 TYKV 074486 TYKV 003005 TYKV 150331 TYKV 002043 TYKV 023439 TYKV 074762 TYKV 003020 TYKV 150342 TYKV 002057 TYKV 023537 TYKV 075659 TYKV 003030 TYKV 150364 TYKV 002063 TYKV 023831 TYKV 076073 TYKV 003034 TYKV 150408 TYKV 002068 TYKV 023978 TYKV 076280 TYKV 013970 TYKV 150419 TYKV 002070 TYKV 024027 TYKV 076349 TYKV 015244 TYKV 150430 TYKV 002103 TYKV 024125 TYKV 076556 TYKV 015345 TYKV 150452 TYKV 002105 TYKV 024174 TYKV 077108 TYKV 015590 TYKV 150518 TYKV 002108 TYKV 024419 TYKV 077177 TYKV 015786 TYKV 150529 TYKV 002114 TYKV 024468 TYKV 077246 TYKV 017945 TYKV 150540 TYKV 002435 TYKV 024566 TYKV 077315 TYKV 018141 TYKV 150562 TYKV 002437 TYKV 024615 TYKV 090208 TYKV 018190 TYKV 150584 TYKV 002560 TYKV 024664 TYKV 090277 TYKV 018239 TYKV 170122 TYKV 002565 TYKV 024762 TYKV 090346 TYKV 018337 TYKV 170133 TYKV 002566 TYKV 024811 TYKV 090484 TYKV 018386 TYKV 170155 TYKV 002574 TYKV 024860 TYKV 090553 TYKV 018435 TYKV 170221 TYKV 002576 TYKV 025105 TYKV 090967 TYKV 018533 TYKV 170342 TYKV 002578 TYKV 025203 TYKV 091312 TYKV 018631 TYKV 170485 TYKV 002579 TYKV 025350 TYKV 091450 TYKV 018729 TYKV 170507 TYKV 002580 TYKV 025399 TYKV 091588 TYKV 018778 TYKV 170540 TYKV 002581 TYKV 025546 TYKV 091726 TYKV 018827 TYKV 170584 TYKV 002585 TYKV 025644 TYKV 092140 TYKV 018876 ТYKА 010579 TYKV 002589 TYKV 025693 TYKV 092209 TYKV 019023 ТYKА 010597 TYKV 002596 TYKV 025892 TYKV 092278 TYKV 019072 TYKV 002599 TYKV 025990 TYKV 092761 TYKV 019170 TYKV 002600 TYKV 026039 TYKV 093037 TYKV 019219 TYKV 002602 TYKV 026431 TYKV 150012 TYKV 019366 TYKV 002603 TYKV 026774 TYKV 150045 TYKV 019415 TYKV 002607 TYKV 026823 TYKV 150056 TYKV 019464 TYKV 002610 TYKV 026921 TYKV 150067 TYKV 019562 TYKV 002611 TYKV 027019 TYKV 150078 TYKV 019709 TYKV 002620 TYKV 027460 TYKV 150089 TYKV 019807 TYKV 002629 TYKV 027656 TYKV 150111 TYKV 019905 TYKV 002645 TYKV 027803 TYKV 150122 TYKV 019954 TYKV 002647 TYKV 027950 TYKV 150155 TYKV 020101 TYKV 002648 TYKV 030436 TYKV 150166 TYKV 020150 TYKV 002992 TYKV 031393 TYKV 150188 TYKV 020248 TYKV 002993 TYKV 046966 TYKV 150199 TYKV 020346 TYKV 002997 TYKV 059385 TYKV 150243 TYKV 020395 TYKV 002998 TYKV 059454 TYKV 150265 TYKV 020888 TYKV 003000 TYKV 061041 TYKV 150287 TYKV 023044 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
Schedule B Amended Exhibit A to the Prior Purchase Agreements Prior Purchase Agreement 1 [attached] Prior Purchase Agreement 2 [attached] Prior Purchase Agreement 3 [attached] Prior Purchase Agreement 4 [attached] Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
Prior Purchase Agreement 1 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV064077 List A TYKV002745 List A TYKA000167 List A TYKV064215 List A TYKV002746 List A TYKA000172 List A TYKV064284 List A TYKV002747 List A TYKA000336 List A TYKV064353 List A TYKV002748 List A TYKA000887 List A TYKV064422 List A TYKV002750 List A TYKA000936 List A TYKV064560 List A TYKV002751 List A TYKA001149 List A TYKV064629 List A TYKV002757 List A TYKA001208 List A TYKV064767 List A TYKV002758 List A TYKA001210 List A TYKV064836 List A TYKV002761 List A TYKA001211 List A TYKV065181 List A TYKV002762 List A TYKA001572 List A TYKV070001 List A TYKV002764 List A TYKA001615 List A TYKV070070 List A TYKV002766 List A TYKA001616 List A TYKV070139 List A TYKV002767 List A TYKA001714 List A TYKV070208 List A TYKV002768 List A TYKA001735 List A TYKV070277 List A TYKV002770 List A TYKA001757 List A TYKV070346 List A TYKV002831 List A TYKA001801 List A TYKV070415 List A TYKV002834 List A TYKA001825 List A TYKV070484 List A TYKV002835 List A TYKA001829 List A TYKV070553 List A TYKV002836 List A TYKA001834 List A TYKV070760 List A TYKV002837 List A TYKA001838 List A TYKV070829 List A TYKV002839 List A TYKA001860 List A TYKV070898 List A TYKV002840 List A TYKA001866 List A TYKV070967 List A TYKV002841 List A TYKA001905 List A TYKV071036 List A TYKV002842 List A TYKA001940 List A TYKV071105 List A TYKV002843 List A TYKA001948 List A TYKV071174 List A TYKV002844 List A TYKA001956 List A TYKV071243 List A TYKV002845 List A TYKA001962 List A TYKV071381 List A TYKV002849 List A TYKA002039 List A TYKV071450 List A TYKV002850 List A TYKA002041 List A TYKV071519 List A TYKV002852 List A TYKA002053 List A TYKV071588 List A TYKV002853 List A TYKA002062 List A TYKV071657 List A TYKV002855 List A TYKA002068 List A TYKV071726 List A TYKV002865 List A TYKA002069 List A TYKV071795 List A TYKV002867 List A TYKA002117 List A TYKV071864 List A TYKV002868 List A TYKA002145 List A TYKV072002 List A TYKV002870 List A TYKA002225 List A TYKV072209 List A TYKV002875 List A TYKA002227 List A TYKV072692 List A TYKV002877 List A TYKA002228 List A TYKV072761 List A TYKV002878 List A TYKA002229 List A TYKV072830 List A TYKV002879 List A TYKA002230 List A TYKV072899 List A TYKV002881 List A TYKA002235 List A TYKV072968 List A TYKV002894 List A TYKA002236 List A TYKV073106 List A TYKV002907 List A TYKA002238 List A TYKV073313 List A TYKV011373 List A TYKA002239 List A TYKV073451 List A TYKV012745 List A TYKA002254 List A TYKV073520 List A TYKV012941 List A TYKA002255 List A TYKV073589 List A TYKV012990 List A TYKA002259 List A TYKV073658 List A TYKV013137 List A TYKA002262 List A TYKV073796 List A TYKV013235 List A TYKA002272 List A TYKV073934 List A TYKV013284 List A TYKA002306 List A TYKV074072 List A TYKV013627 List A TYKA002309 List A TYKV074279 List A TYKV013921 List A TYKA002314 List A TYKV074555 List A TYKV014166 List A TYKA002317 List A TYKV074693 List A TYKV014264 List A TYKA002329 List A TYKV075107 List A TYKV014509 List A TYKA002331 List A TYKV075176 List A TYKV014901 List A TYKA002333 List A TYKV075452 List A TYKV017746 List A TYKA002337 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV075590 List A TYKV030001 List A TYKA002346 List A TYKV075935 List A TYKV030088 List A TYKA002356 List A TYKV076142 List A TYKV030175 List A TYKA002413 List A TYKV076487 List A TYKV030610 List A TYKA002451 List A TYKV076625 List A TYKV030697 List A TYKA002453 List A TYKV076970 List A TYKV030784 List A TYKA002544 List A TYKV077453 List A TYKV030871 List A TYKA002546 List A TYKV077591 List A TYKV031045 List A TYKA002547 List A TYKV077660 List A TYKV031219 List A TYKA002554 List A TYKV077729 List A TYKV031480 List A TYKA002555 List A TYKV077798 List A TYKV032089 List A TYKA002691 List A TYKV077867 List A TYKV032176 List A TYKA002773 List A TYKV077936 List A TYKV032524 List A TYKA002776 List A TYKV078005 List A TYKV032785 List A TYKA002817 List A TYKV078074 List A TYKV032959 List A TYKA002821 List A TYKV078143 List A TYKV033046 List A TYKA002887 List A TYKV078212 List A TYKV033220 List A TYKA002927 List A TYKV078281 List A TYKV033481 List A TYKA002928 List A TYKV078350 List A TYKV033568 List A TYKA002933 List A TYKV078419 List A TYKV033655 List A TYKA002938 List A TYKV078488 List A TYKV033829 List A TYKA002941 List A TYKV078557 List A TYKV034090 List A TYKA003084 List A TYKV078626 List A TYKV034264 List A TYKA003141 List A TYKV078695 List A TYKV034612 List A TYKA003149 List A TYKV078764 List A TYKV044095 List A TYKA003151 List A TYKV078833 List A TYKV044269 List A TYKA003153 List A TYKV078902 List A TYKV044356 List A TYKA003154 List A TYKV078971 List A TYKV044443 List A TYKA003157 List A TYKV079040 List A TYKV044530 List A TYKA003158 List A TYKV079109 List A TYKV044617 List A TYKA003168 List A TYKV079178 List A TYKV044704 List A TYKA003485 List A TYKV079247 List A TYKV044791 List A TYKA003488 List A TYKV079316 List A TYKV045052 List A TYKA003544 List A TYKV079385 List A TYKV045139 List A TYKA003547 List A TYKV079454 List A TYKV045226 List A TYKA003552 List A TYKV079661 List A TYKV045400 List A TYKA003553 List A TYKV079730 List A TYKV045661 List A TYKA003555 List A TYKV079799 List A TYKV045835 List A TYKA003556 List A TYKV079868 List A TYKV045922 List A TYKA003557 List A TYKV080006 List A TYKV046009 List A TYKA003558 List A TYKV080075 List A TYKV046096 List A TYKA003568 List A TYKV080144 List A TYKV046270 List A TYKA003578 List A TYKV080213 List A TYKV046444 List A TYKA003601 List A TYKV080282 List A TYKV046531 List A TYKA003616 List A TYKV080351 List A TYKV046618 List A TYKA003684 List A TYKV080420 List A TYKV046792 List A TYKA003685 List A TYKV080489 List A TYKV047053 List A TYKA003686 List A TYKV080558 List A TYKV047140 List A TYKA003687 List A TYKV080627 List A TYKV047227 List A TYKA003689 List A TYKV080696 List A TYKV047314 List A TYKA003693 List A TYKV080765 List A TYKV047575 List A TYKA003701 List A TYKV080834 List A TYKV047662 List A TYKA003704 List A TYKV080903 List A TYKV047749 List A TYKA003707 List A TYKV080972 List A TYKV047836 List A TYKA003712 List A TYKV081041 List A TYKV047923 List A TYKA003713 List A TYKV081110 List A TYKV048010 List A TYKA003716 List A TYKV091381 List A TYKV048097 List A TYKA003720 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV093244 List A TYKV048184 List A TYKA003722 List A TYKV093658 List A TYKV048271 List A TYKA003729 List A TYKV093727 List A TYKV053037 List A TYKA003730 List A TYKV093865 List A TYKV057453 List A TYKA003731 List A TYKV093934 List A TYKV057522 List A TYKA003735 List A TYKV094072 List A TYKV057591 List A TYKA003736 List A TYKV094210 List A TYKV057660 List A TYKA003737 List A TYKV094279 List A TYKV057729 List A TYKA003740 List A TYKV094693 List A TYKV057798 List A TYKA004045 List A TYKV094831 List A TYKV057867 List A TYKA004113 List A TYKV094900 List A TYKV057936 List A TYKA004134 List A TYKV094969 List A TYKV058005 List A TYKA004264 List A TYKV095038 List A TYKV058074 List A TYKA004278 List A TYKV095107 List A TYKV058143 List A TYKA004293 List A TYKV095176 List A TYKV058281 List A TYKA004296 List A TYKV095521 List A TYKV058350 List A TYKA004308 List A TYKV095728 List A TYKV058419 List A TYKA004317 List A TYKV095797 List A TYKV058488 List A TYKA004321 List A TYKV095866 List A TYKV058557 List A TYKA004453 List A TYKV096004 List A TYKV058695 List A TYKA004456 List A TYKV096211 List A TYKV058764 List A TYKA004461 List A TYKV096349 List A TYKV058833 List A TYKA004463 List A TYKV096418 List A TYKV058902 List A TYKA004464 List A TYKV096556 List A TYKV058971 List A TYKA004465 List A TYKV096694 List A TYKV059040 List A TYKA004468 List A TYKV096763 List A TYKV059109 List A TYKA004469 List A TYKV096832 List A TYKV059247 List A TYKA004481 List A TYKV097039 List A TYKV059316 List A TYKA004996 List A TYKV097108 List A TYKV059523 List A TYKA004997 List A TYKV097177 List A TYKV059661 List A TYKA005003 List A TYKV097384 List A TYKV059730 List A TYKA005007 List A TYKV140001 List A TYKV059868 List A TYKA005018 List A TYKV140012 List A TYKV060006 List A TYKA005042 List A TYKV140023 List A TYKV060075 List A TYKA005047 List A TYKV140034 List A TYKV060213 List A TYKA005817 List A TYKV140045 List A TYKV060282 List A TYKA005837 List A TYKV140089 List A TYKV060351 List A TYKA005841 List A TYKV140111 List A TYKV060420 List A TYKA006252 List A TYKV140133 List A TYKV060489 List A TYKA006263 List A TYKV140144 List A TYKV060627 List A TYKA006278 List A TYKV140155 List A TYKV060765 List A TYKA006292 List A TYKV140166 List A TYKV060834 List A TYKA006293 List A TYKV140177 List A TYKV060903 List A TYKA006294 List A TYKV140188 List A TYKV060972 List A TYKA006297 List A TYKV140199 List A TYKV061110 List A TYKA006571 List A TYKV140221 List A TYKV061179 List A TYKA008148 List A TYKV140243 List A TYKV061317 List A TYKA008209 List A TYKV140254 List A TYKV061386 List A TYKA008222 List A TYKV140265 List A TYKV061455 List A TYKA011058 List A TYKV140287 List A TYKV061593 List A TYKA011065 List A TYKV140298 List A TYKV061731 List A TYKA011067 List A TYKV140309 List A TYKV061800 List A TYKA011070 List A TYKV140353 List A TYKV061869 List A TYKA011071 List A TYKV140364 List A TYKV061938 List A TYKA011073 List A TYKV140375 List A TYKV062007 List A TYKA011075 List A TYKV140419 List A TYKV062076 List A TYKA011081 List A TYKV140430 List A TYKV062145 List A TYKA011088 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV140441 List A TYKV062214 List A TYKA011089 List A TYKV140452 List A TYKV062283 List A TYKA011094 List A TYKV140463 List A TYKV062352 List A TYKA011102 List A TYKV140474 List A TYKV062490 List A TYKA011107 List A TYKV140529 List A TYKV062559 List A TYKV001447 List A TYKV140540 List A TYKV062628 List A TYKV002723 List A TYKV140551 List A TYKV062697 List A TYKV002724 List A TYKV140562 List A TYKV062766 List A TYKV002726 List A TYKV140584 List A TYKV062835 List A TYKV002727 List A TYKA006289 List A - Chivo TYKV062904 List A TYKV002728 List A TYKA006291 List A - Chivo TYKV062973 List A TYKV002729 List A TYKV059937 List A - Chivo TYKV063111 List A TYKV002730 List A TYKV000367 List A - TYKV063249 List A TYKV002731 List A TYKV002989 List A - TYKV063318 List A TYKV002732 List A TYKA008251 List A - TYKV063387 List A TYKV002734 List A TYKA008254 List A - TYKV063456 List A TYKV002737 List A TYKA008257 List A - TYKV063525 List A TYKV002738 List A TYKA008260 List A - TYKV063663 List A TYKV002739 List A TYKV063870 List A TYKV002744 List A TYKV064008 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
Prior Purchase Agreement 2 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV001251 Inv 1002 TYKA010007 Inv 1002 TYKA000051 Inv 1002 TYKV001262 Inv 1002 TYKA010011 Inv 1002 TYKA000318 Inv 1002 TYKV001263 Inv 1002 TYKA010012 Inv 1002 TYKA000676 Inv 1002 TYKV001470 Inv 1002 TYKA010013 Inv 1002 TYKA001090 Inv 1002 TYKV001497 Inv 1002 TYKA010026 Inv 1002 TYKA001209 Inv 1002 TYKV002020 Inv 1002 TYKA010030 Inv 1002 TYKA001733 Inv 1002 TYKV002032 Inv 1002 TYKA010397 Inv 1002 TYKA002355 Inv 1002 TYKV002033 Inv 1002 TYKA010513 Inv 1002 TYKA002505 Inv 1002 TYKV002034 Inv 1002 TYKA010588 Inv 1002 TYKA002794 Inv 1002 TYKV002035 Inv 1002 TYKA011248 Inv 1002 TYKA002815 Inv 1002 TYKV002040 Inv 1002 TYKA011287 Inv 1002 TYKA002852 Inv 1002 TYKV002048 Inv 1002 TYKA011328 Inv 1002 TYKA002856 Inv 1002 TYKV002051 Inv 1002 TYKA011481 Inv 1002 TYKA002886 Inv 1002 TYKV002066 Inv 1002 TYKA011505 Inv 1002 TYKA002931 Inv 1002 TYKV002077 Inv 1002 TYKA011516 Inv 1002 TYKA002940 Inv 1002 TYKV002079 Inv 1002 TYKA011742 Inv 1002 TYKA003075 Inv 1002 TYKV002084 Inv 1002 TYKA011767 Inv 1002 TYKA003076 Inv 1002 TYKV002085 Inv 1002 TYKA012105 Inv 1002 TYKA003115 Inv 1002 TYKV002090 Inv 1002 TYKA012107 Inv 1002 TYKA003156 Inv 1002 TYKV002095 Inv 1002 TYKA012114 Inv 1002 TYKA003162 Inv 1002 TYKV002096 Inv 1002 TYKA012118 Inv 1002 TYKA003170 Inv 1002 TYKV002100 Inv 1002 TYKA012120 Inv 1002 TYKA003236 Inv 1002 TYKV002112 Inv 1002 TYKA012131 Inv 1002 TYKA003277 Inv 1002 TYKV002119 Inv 1002 TYKA012204 Inv 1002 TYKA003285 Inv 1002 TYKV002123 Inv 1002 TYKA012211 Inv 1002 TYKA003293 Inv 1002 TYKV002126 Inv 1002 TYKA012221 Inv 1002 TYKA003298 Inv 1002 TYKV002562 Inv 1002 TYKA012223 Inv 1002 TYKA003329 Inv 1002 TYKV002568 Inv 1002 TYKA012234 Inv 1002 TYKA003332 Inv 1002 TYKV002569 Inv 1002 TYKA012260 Inv 1002 TYKA003333 Inv 1002 TYKV002575 Inv 1002 TYKA012268 Inv 1002 TYKA003336 Inv 1002 TYKV002583 Inv 1002 TYKA012272 Inv 1002 TYKA003340 Inv 1002 TYKV002586 Inv 1002 TYKA012291 Inv 1002 TYKA003457 Inv 1002 TYKV002587 Inv 1002 TYKA012302 Inv 1002 TYKA003466 Inv 1002 TYKV002591 Inv 1002 TYKA012375 Inv 1002 TYKA003500 Inv 1002 TYKV002592 Inv 1002 TYKA012404 Inv 1002 TYKA003607 Inv 1002 TYKV002593 Inv 1002 TYKA012598 Inv 1002 TYKA003614 Inv 1002 TYKV002597 Inv 1002 TYKA012604 Inv 1002 TYKA003705 Inv 1002 TYKV002598 Inv 1002 TYKA012618 Inv 1002 TYKA003727 Inv 1002 TYKV002605 Inv 1002 TYKA012641 Inv 1002 TYKA003766 Inv 1002 TYKV002608 Inv 1002 TYKA012645 Inv 1002 TYKA003800 Inv 1002 TYKV002609 Inv 1002 TYKA012853 Inv 1002 TYKA003801 Inv 1002 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV002612 Inv 1002 TYKA012855 Inv 1002 TYKA003861 Inv 1002 TYKV002617 Inv 1002 TYKA012981 Inv 1002 TYKA003908 Inv 1002 TYKV002618 Inv 1002 TYKA013058 Inv 1002 TYKA003911 Inv 1002 TYKV002621 Inv 1002 TYKA013062 Inv 1002 TYKA003937 Inv 1002 TYKV002622 Inv 1002 TYKA013066 Inv 1002 TYKA003965 Inv 1002 TYKV002625 Inv 1002 TYKA013067 Inv 1002 TYKA003993 Inv 1002 TYKV002627 Inv 1002 TYKA013070 Inv 1002 TYKA004020 Inv 1002 TYKV002630 Inv 1002 TYKA013075 Inv 1002 TYKA004028 Inv 1002 TYKV002633 Inv 1002 TYKA013077 Inv 1002 TYKA004038 Inv 1002 TYKV002635 Inv 1002 TYKA013098 Inv 1002 TYKA004043 Inv 1002 TYKV002637 Inv 1002 TYKA013130 Inv 1002 TYKA004047 Inv 1002 TYKV002638 Inv 1002 TYKA013148 Inv 1002 TYKA004049 Inv 1002 TYKV002640 Inv 1002 TYKA013150 Inv 1002 TYKA004055 Inv 1002 TYKV002641 Inv 1002 TYKA013152 Inv 1002 TYKA004091 