EigenQ sells $2.4m note in $5m financing deal

EigenQ issued a $2.4 million unsecured note as part of a financing arrangement of up to $5 million with Silicon Valley Acquisition Corp. on Monday, according to a Wednesday SEC filing report.

The deal gives EigenQ interim funding while Silicon Valley Acquisition pursues its business combination with the company; SVAQ last closed at $10.34, above its 52-week low of $9.94, InvestingPro data in the report showed.

At the first closing, EigenQ issued $2,413,333.33 in principal amount and granted 201,111 warrants to buy common stock at $12.00 a share. The note reflected a 10% original issue discount on $2,172,000 previously provided by the investor, meaning the principal amount exceeded the cash advanced.

The agreement permits additional closings, subject to conditions. EigenQ may issue as much as $2,586,666.67 more in unsecured notes and up to 215,555 additional warrants, also with a $12.00 exercise price. Total purchase proceeds for the notes and warrants may not exceed $4.5 million, corresponding to $5.0 million in total principal.

If Silicon Valley Acquisition and EigenQ complete their merger, the notes and warrants will be exchanged for unsecured convertible notes and warrants of the combined public company. Convertible notes can be exchanged into equity under specified terms. The parties also expect to enter a registration rights agreement.

The unsecured notes carry 8% annual interest for cash payments and 10% annual interest for payment-in-kind interest, which is paid by adding to the obligation rather than paying cash. The initial conversion price is $12.00 a share, above SVAQ's reported $10.34 share price.

The securities were issued under exemptions from registration under the Securities Act, and the investor represented that it was accredited. The notes are not backed by collateral and are expressly junior to previously disclosed secured financing, with limits on payment and enforcement.

Silicon Valley Acquisition trades on Nasdaq under SVAQ, SVAQU and SVAQW. The unsecured notes mature on April 15, 2027, unless extended.