The $12.25 million At-The-Market (ATM) agreement and various convertible notes for AtlasClear Holdings, Inc. (ATCH) introduce significant potential for share dilution, which could materially impact existing shareholders.
ATM Agreement Details
AtlasClear Holdings, Inc. entered into a "Second ELOC Agreement" (an at-the-market agreement) with Tau Investment Partners LLC on February 5, 2025. This agreement allows the company to sell up to $12.25 million worth of common stock over a 24-month period. The shares will be sold at 97% of the lowest Volume-Weighted Average Price (VWAP) over a three-day pricing period. Given ATCH's current share price of approximately $0.22 as of August 6, 2025, the full utilization of this ATM facility could result in the issuance of a substantial number of new shares. For example, at this price point, $12.25 million could translate to roughly 55.68 million new shares, significantly increasing the outstanding share count of 6.19 million shares.
Convertible Notes Impact
AtlasClear also has several outstanding convertible notes that contribute to potential dilution:
- Seller Notes: As of December 31, 2024, these notes, including Short-Term and Long-Term notes issued in February 2024, represented a potential for 1,690,638 dilutive shares. These notes often convert at a discount to the prevailing VWAP, further impacting the effective conversion price.
- Funicular Note: A secured convertible promissory note for $6.0 million, issued in February 2024, had an initial conversion price of $600 post-reverse split, subject to adjustments based on VWAP with a floor of $120 post-reverse split. As of December 31, 2024, this note accounted for 756,248 potential dilutive shares.
- Hanire Note: A convertible promissory note of up to $40 million was part of a securities purchase agreement on December 31, 2024. If this note were to convert at or near the current low share price, it would introduce a very large number of new shares into the market.
- Chardan Note Conversions: In early February 2025, $375,000 of principal from the Chardan Note was converted into 107,494 shares, with conversion prices ranging from $3.198 to $3.890 per share.
Collectively, the company's December 31, 2024, 10-Q filing indicated 3,096,497 shares issuable under convertible note obligations, excluding warrants. When combined with the potential from the $12.25 million ATM and the $40 million Hanire Note, the total potential dilution could be substantial relative to the current 6.19 million shares outstanding.
Market Context
Fintel data shows that institutional ownership in ATCH is relatively low, with 18 institutions holding 324,520 shares as of August 6, 2025. This represents a small percentage of the current shares outstanding. While short interest stands at 480,883 shares (3.10% of float) with a low "days to cover" of 0.01, indicating that shorts could cover quickly, the significant potential for new share issuance from these financing activities could continue to exert downward pressure on the stock price and further dilute existing shareholder value.