Inv 1002 TYKV002643 Inv 1002 TYKA013162 Inv 1002 TYKA004101 Inv 1002 TYKV002644 Inv 1002 TYKA013163 Inv 1002 TYKA004121 Inv 1002 TYKV002649 Inv 1002 TYKA013343 Inv 1002 TYKA004137 Inv 1002 TYKV002653 Inv 1002 TYKA013367 Inv 1002 TYKA004145 Inv 1002 TYKV002657 Inv 1002 TYKA013376 Inv 1002 TYKA004147 Inv 1002 TYKV002659 Inv 1002 TYKA013570 Inv 1002 TYKA004153 Inv 1002 TYKV002667 Inv 1002 TYKA013577 Inv 1002 TYKA004155 Inv 1002 TYKV002775 Inv 1002 TYKA013579 Inv 1002 TYKA004156 Inv 1002 TYKV002776 Inv 1002 TYKA013618 Inv 1002 TYKA004157 Inv 1002 TYKV002778 Inv 1002 TYKA013643 Inv 1002 TYKA004159 Inv 1002 TYKV002779 Inv 1002 TYKA014309 Inv 1002 TYKA004162 Inv 1002 TYKV002782 Inv 1002 TYKA014312 Inv 1002 TYKA004164 Inv 1002 TYKV002783 Inv 1002 TYKA014313 Inv 1002 TYKA004165 Inv 1002 TYKV002784 Inv 1002 TYKA014319 Inv 1002 TYKA004166 Inv 1002 TYKV002787 Inv 1002 TYKA014321 Inv 1002 TYKA004167 Inv 1002 TYKV002788 Inv 1002 TYKA014322 Inv 1002 TYKA004170 Inv 1002 TYKV002789 Inv 1002 TYKA014323 Inv 1002 TYKA004171 Inv 1002 TYKV002790 Inv 1002 TYKA014325 Inv 1002 TYKA004174 Inv 1002 TYKV002791 Inv 1002 TYKA014326 Inv 1002 TYKA004176 Inv 1002 TYKV002795 Inv 1002 TYKA014328 Inv 1002 TYKA004177 Inv 1002 TYKV002796 Inv 1002 TYKA014329 Inv 1002 TYKA004179 Inv 1002 TYKV002797 Inv 1002 TYKA014330 Inv 1002 TYKA004180 Inv 1002 TYKV002799 Inv 1002 TYKA014331 Inv 1002 TYKA004183 Inv 1002 TYKV002800 Inv 1002 TYKA014332 Inv 1002 TYKA004187 Inv 1002 TYKV002801 Inv 1002 TYKA014333 Inv 1002 TYKA004190 Inv 1002 TYKV002805 Inv 1002 TYKA014336 Inv 1002 TYKA004225 Inv 1002 TYKV002806 Inv 1002 TYKA014338 Inv 1002 TYKA004258 Inv 1002 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV002807 Inv 1002 TYKA014339 Inv 1002 TYKA004271 Inv 1002 TYKV002808 Inv 1002 TYKA014344 Inv 1002 TYKA004274 Inv 1002 TYKV002811 Inv 1002 TYKA014345 Inv 1002 TYKA004277 Inv 1002 TYKV002812 Inv 1002 TYKA014346 Inv 1002 TYKA004292 Inv 1002 TYKV002814 Inv 1002 TYKA014350 Inv 1002 TYKA004320 Inv 1002 TYKV002815 Inv 1002 TYKA014352 Inv 1002 TYKA004368 Inv 1002 TYKV002816 Inv 1002 TYKA014353 Inv 1002 TYKA004369 Inv 1002 TYKV002817 Inv 1002 TYKA014355 Inv 1002 TYKA004371 Inv 1002 TYKV002818 Inv 1002 TYKA014356 Inv 1002 TYKA004372 Inv 1002 TYKV002820 Inv 1002 TYKA014358 Inv 1002 TYKA004373 Inv 1002 TYKV002821 Inv 1002 TYKA014361 Inv 1002 TYKA004376 Inv 1002 TYKV002822 Inv 1002 TYKA014427 Inv 1002 TYKA004389 Inv 1002 TYKV002823 Inv 1002 TYKA014431 Inv 1002 TYKA004390 Inv 1002 TYKV002825 Inv 1002 TYKA014443 Inv 1002 TYKA004391 Inv 1002 TYKV002826 Inv 1002 TYKA014446 Inv 1002 TYKA004395 Inv 1002 TYKV012217 Inv 1002 TYKA014447 Inv 1002 TYKA004427 Inv 1002 TYKV016227 Inv 1002 TYKA014463 Inv 1002 TYKA004428 Inv 1002 TYKV016472 Inv 1002 TYKA014470 Inv 1002 TYKA004431 Inv 1002 TYKV023929 Inv 1002 TYKA014471 Inv 1002 TYKA004434 Inv 1002 TYKV025252 Inv 1002 TYKA014473 Inv 1002 TYKA004437 Inv 1002 TYKV025941 Inv 1002 TYKA014822 Inv 1002 TYKA004442 Inv 1002 TYKV026088 Inv 1002 TYKA014876 Inv 1002 TYKA004450 Inv 1002 TYKV026137 Inv 1002 TYKA014877 Inv 1002 TYKA004452 Inv 1002 TYKV026186 Inv 1002 TYKA014888 Inv 1002 TYKA004457 Inv 1002 TYKV026235 Inv 1002 TYKA014899 Inv 1002 TYKA004472 Inv 1002 TYKV026382 Inv 1002 TYKA015396 Inv 1002 TYKA004476 Inv 1002 TYKV026480 Inv 1002 TYKA015401 Inv 1002 TYKA004604 Inv 1002 TYKV026529 Inv 1002 TYKA015406 Inv 1002 TYKA004608 Inv 1002 TYKV026578 Inv 1002 TYKA015412 Inv 1002 TYKA004615 Inv 1002 TYKV026627 Inv 1002 TYKA015419 Inv 1002 TYKA004624 Inv 1002 TYKV026676 Inv 1002 TYKA015420 Inv 1002 TYKA004772 Inv 1002 TYKV026725 Inv 1002 TYKA015421 Inv 1002 TYKA004886 Inv 1002 TYKV026872 Inv 1002 TYKA015425 Inv 1002 TYKA004890 Inv 1002 TYKV026970 Inv 1002 TYKA015433 Inv 1002 TYKA004893 Inv 1002 TYKV027166 Inv 1002 TYKA015435 Inv 1002 TYKA004921 Inv 1002 TYKV027215 Inv 1002 TYKA022549 Inv 1002 TYKA005017 Inv 1002 TYKV027264 Inv 1002 TYKA022633 Inv 1002 TYKA005021 Inv 1002 TYKV027313 Inv 1002 TYKA022647 Inv 1002 TYKA005029 Inv 1002 TYKV027362 Inv 1002 TYKA022661 Inv 1002 TYKA005045 Inv 1002 TYKV027509 Inv 1002 TYKA022675 Inv 1002 TYKA005399 Inv 1002 TYKV027607 Inv 1002 TYKA022745 Inv 1002 TYKA005509 Inv 1002 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
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Prior Purchase Agreement 3 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
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Prior Purchase Agreement 4 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
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Exhibit B Assignment and Assumption Agreement of Merchant Agreements ASSIGNMENT AND ASSUMPTION OF LEASES THIS ASSIGNMENT AND ASSUMPTION OF LEASES (this “ Assignment ”) is made and entered into as of , 2024 (the “ Effective Date ”), by and between Taproot Acquisition Enterprises, LLC (“ Assignor ”) and Athena Bitcoin, Inc . (collectively, “ Assignee ”) . RECITALS A. Pursuant to the Equipment Financing Agreement dated October , 2024 , by and between Assignor and Assignee (collectively, the “ Agreement ”), Assignor has conveyed to Assignee Bitcoin ATM Kiosks which are currently installed and operational (the “ Property ”) . B. The Property is subject to those merchant agreements identified on Appendix A attached hereto (the “ Leases ”) . C. Pursuant to the Agreement and in connection with the conveyance of the Property, Assignor has agreed to assign to Assignee all of Assignor's right, title, and interest in and to the Leases as landlord, and Assignee has agreed to assume and perform all of Assignor's liabilities and obligations arising under the Leases on and after the Effective Date . ASSIGNMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows : As of the Effective Date, Assignor hereby assigns, transfers, and conveys to Assignee all of Assignor's right, title, and interest in and to the Leases as landlord . Assignor shall indemnify, defend with counsel reasonably acceptable to Assignee, and hold Assignee harmless from any claim, liability, cost, or expense (including, without limitation, reasonable attorneys' fees) arising out of any obligation related to such this Assignment . Assignee hereby assumes all liabilities and obligations of Assignor under the Leases, and agrees to perform all such obligations that are to be performed or that become due on or after the Effective Date . This Assignment shall be binding upon and inure to the benefit of Assignor, Assignee, and their respective successors and assigns . This Assignment shall be governed and construed in accordance with the laws of the State of Florida, without reference to conflict of laws principles . This Assignment may be executed in separate counterparts which, when taken together, shall constitute one document . [Signatures on the following page] Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
e: na Bitcoin, Inc. Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922 IN WITNESS WHEREOF, the parties have executed this Assignment as of the Effective Date. ASSIGNOR: Taproot Acquisition Enterprises, LLC By: Nam Jordan Mirch Title: Ceo ASSIGNEE: Athe By: Name: Matias Goldenhörn Title: CEO
AppendixA Merchant Agreements (attached) Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3402042.1 AMENDMENT TO OMNIBUS AGREEMENT This Amendment (the “Amendment”) to that certain Omnibus Equipment Refinancing Agreement dated September 19 , 2024 , by and between Taproot Acquisition Enterprises, LLC (“Seller”) and Athena Bitcoin, Inc . (“ Purchaser ”) (the “Agreement”) is entered into as of October 30 , 2024 (the “Effective Date”) by and between Taproot Acquisition Enterprises, LLC and Athena Bitcoin, Inc . Purchaser and Seller are sometimes referred to herein as the Party or Parties . RECITALS: WHEREAS, on September 19 , 2024 , the Parties entered into the Agreement to refinance and consolidate Purchaser’s payment obligations under three different financing agreements into one agreement and payment schedule . WHEREAS, the Agreement included a Schedule A, which was intended to reflect the serial numbers for the Equipment that had been sold by Seller to Purchaser that was subject to the Agreement. WHEREAS, Schedule A contained errors and did not include the correct serial numbers for some of the Equipment subject to the Agreement. WHEREAS, the Parties desire to replace Schedule A to the Agreement with a new Schedule A to reflect the correct serial numbers for the Equipment. AGREEMENT: NOW, THEREFORE, in consideration of the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchase agree to the following: 1. Schedule A . Schedule A to the Agreement is hereby substituted with the Schedule A attached hereto as if it was attached to the Agreement. 2. Miscellaneous . a. The Agreement and all of the documents, instruments and materials executed and delivered heretofore or hereafter pursuant to the Agreement are deemed hereby to be amended so that any reference therein to the Agreement shall be a reference to such document as amended by this Amendment . b. Except as specifically amended by this Amendment, the Agreement shall remain in full force and effect . c. This Amendment may be executed simultaneously in any number of counterparts, each of which will be deemed an original but all of which will together constitute Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3402042.1 one and the same agreement. This Amendment may be delivered by fax or .pdf file. d. Capitalized terms used herein but not defined herein shall have the meaning ascribed to such terms in the Agreement. [ signature page follows ] Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3402042.1 IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the date first above written. SELLER: Taproot Acquisition Enterprises, LLC By: Name: Jordan Mirch Title: Manager PURCHASER Athena Bitcoin, Inc. By: Name: Matias Goldenhorn Title: CEO & President Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
PFS:009730.0005.3402042.1 SCHEDULE A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV064077 List A TYKV002745 List A TYKA000167 List A TYKV064215 List A TYKV002746 List A TYKA000172 List A TYKV064284 List A TYKV002747 List A TYKA000336 List A TYKV064353 List A TYKV002748 List A TYKA000887 List A TYKV064422 List A TYKV002750 List A TYKA000936 List A TYKV064560 List A TYKV002751 List A TYKA001149 List A TYKV064629 List A TYKV002757 List A TYKA001208 List A TYKV064767 List A TYKV002758 List A TYKA001210 List A TYKV064836 List A TYKV002761 List A TYKA001211 List A TYKV065181 List A TYKV002762 List A TYKA001572 List A TYKV070001 List A TYKV002764 List A TYKA001615 List A TYKV070070 List A TYKV002766 List A TYKA001616 List A TYKV070139 List A TYKV002767 List A TYKA001714 List A TYKV070208 List A TYKV002768 List A TYKA001735 List A TYKV070277 List A TYKV002770 List A TYKA001757 List A TYKV070346 List A TYKV002831 List A TYKA001801 List A TYKV070415 List A TYKV002834 List A TYKA001825 List A TYKV070484 List A TYKV002835 List A TYKA001829 List A TYKV070553 List A TYKV002836 List A TYKA001834 List A TYKV070760 List A TYKV002837 List A TYKA001838 List A TYKV070829 List A TYKV002839 List A TYKA001860 List A TYKV070898 List A TYKV002840 List A TYKA001866 List A TYKV070967 List A TYKV002841 List A TYKA001905 List A TYKV071036 List A TYKV002842 List A TYKA001940 List A TYKV071105 List A TYKV002843 List A TYKA001948 List A TYKV071174 List A TYKV002844 List A TYKA001956 List A TYKV071243 List A TYKV002845 List A TYKA001962 List A TYKV071381 List A TYKV002849 List A TYKA002039 List A TYKV071450 List A TYKV002850 List A TYKA002041 List A TYKV071519 List A TYKV002852 List A TYKA002053 List A TYKV071588 List A TYKV002853 List A TYKA002062 List A TYKV071657 List A TYKV002855 List A TYKA002068 List A TYKV071726 List A TYKV002865 List A TYKA002069 List A TYKV071795 List A TYKV002867 List A TYKA002117 List A TYKV071864 List A TYKV002868 List A TYKA002145 List A TYKV072002 List A TYKV002870 List A TYKA002225 List A TYKV072209 List A TYKV002875 List A TYKA002227 List A TYKV072692 List A TYKV002877 List A TYKA002228 List A TYKV072761 List A TYKV002878 List A TYKA002229 List A TYKV072830 List A TYKV002879 List A TYKA002230 List A TYKV072899 List A TYKV002881 List A TYKA002235 List A TYKV072968 List A TYKV002894 List A TYKA002236 List A TYKV073106 List A TYKV002907 List A TYKA002238 List A TYKV073313 List A TYKV011373 List A TYKA002239 List A TYKV073451 List A TYKV012745 List A TYKA002254 List A TYKV073520 List A TYKV012941 List A TYKA002255 List A TYKV073589 List A TYKV012990 List A TYKA002259 List A TYKV073658 List A TYKV013137 List A TYKA002262 List A TYKV073796 List A TYKV013235 List A TYKA002272 List A TYKV073934 List A TYKV013284 List A TYKA002306 List A TYKV074072 List A TYKV013627 List A TYKA002309 List A TYKV074279 List A TYKV013921 List A TYKA002314 List A TYKV074555 List A TYKV014166 List A TYKA002317 List A TYKV074693 List A TYKV014264 List A TYKA002329 List A TYKV075107 List A TYKV014509 List A TYKA002331 List A TYKV075176 List A TYKV014901 List A TYKA002333 List A TYKV075452 List A TYKV017746 List A TYKA002337 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV075590 List A TYKV030001 List A TYKA002346 List A TYKV075935 List A TYKV030088 List A TYKA002356 List A TYKV076142 List A TYKV030175 List A TYKA002413 List A TYKV076487 List A TYKV030610 List A TYKA002451 List A TYKV076625 List A TYKV030697 List A TYKA002453 List A TYKV076970 List A TYKV030784 List A TYKA002544 List A TYKV077453 List A TYKV030871 List A TYKA002546 List A TYKV077591 List A TYKV031045 List A TYKA002547 List A TYKV077660 List A TYKV031219 List A TYKA002554 List A TYKV077729 List A TYKV031480 List A TYKA002555 List A TYKV077798 List A TYKV032089 List A TYKA002691 List A TYKV077867 List A TYKV032176 List A TYKA002773 List A TYKV077936 List A TYKV032524 List A TYKA002776 List A TYKV078005 List A TYKV032785 List A TYKA002817 List A TYKV078074 List A TYKV032959 List A TYKA002821 List A TYKV078143 List A TYKV033046 List A TYKA002887 List A TYKV078212 List A TYKV033220 List A TYKA002927 List A TYKV078281 List A TYKV033481 List A TYKA002928 List A TYKV078350 List A TYKV033568 List A TYKA002933 List A TYKV078419 List A TYKV033655 List A TYKA002938 List A TYKV078488 List A TYKV033829 List A TYKA002941 List A TYKV078557 List A TYKV034090 List A TYKA003084 List A TYKV078626 List A TYKV034264 List A TYKA003141 List A TYKV078695 List A TYKV034612 List A TYKA003149 List A TYKV078764 List A TYKV044095 List A TYKA003151 List A TYKV078833 List A TYKV044269 List A TYKA003153 List A TYKV078902 List A TYKV044356 List A TYKA003154 List A TYKV078971 List A TYKV044443 List A TYKA003157 List A TYKV079040 List A TYKV044530 List A TYKA003158 List A TYKV079109 List A TYKV044617 List A TYKA003168 List A TYKV079178 List A TYKV044704 List A TYKA003485 List A TYKV079247 List A TYKV044791 List A TYKA003488 List A TYKV079316 List A TYKV045052 List A TYKA003544 List A TYKV079385 List A TYKV045139 List A TYKA003547 List A TYKV079454 List A TYKV045226 List A TYKA003552 List A TYKV079661 List A TYKV045400 List A TYKA003553 List A TYKV079730 List A TYKV045661 List A TYKA003555 List A TYKV079799 List A TYKV045835 List A TYKA003556 List A TYKV079868 List A TYKV045922 List A TYKA003557 List A TYKV080006 List A TYKV046009 List A TYKA003558 List A TYKV080075 List A TYKV046096 List A TYKA003568 List A TYKV080144 List A TYKV046270 List A TYKA003578 List A TYKV080213 List A TYKV046444 List A TYKA003601 List A TYKV080282 List A TYKV046531 List A TYKA003616 List A TYKV080351 List A TYKV046618 List A TYKA003684 List A TYKV080420 List A TYKV046792 List A TYKA003685 List A TYKV080489 List A TYKV047053 List A TYKA003686 List A TYKV080558 List A TYKV047140 List A TYKA003687 List A TYKV080627 List A TYKV047227 List A TYKA003689 List A TYKV080696 List A TYKV047314 List A TYKA003693 List A TYKV080765 List A TYKV047575 List A TYKA003701 List A TYKV080834 List A TYKV047662 List A TYKA003704 List A TYKV080903 List A TYKV047749 List A TYKA003707 List A TYKV080972 List A TYKV047836 List A TYKA003712 List A TYKV081041 List A TYKV047923 List A TYKA003713 List A TYKV081110 List A TYKV048010 List A TYKA003716 List A TYKV091381 List A TYKV048097 List A TYKA003720 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV093244 List A TYKV048184 List A TYKA003722 List A TYKV093658 List A TYKV048271 List A TYKA003729 List A TYKV093727 List A TYKV053037 List A TYKA003730 List A TYKV093865 List A TYKV057453 List A TYKA003731 List A TYKV093934 List A TYKV057522 List A TYKA003735 