NOTE 15 – CONVERTIBLE DEBENTURES

On November 4, 2025 and December 17, 2025, the Company issued two tranches of senior secured convertible debentures to YA II PN, Ltd. (“Yorkville”) (collectively, the “Convertible Debentures”) with aggregate principal of $50.0 million (each tranche with principal of $25.0 million). The Convertible Debentures were issued as part of the Company’s capital-raising strategy to fund operations and growth initiatives.

Each debenture was issued at a purchase price of 96% of principal, bears interest at 4.0% per annum (increasing to 18.0% upon an event of default), and has a contractual maturity date that is 24 months from issuance (November 4, 2027 and December 17, 2027, respectively).

The Convertible Debentures are secured by first-priority liens on substantially all assets of the Company and are guaranteed by certain subsidiaries.

Prepayment and Amortization Provisions

The Company may, at its option, prepay the Convertible Debentures prior to maturity upon delivery of an irrevocable prepayment notice and payment of a 10% prepayment premium, accrued interest, and outstanding principal. During the prepayment notice period, Yorkville retains the right to convert all or a portion of the outstanding principal and accrued interest into shares of the Company’s common stock.

The Convertible Debentures also provide for monthly principal amortization payments upon the occurrence of specified “Amortization Events,” including a sustained decline in the Company’s stock price below the contractual floor price.

On December 29, 2025, the Company obtained a limited waiver from Yorkville that deferred the required monthly principal amortization payments that were contractually triggered by a floor price event. Under the waiver, the $5.0 million monthly principal payments (plus related interest and premiums) otherwise due in January 2026 were temporarily waived, with the obligation to pay these amounts (aggregating $10.0 million for January and February 2026) deferred until February 1, 2026. The waiver did not modify the total principal due under the Convertible Debentures but extended the initial amortization date, providing the Company additional time to pursue refinancing or repayment alternatives. Based on the limited waiver and uncertainty tied to the Company’s ability to ensure no further amortization events the note is reflected as current on our Consolidated Balance Sheets.

Conversion Features

Yorkville may convert all or any portion of the outstanding principal and accrued interest into shares of the Company’s common stock at a conversion price equal to the lower of:

(i) a fixed price of $6.016 per share, subject to a one-time downward-only reset following registration effectiveness, and

(ii) 97% of the lowest daily volume-weighted average price (“VWAP”) during the three trading days immediately preceding conversion, subject to a $4.00 per share floor price, in each case subject to customary anti-dilution adjustments.

Conversions are also subject to a beneficial ownership limitation (generally 4.99%) and an exchange cap tied to Nasdaq rules, unless stockholder approval is obtained or the limitation is otherwise waived pursuant to the debenture terms.

If fully converted at the $4.00 floor price, the $50.0 million principal amount of the Convertible Debentures would be convertible into a maximum of 12,500,000 shares of the Company’s common stock, exclusive of any shares issuable for accrued interest or premiums. The Company did not register any shares for issuance under the Convertible Debentures and elected to utilize its optional cash settlement provisions in early 2026.

Use of Proceeds and Gold Collateral Funding

Pursuant to amendments to the debenture purchase agreement, the Company was required to allocate an aggregate of $25.1 million of proceeds from the two closings to purchase Allocated Vaulted Gold Bullion through designated controlled accounts, consisting of $12.6 million at the first closing and $12.5 million at the second closing. The gold holdings served as additional collateral under the financing arrangement.

Embedded Derivative Liability – Conversion Option

The Company determined that the holder’s optional conversion feature requires bifurcation as an embedded derivative under ASC 815, Derivatives and Hedge Accounting, because (i) the economic characteristics of the conversion feature are not clearly and closely related to the host debt instrument and (ii) the conversion feature does not qualify for equity classification due to its variable conversion pricing mechanics, including VWAP-based pricing, floor price provisions, and reset features.

Accordingly, the embedded conversion option is accounted for separately as a derivative liability measured at fair value, with changes in fair value recognized in earnings each reporting period. At issuance, the Company allocated proceeds between the host debt and the embedded derivative based on relative fair value, with the derivative recorded as a liability and a corresponding amount recorded as a debt discount on the host debenture.

As of December 31, 2025, the estimated fair value of the embedded derivative liabilities totaled approximately $1.7 million, consisting of approximately $1.1 million attributable to the November 4, 2025 tranche and approximately $0.6 million attributable to the December 17, 2025 tranche. See Note 12, Fair Value Measurements for additional information regarding the Company’s evaluation of the embedded derivative liability. For an overview of the Company’s derivative financial instruments and related disclosures required by ASC 815, see Note 17, Derivative Financial Instruments and Hedging Activities.

Fair Value Gain on Embedded Derivative

During the year ended December 31, 2025, the Company recognized a gain of approximately $7.0 million related to changes in the fair value of the embedded derivative liabilities associated with the Convertible Debentures. This gain is included in other income (expense) in the Consolidated Statements of Operations and comprehensive loss.

Debt Carrying Amount and Interest Expense

As of December 31, 2025, the carrying value of the Convertible Debentures, net of unamortized original issue discount, debt issuance costs, and bifurcation-related discounts, was approximately $38.0 million on a combined basis.

As of December 31, 2025, the Convertible Debentures had unamortized debt discounts (including original issue discounts, derivative discounts, and debt issuance costs) totaling approximately $12.0 million.

Interest expense recognized for the year ended December 31, 2025 includes stated coupon interest and amortization of debt discounts and issuance costs under the effective interest method. For the year ended December 31, 2025, the Company recognized total interest expense of approximately $1.6 million related to the Convertible Debentures, consisting of approximately $0.2 million of contractual interest and approximately $1.4 million of non-cash interest expense from the amortization of discounts and issuance costs.

The effective interest rate on the Convertible Debentures substantially exceeded the 4.0% stated coupon rate. As of December 31, 2025, based on management’s determination and intent to settle the Convertible Debentures in early 2026, the effective interest rates for the November 4, 2025 tranche and the December 17, 2025 tranche were approximately 393.7% and 228.9%, respectively, reflecting the accelerated amortization of unamortized discounts and issuance costs over a significantly shortened expected term. Had the Convertible Debentures been held to their contractual maturity dates, the effective interest rates would have been approximately 17.6% to 26.5%, still materially higher than the stated coupon due to the substantial original issue discount.

Outstanding Principal

As of December 31, 2025, the outstanding principal balance of the Convertible Debentures was $50.0 million, and no principal amounts had been converted into shares during the year.

Subsequent Conversion and Payoff

On January 22, 2026, the Company delivered an irrevocable optional prepayment notice with respect to the Convertible Debentures.

On February 6, 2026, Yorkville elected to convert $15.0 million of principal into shares of the Company’s common stock at a conversion price of $4.00 per share, resulting in the issuance of 3,750,000 shares. No accrued interest was converted.

Following the expiration of the conversion election period, the Company prepaid the remaining amounts outstanding under the Convertible Debentures for an aggregate cash payoff of approximately $38.9 million, consisting of $35.0 million of principal, $3.5 million of prepayment premium, and approximately $0.4 million of accrued interest. Upon payment in full, the Convertible Debentures were satisfied and terminated, and all related security interests and liens were released.