v3.26.1
DEBENTURES
 3 Months Ended
Mar. 31, 2026
Debt Disclosure [Abstract]  
DEBENTURES

9. 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 $47.0 million 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 $14.0 million for gross proceeds of $12.8 million 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 $1.6 million. 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 $5.0 million each, up to a total additional principal amount of $33.0 million.

 

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 $13.1 million.

 

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

 

Description   Date  

Face

Amount

   OID  

Gross

Proceeds

   Conversion Price   Principal Payment Starting Date *  # of Warrants   Exercise Price   Expiration Date   Transaction Costs 
1st Tranche    Jun-22   $14,025    10%  $12,750   $11,100.00   Sep-22   91   $12,210.00    Dec-25   $1,635 
2nd Tranche    Jan-23    5,077    10%   4,615    6,200.00   Jul-23   59    6,200.00    Dec-25    326 
3rd Tranche    Oct-23    2,750    10%   2,500    2,358.00   Jan-24   689    2,358.00    Apr-27    32 
4th Tranche    Nov-23    2,750    10%   2,500    810.00   May-24   2,207    810.00    May-27    30 
5th Tranche    Feb-24    1,100    10%   1,000    192.60   Aug-24   3,712    211.86    Aug-27    50 
6th Tranche    Apr-24    550    10%   500    146.70   Oct-24   2,437    162.00    Oct-27    31 
7th Tranche    May-24    833    10%   750    90.00   Nov-24   6,016    11.00    Nov-27    3 

 

* -principal payments are due to be made in 25 equal installments.

 

Interest rates are 5% for the 1st 12 months and 8% thereafter.

 

These debentures may be extended by six months at the election of the Company by paying a sum equal to six months’ 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 $7.7 million for gross proceeds of $7.0 million, 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 January 2026, the Investors purchased additional tranches under the 2025 Purchase Agreements under similar terms as the January 2025 Tranche for an aggregate principal amount of $17.5 million. As of March 31, 2026, the Investors have the right to purchase additional tranches in an aggregate principal amount of $24.8 million.

 

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

 

Description  Date   Face Amount   Original Issue Discount   Gross Proceeds   Conversion Price   Principal Payment Starting Date *  No. of Warrants   Exercise Price   Expiration Date  Transaction Costs 
Jan-25 Tranche   Jan-25   $7,700    10%  $7,000   $23.58   Apr-25   212,256   $25.938   Jul-28  $290 
Mar-25 Tranche   Mar-25    1,320    10%   1,188    17.91   Jul-25   47,906    17.910   Sep-28   - 
May-25 Tranche   May-25    110    10%   100    17.91   Sep-25   4,889    17.910   Nov-28   - 
Jul-25 Tranche   Jul-25    833    10%   750    6.74   Oct-25   80,354    6.741   Jan-29   - 
Sep-25 Tranche   Sep-25    550    10%   495    2.41   Dec-25   148,340    2.650   Sep-29   - 
Oct-25 Tranche (a)   Oct-25    7,700    10%   6,930    2.41   Dec-25   2,076,763    2.410   Apr-29   - 
Jan-26 Tranche (b)   Jan-26    7,000    10%   6,300    2.41   Mar-26   3,013,245    2.410   Jul-29   - 

 

* -principal payments are due to be made in 25 equal installments.

 

 

Interest rates are 5% for the 1st 12 months and 8% thereafter.

 

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

 

  (a) The Company received $1.5 million in October 2025 and the additional $5.4 million is held in a DACA account which serves as collateral for the October 2025 tranche.
  (b) The Company received $1.3 million in January 2026 and the additional $5.0 million will be held in a DACA account which will serve as collateral for the January 2026 tranche.

 

The funds held in DACA, related to the October 2025 tranche is reflected as restricted cash and the funds related to the January 2026 tranche are reflected as escrow receivable in the accompanying unaudited condensed consolidated balance sheets.

 

Debentures consisted of the following for the periods presented (in thousands):

 

Description  Maturity   Interest Rate   March 31, 2026   December 31, 2025 
Principal (First Tranche Debentures)   December 2024    5.00% - 8.00%  $25   $25 
Principal (Second Tranche Debentures)   July 2025    5.00% - 8.00%   25    25 
Principal (Fourth Tranche Debentures)   June 2026    5.00% - 8.00%   8    8 
Principal (May 2025 Tranche Debentures)   May 2026    5%   86    86 
Principal (July 2025 Tranche Debentures)   July 2026    5%   814    833 
Principal (September 2025 Tranche Debentures)   September 2026    5%   550    550 
Principal (October 2025 Tranche Debentures)   October 2026    5%   7,700    7,700 
Principal (January 2026 Tranche Debentures)   January 2027    5%   7,000    - 
Debt issuance costs and discounts             (3,695)   (2,788)
Total Debentures (current)            $12,513   $6,439 

 

During the three months ended March 31, 2026, the Investors converted $28.6 thousand of principal and interest into the Company’s common shares and the conversion was determined to be a modification of the existing debt. During the three months ended March 31, 2026, the Company incurred $1.8 million in accretion interest and there were no cash repayments.

 

During the three months ended March 31, 2025, the Investors converted $0.4 million of principal and interest into the Company’s common shares resulting in a $87.0 thousand gain on the conversion of convertible debentures. During the three months ended March 31, 2025, the Company incurred $1.0 million in accretion interest and made $0.1 million of cash repayments.