List A TYKV094072 List A TYKV057591 List A TYKA003736 List A TYKV094210 List A TYKV057660 List A TYKA003737 List A TYKV094279 List A TYKV057729 List A TYKA003740 List A TYKV094693 List A TYKV057798 List A TYKA004045 List A TYKV094831 List A TYKV057867 List A TYKA004113 List A TYKV094900 List A TYKV057936 List A TYKA004134 List A TYKV094969 List A TYKV058005 List A TYKA004264 List A TYKV095038 List A TYKV058074 List A TYKA004278 List A TYKV095107 List A TYKV058143 List A TYKA004293 List A TYKV095176 List A TYKV058281 List A TYKA004296 List A TYKV095521 List A TYKV058350 List A TYKA004308 List A TYKV095728 List A TYKV058419 List A TYKA004317 List A TYKV095797 List A TYKV058488 List A TYKA004321 List A TYKV095866 List A TYKV058557 List A TYKA004453 List A TYKV096004 List A TYKV058695 List A TYKA004456 List A TYKV096211 List A TYKV058764 List A TYKA004461 List A TYKV096349 List A TYKV058833 List A TYKA004463 List A TYKV096418 List A TYKV058902 List A TYKA004464 List A TYKV096556 List A TYKV058971 List A TYKA004465 List A TYKV096694 List A TYKV059040 List A TYKA004468 List A TYKV096763 List A TYKV059109 List A TYKA004469 List A TYKV096832 List A TYKV059247 List A TYKA004481 List A TYKV097039 List A TYKV059316 List A TYKA004996 List A TYKV097108 List A TYKV059523 List A TYKA004997 List A TYKV097177 List A TYKV059661 List A TYKA005003 List A TYKV097384 List A TYKV059730 List A TYKA005007 List A TYKV140001 List A TYKV059868 List A TYKA005018 List A TYKV140012 List A TYKV060006 List A TYKA005042 List A TYKV140023 List A TYKV060075 List A TYKA005047 List A TYKV140034 List A TYKV060213 List A TYKA005817 List A TYKV140045 List A TYKV060282 List A TYKA005837 List A TYKV140089 List A TYKV060351 List A TYKA005841 List A TYKV140111 List A TYKV060420 List A TYKA006252 List A TYKV140133 List A TYKV060489 List A TYKA006263 List A TYKV140144 List A TYKV060627 List A TYKA006278 List A TYKV140155 List A TYKV060765 List A TYKA006292 List A TYKV140166 List A TYKV060834 List A TYKA006293 List A TYKV140177 List A TYKV060903 List A TYKA006294 List A TYKV140188 List A TYKV060972 List A TYKA006297 List A TYKV140199 List A TYKV061110 List A TYKA006571 List A TYKV140221 List A TYKV061179 List A TYKA008148 List A TYKV140243 List A TYKV061317 List A TYKA008209 List A TYKV140254 List A TYKV061386 List A TYKA008222 List A TYKV140265 List A TYKV061455 List A TYKA011058 List A TYKV140287 List A TYKV061593 List A TYKA011065 List A TYKV140298 List A TYKV061731 List A TYKA011067 List A TYKV140309 List A TYKV061800 List A TYKA011070 List A TYKV140353 List A TYKV061869 List A TYKA011071 List A TYKV140364 List A TYKV061938 List A TYKA011073 List A TYKV140375 List A TYKV062007 List A TYKA011075 List A TYKV140419 List A TYKV062076 List A TYKA011081 List A TYKV140430 List A TYKV062145 List A TYKA011088 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV140441 List A TYKV062214 List A TYKA011089 List A TYKV140452 List A TYKV062283 List A TYKA011094 List A TYKV140463 List A TYKV062352 List A TYKA011102 List A TYKV140474 List A TYKV062490 List A TYKA011107 List A TYKV140529 List A TYKV062559 List A TYKV001447 List A TYKV140540 List A TYKV062628 List A TYKV002723 List A TYKV140551 List A TYKV062697 List A TYKV002724 List A TYKV140562 List A TYKV062766 List A TYKV002726 List A TYKV140584 List A TYKV062835 List A TYKV002727 List A TYKA006289 List A - Chivo TYKV062904 List A TYKV002728 List A TYKA006291 List A - Chivo TYKV062973 List A TYKV002729 List A TYKV059937 List A - Chivo TYKV063111 List A TYKV002730 List A TYKV000367 List A - TYKV063249 List A TYKV002731 List A TYKV002989 List A - TYKV063318 List A TYKV002732 List A TYKA008251 List A - TYKV063387 List A TYKV002734 List A TYKA008254 List A - TYKV063456 List A TYKV002737 List A TYKA008257 List A - TYKV063525 List A TYKV002738 List A TYKA008260 List A - TYKV063663 List A TYKV002739 List A TYKV063870 List A TYKV002744 List A TYKV064008 List A Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV001251 Inv 1002 TYKA010007 Inv 1002 TYKA000051 Inv 1002 TYKV001262 Inv 1002 TYKA010011 Inv 1002 TYKA000318 Inv 1002 TYKV001263 Inv 1002 TYKA010012 Inv 1002 TYKA000676 Inv 1002 TYKV001470 Inv 1002 TYKA010013 Inv 1002 TYKA001090 Inv 1002 TYKV001497 Inv 1002 TYKA010026 Inv 1002 TYKA001209 Inv 1002 TYKV002020 Inv 1002 TYKA010030 Inv 1002 TYKA001733 Inv 1002 TYKV002032 Inv 1002 TYKA010397 Inv 1002 TYKA002355 Inv 1002 TYKV002033 Inv 1002 TYKA010513 Inv 1002 TYKA002505 Inv 1002 TYKV002034 Inv 1002 TYKA010588 Inv 1002 TYKA002794 Inv 1002 TYKV002035 Inv 1002 TYKA011248 Inv 1002 TYKA002815 Inv 1002 TYKV002040 Inv 1002 TYKA011287 Inv 1002 TYKA002852 Inv 1002 TYKV002048 Inv 1002 TYKA011328 Inv 1002 TYKA002856 Inv 1002 TYKV002051 Inv 1002 TYKA011481 Inv 1002 TYKA002886 Inv 1002 TYKV002066 Inv 1002 TYKA011505 Inv 1002 TYKA002931 Inv 1002 TYKV002077 Inv 1002 TYKA011516 Inv 1002 TYKA002940 Inv 1002 TYKV002079 Inv 1002 TYKA011742 Inv 1002 TYKA003075 Inv 1002 TYKV002084 Inv 1002 TYKA011767 Inv 1002 TYKA003076 Inv 1002 TYKV002085 Inv 1002 TYKA012105 Inv 1002 TYKA003115 Inv 1002 TYKV002090 Inv 1002 TYKA012107 Inv 1002 TYKA003156 Inv 1002 TYKV002095 Inv 1002 TYKA012114 Inv 1002 TYKA003162 Inv 1002 TYKV002096 Inv 1002 TYKA012118 Inv 1002 TYKA003170 Inv 1002 TYKV002100 Inv 1002 TYKA012120 Inv 1002 TYKA003236 Inv 1002 TYKV002112 Inv 1002 TYKA012131 Inv 1002 TYKA003277 Inv 1002 TYKV002119 Inv 1002 TYKA012204 Inv 1002 TYKA003285 Inv 1002 TYKV002123 Inv 1002 TYKA012211 Inv 1002 TYKA003293 Inv 1002 TYKV002126 Inv 1002 TYKA012221 Inv 1002 TYKA003298 Inv 1002 TYKV002562 Inv 1002 TYKA012223 Inv 1002 TYKA003329 Inv 1002 TYKV002568 Inv 1002 TYKA012234 Inv 1002 TYKA003332 Inv 1002 TYKV002569 Inv 1002 TYKA012260 Inv 1002 TYKA003333 Inv 1002 TYKV002575 Inv 1002 TYKA012268 Inv 1002 TYKA003336 Inv 1002 TYKV002583 Inv 1002 TYKA012272 Inv 1002 TYKA003340 Inv 1002 TYKV002586 Inv 1002 TYKA012291 Inv 1002 TYKA003457 Inv 1002 TYKV002587 Inv 1002 TYKA012302 Inv 1002 TYKA003466 Inv 1002 TYKV002591 Inv 1002 TYKA012375 Inv 1002 TYKA003500 Inv 1002 TYKV002592 Inv 1002 TYKA012404 Inv 1002 TYKA003607 Inv 1002 TYKV002593 Inv 1002 TYKA012598 Inv 1002 TYKA003614 Inv 1002 TYKV002597 Inv 1002 TYKA012604 Inv 1002 TYKA003705 Inv 1002 TYKV002598 Inv 1002 TYKA012618 Inv 1002 TYKA003727 Inv 1002 TYKV002605 Inv 1002 TYKA012641 Inv 1002 TYKA003766 Inv 1002 TYKV002608 Inv 1002 TYKA012645 Inv 1002 TYKA003800 Inv 1002 TYKV002609 Inv 1002 TYKA012853 Inv 1002 TYKA003801 Inv 1002 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV002612 Inv 1002 TYKA012855 Inv 1002 TYKA003861 Inv 1002 TYKV002617 Inv 1002 TYKA012981 Inv 1002 TYKA003908 Inv 1002 TYKV002618 Inv 1002 TYKA013058 Inv 1002 TYKA003911 Inv 1002 TYKV002621 Inv 1002 TYKA013062 Inv 1002 TYKA003937 Inv 1002 TYKV002622 Inv 1002 TYKA013066 Inv 1002 TYKA003965 Inv 1002 TYKV002625 Inv 1002 TYKA013067 Inv 1002 TYKA003993 Inv 1002 TYKV002627 Inv 1002 TYKA013070 Inv 1002 TYKA004020 Inv 1002 TYKV002630 Inv 1002 TYKA013075 Inv 1002 TYKA004028 Inv 1002 TYKV002633 Inv 1002 TYKA013077 Inv 1002 TYKA004038 Inv 1002 TYKV002635 Inv 1002 TYKA013098 Inv 1002 TYKA004043 Inv 1002 TYKV002637 Inv 1002 TYKA013130 Inv 1002 TYKA004047 Inv 1002 TYKV002638 Inv 1002 TYKA013148 Inv 1002 TYKA004049 Inv 1002 TYKV002640 Inv 1002 TYKA013150 Inv 1002 TYKA004055 Inv 1002 TYKV002641 Inv 1002 TYKA013152 Inv 1002 TYKA004091 Inv 1002 TYKV002643 Inv 1002 TYKA013162 Inv 1002 TYKA004101 Inv 1002 TYKV002644 Inv 1002 TYKA013163 Inv 1002 TYKA004121 Inv 1002 TYKV002649 Inv 1002 TYKA013343 Inv 1002 TYKA004137 Inv 1002 TYKV002653 Inv 1002 TYKA013367 Inv 1002 TYKA004145 Inv 1002 TYKV002657 Inv 1002 TYKA013376 Inv 1002 TYKA004147 Inv 1002 TYKV002659 Inv 1002 TYKA013570 Inv 1002 TYKA004153 Inv 1002 TYKV002667 Inv 1002 TYKA013577 Inv 1002 TYKA004155 Inv 1002 TYKV002775 Inv 1002 TYKA013579 Inv 1002 TYKA004156 Inv 1002 TYKV002776 Inv 1002 TYKA013618 Inv 1002 TYKA004157 Inv 1002 TYKV002778 Inv 1002 TYKA013643 Inv 1002 TYKA004159 Inv 1002 TYKV002779 Inv 1002 TYKA014309 Inv 1002 TYKA004162 Inv 1002 TYKV002782 Inv 1002 TYKA014312 Inv 1002 TYKA004164 Inv 1002 TYKV002783 Inv 1002 TYKA014313 Inv 1002 TYKA004165 Inv 1002 TYKV002784 Inv 1002 TYKA014319 Inv 1002 TYKA004166 Inv 1002 TYKV002787 Inv 1002 TYKA014321 Inv 1002 TYKA004167 Inv 1002 TYKV002788 Inv 1002 TYKA014322 Inv 1002 TYKA004170 Inv 1002 TYKV002789 Inv 1002 TYKA014323 Inv 1002 TYKA004171 Inv 1002 TYKV002790 Inv 1002 TYKA014325 Inv 1002 TYKA004174 Inv 1002 TYKV002791 Inv 1002 TYKA014326 Inv 1002 TYKA004176 Inv 1002 TYKV002795 Inv 1002 TYKA014328 Inv 1002 TYKA004177 Inv 1002 TYKV002796 Inv 1002 TYKA014329 Inv 1002 TYKA004179 Inv 1002 TYKV002797 Inv 1002 TYKA014330 Inv 1002 TYKA004180 Inv 1002 TYKV002799 Inv 1002 TYKA014331 Inv 1002 TYKA004183 Inv 1002 TYKV002800 Inv 1002 TYKA014332 Inv 1002 TYKA004187 Inv 1002 TYKV002801 Inv 1002 TYKA014333 Inv 1002 TYKA004190 Inv 1002 TYKV002805 Inv 1002 TYKA014336 Inv 1002 TYKA004225 Inv 1002 TYKV002806 Inv 1002 TYKA014338 Inv 1002 TYKA004258 Inv 1002 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV002807 Inv 1002 TYKA014339 Inv 1002 TYKA004271 Inv 1002 TYKV002808 Inv 1002 TYKA014344 Inv 1002 TYKA004274 Inv 1002 TYKV002811 Inv 1002 TYKA014345 Inv 1002 TYKA004277 Inv 1002 TYKV002812 Inv 1002 TYKA014346 Inv 1002 TYKA004292 Inv 1002 TYKV002814 Inv 1002 TYKA014350 Inv 1002 TYKA004320 Inv 1002 TYKV002815 Inv 1002 TYKA014352 Inv 1002 TYKA004368 Inv 1002 TYKV002816 Inv 1002 TYKA014353 Inv 1002 TYKA004369 Inv 1002 TYKV002817 Inv 1002 TYKA014355 Inv 1002 TYKA004371 Inv 1002 TYKV002818 Inv 1002 TYKA014356 Inv 1002 TYKA004372 Inv 1002 TYKV002820 Inv 1002 TYKA014358 Inv 1002 TYKA004373 Inv 1002 TYKV002821 Inv 1002 TYKA014361 Inv 1002 TYKA004376 Inv 1002 TYKV002822 Inv 1002 TYKA014427 Inv 1002 TYKA004389 Inv 1002 TYKV002823 Inv 1002 TYKA014431 Inv 1002 TYKA004390 Inv 1002 TYKV002825 Inv 1002 TYKA014443 Inv 1002 TYKA004391 Inv 1002 TYKV002826 Inv 1002 TYKA014446 Inv 1002 TYKA004395 Inv 1002 TYKV012217 Inv 1002 TYKA014447 Inv 1002 TYKA004427 Inv 1002 TYKV016227 Inv 1002 TYKA014463 Inv 1002 TYKA004428 Inv 1002 TYKV016472 Inv 1002 TYKA014470 Inv 1002 TYKA004431 Inv 1002 TYKV023929 Inv 1002 TYKA014471 Inv 1002 TYKA004434 Inv 1002 TYKV025252 Inv 1002 TYKA014473 Inv 1002 TYKA004437 Inv 1002 TYKV025941 Inv 1002 TYKA014822 Inv 1002 TYKA004442 Inv 1002 TYKV026088 Inv 1002 TYKA014876 Inv 1002 TYKA004450 Inv 1002 TYKV026137 Inv 1002 TYKA014877 Inv 1002 TYKA004452 Inv 1002 TYKV026186 Inv 1002 TYKA014888 Inv 1002 TYKA004457 Inv 1002 TYKV026235 Inv 1002 TYKA014899 Inv 1002 TYKA004472 Inv 1002 TYKV026382 Inv 1002 TYKA015396 Inv 1002 TYKA004476 Inv 1002 TYKV026480 Inv 1002 TYKA015401 Inv 1002 TYKA004604 Inv 1002 TYKV026529 Inv 1002 TYKA015406 Inv 1002 TYKA004608 Inv 1002 TYKV026578 Inv 1002 TYKA015412 Inv 1002 TYKA004615 Inv 1002 TYKV026627 Inv 1002 TYKA015419 Inv 1002 TYKA004624 Inv 1002 TYKV026676 Inv 1002 TYKA015420 Inv 1002 TYKA004772 Inv 1002 TYKV026725 Inv 1002 TYKA015421 Inv 1002 TYKA004886 Inv 1002 TYKV026872 Inv 1002 TYKA015425 Inv 1002 TYKA004890 Inv 1002 TYKV026970 Inv 1002 TYKA015433 Inv 1002 TYKA004893 Inv 1002 TYKV027166 Inv 1002 TYKA015435 Inv 1002 TYKA004921 Inv 1002 TYKV027215 Inv 1002 TYKA022549 Inv 1002 TYKA005017 Inv 1002 TYKV027264 Inv 1002 TYKA022633 Inv 1002 TYKA005021 Inv 1002 TYKV027313 Inv 1002 TYKA022647 Inv 1002 TYKA005029 Inv 1002 TYKV027362 Inv 1002 TYKA022661 Inv 1002 TYKA005045 Inv 1002 TYKV027509 Inv 1002 TYKA022675 Inv 1002 TYKA005399 Inv 1002 TYKV027607 Inv 1002 TYKA022745 Inv 1002 TYKA005509 Inv 1002 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
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TYKV027117 Inv 1005 TYKA015429 Inv 1005 TYKV150001 Inv 1005 TYKA015430 Inv 1005 TYKV170518 Inv 1005 - Chivo TYKA015432 Inv 1005 TYKA000959 Inv 1005 - TYKA015436 Inv 1005 TYKA001579 Inv 1005 - TYKA015437 Inv 1005 TYKA002332 Inv 1005 - TYKA022521 Inv 1005 TYKA022577 Inv 1005 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKA009201 Inv 1007 - 1 TYKA000775 Inv 1007 - 1 TYKA011092 Inv 1007 - 1 TYKA000949 Inv 1007 - 1 TYKA011154 Inv 1007 - 1 TYKA001902 Inv 1007 - 1 TYKV000589 Inv 1007 - 1 TYKA002034 Inv 1007 - 1 TYKV000601 Inv 1007 - 1 TYKA002248 Inv 1007 - 1 TYKV000603 Inv 1007 - 1 TYKA002264 Inv 1007 - 1 TYKV001166 Inv 1007 - 1 TYKA002362 Inv 1007 - 1 TYKV001185 Inv 1007 - 1 TYKA002935 Inv 1007 - 1 TYKV001194 Inv 1007 - 1 TYKA004089 Inv 1007 - 1 TYKV001210 Inv 1007 - 1 TYKA004148 Inv 1007 - 1 TYKV001389 Inv 1007 - 1 TYKA004158 Inv 1007 - 1 TYKV001430 Inv 1007 - 1 TYKA004172 Inv 1007 - 1 TYKV001436 Inv 1007 - 1 TYKA004181 Inv 1007 - 1 TYKV001454 Inv 1007 - 1 TYKA004448 Inv 1007 - 1 TYKV001736 Inv 1007 - 1 TYKA004470 Inv 1007 - 1 TYKV001897 Inv 1007 - 1 TYKA004631 Inv 1007 - 1 TYKV002804 Inv 1007 - 1 TYKA004708 Inv 1007 - 1 TYKV002810 Inv 1007 - 1 TYKA004727 Inv 1007 - 1 TYKV002824 Inv 1007 - 1 TYKA004753 Inv 1007 - 1 TYKV015933 Inv 1007 - 1 TYKA006300 Inv 1007 - 1 TYKV016815 Inv 1007 - 1 TYKA006578 Inv 1007 - 1 TYKV027558 Inv 1007 - 1 TYKA007035 Inv 1007 - 1 TYKV031306 Inv 1007 - 1 TYKA007244 Inv 1007 - 1 TYKV060696 Inv 1007 - 1 TYKA007249 Inv 1007 - 1 TYKV070622 Inv 1007 - 1 TYKA007285 Inv 1007 - 1 TYKV072071 Inv 1007 - 1 TYKA007523 Inv 1007 - 1 TYKV072347 Inv 1007 - 1 TYKA007529 Inv 1007 - 1 TYKV072485 Inv 1007 - 1 TYKA007530 Inv 1007 - 1 TYKV073037 Inv 1007 - 1 TYKA007531 Inv 1007 - 1 TYKV073175 Inv 1007 - 1 TYKA007536 Inv 1007 - 1 TYKV093796 Inv 1007 - 1 TYKA007552 Inv 1007 - 1 TYKV094003 Inv 1007 - 1 TYKA007556 Inv 1007 - 1 TYKV094348 Inv 1007 - 1 TYKA008183 Inv 1007 - 1 TYKV094417 Inv 1007 - 1 TYKA008185 Inv 1007 - 1 TYKV095245 Inv 1007 - 1 TYKA008203 Inv 1007 - 1 TYKV095452 Inv 1007 - 1 TYKA008351 Inv 1007 - 1 TYKV095590 Inv 1007 - 1 TYKA008359 Inv 1007 - 1 TYKV096073 Inv 1007 - 1 TYKA008363 Inv 1007 - 1 TYKV096970 Inv 1007 - 1 TYKA008402 Inv 1007 - 1 TYKV097246 Inv 1007 - 1 TYKA008421 Inv 1007 - 1 TYKV140078 Inv 1007 - 1 TYKA008568 Inv 1007 - 1 TYKV140100 Inv 1007 - 1 TYKA008574 Inv 1007 - 1 TYKV140122 Inv 1007 - 1 TYKA008582 Inv 1007 - 1 TYKV140210 Inv 1007 - 1 TYKA008776 Inv 1007 - 1 TYKV140232 Inv 1007 - 1 TYKA008845 Inv 1007 - 1 TYKV140276 Inv 1007 - 1 TYKA008851 Inv 1007 - 1 TYKV140320 Inv 1007 - 1 TYKA008852 Inv 1007 - 1 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
TYKV140331 Inv 1007 - 1 TYKA008861 Inv 1007 - 1 TYKV140342 Inv 1007 - 1 TYKA008871 Inv 1007 - 1 TYKV140397 Inv 1007 - 1 TYKA008872 Inv 1007 - 1 TYKV140485 Inv 1007 - 1 TYKA008873 Inv 1007 - 1 TYKV140507 Inv 1007 - 1 TYKA008877 Inv 1007 - 1 TYKV140518 TYKV 140573 TYKV 150023 TYKV 170177 Inv 1007 - 1 Inv 1007 - 1 Inv 1007 - 1 Inv 1007 - 1 Docusign Envelope ID: B6A1F75B - DCF8 - 45E5 - BDEE - 6283E02BD922
Exhibit 10.75
EXTENSION OF THE MASTER SERVICES AGREEMENT AND THE SERVICE LEVEL AGREEMENT. This extension to the Master Services Agreement and its Service Level Agreement is entered into by Athena Bitcoin Global , a corporation organized and existing under the laws of Nevada, USA ; Athena Bitcoin Inc . , a corporation organized and existing under the laws of Delaware, USA ; Athena Holdings El Salvador, S . A . de C . V . , a Salvadorian corporation, and Chivo, Sociedad Anonima de Capital Variable, a Salvadorian corporation . It will be effective as of July 31 , 2024 , and will be governed according to the following clauses : i. Background . On July 1 , 2022 , the aforementioned parties signed a Master Services Agreement and its respective Service Level Agreement, which are intended to govern the ATM’s maintenance and support service . The term of the referred contracts began on July 1 , 2022 , ending on July 30 , 2024 . Likewise, in clause 11 . 4 of the Master Services Agreement, it was established that any amendment or modification of the terms will be binding only when it is in writing and signed by the authorized representatives of the parties . ii. Extension of the deadline . The parties agree to extend the term of the referred contracts for TWO MONTHS, starting on July 31 , 2024 , ending on September 30 , 2024 . This, because the parties have expressed their intention to continue with the provision of the contracted services, however, the clauses of the new contract are still pending negotiation . iii. Commitments by Athena In this act, Athena Bitcoin Global , Athena Bitcoin Inc. , and Athena Holdings El Salvador, S.A. de C.V. , undertake to correctly finalize and deliver to Chivo, Sociedad Anonima de Capital Variable, before the expiration of the term of this instrument, that is, before September 30, 2024, the supporting information described in Annex 1 of this agreement.
