12. Debentures and Secured Promissory Notes

On September 17, 2025, the Company entered into a securities purchase agreement with Yorkville to issue a debenture with the principal amount of $8,000,000 issued at a discount of $633,707 for proceeds of approximately $7,366,293. Interest accrued on the outstanding principal amount of the debenture at an annual rate of 8%, subject to a potential increase to 18% per annum upon the occurrence of certain events of default. The debenture had a maturity date of September 17, 2026, and was to be repaid using proceeds from the SEPA; however, on May 27, 2026, the Company used part of the proceeds from the issuance of the Secured Promissory Notes (as defined herein) to repay and extinguish the outstanding balance and accrued interest owing on the debenture.

The debenture was initially recorded at fair value, based on the discounted proceeds. Subsequently, the Company accounted for the debenture at amortized cost using the effective interest rate method, resulting in accretion expense of $374,712 for the nine months ended September 30, 2026. The effective interest rate calculated was 32.75% as of the repayment date. On May 27, 2026, the Company repaid the outstanding principal balance of $2,343,778 related to the Yorkville debenture, together with accrued interest of $135,664, using proceeds received from the issuance of the Secured Promissory Notes.

On May 27, 2026, the Company entered into a Note Purchase Agreement with Streeterville Capital, LLC ("Streeterville"), pursuant to which the Company issued two secured promissory notes with aggregate principal amounts of $22,864,225. The first promissory note ("Note A") was issued with a face value of $12,864,225 and a purchase price of $12,000,000, resulting in an issue discount of $864,225. The second promissory note ("Note B") was issued with a principal amount of $10,000,000. Note A bears interest at 8.75% per annum compounded daily and Note B bears interest at 5.0% per annum compounded daily. Both promissory notes mature on November 27, 2027.

The Secured Promissory Notes are secured by a first-ranking security interest over substantially all assets of the Company. Guarantees are provided by the Company's subsidiaries.

The Company evaluated the transaction under ASC 470-50, Debt Modifications and Extinguishments, and determined that the issuance of the Streeterville promissory notes and repayment of the Yorkville debenture should be accounted for as an extinguishment of debt. Accordingly, the carrying amount of the Yorkville debenture was derecognized upon settlement, and the newly issued promissory notes were recognized as new debt instruments.

The Company initially recorded the Note A and Note B ("promissory notes") at fair value based on the proceeds received, net of directly attributable debt issuance costs. Subsequently, the Company accounts for the promissory notes at amortized cost using the effective interest method. Debt issuance costs are amortized over the contractual life of the respective promissory notes. The Company incurred $615,000 in debt issuance cost related to the promissory notes.

The Note A permits the lender to require monthly redemptions beginning on the seventh month following the issuance, subject to the terms of the agreement. Beginning on the seventh month following the issuance date, the lender has the right to require monthly redemptions of up to $500,000 per month plus make-whole interest calculated as if the redeemed amount had remained outstanding until maturity. If the Company fails to satisfy a redemption notice within the required period, the outstanding balance is increased by 20% of the applicable redemption amount. In addition, beginning on the sixth month following the issuance date, both Note A and Note B permit the lender to require limited redemptions of up to 5% of the cumulative daily dollar trading volume during specified redemption windows when the Company's common shares trade at least 15% above the defined Minimum Price per the agreement. Such limited redemptions are payable at 110% of the applicable redemption amount.

Both Note A and Note B contain customary trigger event and event of default provisions, including payment defaults, insolvency events, delisting determinations and specified corporate transactions. Upon the occurrence of trigger events, the lender may increase the outstanding balance by 5% for certain minor trigger events or 15% for certain major trigger events, subject to contractual limitations. Following an event of default, the lender may accelerate repayment and default interest may accrue at a rate of up to 18% per annum, subject to applicable law.

In connection with Note B, $10,000,000 of the proceeds were deposited into a restricted deposit account maintained pursuant to a Deposit Account Control Agreement. The lender has control rights over the account upon the occurrence of specified trigger events and may direct the disposition of funds in the account. Under certain circumstances, amounts outstanding under Note B may be exchanged into additional Note A borrowings. Specifically, for each $2.0 million of Note A principal repaid, up to $1.0 million of the outstanding Note B balance may be exchanged into a new Note A advance, subject to the conditions set out in the financing agreements.

