Prostar closes $675,000 (U.S.) debenture offering

Executive Summary

• Prostar Holdings Inc. has closed a non-brokered private placement of secured convertible debentures with an aggregate principal amount of $675,000 USD.
• The debentures carry a 12.5% annual interest rate, mature in 24 months, and are convertible into company units at a price of 10 cents USD per unit.
• Key directors, including Wayne Moore, participated in the financing, triggering early warning and related-party disclosure requirements.

Key Details

• Transaction Structure: Non-brokered private placement of secured convertible debentures.
• Principal Amount: $675,000 USD.
• Interest Rate: 12.5% per annum.
• Maturity: 24 months from the date of issuance.
• Conversion Terms:
  • Conversion price: 10 U.S. cents per unit.
  • Conversion option: Available to the holder at any time prior to maturity.
  • Trigger Events: Automatic conversion into units at the conversion price upon:
    • Reaching $2 million USD in booked annual recurring revenue (ARR) in 2026.
    • Reaching $2.5 million USD in booked ARR in 2027.
• Unit Composition: Each unit consists of one common share and one-half of one common share purchase warrant.
• Warrant Terms:
  • Exercise price: 14 U.S. cents per common share.
  • Duration: Five years from the closing date.
• Interest Settlement: Holders may elect to settle accrued interest in cash or via issuance of common shares at the market price (subject to TSX-V approval).
• Security: Debentures are secured by a first-ranking security interest over all present and after-acquired property and assets of the company.
• Use of Proceeds: General corporate purposes.
• Regulatory Status: Subject to TSX-V approval and other necessary regulatory approvals.
• Hold Period: Four-month hold period from the closing date under applicable Canadian securities laws.
• Insider Participation (Early Warning):
  • Wayne Moore (Director) acquired $500,000 USD principal amount of debentures.
  • Pre-acquisition holdings: 8,993,333 common shares, 850,000 stock options, and 5,033,333 warrants (~5.57% undiluted, ~8.89% partially diluted).
  • Post-acquisition holdings: $500,000 USD debentures, 8,993,333 common shares, 850,000 stock options, and 5,033,333 warrants (~5.57% undiluted, ~12.79% partially diluted assuming conversion).
• Related-Party Transaction:
  • Directors Wayne Moore and Jonathan Richards purchased a combined $525,000 USD of the debentures.
  • Exempt from formal valuation and minority shareholder approval requirements under MI 61-101.
  • No material change report was filed 21 days prior to closing due to expedited business reasons.