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iv . Final statements . Finally, the parties have agreed to ratify all other clauses and conditions agreed in the referred contracts, which remain in force in their entirety . By signing this document, the parties agree to continue with the referred Master Services Agreement and Service Level Agreement . THIS DOCUMENT IS SIGNED BY ALL PARTIES BELOW: ATHENA BITCOIN GLOBAL Firma: Matias Goldenhorn (Aug 5, 2024 14:45 CDT) Nombre: Matías GoldenHorn Cargo: Legal representative Fecha: Aug 5, 2024 CHIVO, S.A. DE C.V. Firma: Alejandro Pineda (Aug 7, 2024 11:59 MDT) Nombre: Alejandro Pineda Cargo: General Manager Fecha: Aug 7, 2024 ATHENA BITCOIN INC. Firma: Matias Goldenhorn (Aug 5, 2024 14:45 CDT) Nombre: Matías GoldenHorn Cargo: Legal representative Fecha: Aug 5, 2024 ATHENA HOLDINGS EL SALVADOR S.A. DE C.V. Firma: Carlos Rivas (Aug 5, 2024 13:54 MDT) Nombre: Carlos Rivas Cargo: Legal representative Fecha: Aug 5, 2024
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ANNEX 1 Support information pending delivery by Athena Bitcoin Global, Athena Bitcoin Inc., and Athena Holdings El Salvador, S.A. de C.V. 1) Supporting Documentation pending delivery by Athena Holdings El Salvador, S.A. de C.V.
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ANNEX 1 Support information pending delivery by Athena Bitcoin Global, Athena Bitcoin Inc., and Athena Holdings El Salvador, S.A. de C.V. 1) Supporting Documentation pending delivery by Athena Holdings El Salvador, S.A. de C.V.
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ANNEX 1 Support information pending delivery by Athena Bitcoin Global, Athena Bitcoin Inc., and Athena Holdings El Salvador, S.A. de C.V. 2) Supporting Documentation pending delivery by Athena Bitcoin Global and Athena Bitcoin Inc. THIS DOCUMENT IS SIGNED BY ALL PARTIES BELOW:
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ATHENA BITCOIN GLOBAL Firma: Matias Goldenhorn (Aug 5, 2024 14:45 CDT) Nombre: Matías GoldenHorn Cargo: Legal representative Fecha: Aug 5, 2024 CHIVO, S.A. DE C.V. Firma: Alejandro Pineda (Aug 7, 2024 11:59 MDT) Nombre: Alejandro Pineda Cargo: General Manager Fecha: Aug 7, 2024 ATHENA BITCOIN INC. Firma: Matias Goldenhorn (Aug 5, 2024 14:45 CDT) Nombre: Matías GoldenHorn Cargo: Legal representative Fecha: Aug 5, 2024 ATHENA HOLDINGS EL SALVADOR S.A. DE C.V. Firma: Carlos Rivas (Aug 5, 2024 13:54 MDT) Nombre: Carlos Rivas Cargo: Legal representative Fecha: Aug 5, 2024
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V1 020824 CW - EXTENSION LETTER - MSA - SLA Final Audit Report 2024 - 08 - 07 Created: By: Status: 2024 - 08 - 03 Brenda Fuentes (brenda.fuentes@chivowallet.com) Signed Transaction ID: CBJCHBCAABAAxfMdMUf3PCBHvB3iC6 - EUKCHaE62c_OU "V1 020824 CW - EXTENSION LETTER - MSA - SLA" History Document created by Brenda Fuentes (brenda.fuentes@chivowallet.com) 2024 - 08 - 03 - 2:49:21 AM GMT Document emailed to matias@athenabitcoin.com for signature 2024 - 08 - 03 - 2:53:40 AM GMT Email viewed by matias@athenabitcoin.com 2024 - 08 - 05 - 7:43:48 PM GMT Signer matias@athenabitcoin.com entered name at signing as Matias Goldenhorn 2024 - 08 - 05 - 7:45:07 PM GMT Document e - signed by Matias Goldenhorn (matias@athenabitcoin.com) Signature Date: 2024 - 08 - 05 - 7:45:09 PM GMT - Time Source: server Document emailed to carlos@athena.sv for signature 2024 - 08 - 05 - 7:45:10 PM GMT Email viewed by carlos@athena.sv 2024 - 08 - 05 - 7:46:28 PM GMT Signer carlos@athena.sv entered name at signing as Carlos Rivas 2024 - 08 - 05 - 7:54:56 PM GMT Document e - signed by Carlos Rivas (carlos@athena.sv) Signature Date: 2024 - 08 - 05 - 7:54:58 PM GMT - Time Source: server - Signature captured from device with phone number XXXXXXX2407 Document emailed to alejandro.pineda@chivowallet.com for signature 2024 - 08 - 05 - 7:54:59 PM GMT
Email viewed by alejandro.pineda@chivowallet.com 2024 - 08 - 07 - 5:57:59 PM GMT Signer alejandro.pineda@chivowallet.com entered name at signing as Alejandro Pineda 2024 - 08 - 07 - 5:59:45 PM GMT Document e - signed by Alejandro Pineda (alejandro.pineda@chivowallet.com) Signature Date: 2024 - 08 - 07 - 5:59:47 PM GMT - Time Source: server Agreement completed. 2024 - 08 - 07 - 5:59:47 PM GMT
Exhibit 10.76
MASTER SERVICES AGREEMENT This Master Services Agreement (this "MSA ") is hereby entered into by Athena Bitcoin Global, a corporation organized and existing under the laws of Nevada, USA, Athena Bitcoin Inc . , a corporation organized and existing under the laws of Delaware , USA, and Athena Holdings El Salvador, Sociedad An 6 nima de Capital Variable, a Salvadorean corporation (Athena Bitcoin Global, Athena Bitcoin Inc . ,and Athena Holdings El Salvador, Sociedad An 6 nima de Capital Variable collectively referred to as the "Company"), and Chivo, Sociedad Anonima de Capital Variable ("Republic") , and solely for the effects of Section 11 . 9 , Francisco Ernesto Costa L 6 pez ("Contract Administrator") and is effective as of December 1 , 2024 ("MSA Effective Date") . In this MSA, Company and Republic are each referred to as a "Party" or collectively as the "Parties" . Capitalized terms that are not defined i n the body or exhibits of this MSA have the meanings set forth in Exhibit A (Definitions) . 1. MSA 1. Service Level Agreements . The Republic and/or any of its Entities may procure services from Company and/or any of its Affiliates by executing a service level agreement, in addition to this MSA, in the form attached hereto as Exhibit C (an "SLA"), which will describe specific services that the Company Entities will provide to the Republic Entities (the "Services") and will set forth terms applicable to such Services . The SLAshall form an independent agreement binding on each of the Republic Entities and Company Entities that execute it . By executing an SLA, the applicable Republic Entities and Company Entities agree to the terms of the SLA and the terms in this MSA . 2. Application of MSA to SLA . When interpreting the terms of this MSA with respect to the SLA, (i) references to "Company", "Republic" , and "Party" will be construed as references to the Company Entities and the Republic Entities that signed the SLA, except where the context indicates otherwise, (ii) references to "Services" will be construed as references to the Services de scribed in the SLA, and (iii) references to an "SLA" will refer to the terms of both the SLAand the terms of this MSA as applicable to the SLA . If there is a conflict between the terms of the SLA and this MSA, the SLA will control . 3. Responsibility for Entities . Company will be jo intly and severally liable for all the acts and omissions of each Party that is part of the Company . 2. SERVICES With respect to the Services set forth in the SLA, Company will provide the Services and perform as follows: 2 . 1 . Provision of Services . Company will provide the Services in accordance with (i) the terms of the SLA and (ii) Applicable Law . The Services will include all ancillary services required for Company to provide the Services to Republic, including all those that are inherent , necessary , or customary to provide the Services . Company wiII only use personnel who are suitably skilled, experience - cl, and qualified to provide the Services . 2 . 2 . Development and Integration . Company will provide (i) continuous maintenance and necessary repairs for the Republic ' s automated teller machines that accept and distribute Bitcoin cryptocurrency (any such machine, the "Republic ATM") , and (ii) maintenance, support, and rJf
software updates and corrections in relation to the Republic ATMs, in accordance with the SLA and the other requirements that Republic may provide to Company from time to time . Company will provide Republic with the Technology required for Republic to use or make available the Services for the Republic ATMs as contemplated in the SLA . Company will provide a dedicated integration and development team and all development resources necessary to fully integrate and develop the Services . 3. Perfom 1 ance Standards . Company will use its best efforts to perfonn the Services . All Services will be performed by Company in a workmanlike manner and, in anyevent, no less than with that degree of skill and care that Company uses when performing the same or similar services to its other customers (e . g . , at least the same degree of accuracy, quality, completeness, timeliness, and responsiveness) . 4. Reporting and Monthly Deposits . Company will provide Republic with accurate and complete reports, ina formand format specified by Republic, at the end of each calendar month . The reports shall clearly state the number of Republic ATM transactions per month, the amount of Bitcoin sold in the transactions, the price for such sales, the resulting value of those sales in United States dollars (such va lu e, the "Monthly Amount"), and any other items as Repub l ic may reasonably request . Company shall also provide any other reports stated in the SLAor that may be reasonably requested by Republic, Company shall promptly, but in no event later than ten ( 10 ) days after the end of each month, deposit the Monthly Amount in United States dollars to an account es tab]ished by the Republic . 5. Relationship Management. 1. As part of the Services, Company will make available personnel (the "Republic RM Team") who will provide Republic with support services and other administrative, operational, technical, and partner support, as reasonably requested by Republic . The Republic RM Team will be dedicated to Republic and adequate in number . The Republi c RM Team will be available for regular, periodic meetings as reasonably determined by Republic to discuss the Services generally . The Republic RM Team will meet with Republic at least one ( 1 ) time every quarter, during which meeting the Republic RM Team will provide Republic with, among other things, a summary of results, improvement opportun i ties, case resolutions, instances of fraud , and corrective actions taken . 2. Republic may request weekly reconciliation and reporting reviews and business and operations reviews to discuss any specific issues that arise in connection with the Services . The regular, periodic meetings may be held in person, by videoconference, or other format reasonably agreed by the Parties . Company may replace any member of the Republic RM Team by providing Republic with written notice (including via email) of such replacement . From time to time, Republic may raise concerns or i ssues regarding the Services to Company, a nd Company will make available its executives who have the decision - making power to address the concerns or issues raised . 6. Service Providers . Company will obtain Republic's prior written consent, or a waiver of such consent in writing, before using a Se rvice Provider in connection with the SLA . Company will use its best commercially reasonable efforts to obtain a wr itt en agreement with each Service Provider that enables Company to comp ly with its obligations under the SLA, and such written agreement must not contradict or be inco nsistent with the tenns of the MSAand SLA . Except as
set forth in this Section 2 . 6 , Company will not use a Service Provider . The acts and omissions of a Service Provider will be treated as the acts and omissions of Company , and Company will be responsible and liable for the acts and omissions of its Service Providers . 7. User Communications . Company will not, and will cause its Affiliates to not, communicate or otherwise contact any User in connection with the Services without Republic's prior written consent (including via email) . 8. Continued Performance. Company acknowledges that the timely and complete performance of its obligations under this MSA and the SLA is critical to the business and operations of Republic and that time is of the essence , and Company will provide the Services and perform its obligations accordingly. Except if prohibited by Applicable Law, during any dispute resolution proceedings involving the SLA, whether informal or formal, Company will continue to provide the Services in accordance with the SLA (and waives any right to suspend, delay, or otherwise diminish perfonnance ), and Republic may continue to exercise its rights in accordance with the SLA. Any limitation on the amount or nature of damages in the SLA will be ineffective to limit the Company's liability for injury caused to Republic by reason of breach of the foregoing prohibitions. Company hereby waives the defense of the adequacy of monetary damages in the context of an action by Republic for equitable enforcement of this Section 2.8.Company Policies and Procedures. If the SLA requires Company to perform the Services in accordance with Company's policies or procedures , Company will ensure that such policies or procedures do not conflict with its obligations under the SLA. If there is a conflict between any Company policy or procedure, and the SLA , the SLA will control. 9. Business Expansion . If Company develops or provides a new service , not currently covered by this MSA or its SLA, the Parties agree to and will negotiate in good faith to determine the terms under which such service will be included within the scope of this MSA . The inclusion of any future service shall be subject to mutual agreement on all necessary terms, including pricing, service levels, and any additional or modified obligations each party may assume . 3. INTELLECTUAL PROPERTY. 1. Assignment of Intellectual Property . Company hereby assigns to Republic , Company's entire right, title, and interest in and to any Intellectual Property Rights, hereafter made or conceived solely or jointly by Company or its Affiliates while working for or on behalf ofRepublic pursuant to the terms of the MSAor the SLA , which relate to the "Foreground IP" . Company shall disclose all Foreground IP promptly to Republic . Company shall, upon r e quest of Republic, promptly execute a specific assignment of title to Republic or its Entities and take all other actions reasonably necessary to enable Republic to secure for itself all Foreground IP in El Salvador, the United States or any other counh - y . It shall be conclusively presumed that any patent applications relating to the Republic ATM , which Company may file within one year after termination of this MSA, shall belong to Repub l ic , and Company hereby irrevocably a ss igns the same to Republic or its designated Entity , as having been conceived or reduced to practice during the term of this MSA . 2. Works of Authorship . AH Foreground IP that are writings or works of authorship, including , without limitation , program codes or documentation, produced or authored by Company or its Affiliates in the course of performing services for Republic , together with any associated copyrights, are works made for hire and the exclusive property of Republic . To the extent that an y writings or works of authorship may not, by operation of law , be works made for hire , Company hereby irrevocably assigns Republic all ownership of and all rights of copyright in, 12 - -
such items , and Republic shall have the right to obtain and hold in its own name , rights of copyright , copyright registrations, and similar protections which may be available in such works . Company shall give Republic or its designees all assistance reasonably required to perfect such rights . 3. License to Services and Company Technology . With respect to the SLA, Company hereby grants to Republic and its Entities a non - exclusive, non - sub li censable (except to Representatives of a Republic Entity), royalty - free, fully paid - up , irrevocable, perpetual , worldwide right and license to (i) access and use the Services and make them available for the Republic ATMs ; and (ii) use, evaluate, test, install , integrate , modify, reproduce , and distribute the Company Technology in connection with using the Services and integrating the Services for the Republic ATMs . 4. License to Republic Technology . With respect to the SLA, Republic hereby grant s to Company a non - exclusive,non - sublicensable (except to Service Providers approved pursuant to Section 2 . 6 ) , non - transferable, royalty - free, fully paid - up , worldwide right and license , during the SLATerm, to use, evaluate, test, install, integrate, modify, and reproduce (i) the Republic Technology provided to Company in connection with the SLA and (ii) the Foreground IP, in each case, sole l y as required for Company to perform its obligations under the SLA . 5. License to Technology in Foreground IP . Republic hereby grants to Company a non - exclusive, non - transferable, royalty - free, fully paid - up, perpetual, worldwide right and license, to use, evaluate, test, install , integrate, modify, and reproduce all Technology in the Foreground IP (excluding the use of the compiled binaries of t he Bitcoin Chivo Wallet) for any purpose, including for use in products or services provided by Company to third parties . For the avoidance of doubt, Republic shall retain all rights, title and interest in the Republic ATMs, including all Intellectual Property Rights therein or thereto . 6. Non - Exclusivity ; No Commitments . The Parties and their Affiliates acknowledge and agree that the terms of this MSA and the SLA, the Services, and the relationship between the Parties and their respective Affiliates, do not impose any obligations of exclusivity on either Party or its Affiliates . Republic and its Affiliates are under no obligation to (i) enter into the SLA, (ii) guarantee a minimum number of Users who will use the Services, or (iii) provide a minimum volume of transactions processed through the Services or a minimum amount of fees, amounts paid, or revenues in connection with the Services . 7. Republic Entities and Third Parties . Any Republic Entity may perform any of Republic's obligations, grant any approvals required by Republic, and exercise all rights and all licens es granted to Republic under the SLA . Republic may designate a Represen tative to receive, on its behalf, any info rmation , communications, reports, or other materials to be provided by Company to Republic pursuant to the SLA . Republic may engage its Representatives to perfonn its obligations under the SLA . The acts and omissions of a Representative in performing Republ ic ' s obligations under the SLA will be treated as the acts and omissions of Republic under the SLA . 8. Further Assurances . If for any reason, Republic is unable to secure Company's signature on any document needed to apply for, perfect, or otherwise acquire title to the Intellectual Property Righ ts granted to it under this Section 3 , or to enforce such rights, Company hereby d esignates Republic as Company's attorney - in - fact and agent, so lely and exclusively to act for and on Company's behalf to execute and file such documents with the same legal force and effect as if executed by Company and for no other purpose .
