10. DEBENTURES

In June 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreements”) with arm’s-length accredited institutional investors (the “Investors”) for the sale of debentures, which are convertible into the Company’s common shares in an aggregate principal amount of up to $47,025,000 with a 10% original issue discount (the “Debentures”). On June 30, 2022, the Company consummated the closing for the sale of (i) the initial debenture in the principal amount of $14,025,000 for gross proceeds of $12,750,000, after considering the 10% original issue discount (“First Tranche Debentures”). In addition, the Investors received 91 warrants at a strike price of $12,210.00, which expired on December 31, 2025 (the “First Tranche Warrants” and the issuance of the First Tranche Debentures and the Frist Tranche Warrants, the “First Tranche”). The First Tranche Warrants and First Tranche Debentures each have down-round provisions whereby the conversion and strike prices will be adjusted downward if the Company issues equity instruments at lower prices. The First Tranche Warrants strike price, and the First Tranche Debenture conversion price will be adjusted down to the effective conversion price of the issued equity instruments. The transaction costs incurred in relation to first tranche were $1,634,894. The Debentures are senior to all other indebtedness or claims in right of payment, other than indebtedness secured by purchase money security interests.

The Investors had the right to purchase additional tranches of $5,000,000 each, up to a total additional principal amount of $33,000,000.

From January 2023 through May 2024, the Investors purchased additional tranches under the Purchase Agreements under similar terms as the First Tranche for an aggregate principal amount of $13,059,923.

The details of each of these seven tranches are summarized in the table below:

 SCHEDULE OF  TRANCHES OF DEBT

Interest rates - 5% for the first 12 months; and 8% thereafter.

These debentures may be extended for six months, at the election of the Company, by paying a sum equal to six months of interest on the principal amount outstanding at the end of the 12th month, at the rate of 8% per annum.

In January 2025, the Company entered into a Securities Purchase Agreement (the “2025 Purchase Agreements”) with arm’s-length accredited institutional investors (the “Investors”) for the sale of debentures, which are convertible into the Company’s common shares in an aggregate principal amount of up to $50.0 million in debentures with a 10% original issue discount. On January 16, 2025, the Company consummated the closing for the sale of (i) the initial debenture in the principal amount of $7,700,000 for gross proceeds of $7,000,000, after considering the 10% original issue discount. In addition, the Investors received 212,256 warrants at a strike price of $25.938. The issuance of the additional tranche triggered the round down provision, adjusting the exercise price of the First, Second, Third, Fourth, Fifth, Sixth, and Seventh Tranche Debentures and First, Second, Third, Fourth, Fifth, Sixth, and Seventh Tranche Warrants to $23.58.

From March 2025 through October 2025, the Investors purchased additional tranches under the 2025 Purchase Agreements under similar terms as the January 2025 Tranche for an aggregate principal amount of $10,513,334.

The details of each of the tranches are summarized in the table below:

Interest rates - 5% for the first 12 months; and 8% thereafter.

These debentures may be extended for six months, at the election of the Company, by paying a sum equal to six months of interest on the principal amount outstanding at the end of the 12th month, at the rate of 8% per annum.

(a) - The Company received $1,500,000 in October 2025 and the additional $5,430,000 is held in a DACA account which serves as collateral for the October 2025 tranche. The funds held in the DACA are reflected as restricted cash in the accompanying consolidated balance sheets.

In April 2025, the Company issued a promissory note (the “April 2025 Note”) with an arm’s-length accredited investor for $290,000 in debentures with a $40,000 original issue discount for gross proceeds of $250,000. The interest rate is 12% applied on the issuance date to the principal amount of $290,000. The April 2025 Note was satisfied in full in October 2025.

The following table summarizes our outstanding debentures as of the dates indicated:

 SCHEDULE OF OUTSTANDING DEBENTURES

During the year ended December 31, 2025, the Investors converted $16,186,143 of principal and interest into the Company’s common shares resulting in an $86,563 gain on the conversion of convertible debentures and $10,131,237 of losses on extinguishment debt. During the year ended December 31, 2025, the Company incurred $3,148,068 in accretion interest and made $431,552 of cash repayments.

During the year ended December 31, 2024, the Investors converted $11,469,407 of principal and interest into the Company’s common shares resulting in a $1,627,858 loss on the conversion of convertible debentures and $2,805,306 of losses on the extinguishment of debentures. During the year ended December 31, 2024, the Company incurred $2,978,722 in accretion interest and made $1,331,467 of cash repayments.

Subsequent to year end, on January 2, 2026, the Company entered into security purchase agreements with certain accredited investors for the purchase of $7,000,000 in convertible debentures (the “January 2026 Debentures”) due January 1, 2027. The Debentures are convertible into common shares at $2.41 per share. As of December 31, 2025, the Convertible Debt Investors have the right to purchase additional tranches in an aggregate principal amount of $31,786,666. In addition, the accredited investors received 3,013,245 warrants at a strike price of $2.41 which expire on June 2, 2029 (the “January 2026 Debenture Warrants”). The 2026 Debenture and the 2026 Debenture Warrants each have down-round provisions whereby the conversion and strike prices will be adjusted downward if the Company issues equity instruments at lower prices.