Stablecoin Development Corp 10-Q

ITEM 1A. RISK FACTORS   While, as a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, we are not required to provide updated quarterly information under this Item, we are providing the below disclosure as additional material risks we face.   For information regarding factors that could affect our business, results of operations, financial condition and liquidity, see the risk factors discussed under Part I, Item 1A included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 31, 2023.    Risk Relating to the Debentures   We have debt, which is secured by all of our assets, and defaulting on such debt may have a material adverse effect on the Company.   The Debentures represent outstanding secured convertible notes of the Company. Pursuant to the Security Agreement and Subsidiary Guarantee, all of our assets, including our accounts receivable and general intangibles, including all inventory, machinery, equipment, furniture and fixtures and the products and proceeds of all the foregoing, have been pledged as collateral to secure the repayment of the Debentures. If we are unable to repay these Debentures or if another type of event of default occurs, a decision by the holders of the Debentures to foreclose on their security interest would materially and adversely affect our future.   The issuance of our Common Stock in connection with the conversion of the Debentures would cause substantial dilution, and could materially affect the trading price of our common shares.   There is an aggregate principal amount of $3.3 million outstanding under the Debentures. To the extent we or the holders of the Debentures converts the Debentures into our Common Stock, including for more shares of Common Stock than we currently anticipate due to the monthly redemption provision in the Debentures and the trading price of our Common Stock potentially declining, substantial amounts of our Common Stock will be issued. Such issuances could result in substantial decreases to our stock price and dilution to our existing shareholders.   ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS   None.   ITEM 3. DEFAULTS UPON SENIOR SECURITIES   None.   ITEM 4. MINE SAFETY DISCLOSURES   Not Applicable.