4. DATA; DATA SECURITY. 1. Data Use, Disclosure and Retention . Notwithstanding anything to the contrary in Section I, Company will only use data related to Republic and any intellectual property of Republic so l ely as required to provide the Services to Republic as required under this MSA, the SLA, or, as applicable, to comply with any Governmental Authority . Company shall secure and protect such data from misuse and unauthorized access and implement and maintain security (including, operation, t ec hnical , and physical controls), data management, human resource management, asset protection and incident response standards, processes, and protocols of an appropriate level and strength to reasonably protect such data . Company shall use all reasonable efforts to ensure that Republic's data will not be subject to any loss, theft, unauthorized use or access, damage, or other loss of value . 2. Management of Data and Data Security . Company will secure and protect the Services from misuse and unauthorized access and implement security, data management, and incident response protocols in accordance with industry best practices and comply with the terms of Exhibit B (Data Security Program) . 3. Business Continuity and Disaster Recovery . Company will maintain a business continuity and disaster recovery plan that complies with industry best practices and that enables Company to perform its obligations under the SLA in accordance with the terms thereof without any interruption (the "BCDR Plan") . Company will maintain multiple data centers in different geographic locations and will ensure that all core components of the Company Technology , and all data repositories used to provide the Services, are located in multiple and redundant data centers . Upon Republic's request, Company will provide Republic with a copy of the BCDR Plan . Company will test the BCDR Plan no less than once annually and will provide Republic with a copy of the test results no later than thirty ( 30 ) days following the completion of such test, including a detailed description of any material deficiencies, and Company's plan and schedule for curing such deficiencies . If there is a business interruption or disaster , Company will activate and comply with its BCDR Plan . 5. FEES AND INVOICES . 1. Service Fees . Athena Holdings El Salvador Sociedad An 6 nima de Cap i tal Variable, shall invoice Republic on a monthly basis in the total amount of the fees incurred by Company in connection with providing the Services to Republic (the "Service Fees") . Republic shall submit payment with respect to any invoice via wire transfer to the Company account listed on such invoice within thirty ( 30 ) days of receipt of such invoice . Except for the Service Fees , Company will not charge, directly or indirectly, any fees or other charges, or seek reimbursements, for the Services to Republic, its Entities or Users . Other payment methods may be established by mutual agreement between the parties ; any new fonn of payment must have its respective process in place . 2. Service Fee Disputes . Service Fee Disputes . If either party disputes any amounts in connection with the Services ( e . g . , amounts owed, paid, or transferred to either party or charged, reimbursed, collected, invoiced, withheld, or transferred by either party), the disputing party must provide written notice (including via email) of such dispute to the other party (a "Notice of Dispute") . Each Notice of Dispute will include sufficient detail for the receiving party to investigate the dispute in good faith . Once the receiving party has received sufficient detail about the dispute, it will use commercially reasonable efforts to resolve the issue and communicate its position in writing within ten( 10 ) days ofreceiving the Notice of Dispute . If the parties are unable to resolve the dispute within thirty ( 30 ) days of the receiving party's receipt of the Notice of Dispute, the
dispute will be promptly escalated to senior personnel of each party for resolution at the request of either party . If a party does not provide a Notice of Dispute with respect to any amounts in connection with the Serv ic es, it does not waive its right to dispute such amounts at a later date, even ifit has paid the amount charged or accepted the amount reimbursed . 3. Truces . The fees set forth in this MSA and the SLA do not include any sales, value - added tax (VAT), use taxes, duties , and other charges of any kind imposed by any federal, state, local , or international governmental authority ("Truces") on amounts payable by the Republic under this MSA and the SLA . The Republic agrees to bear and pay all such Taxes (excluding tax assessed on Company's net income) including VAT, directly to the relevant taxing authorities or reimburse the Company if such Taxes are paid on the Republic 's behalf .. The Republic will provide to Company any withhold tax certificate derived from the services rendered within sixty ( 60 ) days of receipt of monthly invoice . 4. Books and Records ; Audit . Company will keep and maintain consistently applied, complete and accurate books, records and other documentation, that are, in each case, audited by a reputable and duly licensed audit firm, in connection with the Services, including for all financial transactions, and will retain such books, records and other documentation for a period of no less than ten ( l 0 ) years following the expiration or termination of the SLA or for such longer period as may be required under Applicable Law (the "Audit Period") . During the Audit Period , upon providing reasonably advanced written notice (including via email) to Company, Republic may audit, or may direct a third - party auditing firm to audit such books and records during normal business hours . Company will cooperate with Republic or such auditing firm in conducting any such audit . 6. TERM AND TERMINATION RIGHTS. 1. Term . This MSA commences on this MSA Effective Date and, unless otherwise terminated pursuant to the terms of this MSA, continues through November 30 , 2027 the "MSA Term") . 2. Service Level Agreement Term . The SLA commences on the effective date set forth in the SLA and, unless the SLA is terminated, continues for the period of time set forth in the SLA, or if no period of time is set forth, for the period of time coterminous with this MSA (such period of time and any applicable Phase - Out Period, the "SLA Term") . If the SLA Tenn continues beyond the expiration of the MSA Term, the MSA Term of this MSA will be extended until such time that the SLA expires or is terminated, solely with respect to the Services provided under that SLA . The termination of a specific SLA will not tenninate this MSAor any other SLA . Notwithstanding the foregoing, upon termination of this MSA by Republic, the SLA will terminate . 3. Termination for Cause . Either Party to this MSA or the SLA may terminate this MSA or the SLA (as the case may be) by providing written notice to the other Party , if the other Party commits a material breach of this MSA or the SLA (as the case may be) that (i) is not capable of cure, or (ii) is capable of cure but that the other Party fails to cure within thirty ( 30 ) days after receipt of written notice from the other Party of such breach . 4. Termination for Financial Insolvency . Republic or any Republic Entity that is a party to the SLA, at its sole discretion, may terminate this MSA or the SLA (as the case may be) by providing Company with written notice , if Company (i) becomes insolvent, undergoes a dissolution, or ceases its business operations, or any petition is filed or other steps are taken for its bankruptcy, liquidation, receivership, administration , examinership, dissolution, or other similar action, or (ii) commences negotiations or enters into an agreement with all or any class of its creditors in
cp relation to any assignment for the benefit of such creditors, the rescheduling of any of its debts, and/or any compromise or other arrangement with any of its creditors. 5. Termination Due to a New Regulatory Requirement . If a Governmental Authority enacts or issues an Applicable Law that conflicts with any term of the SLA (a "Regulatory Requirement"), the Parties will discuss an amendment to the SLA to modify the SLAas required to comply with such Regulatory Requirement . While the Parties are discussing such amendment, if, due to the Regulatory Requirement, Company is unable to perform an obligation under the SLA, then prior to not perfonning such obligation, Company will inform Republic of the obligation it is unable to perform and will use commercially reasonable efforts to continue to try to perform such obligation in a manner that does not diminish or degrade the functionality of the Services or the User experience (if applicable) . If the Parties cannot agree upon the amendment, then upon written notice to Company, Republic may, at its sole discretion, terminate the portion of the SLA affected by the Regulatory Requirement (if practicable) or terminate the SLA in its entirety . Notwithstanding the above, the amendment provision of this Section 6 . 5 shall not be triggered by any actions of Republic or its Entities . 6. Additional Termination . Republic may terminate this MSA or the SLA at any time and for any reason by providing the Company with at least thirty ( 30 ) days' prior written notice . 7. Not Exclusive Remedy . Termination of this MSA or the SLA is not an exclusive remedy, and the exercise by any Party of any remedy under this MSA or the SLA will be without prejudice to any other remedy it may have under this MSA, the SLA, Applicable Law, or otherwise . 8. Phase - Out Period/Transition Support . If the SLAexpires or is terminated for any reason, Republic may elect to have the Services continue for a period of six ( 6 ) months, or such other agreed upon period, starting from the date of tennination of the SLA (the "Phase - Out Period") ; During the Phase - Out Period , Republic may continue to exercise its rights under the SLA, and Company will : (i) continue to operate and provide the Company Technology and Services , and continue to perform its other obligations under the SLA, (ii) cooperate, in a manner that minimizes disruption to Republic and Users, with any transition of the Services to an alternative service provider selected by Republic in its sole discretion, (iii) permit Republic to havefull access to all personnel necessary to transition Services to such alternative service provider, and (iv) perform any other actions that are necessary and proper to ensure the transition of the provision of the Services to such alternative service provider . 9. Migration of Data . Upon the expiration or tennination of the SLA, or otherwise upon Republic's request, Company will provide Republic all Data that is necessary for an alternative service provider, selected by Republic in its sole discretion, to provide the Services ( or substantially similar services) . All such Data will be provided in a form and format selected by Republic and shall be Republic Data . 6 . l 0 . Return/Destruction of Confidential Information . Upon the expiration or termination of this MSA or the SLA (as the case may be) (and any Phase - Out Period), Company wil l cause its Affiliates and its and their Representatives to, return or destroy all copies of Republic's and its Entities' respective Confidential Information possessed by or within the control of Company or its Affiliates or their Representatives in connection with this MSA or the SLA (as the case may be) . Notwithstanding the foregoing, Company may retain Republic's Confidential Information if it is required to be retained (i) to comply with Applicable Law, or (ii) to comply with its obligations under this MSA or the SLA due to an obligation that survives the expiration or termination of this MSA and the SLA . All such retained Confidential Information will (a) only
be retained for so long as required and (b) still be subject to the use, disclosure, data security, and other restrictions and obligations in this MSA and the SLA (as applicable). 6 . 11 . Survival . The following Sections and Exhibits will survive any expiration or termination of this MSA or the SLA : Section 1 (MSA), Section 2 . 6 (Service Providers), Section 2 . 7 Communications), Section 3 . 6 (Non - Exclusivity ; No Commitments), Section 4 . 2 (Management of Data and Data Security) , including Exhibit B (Data Security Program), Section 5 . 4 (Books and Records ; Audit), Section 6 . 7 (Not Exclusive Remedy), Section 6 . 8 (Phase - Out Period), Section 6 . 9 (Migration of Data), Section 6 . 10 (Return/Destruction oflnfonnation and Data) , Section 6 . 11 (Survival), Section 6 . 12 (Effect ofTennination), Section 8 (D is claimers ; Limitation of Liability), Section 9 {Indemnification and Performance Bond), Section 10 (Confidentiality), Section 1 1 (General), Exhibit A (Definitions) , in addition to any Sections and Exhibits that are otherwise designated as surviving . 6 . 12 . Effect of Termination . Tennination or expiration of the SLA will not affect a Party's respective rights, obligations, and remedies under the SLA with r espect to transactions submitted by a User or Republic before the date of termination or expiration (including any chargebacks or reversals related thereto), or with respect to a Party's right to collect for fees of any transaction or service provided . 7. REPRESENTATIONS, WARRANTIES AND COVENANTS. 1. Mutual . Each Party to this MSA and the SLA represents and warrants that : (i) it has and will retain, the full right , power, and authority to enter into this MSAor the SLA ; (ii) ithas been duly authorized to do so by all required governmental, corporate or similar action ; (iii ) when executed and delivered by such Party, this MSA or the SLA will be legally binding upon and enforceable against such Party, and this MSAor the SLA will not conflict with any agreement , instrument, or understanding , oral or written, to which such Party is a party or by which it may be bound ; and (iv) as of the date such Party executed this MSA or the SLA, there are no proceedings pending or , to its knowledge, threatened or reasonably anticipated that would challenge or that may have a material adverse effect on its performance under th i s MSA or the SLA . 2. Company. Company represents, warrants, and covenants that: 1. Company Organization . Company is duly organized, validly existing, and in good standing as a corporation or other en 6 ty as represented in this MSA or the SLA under the laws and regulations of its jurisdiction of incorporation,organization, or chartering . 2. Company Property . 1. The Company Technology, Company Data , and the Services , and the use of them as contemplated under each applicable SLA, do not and will not infringe , violate, or misappropriate the Intellectual Property Rights of any Entity anywhere in the world . 2. The Company Technology i s and will b e sufficient to enable the Services, including to operate them for the Republic ATMs and enable the use of the Services by Users or Republic, as contemplated under the SLA . 3. Open Source Software . No portion of the Company Technology is or will be subject to any open source or other lic e n se that when used with the Republic ATMs or Republic's Technology as contemplated by each applicable SLA, will require any software
associated with the Republic ATMs or Republic's Technology to be disclosed or distributed in sour ce code form , licensed for the making of derivative works , or free l y redistributable . 4. No Harmful Material or Di sruption . Th e Company Technology and the Services do not and will not contain or cause any viruses , worms , time bombs, Trojan horses or other hannful, malicious or destructive code to be installed on or introduced into the software for the Republic ATMs or Republic's Technology . Company and i ts Service Pro v ider s will not engage in any act or fail to take any act that could or does re su lt in the disablement, interference, or impairment, in whole or in part, any part of the Republic ATMs or Republic's Technology . 5. Applicable Rights and Licenses . Company has , and each of the Service Provid ers has , obtained and possesses , and will maintain at all times, all authorizations, pennissions, consents, rights , licenses, agreements, permits , approvals, r egistrations, orders, declarations , filings, and the like , that are required under Applicable Law or by a Governmental Authority, and/or that are nece ss ary (i) to provide the Services and perform its ob ligations, and (ii) for the Se rvic es to be made availab le and used as contemplated under each applicable SLA . In the case of the U nit ed States of America, if the Republic wishes to install ATMs in a State where Athena does not hold the necessary licen ses, the process to befollowed sh all be mutually agreed upon by the parties . 6. Compliance with Applicable Law . Company's and each Service Providers' perfonnance of i ts obligations under this MSAand the SLA, and the Services, are and will at all times be in compliance with Applicable Law . Company will promptly notify Republic of any actual or expected changes in Applicable Law that would reasonably b e expected to affect the Services or the use of the Ser v ices as contemplated . 7. Protection of Reputation . Company and each Service Provider will take no action that is intended to, or would reasonably be expected to , harm Republic or its reputation or which reasonably would be expected to lead to unwanted or unfavorable publicity to Republic . 8. Access to Bitcoin and Private Keys . If the Services include private key management, custodial services or relate in any manner to access control restrictions of the Bitcoin Chivo Wallet or to a User's bitcoin , then Company and each Service Provider will provide, at all times , Republic with access to the bitcoin in the Bitcoin Chivo Wallet . 7 . 3 . Anti - Corruption . Company, on behalf of itself, its Affiliates, i t s Service Providers, and each of their Representatives, represents, warrants and covenants that they have not engaged in and covenants that they will refrain from offering, promising , paying , giving, authorizing the paying or giving of , soliciting , or accepting money or Anything of Value , directly or indirectly , to or from (i) any Government Official to (a) influence any act or decision of a Government Official in his or her official capacity, (b) induce a Government Official to use his or her influenc e with a government or instrumentality thereof , or (c) otherwise secure any improper advantage ; or (ii) any Entity in any manner that would constitute bribery or an illegal kickback, or would otherwise violate applicable anti - corruption la ws . Company will immediatel y report to Republic any breach of this Section 7 . 3 . As used in this Section 7 . 3 , "Anyth ing of Value" include s cash or a cash
equivalent (including "grease," "expediting" or facilitation payments), discounts, rebates, gifts, meals, entertainment, hospitality, use of materials, facilities or equipment, transportation, lodging, or promise of future employment . As used in this Section 7 . 3 . "Government Official" refers to any official or employee of any multinational, national, regional, or local government in any country, including any official or employee of any government department, agency, commission, or division ; any official or employee of any government - owned or government controlled enterprise ; any official or employee of any public educational, scientific, or research institution ; any political party or official or employee of a political party ; any candidate for public office ; any official or employee of a public international organization ; and any Entity acting on behalf of or any relatives, family, or household members of any of those listed above . 7 . 4 . Anti - Money Laundering . Company, on behalf of itself , its Affiliates, its Service Providers, and each of their Representatives, represents, warrants and covenants that they will comply with all applicable laws and regulations aimed at preventing, detecting, and reporting money laundering and suspicious transactions and will take all necessary and appropriate steps, consistent with Applicable Law and generally accepted industry standards set forth by the Financial Action Task Force ("FATF"), to (i) obtain, verify, and retain information with regard to User identification and source of funds, (ii) maintain records of all User transactions, (iii) file reports with applicable Governmental Authorities, and (iv) block account access and terminate transactions that are, or are reasonably suspected to be, in contravention of Applicable Law and generally accepted industry standards set forth by the FATF . Company will immediately report to Republic any breach of this Section 7 . 4 . 8. DISCLAIMERS. 1. Warranty Disclaimer . EXCEPT AS EXPRESSLY SET FORTH IN THIS MSA OR THE SLA, NEITHER PARTY TO THIS MSA OR THE SLA MAKES ANY REPRESENTATIONS OR WARRANTIES , AND ALL OF THE PARTIES HEREBY EXPRESSLY DISCLAIM, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL WARRANTIES, EXPRESS OR IMPLIED, WRITTEN OR ORAL, STATUTORY OR OTHERWISE, INCLUDING WARRANTIES OF MERCHANTABILITYAND FITNESS FOR A PARTICULAR PURPOSE, AND IMPLIED WARRANTIES OF NON - INFRINGEMENT AND THOSE ARISING FROM THE COURSE OF DEALING OR PERFORMANCE, USAGE OR TRADE PRACTICES . 2. Damages Disclaimer. EXCEPT WITH RESPECT TO (I) A BREACH OF SECTION 2.8 (CONTINUED PERFORMANCE). (II) ANY OBLIGATIONS UNDER SECTION .2 (INDEMNIFICATION AND PERFORMANCE BOND) . (III) A BREACH OF ANY OBLIGATIONS OR RESTRICTIONS REGARDING DATA USE OR SECURITY OR REGARDING CONFIDENTIAL INFORMATION, INCLUDING SECTION 4 (DATA: DATA SECURITY) AND SECTION 10 (CONFIDENTIALITY) , (IV) A BREACH OF SECTION 7.2.8 (ACCESS TO BITCOIN AND PRIVATE KEYS) . (V) A PARTY'S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD, OR FRAUDULENT MISREPRESENTATION, OR (VI) DEATH OR BODILY INJURY CAUSED BY A PARTY, TOTHE MAXIMUM EXTENT PERMITTED BY LAW, NEITHER PARTY TO THIS MSA OR THE SLA WILL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL , PUNITIVE, OR CONSEQUENTIAL DAMAGES, OR LOST PROFITS (DIRECT OR INDIRECT), OF ANY KIND IN CONNECTION WITH THE TERMS OR THE BREACH OF THE TERMS OR SUBJECT MATTER OF THIS MSAOR THE SLA, REGARDLESS OF THE FORM OF ACTION , WHETHER IN CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY OR OTHERWISE, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE.
