CONVERTIBLE DEBENTURES |
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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE DEBENTURES [Text Block] |
8. CONVERTIBLE DEBENTURES On June 17, 2022, July 8, 2022, and March 2, 2023, the Company closed its non-brokered private placement of unsecured convertible debentures for total gross proceeds of $3,306. The debentures bear interest at a rate of 14% per annum and mature on February 17, 2024, March 8, 2024, and November 2, 2024, respectively. The debentures are convertible into shares of the Company at $0.078 ($0.10 CAD) per share for 2022 issued debentures and at $0.070 ($0.095 CAD) per share for 2023 issued debentures.
In conjunction with the three tranches of convertible debt financing, the Company issued 16,044,774, 13,805,964, and 18,461,015 warrants. The warrants are exercisable into one common share of the Company at $0.067 ($0.085 CAD) per share and expire on February 17, 2024, at $0.067 ($0.085 CAD) per share and expire on March 8, 2024, and at $0.070 ($0.095 CAD) per share and expire on November 2, 2024, respectively.
On February 16, 2024, the Company issued 12-month convertible debentures of $941, bearing an interest rate of 20% per annum. These debentures replaced previously issued debentures that were due in February 2024. These debentures are convertible into common shares of the Company at a price of $0.06 ($0.08 CAD) per share, or at the holder's option. 15,696,882 warrants were also issued on February 16, 2024 exercisable at $0.06 ($0.08 CAD) until February 16, 2025. These warrants were determined to be liability classified as the warrants can be exercised in a currency other than its functional currency (Notes 7, 10). The Company repaid a total of $936 for the convertible debentures in December 2024 and the remaining $5 in February 2025, along with accrued interest. Additionally, on March 8, 2024, and February 14, 2025, the Company repaid convertible debentures totaling $831 and $6, in cash, respectively, with a loss of $5 and $Nil recognized. Based on the terms of the newly issued debentures, the convertible debentures were determined to be a financial instrument comprising a host debt component, and the conversion feature and warrants denominated in Canadian dollars are classified as a derivative liability. In this case, as the conversion option on the instrument is bifurcated both before and after the modification or exchange, the Company used the 10% cash flow test. As a result, the change in cash flows was considered not substantial for the convertible debentures issued on June 17, 2022, and July 8, 2022, and extinguishment accounting was not applied. A new effective interest rate was determined and there was no gain or loss recorded on the consolidated statements of operations and comprehensive loss. However, the convertible debentures issued on March 2, 2023, surpassed the 10% cash flow test and as a result, the debentures were considered extinguished. A new effective interest was determined and there was a loss on extinguishment recorded on the consolidated statements of operations and comprehensive loss. Under ASC 815, for the convertible debentures that did not meet the 10% cash flow test, the amended conversion feature and the replacement warrants were valued using the Black Scholes model and the difference between the fair value of the original conversion feature and amended conversion feature were reflected on the consolidated statements of operations and comprehensive loss as a gain/loss on the revaluation of the derivative liabilities. The changes in fair value of the warrants associated with the prior debentures was recognized as a gain/loss and the fair value of the replacement warrants were deducted from the face value of the replacement debentures. For the convertible debentures that surpassed the 10% cash flow test, the fair value of the debentures at maturity were present valued using the new effective interest rate of 44.01% and the conversion feature and replacement warrants were valued using the Black Scholes model. The difference between the present value of the new debentures, conversion feature, replacement warrants and the carrying value of the prior debentures, fair value of the original conversion feature and warrants were recorded on the consolidated statements of operations and comprehensive loss as a loss on extinguishment of $55. On March 8, 2024, the Company completed a private placement of $1,000 and issued 4,107,998 units and 41,707,215 common shares to settle $1,924 of debenture debt. The fair value of the shares and warrants is $2,723 and $59, respectively. These warrants were determined to be liability classified as the warrants have an exercise price in a currency other than its functional currency (Notes 7, 10). In conjunction with the Company's CSE listing on September 19, 2024, 41,707,215 warrants were issued to certain directors and individual who converted their debts into common shares of the Company on March 8, 2024. These warrants were treated as a contingency with their fair value being recorded as a derivative liability on March 8, 2024. On September 19, 2024, these warrants were revalued at $359 and recorded as equity since all are exercisable in USD, the functional currency of the Company. Under ASC 815, the conversion of debt with a bifurcated conversion option is accounted for under the debt extinguishment accounting model. Therefore, both the debt and the conversion option that is accounted for as a derivative was derecognized at their carrying amounts and the consideration transferred were measured at its then-current fair value, with any difference recorded as a gain or loss on the extinguishment of the two separate liabilities. The existing debenture settlement resulted in a loss on conversion of $1,690. On November 14, 2024, February 3, 2025, March 11, 2025, May 19, 2025, and May 31, 2025, FCC entered into convertible loan agreements for $250, $200, $20, $75, and $121 respectively. The loans bear interest at 5% per annum and have 12 months terms. The principal and accrued interest is convertible into common shares of FCC at the lower of the price per share in the lowest equity financing undertaken by FCC during the term of the loan or $0.106. Under ASC 815, the conversion feature does not require bifurcation. Therefore, both the debt and the conversion option is accounted for as a single liability carried at book value plus accrued interest. The fair value of the warrants and conversion features were determined using the Black-Scholes Option Pricing Model using the assumptions set out as follows:
A continuity schedule of the Company's convertible debt is as follows:
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