Prostar arranges $500,000 (U.S.) debenture financing

Executive Summary

• Prostar Holdings Inc. is completing a non-brokered private placement of secured convertible debentures with a company director for up to $500,000 USD.
• The debentures carry a 12.5% annual interest rate, mature in 24 months, and convert into units at 10 cents per unit.
• Mandatory conversion triggers are tied to revenue milestones: $2 million ARR in 2026 or $2.5 million ARR in 2027.

Key Details

• Transaction Structure: Non-brokered private placement of secured convertible debentures.
• Principal Amount: Up to $500,000 USD.
• Investor: A director of the company (related party transaction).
• Interest Rate: 12.5% per annum.
• Maturity: 24 months from issuance.
• Conversion Price: 10 U.S. cents per unit.
• Unit Composition: Each unit consists of one common share and one-half of one common share purchase warrant.
• Warrant Terms: Each full warrant allows the purchase of one common share at 14 U.S. cents per share for five years from the closing date.
• Mandatory Conversion Triggers:
  • Automatic conversion upon reaching $2 million USD in booked annual recurring revenue (ARR) in 2026.
  • Automatic conversion upon reaching $2.5 million USD in booked ARR in 2027.
• Interest Settlement Option: Upon voluntary conversion, maturity, or trigger event, the company may settle accrued interest in cash or via common shares. If settled via shares, the conversion rate is the lower of the discounted market price (per TSX-V policies) or the common share conversion price on the last trading day prior to the announcement.
• Security: 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 Venture Exchange approval and other necessary regulatory approvals.
• Hold Period: Four-month hold period from closing under Canadian securities laws.
• Related Party Disclosure: The transaction is a related party transaction under Multilateral Instrument 61-101; the company relies on exemptions from formal valuation and minority shareholder approval requirements.