9. INDEMNIFICATION . 1. lndemnification . Each party (the "Indemnifying Party") agrees to indemnify, defend, and hold harmless the other party (the "Indemnified Party") and its respective entities, employees, officers, directors, and other representatives ( collectively, the "Indemnified Parties") from and against anyand all losses, costs, expenses (including reasonable legal fees and expenses such as for attorneys, experts, and consultants, and reasonable out - of - pocket costs, and interest), penalties, fines, judgments, settlements, damages (of all types including special damages), or liabilities ( collectively, "Losses"), suffered or incurred by any of them in connection with any claim, cause of action, or other legal assertion, brought or threatened to be brought by a third party, or any investigation, examination, or proceeding of a Governmental Authority, or any request by a third party for reimbursement or compensation ( each a "Claim"), where such Claim arises out of or alleges any of the following : (i) any acts or omissions of the Indemnifying Party or a Service Provider that constitute a breach of Section 7 (Representations and Warranties) or any other representations or warranties made under this MSA or the SLA ; (ii) the Indemnifying Party's or a Service Provider's failure to pay any withholding Taxes, social security, unemployment or disability insurance, or similar items in connection with compensation received pursuant to this MSA or the SLA ; (iii) the lndemtrifying Party's or a Service Provider's fraud, fraudulent misrepresentation, gross negligence, or willful misconduct; (iv) any acts or omissions of the Indemnifying Party or its Service Providers that cause any loss, theft, impairment, unauthorized use or access of, damage to, or other loss of any bitcoin in a Bitcoin Chivo Wallet ; (v) any acts or omissions of the Indemnifying Party or its Service Providers that cause any loss, theft, impainnent, unauthorized use or access of, damage to, or other loss due to the malfunctioning or lack of service of any Republic ATM ; or (vi) a Data Breach (collectively (i) - (vi), "Claims"), in addition to any other claims defined as "Claims" in the SLA. The Indemnified Party will give prompt notice of any Claims to the indemnifying Party . An Indemnified Party may participate in the defense of any Claims with counsel of its own choosing, at its own cost and expense . The Indemnifying Party will not settle any Claims without the Indemnified Party's prior written consent, which will not be unreasonably withheld . The remedies in this Section are not exclusive and do not limit the remedies provided elsewhere in this MSA, the SLA, or under Applicable Law . 10. CONFIDENTIALITY. 1. Definition and Exclusions. 10.1.l. Definition of Cl. A Party ( each a "Disclosing Party") may disclose infonnation , directly or indirectly, to the other Party (each a "Receiving Party"), and such information will be q? - -- " deemed to be "Confidential Information" if when it is disclosed, regardless of the form or medium
(whether in writing, verbally, electronically, or otherwise), (i) it is designated as confidential by the Disclosing Party, or (ii) it should reasonably be understood by the Receiving Party , given the nature of the information or the circumstances surrounding its disclosure, to be confidential . Confidential Information includes information such as product designs, product plans, software, Technology, financial information, marketing plans , business opportunities, pricing information, information regarding customers or users, inventions, and know - how . The terms of this MSA and the SLA will be treated as Confidential Information . Notwithstanding the foregoing, all Republic Technology, Republic Data and information comprising or concerning the Republic ATMs or Republic's or its Entities' use of the Services, including Usage Information , will be deemed to be Republic's Confidential Information . Notwithstanding anything to the contrary, Personal Data will not be deemed to be Confidential Information under this MSA or the SLA and the use, disclosure, and retention thereof will be governed by other provisions under this MSA and the SLA . 10 . 1 . 2 . Exclusion for Government Business . In the case of Republic as the Receiving Party, the obligations under this MSA and the SLA with respect to Confidential Information, including the restrictions on use and disclosure in Section 10 . 2 , do not apply to information that is desirable to use or disclose to third parties in conjunction with the performance of official government business . 2. Use and Disclosure of CL A Receiving Party will only use the Confidential Information of a Disclosing Party as required to perform its obligations and exercise its rights under this MSA or the SLA, provided that, subject to the requirements of Section 10 . 3 , a Receiving Party may disclose the existence of this MSA or the SLA and their respective key terms pursuant to a securities filing to a Governmental Authority . A Receiving Party will hold the Confidential Information it receives in strict confidence and take appropriate precautions to protect such Confidential Information (such precautions to include, at a minimum, all precautions such Receiving Party employs with respect to its own Confidential Information) . A Receiving Party will not disclose the other Party's Confidential Information to anyone other than to its Affiliates and its and their Representatives, subject to the following conditions : any individual (including any third parties that provides services in relation to this MSA and the SLA) who receives Confidential Information in accordance with the foregoing must ( 1 ) have a "need to know" such Confidential Information for the purposes of the Receiving Party exercising its rights or perfonning its obligations under this MSA or the SLA, and ( 2 ) be subject to confidentiality obligations that offer at least the same degree of protection as the confidentiality obligations set out in this MSA or the SLA (as the case may be) . A Receiving Party making such disclosures will be liable for each such individual's retention, use , and disclosure of the Disclosing Party's Confidential Information . Company will treat all Confidential Information disclosed by Republic, its Entities, and their respective Representatives who are disclosing Confidential Information on their behalf in connection with the Services, as Republic ' s Confidential Information . Notwithstanding anything to the contrary in this MSA or the SLA, Company may request from Republic consent to use or disclose Confidential Information of Republic or its Entities to a third party and Republic may, in its sole discretion, consent or not to such request . 3. Disclosures to Governmental Authorities . If a Governmental Authority requires a Receiving Party to disclose the Confidential Information of a Disclosing Party, the Receiving Party will (i) immediately notify the Disclosing Party after learning of the existence or likely existence of such requirement (unless prohibited by Applicable Law) ; (ii) limit the scope of such disclosure to only the Confidential Information necessary tocomply with the requirement ; (iii) make best efforts to obtain confidential treatment of or protection by order of any Confidential Information ; and (iv) permit, subject to Applicable Law, the Disclosing Party to seek a protective order or to otherwise challenge or limit the disclosure of the Confidential Information prior to the disclosure thereof .
4. Feedback . A Party or any one of its Affiliates may, but is not required to, provide the other Party or its Affiliates, suggestions, comments, ideas, or know - how, in any form, that are related to the other Party's or its Affiliates' respective products, services, or Technology ("Feedback'') . Any such Feedback will be considered ConfidentiaJ Information . Neither Party nor any of their respective Affiliates will have any obligation to provide compensation for any use of Residuals or Feedback . Nothing in this Section 10 . 4 , will be deemed to license any patents or transfer any Intellectual Property Rights from a Party or its Affiliates to the other Party or its Affiliates . Notwithstanding anything to the contrary, this Section 10 . 4 does not govern the use and disclosure of Personal Data . 5. Residuals . Notwithstanding anything to the contrary in this MSA regarding Confidential Information, neither Party nor its Affiliates (including its employees, subcontractors, consultants, Service Providers, and agents) shall be prohibited or enjoined from utilizing general knowledge, skms and experience, concepts, know - how and techniques retained in the unaided memory of an individual and acquired as a result of such individual's authorized access to the other Party's Confidential Information during the course of the performance or receipt of the Services ("Residuals") provided that none of such Residuals include any trade secrets of the other Party . 11. GENERAL. 1. Governing Law ; Jurisdiction : Venue . The MSA and SLA shall be governed by and construed in accordance with the internal laws of the state of Florida, without giving effect toany choice or conflict of law provision or rule (whether of the state of New York or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the state of Florida . The Parties will make a good - faith effort to settle between themselves any claim, dispute, or controversy (each, a "Dispute") arising out of or in connection with the MSA and SLA . If any Dispute cannot be settled within thirty ( 30 ) days after notice of such Dispute is provided by one Party to the other Party, such Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules . The place of arbitration shall be Miami, Florida . 2. Assignment . Thi s MSA and the SLA will each bind and inure to the benefit of each of its respective Parties and their permitted successors and assigns . Company and its Affiliates will not , in whole or in part, assign this MSA or the SLA (as the case may be), without the prior written consent of Republic, which shall not be unreasonably withheld or delayed . For the purposes of this Section 11 . 2 , a change of control of Company will be deemed to be an assignment, and if Company undergoes a change of control without the consent of Republic, such change of control will be deemed to be a material breach of this Section 11 . 2 . Republic may assign this MSAor the SLA (including assigning its rights and licenses and delegating its obligations) to any of its Entities . Except as expressly authorized under this Section 11 . 2 , any attempt to transfer or assign this MSA or the SLA will be null and vo id . 11.3. Notices. Except a s otherwise express l y set forth in this MSA or the SLA, any notice required under this MSA or the SLA will be in writing delivered to the applicable address or email below and will be deemed given : (i) upon receipt when delivered personally : (ii) two ( 2 ) days (other than weekends or public holidays) after it is sent if sent by certified or registered mail (return receipt requested) ; (iii) one - f
day (other than weekends or public holidays) after it is sent if by next day delivery by a major commercial delivery service ; or, one ( 1 ) day after it i s sent by email . Any notice provided to Athena Bitcoin Global shall be deemed effectively provided to Company inclusive of all Parties included in the definition · of "Company . " Republic: Chivo, Sociedad An6nima de Capital Variable Company: Athena Bitcoin Inc. Attn : Legal Representative Boulevard del Hip 6 dromo Local 8 , # 243 , Century Tower Sergio Viera de Mello, San Salvador, El Salvador Email : legal@chivowallet . com Attn: Chief Executive Officer I SE 3 rd Ave, Suite 2740 Miami , FL 33131 Email: legal@athenabitcoin.com 4. Amendments . No s upplement , modification, or amendment of this MSA or the SLA will be binding unless executed in writing by a duly authorized signatory of each Party . A valid amendment of this MSA will be deemed to automatically amend and will be binding upon Party that is a signatory to the SLA . 5. Waivers . No waiver will be implied from conduct or failure toenforce or exercise rights under this MSA or the SLA, nor will any waiver be effective, unless in writing signed by a duly authorized signatory on behalf of the Party claimed to have waived such rights . 6. No Publicity by Company . Company and its Affiliates will not engage in any promotions , publicity , marketing, or make any other public statement relating to the Services as used in connection with the Republic ATMs or its relationship with Republic or Users (including regarding the existence and tenns of this MSA or the SLA), unless Company has obtained Republic's prior written consent, which shall not be unreasonably withheld . For the purposes of this Section 11 . 6 . public statements include press releas e s, written or oral statements made to the media , biogs , trade organizations . publications , websites, or any other public audience . Notwithstanding anything to the contrary in this MSA, the SLA or otherwise , Republic and its Entities may publicly disclose information about the Services, including with refer e nce to Company . 7. Insurance . During the MSA Tenn , Company shall, at its own expense, maintain and carry insurance in full force and effect with financially sound and reputable insurers, that includes , but is not limited to, commercial general liability with limits no le ss than an amount deemed rea s onably sa ti s fac tory by Republic which policy will include contractual liability coverage insuring the activities of Company under this MSA . Upon Republic's request, Company shall provide Republic with a certificate of insurance from Company's insurer evidencing the insurance coverage specified in this MSA . The certificate of insurance shall nam e Republic as an additional insured . Company sha ll provide Republic with sixty( 60 ) days' advance written notice in the event of a cancellation or material change in Company's insuran ce policy . 8. Entire Agreement . This MSA (including all exhibits) is the complete and exclusive statement of the mutual understanding of the Parties , and supersedes and cancels all previous written and oral agreements and communications, relating to the s ub je c t matter of this MSA . l 11 e SLA (including any exhibits), is the complete and exclusive statement of the mutual understanding of the Parties with re s pe c t to the Services provided thereunder, and supersedes and cancels all
previous written and oral agreements and commurucations, relating to the subject matter of the SLA. 9. Contract Administration . Hereby Republic appoints Francisco Ernesto Costa Lopez, Chief Financial Officer, as Administrator of this MSA and the SLA ; or to whoever replaces hjm in the position in the event of resignation or dismissal . The contract administrator will : a) Monitor the execution of the contract and make claims to the Company in case of non - compliance ; b) Make reports of anydeficiency or anomaly in the development of the contract andsend it to the General Director of Chivo, c) Issue recommendations on whether or not is appropriate to modify the agreement ; and d) Evaluate the performance of the Company, preparing a signed and sealed report, within a maximum period of fifteen business days after the start of the service . The Contract Administrator signs this agreement solely in that capacity and should not be considered a party of this agreement . 10. Independent Contractors . The Parties are independent contractors . There is no relationship of partnership, joint venture, employment, franchise or agency created between the Parties . Company will be solely responsible and liable for any compensation due any of its employees, agents, or contractors and employment - related Taxes, insurance premiums or other employment benefits required to beprovided toits employees, agents, or subcontractors under Applicable Law . Company and its employees, agents or subcontractors will not be eligible for any benefits from Republic (including vacation or illness payments, stock awards, bonus plans, health insurance or retirement benefits) nonnally provided by Republic to its employees . 11. Remedies . Unless expressly set forth otherwise in this MSAor the SLA, any and all remedies expressly conferred upon a Party are cumulative with and not exclusive of any other remedy conferred by this MSA or the SLA or by law on that Party, and the exercise of any one remedy does not preclude the exercise of any other available remedy . 12. Counterparts . This MSAand the SLAmay be executed in one or more counterparts, each of whlch will be considered an original, but all of which to get h er will constitute one agreement . Severability . Any provision of this MSA or the SLA that is invalid, prohlbited, or unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability, without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction will not invalidate or render unenforceable such provision in any other jurisdiction . 13. Third - Party Rights . Except as expres s ly set forth in this MSA or the SLA, any party that is not a Party to this MSA will not have any rights as a third - party beneficiary to enforce any tern 1 of this MSA . 14. Construction . Captions are for corlvenience only and do not constitute a limitati on of the tenns hereof . The singular includes the plural, and the plural includes the singular . References to "herein," '' hereund e r , " "hereinabove , " or like words will refer to this MSA or the SLA as a whole and not to any particular section, subsection , or clause contained in this MSA or the SLA . The tern 1 s "include" and "including" are not limiting . Reference to any agreement or document includes any pennitted modifications, supplements, amendment s and replacements thereto . References to "day" refer toa calendar day, unless otherwise expressly stated . I I . 15 . Authorized Representative . Authorized Representative represents and wananrs that be is an authorized representative of each of Athena Bitcoin Holdings E l Salvador SA DE CV, Athena Bitcoin , Inc . , Athena Bitcoin Global and has the full authorization and authority to execute this
Agreement. Authorized Representative represents and wan·ants that he has had the opportunity to consult legal counsel prior to executing this Agreement. [SIGNATURE PAGE FOLLOWS}
By signing below, each Party acknowledges that it has read, and agrees to, all the terms of this MSA. Chivo, Sociedad An6nima de Capital Variable By Nam ::::::: Title: Legal Representative Name: Francisco Ernesto Costa Lopez Ti tle: CFO of Chivo, Sociedad An6nima de Capital Variable Athena Bitcoin By: Name: Mat Title: CEO Athena mt,oi / , ) By: 5 Name: Matias A. Goldenhom Title: CEO
EXHIBIT A DEFINITIONS "Affiliate" means, with respect to a s pecifi ed Entity, any other Entity that directly or indirectly controls, is controlled by, or is under common control with such specified Entity . Fo r the purposes of this definition, "control" means the possession, directly or indirectly, of the pow e r to ind epen dently direct or cause tJ 1 e direction of the management and policies of an Entity, whether through ownership of mor e than fifty percent ( 50 % ) of the s tock or other equity intere sts entitled to vote for representation on its board of director s, or body perfonning similar functions, b y contract or otherwise . "Applicable Law" means, with re s pect to a specified Entity, each of the following , wh eth e r ex i sti ng now or in the future, including any update s thereto, tha t are applicable to s uch Entity : (i) the mies, requirem e nts , or operational and technical s tandards of any r elevant self - re gulatory organization having jurisdiction or oversight over the Services, including the PCI DSS ; and (ii) all laws, treaties, rule s, regulations , regulatory guidance, directives, policies, orders, or determinations of , or mandatory written direction from or agreements with,any Governmental Authority, including trade control laws , export laws, sanctions regulations, stat ut es, or regulations , relating to store d value, money transmission, unclaimed property, payment processing, telecommunications, unfair or deceptive trade practices or acts, anti - corruption, trade compliance, anti - money la unde ring , terrorist financing, "know your customer ," privacy, or data sec urity . "Bitcoin Chivo Wallet" means that certain bitcoin wallet, including the application that Republic will make available for Android, iOS , an d otl 1 er operating systems, offered, no w or in the future , to Users . "Bitcoin Digital Platform" means the digital platfonn based on blockchain technology , including all features, services and product s that Republic or its Entities make available to the citizens of El Salvador through hardware, software, APis, websites or other interfaces of any type , whether presentl y existi n g or later developed , that are developed or marketed, in whole or in part, b y or for any of them, or that relate to the Bitcoin Chivo Wallet . "Company" ha s the meaning se t forth in Section 1.2 of this MSA. "Company Data" means any data that Company provides, makes available, or uses in connection wi th the Services. "Company Entities" mean s Company or its Affiliates that have signed the SLA. "Company Technology " means Technology that Company provides, makes available, or use s in connection with the Services . "Confidential Information" h as the meaning set forth in Section 10 of this MSA. "Data" means Company Data , Republic Data , Per so nal Data and, with respect to the SLA, any othe r data exp re ssly included as "Data" in the SLA . "Data Breach " means (i) any unauthorized access to or use of Republic Data or Per so nal Data resulting from Company's or a Service Provider's breach of the data secmity obligations set forth in this MSAor the SLA (as the case may be), including tho se in Sect ion 4 of this MSA, or (ii) Company's
or a Service Provider's misuse of or unauthorized access to Republic Data or Personal D ata (e.g., as a result of a breach of any data u se obligations or resttictions). "Data Security Program" means Exhibit B of this MSA. "Disclosing Party" has the meaning set forth in Section 10.l of this MSA. "Entity" means an individual, corporation, : fim 1 , limited liability company, partnership,joint venture, trust, unincorporated organization, estate, association, Governmental Authority, or other entity or organization, whether or not a legal entity . "Feedback" has the meaning set forth in Section 10.4 of this MSA. "Fo re ground IP" means the Bitcoin Chivo Wallet and the website developed by the Company for accessing the Bitcoin Chivo Wallet . "Governmental Authority" means any duly authorized federal, national, supranational, inter governmental, state, provincial, local, or other government, governmental, regulatory, or administrative authority, self - regulatory authority, governmental agency, bureau , office or commission, or any court, tribunal, or judicial or arbitral body, of competent jurisdiction . "Intellectual Property Rights" means any and all right , title, and interest in and to any and all trade secrets, patents, copyrights, service marks, trademarks, know - how, inventions, techniques, processes, devices, discoveries or improvements, trade names, rights in trade dress and packaging, moral rights, and similar rights of any type , including any applications, continuations or other registrations with respect to any of the foregoing, under the laws or regulations of any foreign or domestic governmental, regulatory, or judicial authority . "Losses" has the meaning set forth in Section 9 .1 of this MSA. "MSA Term" has the meaning set forth in Section 6.1 of this MSA. "Party" or "Parties" have the meaning set forth in Section 1.2 of this MSA. "Personal Data" means any infonnation from , about, or that can be associated with any household, individual consumer, or any other legal person (human or non - human), including any Users , employees, and contingent workers, or that otherwise is regarded as personal data or personal information under Applicable Law, including any financial data , transaction data or other data or information related to the usage of the Republic ATMs collected by or on behalf of Company from Users of any Services . "Phase - Out Period" has the meaning set forth in Section 6.8 of this MSA. "Receiving Party" has the meaning set forth in Section IO . I of this MSA. "Representative" means, with respect to a specified Entity, any of its directors , officers, employees, agents, consultants, contractors , subcontractors, service providers, advisors, accountants, attorneys, or other representatives . For clarity, Company's Representatives includes its Service Providers . "Republic" has the meaning set forth in Section 1.2 of this MSA.
"Republic Claims" has the meaning set forth in Section 9.1 of this MSA. "Republic Data" means (i) all data collected by, stored in, used by, or circulated in or through the Bitcoin Digital Platform, (ii) all data relating to Republic's and Users' use of the Services , and (iii) any other data as specified as Republic in the SLA . "Republic Entity" means R e public or its Affiliates that have signed the SLA. "Republic Indemnified Parties" has the meaning set forth in Section 9.1 of this MSA. "Republic Technology " means Technology that Republic provides to Company in connection with the Services. For clarity, Republic Technology does not include Republic Data. "Residuals" has the meaning set forth in Section 10.4 of this MSA. "Service Fees" has the meaning se t forth in Section 5.1 of this MSA. "Service Provider" means , any Entity, other than a Company employee , who performs any of Company's obligations under the SLA or who provides, directly or indirectly, any product or service to, on behalf of, or for the benefit of Company (including all other third parties downstream of any such Entity who are performing obligations or providing products or services in connection with the SLA) . "Ser vices " has the meanin g set forth in Section 1. 1 this MSA. "SLA" has the meaning set forth in Section 1. 1 of this MSA. "SLATerm" has the meaning set forth in Section 6 .1 of this MSA. "Taxes" has the meaning set forth in Section 5.3 of this MSA. " Technology" mean s application programming interfaces, software d eve lopment kits, softw ar e ( in cl u di n g object an d so u rce code) , applications, t echnica l integrations, payment processing platforms , blockchain technology and any derivative technology thereof or technology necessary to use or access blockchain technology , equipment, i nformation techno l ogy infra s tructure , systems, ot h er technology , and any updates or modifications to , and documentation (e . g . , instructiona l materials) re la ted to, a n y of the foregoing . "Usage Information" means any data that is based on, generated or created fro m , or information about, the use of the Services by Republic or its Affiliate s or Users (e . g . , th e number of transactio ns or the a m ounts of transactions) . "User s" means any user who ha s taken an action to use (e . g . , initiat e d the signup proces s ), or who is u s i ng, any Services made availab l e pursuant to the SLA for the Republic ATMs .
