Note 12 - Unsecured Convertible Debentures
|12 Months Ended|
Mar. 31, 2020
|Notes to Financial Statements|
|Debt Disclosure [Text Block]||
Concurrently with the public offering described in note
February 21, 2017,the Corporation issued $
2,000) aggregate principal amount of unsecured convertible debentures maturing
February 21, 2020and contingent warrants to acquire up to
1,052,630Common Shares (the “
Private Placement”). The debentures were paid in full at maturity.
The debentures could have been converted into Common Shares at any time by the holder at a fixed price of CAD
$1.90per Common Share except if the Corporation paid before the maturity, all or any portion of the convertible debentures. If the Corporation had paid all or any portion of the convertible debenture before maturity, then warrants would have become exercisable at CAD
$1.90per Common Share for the equivalent convertible debenture amount prepaid. The contingent warrants were exercisable for the remaining term of the convertible debt for the same price as the conversion options. The unsecured convertible debentures were issued at a discount of
3.5%to the principal amount, for aggregate gross proceeds of
The convertible debentures provided the Corporation an accelerated conversion right whereby the Corporation could have, at any time at least
fourmonths after the date of issuance of the convertible debentures, accelerate the conversion of the debentures to Common Shares in the event that the volume weighted average price of the Common Shares on the TSX Venture Exchange was equal to or exceeds
CAD$2.65,subject to customary adjustment provisions, during
20consecutive trading days.
The interest paid on the convertible debentures under the terms of the agreement was
8%per annum, payable on a quarterly basis in cash or Common Shares or a combination thereof, commencing on
March 31, 2017.The decision to pay the interest due in cash or shares was at the discretion of the Corporation and the number of Common Shares to be issued were calculated at the current market price as at the close of business on the day before the interest payment was to be made. Payment in Common Shares would have been at a floor price of
$0.10per share, with the difference between the amount payable and the amount computed at floor price payable in cash.
The proceeds of the Private Placement were split between the liability and the equity at the time of the Private Placement. Both the conversion option and contingent warrants were considered the equity component of the Private Placement. The fair value of the liability component was determined through a discounted cash flow analysis using a discount rate of
20%that was set based on a similar debt and maturity considering the Corporation’s credit risk, excluding the conversion option and contingent warrants. The amount allocated to the equity component was the residual amount after deducting the fair value of the financial liability component from the fair value of the entire financial instrument. Subsequent to initial recognition, the liability was measured at amortized cost calculated using the effective interest rate method and accreted up to the principal balance at maturity. The interest accretion is presented in financial expenses. The equity component is
notre-measured. Transaction costs were allocated to the components in proportion to their initial carrying amounts. The portion allocated to the liability was recognized as a reduction of the debt whereas the portion allocated to other equity was recognized as a reduction to other equity.
The split between the liability and equity component portions of the Private Placement are summarized below:
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef