Data443 Risk Mitigation (ATDS) assumes $2M note with potential equity conversion cap
Rhea-AI Filing Summary
Data443 Risk Mitigation, Inc. entered into a Compensation Agreement with Guangzhou Xiaoyu DiDa Technology Co., Ltd. on July 16, 2026. This arrangement relates to the termination of XYDD’s earlier business combination agreement with Four Leaf Acquisition Corporation so that Four Leaf can pursue a proposed combination with Data443.
Under the agreement, Data443 will issue XYDD a $2,000,000 promissory note, payable in two $1,000,000 installments within 90 and 120 days after the “Date of Deal Close,” with no interest if paid on time and 15% simple interest on overdue amounts. If any balance remains 12 months after the Date of Deal Close, XYDD may convert it into PubCo ordinary shares at 80% of the 20‑day VWAP, subject to a floor of 50% of the 20‑day VWAP and a cap of 19.99% of PubCo shares outstanding at that date. In addition, 1,800,000 PubCo shares will be allocated to S.SHUN Holdings Limited for prior finder services.
Positive
- None.
Negative
- Takes on a $2,000,000 promissory note obligation with potential 15% default interest if installments are not paid on time.
- If not fully repaid within 12 months, the note can convert into equity up to 19.99% of PubCo shares, alongside 1,800,000 additional PubCo shares to a finder, creating potential dilution.
8-K Event Classification
3 items: 1.01, 2.03, 9.01
3 items
Item 1.01
Entry into a Material Definitive Agreement
Business
The company signed a significant contract such as a merger agreement, credit facility, or major partnership.
Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement
Financial
The company incurred a new significant debt or off-balance-sheet obligation.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Promissory note principal: $2,000,000
Installment payments: $1,000,000 each
Default interest rate: 15% per annum
+5 more
8 metrics
Promissory note principal
$2,000,000
Principal amount of the Note issued to XYDD as compensation
Installment payments
$1,000,000 each
Two installments due within 90 and 120 days after the Date of Deal Close
Default interest rate
15% per annum
Simple interest applied to any installment not paid when due
Prepayment period
12 months
Note may be prepaid in full any time before 12 months after the Date of Deal Close
Conversion discount
80% of 20-day VWAP
Conversion price for unpaid amounts if converted into PubCo shares
Conversion floor
50% of 20-day VWAP
Minimum price reference based on VWAP following the Date of Deal Close
Equity cap
19.99% of PubCo shares
Maximum portion of PubCo shares outstanding at Date of Deal Close issuable on conversion
Finder share allocation
1,800,000 shares
PubCo shares allocated to S.SHUN Holdings Limited for prior finder services
Key Terms
promissory note, VWAP, off-balance sheet arrangement, Emerging growth company, +1 more
5 terms
promissory note financial
"issue to XYDD a promissory note in the principal amount of $2,000,000"
A promissory note is a written IOU in which one party promises to pay a specific sum, often with interest, to another party by a set date or on demand. Investors care because it functions like a loan: it creates a legal claim on future cash flows, carries credit and timing risk, and can affect valuation or liquidity—think of it as a formal, tradable promise to be repaid that can be assessed like any other debt investment.
VWAP financial
"conversion price equal to 80% of the 20-trading-day VWAP of PubCo’s shares"
VWAP, or Volume-Weighted Average Price, is a way to find the average price of a stock throughout the trading day, giving more importance to times when more shares are traded. It helps traders see the typical price and decide whether a stock is expensive or cheap compared to its average, similar to finding the average speed during a trip by giving more weight to times when you traveled faster or slower.
off-balance sheet arrangement financial
"an obligation under an off-balance sheet arrangement of a registrant"
An off-balance sheet arrangement is a financial commitment or asset that a company keeps out of its main financial statements so it does not show up as a direct asset or liability. Think of it like renting equipment or using a separate storage locker instead of putting the item in your home: the economic effects exist, but they aren’t listed on the company’s primary balance sheet. Investors care because these arrangements can hide risks, obligations or sources of cash flow that affect a company’s true financial strength and future performance.
Emerging growth company regulatory
"Emerging growth company"
An emerging growth company is a recently public or smaller public firm that qualifies for temporary, lighter regulatory and disclosure rules to reduce the cost and effort of being public. For investors, it means the company may provide less historical financial detail and face fewer reporting requirements than larger firms, so it can grow more quickly but also carries higher uncertainty—like buying a promising early-stage product with fewer user reviews.
SIAC rules regulatory
"disputes are resolved by arbitration under SIAC rules"
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What material agreement did Data443 (ATDS) enter into on July 16, 2026?
Data443 signed a Compensation Agreement with Guangzhou Xiaoyu DiDa Technology Co., Ltd., issuing a $2,000,000 promissory note. The deal compensates XYDD for terminating its earlier business combination agreement with Four Leaf Acquisition Corporation to allow a proposed combination with Data443.
What are the key terms of the $2,000,000 note disclosed by Data443 (ATDS)?
The note has $2,000,000 principal, paid in two $1,000,000 installments due within 90 and 120 days after the Date of Deal Close. It carries no interest if paid on time but bears 15% simple interest per year on any overdue installment amounts.
How can the Data443 (ATDS) promissory note convert into equity?
If any balance remains 12 months after the Date of Deal Close, XYDD may convert outstanding amounts into PubCo shares at 80% of the prior 20‑day VWAP. Conversion is floored at 50% of the 20‑day VWAP and capped at 19.99% of PubCo shares outstanding at deal close.
When is Data443 (ATDS) required to pay installments on the $2,000,000 note?
Data443 must pay $1,000,000 within 90 days and another $1,000,000 within 120 days after the Date of Deal Close. Timely payment avoids interest, while late payment triggers 15% simple annual interest from each missed due date.
Why did Data443 (ATDS) agree to compensate XYDD under this arrangement?
Data443 agreed to the Compensation Agreement because XYDD’s prior business combination with Four Leaf Acquisition Corporation was terminated. That termination allows Four Leaf to pursue a proposed business combination with Data443, and the $2,000,000 note compensates XYDD for ending its earlier deal.