EXIDBITB DATA SECURITY PROGRAM Company will maintain a comprehensive written information security program that includes technical, physical, and administrative/organizational safeguards designed to (i) ensure the security and confidentiality of Republic Data and Personal Data, (ii) protect against any anticipated threats or hazards to the security and integrity of Republic Data and of Personal Data, (iii) protect against any actual or suspected unauthorized processing, loss, or acquisition of any Republic Data and any Personal Data, and (iv) ensure the proper disposal of Republic Data and Personal Data . Company will ensure that such program satisfies all of the requirements set forth in this Exhibit Band that Company complies with all such requirements, as well as any other written information security policies, procedures, and guidelines that are applicable to the Services . As used in this Exhibit B, the terms "systems", "information systems", and the like, include all information technology systems and all other Technology . Capitalized terms used but not defined in this Exhibit B will have the meanings set forth in the MSA . 1. Network Segmentation . Company's systems that host Republic Data or Personal Data will be segmented from the Internet by actively managed network access controls that will restrict traffic to the minimum required for proper operation of those systems . Company's systems will also segment the Republic Data and Personal Data from other data, either via separate systems or logical segmentation . 2. Data Storage . Company will store all Republic Data and Personal Data in a manner that enables Company to comply with its obligations under the SLA, including its obligations that require it to be able to identify Republic Data or Personal Data such as those regarding Data Breach Incident notifications and data destruction . 3. Personnel Screening . Company must limit access to Republic Data and Personal Data by Company's employees and Service Providers based on their respective job function and ona need to - know basis . Company will cause all of Company's employees with access to Republic Data and Personal Data to undergo, at a minimum, background screening for criminal history and, in the case of financial related support services, financial risk, unless otherwise restricted by Applicable Law . A Company employee's or a Service Provider's access to Republic's or its Affiliates' respective systems must be revoked at the time that such employee or Service Provider no longer needs access to such systems to facilitate Company's provision of the Services . 4. User Authentication . Company will use multiple factor authentication protocols / methods to access Republic Data or Personal Data . All passwords used by Company in connection with Republic Data and Personal Data must meet or exceed Republic's length, complexity, and age requirements . Company will not use, and will prohibit the use of, shared credentials, with respect to accessing Republic's or its Affiliates' respective systems, or Republic Data or Personal Data residing on other systems . 5. Logging and Monitoring . Company must ensure that it has a process to monitor its systems and networks . This must include monitoring of the environment for external threat actors and internal abuse by Representatives . The process must include steps to follow - up on suspicious activity and investigate potential security breaches . With respect to the SLA, during the SLA Term and for ninety ( 90 ) days thereafter, Company must ensure that relevant log data is available for analysis by Republic should the need for such infonnation arise as part of Republic's own incident response process .
6. Vulnerability Management and Application Security . Company will (i) operate systems to discover vulnerabilities on systems that protect Republic Data and Personal Data or connectivity and will remediate these vulnerabilities within a reasonable timeframe no t to exceed ninety ( 90 ) days from discovery, and (ii) conduct regular security assessments of any code tha t Company owns or controls, and will remediate any vulnerabilities found during these assessments within a reasonable timeframe not to exceed ninety ( 90 ) days from discovery . 7. Encryption . 1. Encryption in Tran sit . Company w 1 il ensure th at all access to Republic Data and Personal Da ta i s protected by Transport La yer Security, IPS ec, or equivalent protocols . Company will only use encryption algorithms and protocols that comply with industry best practice s and that ar e approved in the then - current versio n of the National Inst itute of Standards and Technology Special Publication 80052 . An alternative algorithm or protocol may only be used upon Republic's prior written consent . 7 . 2 Encryption at Re s t . All Republic Data and Personal Data at re s t in p ersiste nt storage (s uch as s pinning disk , SSD, and fl ash drive or other removable media) mus t be encrypted . The granularity of encryption w ill be commensurate with the u se case and risks of this data (for example, on a single u ser system, whole - disk encryption will meet t he requirement , but on a multi - tenant system with registered data, field - level encryption i s required) . 8. PCI Compliance . If Company stores, accesses, or processes any Pay men t Card information in connection with the Services, Company represents and warrants that it will, and each of the Service Providers will,(i) at all times comply with and will have a program to assure its continued compliance with the Payment Card Indu stry Data Secur i ty Standards (" PCI DSS") published by th e PCI Security Standards Co uncil, as the PCI DSS may be amended, supp l emented, or replaced from time to time ; (ii) report in writing to Republic, at lea st annu a lly, proof of suc h compliance with th e PCI DSS , as det e nnined by a Qualified Security Assessor ( QSA) ; and (iii) promptl y report in writing to Republic upon becoming aware of Company's or a Service Provider's non compliance or likely non - compliance with PCI DSS for any reason . 9. Cooperation with Republic Security Investigations . Company agrees to fully cooperate with R e public in se curity investigations , except to the extent prohibited by Applicable Law . Company will provide any and all logs surroun ding the syste ms that are under investigation using the following requirement s : • Logging of the systems and network shou ld include details about th e acce ss and actions of th e users , errors, events, etc . across all its infonnation sys tem s . • T 11 ese lo gs mu st be protected and not r emoved or modified by unauthorized Enti ti es . • Ninety ( 90 ) days ofrel ev ant log data must be readily available - with historic data securely warehoused se parately - for analysis b y R epub lic should the need for s uch informatio n arise . • All systems adminislrnlor log s and u ser log s shou ld be registered, regardles s of the privileges any sys tem administrator o r user has . • Al l sys t ems s hou ld be configured with the same time and date ; Network Time Protocol (NTP) for c lock s ynchronization is r e quired . Exc ept w h en prohibited by Applicab l e La w, upo n Company h av in g knowledge that a Compa n y emp loyee or other Repr ese ntative of Company ha s violated any of th e data use or data sec urity obligations or restrictions in the SLA or has caused Company to violat e an y agreement b e twe en Company and Republic, Co mpany will provide Republic infonnation regarding s u ch violation .
10. Security Reports and Assessments . 1. Security Report . Within one hundred eighty ( 180 ) days of the eff e c tive date of the SLA ; and within ten ( 10 ) da ys of each anniversary thereof (or as may otherwise b e reasonably requested by Rep u blic) , Company will deliver to Republic a repor t prepared ( no more than one ( 1 ) year prior to such dat e) by an audit finn and such repo r t must desc ri be Company's systems and security controls impleme nt ed and used at the locations involved in Company's provision of the Services governed by the SLA (such report , the "Security Report") . The third - party auditor must be a widely - used and reputable auditor in the financial services industry in the applicable jurisdiction and with respect to the United States must be a national major auditing firm . The Security Report must be a SOC 2 Type II report that has been prepared in accordance with the American Institute of Certified Public Accountants' Trust Service Principles / Criteria (including security, availability, processing integrity, confidentiality, and privacy ) . Where a SOC 2 Type TI report cannot be procured or where it is not a common report in the applicable jurisdiction , Company may provide a mutualJy agreed upon widely accepted equivalent (e . g . , a SOC 2 Type I report during an initial period) . Company will use its best commercially reasonable efforts to cause each Service Provider to also provide Republic a Security Report in accordance with the foregoing requirements . 1. Security Assessment . If Company or a Service Provider fails tocomply with the Security Report obligations set forth above in Section 10 . 1 (Security Report), then, at any time, Republic will have a right to perform a security assessment (asset forth in this Section 10 . 2 ) on Company or such Service Provider . During anyperiod of time in which Republic has the right to perfonn a security assessment on Company or a Service Provider , upon five ( 5 ) days' advanced written notice (except in emergency s ituations, where as much notice as reasonably practicable will be given), Company will pennit , or will cause the Service Provider to permit, Republic or its designated Representative to review and access Company's or the Service Provider's (as applicable) books, records, third - party audit and examination reports, systems, facilities, controls, processes, procedures, and information regarding : (i) the use, processing , storage, treatment, and security of data, including Republic Data and Personal Data ; (ii) the management of employees and Service Providers, including with respect to the foregoing obligations in Section 3 (Personnel Screening) ; and (iii) in the event of a Data Breach Incident (as defined in Section 12 (Data Breach ) below) , to locate the source and scope of the breach and provide Republic withany material infonnation related to Republic , its Affiliates , Users, Republic Data, or Personal Data, with respect to such Data Breach Incident (any such review and access, a "Security Assessment" ) . Any such Security Assessment will be conducted during normal business hours and in a manner designed to cause minimal disruption to Company's or the Service Provider's (as applicable) ordinary busines s activities . For purposes of this provision , an emergency situation will include any situation posing imminent risk of harm or damage (as determined by Republic) to Republic' s or its Affiliates' respective systems or data , including the systems underlying Republic ATMs, Republic Data , or Personal Data , or any situation that could expose Republic or its Affiliates to legal, financial, or business liability , or cause Republic or its Affiliates to violate any Applicable Law . 3 . 1 Correction of Non - Compliance . If a S ec ur i ty Assessment or Security Report reveals any non - compliance by Company or a Service Provider of its obligations under or in connection with the SLA, Company wilJ promptly remedy , or cause the Service Provider to promptly remedy, such non - compliance at its sole expense, and Republic or its designated Representative may perform, upon Republic's noti c e to Compan y, at any time, subsequent Security Assessments to verify the sufficiency of such remedial efforts and ongoing compliance with such obligations . Company will be responsible for , and promptly reimburse R e public for, the cost of any Security Assessment that reveals non - compliance by Company or any Service Pro v ide r . 42
11. Incident Response . Company must ensure an incident response ("IR") program is in place following industry best practices . The process should include steps to follow - up on suspicious activity and investigate potential or actual security breaches in line with the following : • Detection . An initial assessment and triage of any suspicious activity or other suspected incident must be conducted within twelve ( 12 ) hours of detection . An initial incident report - quantifying and categorizing the incident - must be drafted for information technology per sonne l or information securi ty officers and shared with Republic I},O more than seventy two ( 72 ) hours after de tecti on for analysis . • Analysis (active IR required) . A complete assessment and triage of the incident, including containment , eradication, evidence preservation, and initial recovery must be conducted . • Recovery (no active IR required) . The final collection of evidence, analysis and forensic investigation , including remediation and full recovery , must be conducted . A full incident report must be sha red with Republic within twenty - four ( 24 ) hours of the termination of this phase . • Post - incident (actions) . Once the incident is adequately handled, the IR team must issue a 'post mortem' report detailing t he cause and cost of the incident and the steps th e organization should take to prevent future incidents . 12. Data Breach . If Company becomes aware of any unauthorized access to or misuse of Republic Data or Per sonal Data or Company's or a Service Pro vi der 's Technology that stores or has access to Republic Data or Personal Data (a " Data Breach Incident "), Company will : (i) immediately notify Republic of such Dat a Breach Incident (which, in any case, may not occur more than seventy two ( 72 ) hours after becoming aware that such Data Breach Incident may have occurred), and (ii) will work with Republic 's sec urity staff to contain, mitigate, and resolve the Data Breach Incident in accordance with the IR protocols set forth in this Exhibit . Such n otice will describe when and where the Data Breach Incident occurred , the effec t on Republic , its Affiliates , the Users, Republi c Data , and Personal Data , and Company's planned correct ive action in response to the Data Breach Incident . 13. Destruction of Data . With respect to the SLA, Company will destroy Republic Data and Personal Data within its possession or control upon th e later of the time that (i) that s 1 . 1 ch Republic Data or Personal Data (as applicable) is no longer required for Company to perform it s obligations under the SLA ( including any obligations that survive expiration or tenninalion of the SLA), or (ii) Company no longer needs to retain such Republic Data or Pers ona l Data (as applicable) tocomply with Applicable Law . For clarity, in the case of (i) or (ii), Company will only retain the minimum amount of Republic Data or Personal Data (as applicable) required for Company to perfonn its obligations or comply with Applicable Law (as applicab l e) and for only so lon g as required . Company will , (a) destroy such data, and any deriv ative works thereof, within a reasonable period not to exceed ninety ( 90 ) da ys from such time set forth i n th e foregoing ( i) or ( ii), (b) use industry best practices to ens ure that the data cannot be recovered, and (c) certify in writing to Republic that it has met the foregoing obligations . Upon Republic's request, Company will destroy all Republic Data or Personal Data s pecified by Republic , including as required for Republic to comply with Applicable Law (e . g . , Republic's requirement under Appl i cable Law to delete P ersona l Data in response to a User's request) . Company will cause the Service Providers to comp ly with the foregoing dal'a deletion requirements with r espect to any Republic Data or Per sona l Data within their possession or con tr ol . 14. Service Providers . Company will use reasonable best efforts to cause all Service Providers to comp l y with (i) all data u se , di sc losure , and retention rights and restrictions , and data security
obligations, that apply to Company under the SLA, and (ii) comply with the obligations set forth in this Exhibit Bas if each such Service Provid e r was Company hereunder, including with respect to, each s uch Service P rovider' s personnel , systems, and networks, and the Republic Data and Personal Data it possesses, controls, or can otherwise access in connection with the SLA .
EXHIBITC FORM OF SERVICE LEVEL AGREEMENT Attached
Exhibit 10.77
SERVICELEVELAGREEMENT This Service Level Agreement, dated as of December 1 , 2024 (the "Effective Date"), by and among Athena Bitcoin Inc . , a corporation organized and existing under the laws of Delaware, USA , Athena Bitcoin Global, a corporation organized and existing under the laws of Nevada , USA, Athena Holdings El Salvador, Sociedad Anonima de Capital Variable, a Salvadorian corporation (Athena Bitcoin Inc . , Athena Bitcoin Global, and Athena Holdings El Salvador Sociedad An 6 nima de Capital Variable, are collectively referred to as "A then a") and Chivo, Sociedad An 6 nima de Capital Variable, a Salvadorian corporation ("Chivo") (the "SLA"), defines the service levels that Athena will provide Chivo in respect of the maintenance and support of the Core ATM Services (as defined below) . For the avoidance of doubt , Athena will provide such maintenance and support services only to Chivo , and Chivo will be solely responsible for all support interactions with End Users . Capitalized terms not otherwise defined in this SLA will have the meanings ascribed to them in the Master Services Agreement, dated as of December 1 , 2024 by and between Athena and Chivo, Sociedad Anonima de Capital Variable (the "MSA ") . Unless otherwise provided in the MSA , this Service Level Agreement sets forth Chivo's sole and exclusive remedies, and Athena's sole and exclusive obligations, for any unavailability , non - performance, or other failure by Athena to provide the Core ATM Services . 1. Definitions. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such term in this Section 1 . "Core ATM Services" means the services provided by Athena that enables Users to use the Republic ATMs to deposit, sell, buy, and withdraw the Bitcoin cryptocurrency, as further detailed in Annex A attached hereto . The Core ATM Services shall include ATM operations in the United States and in the Republic of El Salvador, customer service , maintenance services, and meetings with Chivo , and any other related services communicated by Chivo to Athena . "Incident" means any reproducible problem , failure or other error in any currently supported Republic ATMs that causes (i) any failure of the Republic ATMs to operate in conformance with the Chivo's specifications or (ii) any failure of the Republic ATMs which causes data loss, data corruption, abnormal termination, lockup or hang . Incidents do not include any issues caused by any failure in Chivo's software or systems . "Incident Tracking System" means an application provided via a web application to Chivo by Athena for the purpose of reporting, discussing, and tracking Incidents and Incident resolutions . The Incident Tracking System will provide Chivo with access to an online dashboard for monitoring service availability . "Maintenance Downtime" means the period for which the Republic ATMs will be unavailable for maintenance every six ( 6 ) months or when Athena support team detect a malfunction . Chivo will be notified at least forty - two ( 48 ) hours in ad v ance of any Maintenance Downtime expected to last more than one ( 1 ) hour (except for emergency
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maintenance, in which case Athena will provide Chivo with advance notice to the extent reasonably possible). "Order" means any transaction undertaken on the Republic ATMs, including the deposit, buy, sell, and withdrawal of Bitcoin cryptocurrency. "Order Success Rate" means the percentage result of (total Orders - invalid Orders) / total Orders. "Permanent Fix" means the full resolution of an Incident. It is measured from the time the status of the Incident suppo11 ticket is marked "In Progress" by the Athena suppo1t team until the time that Athena has resolved the Incident and communicated the resolution to Chivo (including by marking it as "Resolved" in the Incident Tracking System). "Response Time" is the time it takes to acknowledge an Incident in a non - automated way . It is measured from the time a suppo 1 t ticket is created until the time that Chi vo is advised their problem has been received via email and the Incident marked "In Progress" in the Incident Tracking System . "Temporary Fix" means the commercially reasonable efforts Athena will use following the initial response to resolve or provide a workaround to each Incident within the applicable windows set forth below, taking into account the complexity of the Incident and the impact of the Incident on Chivo . 2. Availability; Service Credits for System Outages. 1. Core ATM Services. 1. Except as provided below, Athena will make the Core ATM Services available 99 % of the time (" Availability"), excluding approved Maintenance Downtime . 2. If requested by Chivo, Athena will provide assistance to Users contacting Chivo service via in writing with issues or problems related to the Republic ATMs guaranteeing that all Services will be performed in a workmanlike manner and, in any event , no less than with that degree of skill and care that Athena uses when performing the same or similar services to its other customers (e . g . , at least the same degree of accuracy , quality, completeness, timeliness, and responsiveness) . 3. Athena will provide Chivo with daily reports that will include the following information : reports detailing the amount of remaining cash collected from the ATMs, cash disbursements made by Chivo, transactional reconciliations performed, ticket audit support number, amount of cash in the ATMs and the amount of cash in the bank . These reports must be submitted on the following day . In addition, Company must prepare monthly reports that must be presented within the first five days of the following month, which will include the ATMs account statements . For the pwpose of best complying with the provisions set forth herein, both parties shall work together to define the optimal mechanisms for sharing the necessary information to provide the requested reports .
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2 . 1 . 4 Athena will maintain a reserved amount of USD 600 , 000 . 00 which will be readily available to expedite the process of provisioning the ATMs with cash flow on an urgent basis when Chivo deems it necessary . This reserved amount will not be subject to commission charges for standard operations but will incur in a 0 . 487 % monthly charge payable by Chivo to Athena for maintaining the reserve . The procedure for the use and operation of the reserved amount, including invoicing and payment terms for the monthly charge, shall be outlined in a separate document to be approved by both parties . 2. Order Success Rate. Athena will achieve an Order Success Rate of 80% per month. 3. Exclusions . The following shall be excluded from the calculations of Availability and Order Success Rate as set forth in Section 2 . 2 : (i) temporary interruptions of the CoreATM Services or the Republic ATMs due to Maintenance Downtime , provided that Athena shall make best efforts to provide Chivo with notice two ( 2 ) days prior to such Maintenance Downtime ; (ii) factors outside Athena's reasonable control, including , but not limited to, natural disaster, war, acts of terrorism, riots, government action , or a network or device failure external to Athena's data centers ; and (iii) failure by Chivo Third Party Service Providers and Chivo to adhere to any required configurations, use supported platforms, or follow any policies for acceptable use . . 4. Data . Athena will secure and protect the Core ATM Services from misuse and unauthorized access and implement security, data management , and incident response protocols in accordance with industry best practices and comply with the t erms of Exhibit B of the MSA . Notwithstanding anything to the contrary in Exh ibit B of the MSA, in the event that Athena reasonably believes that any Republic ATM data has been materially disclosed to or accessed by an unauthorized person (a "Security Incident"), Athena shall : (a) immediately initiate response measures designed to identify the nature and scope of the incident , and (b) notify the Ch ivo' s designated sec urit y officer (or other contact as designated by Chivo) as soon as practicable , subject to any law enforcement investigation . Athena will provide regular updates to Chivo of its efforts to correct such compromise . Athena with the cooperation of Chivo, shall assume responsibility for remediating the Security Incident as required by applicable law . Excep t as required by applicable law, neither Athena, nor its employees, agents , or contractors shall communicate with or contact Users regarding a Security Incident without the prior written consent of Chivo, which consent shall not be unreasonably withheld . Chivo bas sole responsibility for communicating any notifications received hereunder to Users in accordance with applicable law . 3. Term, Termination, and Remedies. 3.1 Term. This SLA shall becom e effective as of the Effective Dat e , and, unless otherwise terminated pursuant to the terms of this SLA, continues through November 30, 2027.
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2. Termination. 1. Chivo shall have the right to terminate the SLA upon thirty ( 30 ) days' notice to Athena, provided Chivo provides Athena written notice within ( 30 ) days after the "Termination Event" below has occurred and provided that such termination shall become effective on a date specified by Chivo which date shall not be later than ( 6 ) months after Chivo's delivery to Athena of a written notice of its intention to so terminate this Agreement . 2. As used herein, a "Termination Event" shall mean (a) six ( 6 ) consecutive Failed Months ; (b) a complete network failure of the Republic ATM due to situations under Athena responsibility ; or (c) three ( 3 ) not consecutive written notices of miss delivery of order success rate . 3. Remedies . Chivo and Athena agree that upon the occurrence of a Failed Month or Termination Event, Chivo's exclusive remedy shall be to choose among one of the following : terminate the SLA as contemplated in Section 3 . 2 . 4. Incident Response Time . 1. Incident Identification and Reporting . If Chivo believes an Incident exists, Chivo will conduct the initial analysis and troubleshooting of each Incident and use commercially reasonable efforts to resolve the Incident before escalating to Athena . If Chivo is unable to resolve an Incident, Chivo will report it to Athena's client support team as follows : (i) via support email address (currently atmop@athena . sv), or (ii) v ia an Incident Tracking System . Chivo will provide the below information along with its notification of any Incident (in addition to any other information that Athena may reasonably request) : . Timestamp: (EST) • Author: • Call - Back Number: . Connection - Type: Error - Message (if available): . Short Description: • Perceived Severity Level: 4 . 2 Incident Resolution . Following Athena's acknowledgement to Chivo of the Incident, Athena and Chivo will cooperate to enable Athena to reproduce or see sufficient evidence of the Incident in order to confom that such Incident is being caused by the Republic ATMs . Upon Athena confirming the reported behavior , Athena will assign a severity level in accordance with the below table . If after assignment of a sever ity level , Athena reasonably determines that the Incident was misclassified or Athena develops a procedural workaround reasonably acceptable to Chivo, Athena will be entitled to make a new severity level recommendation and if agreed to by Chivo, the Incident will be reclassified accordingly .
