Note 9 - Convertible Debentures

9 Months Ended

Mar. 31, 2024

NOTE 9 - CONVERTIBLE DEBENTURES

On July 1, 2023, all of the issued and outstanding Convertible debt of $6,142,793 together with $228,648 in promissory notes (the “Old Debt”) were exchanged for a new $3,000,000, 8% interest promissory note (“New Promissory Note”), due by July 8, 2024 which is now in default. As the lender did not receive any consideration for the reduction of the debt, the transaction is treated as a troubled debt restructure under ASC 470-60. The note is due on demand in the event of default. During the nine months ended March 31, 2024, a gain on troubled debt restructure of $3,371,441 was recognized on the exchange of the Old Debt for the New Promissory Note.

As of June 30, 2023, the Company’s convertible debentures have been summarized as follows:

SBI Investments LLC (“SBI”)

Original debt	Total penalties		Accrued interest as of June 30, 2023		Total balance settled through issuance of shares			Balance due as of June 30, 2023		Original interest rate*			Inception	Original due date
$	$		$		$			$
469,760		369,375		652,718		(599,254	)		892,599		12	%	May 12, 2017	November 12, 2017
105,000		68,045		456,363		-			629,408		8	%	May 19, 2017	November 19, 2017
119,227		249,675		986,862		-			1,355,764		8	%	May 18, 2017	November 18, 2017
469,760		220,917		794,593		(431,605	)		1,053,665		12	%	May 12, 2017	November 12, 2017
105,000		170,240		588,152		-			863,392		8	%	May 19, 2017	November 19, 2017
119,227		180,550		811,858		-			1,111,635		8	%	May 18, 2017	November 18, 2017
28,750		46,623		160,957		-			236,330		8	%	June 23, 2017	December 23, 2017
1,416,724		1,305,425		4,451,503		(1,030,859	)		6,142,793

On June 30, 2023, SBI acquired all of the issued and outstanding convertible debt of L2 Capital, reflected above and on July 1, 2023, exchanged all of the convertible debt for an 8% interest promissory note described above.

JMJ Financial

On November 16, 2017, the Company entered into a debt agreement with JMJ Financial. A total of $200,000 was received. The convertible debenture became due on May 15, 2018. As of March 31, 2024, and June 30, 2023, $74,000 remains due.

The note becomes convertible in the event the Company breaches any of the default provisions. On January 16, 2018, the note was in default and accordingly became convertible. The conversion price is the lesser of $0.05 or 50% of the lowest trade price in the 25 trading days previous to the conversion. The lender is limited to holding no more than 4.99% of the issued and outstanding common stock at the time of conversion. After the expiration of 120 days following the delivery date of any consideration, the Company will have no right of prepayment without written consent of the lender.

A reconciliation of the Company’s convertible debenture is as follows:

Balance, June 30, 2023	$	6,216,793
Conversion of SBI to promissory note		(6,142,793	)
Balance, March 31, 2024	$	74,000

On March 25, 2021, the Company’s common shares were suspended from trading. As a result, the Company is not able to satisfy the conversion rights under the convertible debt agreements, the fair values of all derivative liabilities have been measured at $nil as at March 31, 2024 and June 30, 2023.

INTEGRAL TECHNOLOGIES INC 10-Q