1606 Corp. (CBDW) Announces Major Amendment to Promissory Note with Former CEO Gregory Lambrecht—Key Terms, Shareholder Impact, and Potential Market Implications
Phoenix, AZ – July 24, 2026 – 1606 Corp. (OTC: CBDW), a Nevada-based technology company specializing in prepackaged software, has filed a Form 8-K disclosing a significant amendment to a material financial agreement with its former CEO and director, Gregory Lambrecht. This development, effective June 9, 2026, introduces several changes to the terms of an outstanding promissory note with a principal balance of \$2,037,184.36 as of March 31, 2026.
Key Points of the Report
- Extension of Maturity Date: The maturity date for the outstanding promissory note has been extended to December 31, 2026.
- Conversion Rights and Discount: The note is now convertible, at the sole option of Mr. Lambrecht, into shares of 1606 Corp. common stock at a 50% discount to the closing bid price on the date of conversion. This is a deep discount that could be highly dilutive to existing shareholders if exercised.
- Beneficial Ownership Limitation: The conversion is subject to a beneficial ownership limitation, preventing Mr. Lambrecht and his affiliates from owning more than 9.99% of the company’s outstanding common stock at any time, and under no circumstances 10% or more. Any increase to this limitation can only take effect 61 days after written notice to the company.
- Rule 144 “Tack Back” Rights: If allowed under the Securities Act, Mr. Lambrecht may “tack back” to the original loan date for purposes of satisfying the holding period under Rule 144. This could permit earlier public resale of shares upon conversion.
- No Other Changes: All other terms and conditions of the original note remain in effect, unless specifically amended by this addendum.
Potentially Price-Sensitive Information for Shareholders
- Significant Dilution Risk: The ability of the former CEO to convert over \$2 million of debt into equity at a 50% discount presents a substantial risk of dilution for current shareholders. Such a large conversion below market price could put significant downward pressure on the share price if Mr. Lambrecht chooses to convert and sell the shares.
- Overhang and Market Uncertainty: The presence of a large, convertible note with deep-discount terms may act as an “overhang” on the stock, potentially limiting upward price movement and investor confidence until the debt is resolved or converted.
- Insider Dynamics: The agreement is with a former CEO and director, which may raise questions about insider influence and governance dynamics within the company.
- Rule 144 Liquidity: If the “tack back” provision is utilized, it could accelerate the timeline for shares issued upon conversion to become freely tradable, potentially increasing selling pressure.
Additional Information
- The Board of Directors unanimously approved the addendum by written consent on July 22, 2026.
- The company remains an “emerging growth company” under applicable Securities Act rules, and has not elected to use the extended transition period for new or revised accounting standards.
- The company’s principal offices remain at 2425 E. Camelback Rd, Suite 150, Phoenix, AZ 85016.
Executive Changes
- There was also a note regarding the resignation of an officer, Mr. Aravamudan, whose departure was not due to any disagreement with the company on matters relating to operations, policies, or practices.
Exhibits
- The full Addendum to the Amended and Restated Promissory Note is filed as Exhibit 4.1 in the 8-K and can be reviewed for further details.
Conclusion
The amendment of the promissory note with deep-discount conversion rights and a substantial principal amount introduces material dilution risk and could significantly influence 1606 Corp.’s share price and trading dynamics. Shareholders and potential investors are encouraged to monitor developments closely, as any conversion or sale of shares under these terms could impact the market.
Disclaimer: This article is provided for informational purposes only and does not constitute investment advice. Please consult your financial advisor or perform your own due diligence before making investment decisions. The author and publisher are not liable for any losses or damages resulting from the use of this information.