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Severity Level 3 Severity Level 2 Severity Level 1 Minor bug fixes - this level includes problems that have little or no impact on daily business process (e . g . , content changes) Less than 95 % Order Success Rate over 60 minutes Less than 95 % Order Success Rate over 15 minutes Incident I business day 90 minutes 45 minutes Re s ponse Time Discussed in next business review Every 4 hours Every 30 minutes Communication Until Temporary Fix I week 4 hours 90 minutes Time to Temporary Fix More than 2 w eeks More than 4 days NIA - Highest severity level Aging of Incident without Permanent Fix (results in escalation of seve rity le ve l) NIA 72 hours 48 hours Time to Permanent Fix The foregoing will not be applicable when the resolution of incidents depends on the support of a supplier or third party . Athena's suppo 11 obligations with respect to each Incident are conditioned on Chivo providing Athena with : (i) a detailed Incident overview as specified above ; and (ii) access to an authorized contact who will provide Athena with reasonable assistance in resolving the issue .
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The Contract Administrator appointed by Chivo in section 11.9 of the MSA, signs this SLA solely in that capacity and should not be considered a party of this agreement. [Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Pa11ies have executed this SLA through their duly authorized officers as of the Effective Date. Chivo, Sociedad AnOnima de Capi t al Variabl s N : --- ' ; , Title: Legal Representative Chivo's Contract Administrator By: Name: Francisco E esto Costa Lopez Title: CFO of Chivo, S.A. de C.V. By: Name: Carlos Title: L
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REPUBLIC ATMs Quantity Location 200 El Salvador 64 USA Fee Service for El Salvador USD 500.00per ATM monthly ATM operations in El Salvador USD 590.00 per event ATM Vinyl Replacement 0.50% per transaction Software fee USD 910.00per ATM ATM relocation USD 185.00 per ATM ATM bolting USD 145.00 per ATM Network setup USD 75.00 per ATM Cash load USD 75.00 per ATM Cash unload USD 115.00 per serv ic e / hour ATM repair service USD 50.00 per ATM Software modifications setup USD 115.00 per ATM Preventive maintenance USD 135.00 per service / hour Emergency repair service USD 850.00 per lock Bitaccess lock replacement USD 1,250.00 per lock Genesis lock replacement Fee Service for United States [0.5% transaction fee per transaction in the United States] USD 875.00 per ATM ATM operations in the United States 1.0% per transaction Software fee USD 1420.00 ATM relocation (within the same state) USD 195.00 ATM bolting USD 175.00 per ATM Network setup USD 130 per se r v ice / hour ATM repair service USD 60.00per ATM Software modifications setup USD 130 . 00 per ATM Preventive maintenance USD 145.00 per service / hour Emergency repair service USD 1,300.00 per lock ATM lock replacement Annex A Core ATM Services <f2
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.: Prices are referenced in normal working conditions, any additional will be promptly quoted • Prices should only be quoted for ATMs that are in operation and fully working. • The services already include one (1) event of ATM Vinyl Replacement free of charge that may be requested at the Republic's sole discretion. • Prices indicated correspond to activities carried out during normal hour s from Monday to Friday 9:00 am to 5:00 pm/ not included holidays • Weekends, holidays or outside normal hours have a 30% surcharge • An y service not above expressed in the price li s t, will need a purchase order in order to work a quotation. A weekly loading or unloading trip per ATM i s includ e d in th e contract (only applicable for El Sal v ador), any extra loading or unloading will be charged according to fees above described. Athena agrees to ensure that, at the commencement of the contract renewal, the entire fleet of El Salvador ATMs is equipped with vinyl's in good condition.
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Exhibit 10.78
FINANCIAL SETTLEMENT AGREEMENT This FINANCIAL SETTLEMENT AGREEMENT (the "Agreement" ), effective as of June 30 , 2024 ("Effective Date" ), is entered into by and among Chivo, Sociedad Anónima de Capital Variable, a Salvadorean corporation ("Chivo") , Athena Holdings El Salvador, Sociedad Anonima de Capital Variable, a Salvadorean corporation ("Athena El Salvador") , Athena Bitcoin, Inc . , a Delaware corporation ("Athena US") , Athena Bitcoin Global, a Nevada corporation ("Athena Bitcoin Global") , each, individually referred to as ("Party") and collectively as ("Parties") . Athena El Salvador, Athena US, and Athena Bitcoin Global shall be referred to as "Athena" . RECITALS WHEREAS, Athena Holdings El Salvador, Sociedad Anónima de Capital Variable, a Salvadorean corporation, Athena Bitcoin, Inc . , Athena Bitcoin Global, and Chivo, Sociedad Anónima de Capital Variable, entered into the Master Service Agreement and the Service Level Agreement effective as of July 1 , 2022 . WHEREAS, Athena Holdings El Salvador, Sociedad Anónima de Capital Variable, a Salvadorean corporation, Athena Bitcoin, Inc . , Athena Bitcoin Global, and Chivo, Sociedad Anónima de Capital Variable, initiated a financial reconciliation process . NOW THEREFORE, in consideration of the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows : 1. Financial Settlement . Athena and Chivo have settled all outstanding fees resulting from the financial reconciliation that took place between both parties, having reached a mutually satisfactory agreement on how to proceed in relation to the conclusions reached . 2. Release of Chivo . Except as otherwise allowable under this Agreement or otherwise necessary to enforce the terms of this Agreement, for consideration of the mutual promises contained herein, the receipt and sufficiency of which are hereby expressly acknowledged by the Parties, Athena, for themselves and each of their present, former, and future parents, predecessors, successors, assigns, assignees, owners, members, officers, shareholders and directors (whether acting in such capacity or individually), attorneys, representatives, employees, managers, heirs, executors, or administrators, and all those who claim through them or could claim through them, unconditionally and irrevocably remise, waive, satisfy, release, acquit, and discharge Chivo and each of their present, former, and future parents, predecessors, and each person or entity acting or purporting to act for them or on their behalf, and each of them, respectively, from and against any and all past, present and future claims, counterclaims, actions, causes of action, set - offs, controversies, or liabilities, whether known or unknown or capable of being known, arising at law or in equity, by right of action or otherwise, including, but not limited to, suits, debts, accounts, bills, compensation, damages, judgments, executions, warranties, expenses, claims, and demands whatsoever that Athena, or their attorneys, agents, representatives, predecessors, successors, and assigns have or may have against Chivo, for, upon, or by reason of any matter, cause, or thing, whatsoever, in law or equity, in connection with or
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arising from any fees in relation to the MSA and the SLA effective as of July 1, 2022, through the date upon which this financial settlement is effective. 3. Release of Athena . Except as otherwise allowable under this Agreement or otherwise necessary to enforce the terms of this Agreement, for consideration of the mutual promises contained herein, the receipt and sufficiency of which are hereby expressly acknowledged by the Parties, Chivo, for itself and each of its present, former, and future parents, predecessors, successors, assigns, assignees, owners, members, officers, shareholders and directors (whether acting in such capacity or individually), attorneys, representatives, employees, managers, heirs, executors, or administrators, and all those who claim through them or could claim through them, unconditionally and irrevocably remise, waive, satisfy, release, acquit, and discharge Athena and each of their present, former, and future parents, predecessors, and each person or entity acting or purporting to act for them or on their behalf, and each of them, respectively, from and against any and all past, present and future claims, counterclaims, actions, causes of action, set - offs, controversies, or liabilities, whether known or unknown or capable of being known, arising at law or in equity, by right of action or otherwise, including, but not limited to, suits, debts, accounts, bills, compensation, damages, judgments, executions, warranties, expenses, claims, and demands whatsoever that Chivo, or its attorneys, agents, representatives, predecessors, successors, and assigns have or may have against Athena, for, upon, or by reason of any matter, cause, or thing, whatsoever, in law or equity, in connection with or arising from any fees in relation to the MSA and the SLA effective as of July 1 , 2022 , through the date upon which this financial settlement is effective . 4. Representations and Indemnifications . The Parties represent and warrant to each other that each is the sole and lawful owner of all right, title, and interest in and to every claim and other matter that each releases and/or waives in this Agreement and that it has not previously assigned or transferred, or purported to do so, to any person or other entity any right, title, or interest in any such claim or other matter . In the event that such representation is false and any such claim or matter is asserted against any Party by anyone who is the assignee or transferee of such a claim or matter, then the Party who assigned or transferred such claim or matter shall fully indemnify, defend, and hold harmless the Party against whom such claim or matter is asserted and its successors from and against such claim or matter and from all actual costs, attorneys' fees, expenses, liabilities, and damages that such Party and its successors incur as a result of the assertion of such claim or matter . 5. Limitation of Release . This Agreement does not release : (a) claims arising out of the failure of any Party to perform in conformity with the terms of this Agreement ; (b) acts of bad faith or fraud, including acts of bad faith or fraud in connection with a Party's finances or financial statements as it relates to another Party to this Agreement, (c) failure to verify a Party's financial records, provided that such failure results in such Party's inability to calculate or make any required payments to another Party, (d) failure to maintain complete and accurate financial records during the terms of the MSA and SLA dated as of July 1 , 2022 , (e) failure to maintain complete and accurate records relating to the administration of bank accounts and fund flows used in the operating and maintaining Chivo ATMs, (f) matters not in connection nor arising out of the MSA and the SLA effective as of July 1 , 2022 , or (g) any future disputes between the Parties, including their successors and assigns .
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6. Non - Disparagement . The Parties agree and covenant that they each shall refrain from all conduct, verbal or otherwise, that disparages or damages or that could reasonably be foreseen to disparage or damage the reputation, goodwill, or standing in the industry of the other Party or Parties or their owners, members, directors, managers, officers, employees, representatives, attorneys, or advisors including, but not limited to, making, publishing, or communicating to any person or entity, or in any public forum, any defamatory or disparaging remarks, comments, or statements concerning the other Party or Parties or their business, or any of its owners, members, managers, employees, officers or directors, or its existing or prospective customers, suppliers, investors, and other associated third parties, now or in the future . Nothing in this section shall prohibit either Party from exercising its rights or remedies under this Agreement or under law and equity . 7. Confidentiality . The Parties agree and covenant that they shall not, directly or indirectly, without the prior written consent of the other Parties, disclose the terms or existence of this Agreement, or any information or evidence elicited or exchanged in relation to the released matters, to any person or entity, other than to such Party's attorneys and accountants strictly for purposes of the transactions contemplated hereby . The confidentiality provision is a material term of this Agreement, breach of which will cause the other Parties irreparable harm . If any Party is required by an appropriate order of a competent court or governmental authority to disclose the terms of this Agreement to individuals other than those set forth herein, the disclosing Party shall notify the other Parties, in writing, at least fifteen ( 15 ) days prior to such disclosure . The terms of this section shall survive any termination of this Agreement . 8. Breach ; Damages ; and Remedies . If a Party fails to perform any of the covenants as set forth in this Agreement, or otherwise breaches any material representation, covenant, or warranty under this Agreement, the other Party or Parties may pursue any and all legal or equitable remedies available to it . In such an action, the prevailing party shall be entitled to an award for reimbursement of any and all attorneys' fees, expenses and costs incurred by the prevailing party in furtherance of pursuing or defending the action . 9. Governing Law ; Jurisdiction ; Venue . This Agreement shall be governed by and construed in accordance with the internal laws of the state of Florida, without giving effect to any choice or conflict of law provision or rule (whether of the state of Florida or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the state of Florida . The Parties will make a good - faith effort to settle between themselves any claim, dispute, or controversy (each, a "Dispute") arising out of or in connection with this Agreement . If any Dispute cannot be settled within thirty ( 30 ) days after notice of such Dispute is provided by one Party to the other Party, such Dispute shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules . The place of arbitration shall be Miami, Florida . 10. Severability . If any provision of the Agreement or the application thereof is held invalid by a court, arbitrator, or government agency of competent jurisdiction, the Parties agree that such a determination of invalidity shall not affect other provisions or applications of the Agreement which can be given effect without the invalid provisions and thus shall remain in full force and effect or application .
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11 . Successors and Assigns . This Agreement shall bind and inure to the benefit of the Parties and their respective successors, assigns, administrative agents, heirs and estate, as the case may be . No Party may assign, delegate, or convey its rights and obligations under this Agreement, whether by operation of law or otherwise, to any third party without the prior consent of the other Parties hereto . 13. Final and Binding Agreement . The Parties acknowledge that this Agreement is a full and final accord and satisfaction and shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, agents, representatives, successors, and assigns . 14. No Oral Modification . This Agreement shall not be altered, amended, or modified by oral representation made before or after the execution of this Agreement . All modifications must be in writing and duly executed by all Parties . 15. Entire Agreement . This Agreement constitutes a single, integrated, written contract expressing the entire understanding and agreement among the Parties, and the terms of the Agreement are contractual and not merely recitals . No other agreement, written or oral, expressed or implied, exists among the Parties with respect to the subject matter of this Agreement, and the Parties represent that no promise, inducement, or other agreement not expressly contained in this Agreement has been made conferring any benefit upon them . 16. Notices . All notices, requests, consents and other communications pursuant to this Agreement shall be delivered by email or in writing to the applicable address below and will be deemed given : (a) upon receipt when delivered personally ; (b) two ( 2 ) days (other than weekends or Salvadorean public holidays) after it is sent if sent by certified or registered mail (return receipt requested) ; (c) one ( 1 ) day (other than weekends or Salvadorean public holidays) after it is sent if by next day delivery by a major commercial delivery service ; or (d) one ( 1 ) day after it is sent . Athena Bitcoin Global 1 SE 3rd Ave. Suite 2740, Miami, FL. 33131 legal@athenabitcoin.com Athena Bitcoin, Inc. 1 SE 3rd Ave. Suite 2740, Miami, FL. 33131 legal@athenabitcoin.com Athena Holdings El Salvador, SA DE CV Edificio Insigne, nivel 10, oficina 1010, Av. Las Magnolias San Salvador, El Salvador. legal@athenabitcoin.com Chivo, Sociedad Anónima de Capital Variable Boulevard del Hipodromo Local 8, #243, Century Tower Sergio Viera de Mello San Salvador, El Salvador. legal@chivowallet.com 17. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument, but all of which together shall constitute one instrument . 18. Headings and Captions . The headings and captions inserted into this Agreement are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Agreement, or any provision hereof, or in any way affect the interpretation of this Agreement . 19. Authorized Representative . Authorized Representative represents and warrants that he is an authorized representative of each of Athena Holdings El Salvador SA DE CV, Athena Bitcoin, Inc . , Athena Bitcoin Global, Chivo, S . A . de C . V . and has the full authorization and authority to
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execute this Agreement. Authorized Representative represents and warrants that he has had the opportunity to consult legal counsel prior to executing this Agreement. [SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Parties have caused this financial settlement agreement to be executed by their duly authorized representatives. Athena Bitcoin, Inc. By : Matias Goldenhorn (Jan 31 , 2025 18 : 53 CST) Name : Matias Goldenhorn Title : CEO Chivo, Sociedad Anónima de Capital Variable. By: Raymond (Feb 11, 2025 10:36 CST) Name: Raymon Villalta Title: CEO Athena Bitcoin Global By: Matias Goldenhorn (Jan 31, 2025 18:53 CST) Name: Matias Goldenhorn Title: CEO Athena Holdings El Salvador, S.A. DE C.V. By: Carlos Miguel Rivas Carrillo (Jan 21, 2025 11:31 CST) Name: Carlos Rivas Title: Legal Representative
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FINANCIAL SETTLEMENT AGREEMENT ATHENA CHIVO 0125 Final Audit Report 2025 - 02 - 11 Created: By: Status: 2025 - 01 - 21 Julissa Vásquez (julissa.vasquez@chivowallet.com) Signed Transaction ID: CBJCHBCAABAAX0ANWShRn_VVQ8NPJ4Ox36fLBMccmZZ6 "FINANCIAL SETTLEMENT AGREEMENT ATHENA CHIVO 01 25" History Document created by Julissa Vásquez (julissa.vasquez@chivowallet.com) 2025 - 01 - 21 - 3:58:36 PM GMT Document emailed to Carlos Miguel Rivas Carrillo (carlos@athena.sv) for signature 2025 - 01 - 21 - 4:19:48 PM GMT Document emailed to matias@athenabitcoin.com for signature 2025 - 01 - 21 - 4:19:48 PM GMT Document emailed to raymond@chivowallet.com for signature 2025 - 01 - 21 - 4:19:48 PM GMT Email viewed by Carlos Miguel Rivas Carrillo (carlos@athena.sv) 2025 - 01 - 21 - 5:29:59 PM GMT Document e - signed by Carlos Miguel Rivas Carrillo (carlos@athena.sv) Signature Date: 2025 - 01 - 21 - 5:31:11 PM GMT - Time Source: server Email viewed by matias@athenabitcoin.com 2025 - 02 - 01 - 0:51:38 AM GMT New document URL requested by matias@athenabitcoin.com 2025 - 02 - 01 - 0:51:52 AM GMT Signer matias@athenabitcoin.com entered name at signing as Matias Goldenhorn 2025 - 02 - 01 - 0:53:42 AM GMT Document e - signed by Matias Goldenhorn (matias@athenabitcoin.com) Signature Date: 2025 - 02 - 01 - 0:53:44 AM GMT - Time Source: server
New document URL requested by Carlos Miguel Rivas Carrillo (carlos@athena.sv) 2025 - 02 - 11 - 3:45:15 PM GMT Email viewed by raymond@chivowallet.com 2025 - 02 - 11 - 4:35:31 PM GMT Signer raymond@chivowallet.com entered name at signing as Raymond 2025 - 02 - 11 - 4:36:00 PM GMT Document e - signed by Raymond (raymond@chivowallet.com) Signature Date: 2025 - 02 - 11 - 4:36:02 PM GMT - Time Source: server Agreement completed. 2025 - 02 - 11 - 4:36:02 PM GMT
Exhibit 21.1
List of Subsidiaries
Set forth below are the Company’s wholly-owned subsidiaries:
Athena Bitcoin, Inc. incorporated in Delaware (a)
Athena Holdings El Salvador, S.A. de C. V. incorporated in El Salvador (b)
Athena Holdings Colombia, SAS incorporated in Colombia (c)
Athena Holding Company S.R.L. incorporated in Argentina (d)
Athena Bitcoin S. de R. L. de C. V. incorporated in Mexico (e)
Athena Holdings of PR LLC incorporated in Puerto Rico (f)
Athena Business Holdings Panama S.A. incorporated in Panama (g)
Athena Bitcoin Inc. owns directly or indirectly 100% of the voting rights to all the named subsidiaries.
| a. | Athena Bitcoin Global owns 100% of outstanding shares of Athena Bitcoin, Inc | |
| b. | Athena Bitcoin, Inc. owns 99% of Athena Holdings El Salvador, S.A. de C.V. and Eric Gravengaard holds 1% on behalf of the Company. | |
| c. | Athena Bitcoin, Inc. beneficially owns and controls Athena Holdings, Colombia, SAS which is nominally owned by Eric Gravengaard 95% and Matias Goldenhörn 5%. | |
| d. | Athena Bitcoin, Inc. beneficially owns and controls Athena Holding Company S.R.L. which is nominally owned by Eric Gravengaard 45%, Gilbert Valentine 45%, and Matias Goldenhörn 10%. | |
| e. | Athena Bitcoin, Inc. owns 2,999 Shares of Athena Bitcoin S. de R. L. de C.V. and Matias Goldenhorn owns 1 Share on behalf of the Company. | |
| f. | Athena Bitcoin, Inc. is the sole member of Athena Holdings of PR LLC | |
| g. | Athena Bitcoin, Inc. owns 100% Athena Business Holdings Panama S.A. |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the inclusion in the Registration Statement on Form S-1 of our report dated January 28, 2025, relating to the consolidated financial statements of Athena Bitcoin Global for the years ended December 31, 2023 and December 31, 2022. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ FGMK, LLC
Chicago, Illinois
February 11, 2025