The Company entered into a Note exchange agreement with the lender on September 1, 2026. The Company exchanged $2,000,000 of Note B borrowings to a separate Note A-2 borrowing. Upon execution of the exchange the Note A-2 was issued at a face value of $2,139,037 and a purchase price of $2,000,000, resulting in an issuance discount of $139,037. Note A-2 bears interest of 8.75% per annum compounded daily and matures at the same time as Note A and B above on November 27, 2027. Upon the exchange, the $2,000,000 related to Note A-2 was no longer subject to the restrictions applicable to Note B.

In connection with the exchange agreement, a side letter was signed that required the Company to make a mandatory prepayment upon receipt of proceeds from certain equity fundraising or other financing transactions. The required prepayment is equal to the lesser of 25% of the gross proceeds from the applicable financing transaction and the aggregate outstanding balance of the A Notes and is payable within two trading days of receipt of the proceeds. The lender may determine the outstanding A Note against which the mandatory prepayment is applied. As at September 30, 2026 the Company has repaid $860,680 of the Note A principal based on the financing proceeds received.

The Company evaluated the exchange transaction under ASC 470-50, Debt Modification and Extinguishment and determined that the exchange of Note B to Note A-2 should be accounted for as a debt modification. Accordingly, the carrying amount of the modified portion of Note A and Note B was carried forward and adjusted for the effects of the modification. The Company incurred $7,411 in debt issuance cost related to the promissory notes exchange which was expensed during the nine months ended September 30, 2026.

The Note A-2 permits the lender to require monthly redemptions beginning December 27, 2026, subject to the terms of the agreement. The lender has the right to require monthly redemptions of up to $100,000 per month plus make-whole interest calculated as if the redeemed amount had remained outstanding until maturity. If the Company fails to satisfy a redemption notice within the required period, the outstanding balance is increased by 20% of the applicable redemption amount. In addition, beginning on November 27, 2026 Note A-2 permits the lender to require limited redemptions of up to 5% of the cumulative daily dollar trading volume during specified redemption windows when the Company's common shares trade at least 15% above the defined Minimum Price per the agreement. Such limited redemptions are payable at 110% of the applicable redemption amount.

Similar to Note A and Note B, Note A-2 contains customary trigger event and event of default provisions, including payment defaults, insolvency events, delisting determinations and specified corporate transactions. Upon the occurrence of trigger events, the lender may increase the outstanding balance by 5% for certain minor trigger events or 15% for certain major trigger events, subject to contractual limitations. Following an event of default, the lender may accelerate repayment, and default interest may accrue at a rate of up to 18% per annum, subject to applicable law.

As at September 30, 2026, the Company was in compliance with the terms and covenants of all the notes.

The Company evaluated the embedded features contained within the promissory notes, and concluded that certain features would require bifurcation under ASC 815; however, the fair value of such features was determined to be de minimis. Accordingly, no embedded derivative liability was recorded as of September 30, 2026.

Debenture issued on September 17, 2025:	September 30, 2026
Net balance as at December 31, 2025	5,245,543
Repayment of new debenture	(3,180,084	)
Interest accretion	374,712
Interest payment	(96,393	)

Ending balance as of May 27, 2026	$	2,343,778
Repayment of Yorkville debenture		(2,343,778	)
Ending balance as of September 30, 2026	$	-

Note A and Note A-2		September 30, 2026
Principal of Note A and Note A-2		15,003,262
Discount on debt		(1,003,262	)
Debt issuance costs		(349,091	)
Repayment		(860,680	)
Interest accretion		397,935
Ending balance	$	13,188,164
Interest Payable		403,726


Note B issued on May 27, 2026:		September 30, 2026
Principal of Note B		10,000,000
Exchange to Note A-2		(2,000,000	)
Debt issuance costs		(265,909	)
Interest accretion		63,906
Ending balance	$	7,797,997
Interest Payable		169,870

As of September 30, 2026, total accrued interest related to the promissory notes was $573,596. The interest is payable at maturity or upon redemption of the principal. Of the total accrued interest, $289,710 was included in the current portion of interest payable on secured promissory notes and $283,886 was included in the non-current portion of interest payable on secured promissory notes on the condensed consolidated balance sheet, with the corresponding amounts recognized in interest expense in the condensed consolidated statement of operations and comprehensive loss.