4 min read
Sources:
Form 1-A/A, Form 1-SA, Form 1-A and library pages
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Last reviewed:
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Short answer
If an independent valuation in the first half of 2027 puts the non-voting shares at $1.40 or more, every outstanding bond converts automatically into non-voting common stock at 7,143 shares per $10,000 bond: $38,612,004 of bonds becomes about 27.6 million shares, the company stops paying about $1.93 million a year of interest, and the non-voting share count rises from about 48.5 million to about 76.1 million. If the test is not met, nothing happens that year: the bonds stay, the 5% keeps being paid monthly, and the test repeats each year until the bonds are due on December 31, 2032. Kevin's $6 million of bonds convert on the same terms as everyone else's. 12
First test: 2027 (valuation within 180 days of January 1, 2027, then annually)
Threshold: $1.40 a share (independent valuation, or the public price if listed)
Bonds outstanding: $38,612,004 (June 30, 2026)
Shares on conversion: About 27.6M (7,143 per $10,000 bond)
Interest that would stop: About $1.93M a year (5% on the June 30, 2026 balance)
The mechanics
The bonds pay 5% a year in equal monthly installments and are due December 31, 2032. The company may prepay them from January 1, 2030. Each $10,000 bond converts into 7,143 non-voting shares, a fixed price of $1.40. Conversion is automatic, not optional: beginning January 1, 2027, the company must obtain a valuation within 180 days of the start of each year until maturity, from a public price if the shares are listed and otherwise from an independent valuation it commissions. If that valuation is $1.40 a share or more, all bonds convert. If it is not, no conversion occurs that year and the bonds carry on. If conversion never happens, holders are repaid principal plus accrued interest at maturity. The September 2026 offering circular adds that economic-extension provisions could extend the maturity by up to two further years. 123
If the test is met
Item | Before conversion | After conversion |
|---|---|---|
Bonds outstanding | $38,612,004 | $0 |
Annual cash interest | About $1,930,600 | $0 |
Non-voting shares | About 48.5 million | About 76.1 million |
Share of non-voting stock held by today's shareholders | 100% | About 64% |
Kevin's bonds | $6,000,000 | About 4.29 million shares |
The figures are arithmetic from the filed numbers and ignore the warrants, the options and any preferred stock. The effect on the income statement is large relative to the company's size: in the first half of 2026 the company reported income from operations of $539,484 and a net loss of $150,608 after $871,185 of bond interest. Without the interest, the same half-year would have shown a profit. 4
If the test is not met
Nothing changes. The bonds remain debt, the 5% is paid monthly, and the question is asked again the following year. Bondholders are not worse off for a missed test; they keep a 5% instrument due in 2032. Shareholders are: the interest keeps coming out of operating cash, and the dilution is only deferred, not avoided, unless the bonds are repaid in cash from 2030 or at maturity. 1
How to weigh it
The $1.40 threshold is set by the bond terms, and the valuation that tests it is commissioned by the company from an independent valuer. That is the item a skeptic raises first. Two filed numbers sit on either side of it: the $1.00 and $2.00 prices outside investors paid for common stock, and the $0.66 strike set for the December 2025 options. The option page explains how that strike was set; it is a different exercise from the bond test. Whatever the 2027 valuation says, it will be disclosed in the filings, and this page will carry the outcome and the date. 35
Meet the $1.40 test and $38.6 million of debt becomes about 27.6 million shares, and about $1.93 million a year of interest stops. Miss it and the bonds stay, the interest continues, and the test comes back every year until 2032. 12
Simply put
✅ The test
➡️ Starting in 2027, an outside valuer values the shares once a year.
➡️ At $1.40 or more, every bond turns into stock automatically.
✅ If it passes
➡️ $38.6 million of debt disappears and becomes about 27.6 million shares.
➡️ The company stops paying about $1.9 million a year in interest. Last half-year, that interest was the difference between a profit and a loss.
➡️ Existing shareholders own a smaller slice, about 64% of the non-voting stock instead of 100%.
✅ If it fails
➡️ Nothing changes. Bondholders keep getting 5%. The test runs again next year, until 2032.
Sources
Form 1-A/A, bond offering statement, File No. 024-12564, filed March 10, 2025 (bond terms: 5%, maturity, conversion at $1.40, automatic conversion test). Open the filing
Form 1-SA, six months ended June 30, 2026, filed September 28, 2026, Note on Convertible Bonds ($38,612,004 outstanding; $871,185 interest for the half-year). Open the filing list
Form 1-A, Offering Circular dated September 2, 2026, Risk Factors and roadmap (valuation planned for Q1 2027; "economic-extension provisions could extend the maturity of those bonds by up to an additional two years"). Open the filing
Library, Reinvest by the numbers, dated (first half 2026 revenue, income from operations, net loss, shares). Read the page
Library, How does the 2025 stock option plan work, and who was granted what? Read the page
Library, How do the Reinvest convertible bonds work? (terms and Kevin's holdings). Read the page
