Prospera Announces Financing Update

Executive Summary

• Prospera Energy Inc. announced the closing of a convertible debt offering, raising $3,627,580 in net proceeds to strengthen working capital, reactivate wells, and optimize production.
• The company executed a significant debt restructuring, extinguishing $1.5 million in matured convertible debt plus accrued interest by issuing a new 12-month promissory note, making a cash payment, and settling remaining interest via shares.
• Additionally, Prospera settled outstanding trade payables with four vendors through the issuance of common shares and announced a change in its reserves auditor.

Key Details

• Convertible Debt Offering Closing:

  • Total proceeds raised: $3,627,580.
  • Original offering amount: $4,000,000 CAD.
  • Use of proceeds: Strengthening working capital, well reactivations, production optimization, and strategic acquisitions.
  • Structure: Non-brokered private placement of unsecured convertible debentures with a three-year term.
  • Interest: 12% calculated quarterly, paid at maturity or conversion (cash or shares at market price).
  • Conversion Terms:
    • $0.05/share if converted within the first year.
    • $0.10/share if converted in years two or three.
    • Converts into units consisting of one common share and one warrant exercisable into another common share at $0.05 for three years.
    • Forced conversion clause: Company may force conversion if shares trade at $0.125 for ten consecutive days.
  • Insider Participation: Substantial participation from insiders and Board members.
  • Finders Fees: 7% cash and 7% warrants.

• Debt Restructuring (Extinguishment of Matured Debt):

  • Total matured debt extinguished: $1,500,000 principal + $559,374.82 accrued interest (as of March 26, 2025).
  • Settlement Method 1 (Principal): Issuance of a 12-month unsecured promissory note bearing 12% interest, payable as a balloon payment at term end.
  • Settlement Method 2 (Partial Interest): Cash payment of $200,000.
  • Settlement Method 3 (Remaining Interest): $359,374.82 settled via shares-for-debt agreement at $0.04 per share.

• Shares for Debt Settlements (Trade Payables):

  • Vendor 1: Settled $12,532.77 via 200,000 common shares ($0.063/share).
  • Vendor 2: Settled $83,876.15 via 1,677,523 common shares ($0.05/share).
  • Vendor 3: Settled $290,000.00 via 5,800,000 common shares ($0.05/share).
  • Vendor 4: Settled $3,150.00 via 63,000 common shares ($0.05/share).
  • Restrictions: Shares subject to a 4-month-and-1-day trading restriction and TSXV acceptance.

• Administrative Changes:

  • Reserves Auditor changed from InSite Petroleum Consultants to Sproule ERCE.

Notable Quotes

• Chris Ludtke, CFO: “The financing materially improves our liquidity, reduces near-term balance sheet risk, and positions the company for sustainable execution.”