As discussed in note 2, the Company’s functional currency is the Canadian dollar and as discussed in note 13, the capped call transaction (the “Capped Call”) cap price is $2.72 per common share.  Because the Capped Call is priced in U.S. dollars, relative to the Company’s functional currency, US GAAP requires the Capped Call to be accounted for as a stand-alone derivative instrument (the "Capped Call Derivative"). The Capped Call Derivative is recorded at fair value on the Company’s consolidated balance sheets and mark-to-market changes in fair value are recorded in earnings.  Using Level 2 inputs of the fair value hierarchy under US GAAP, the Capped Call Derivative is measured and recorded at fair value using the Black-Scholes model described below as there is no active market for the Capped Call.

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The fair value of the Capped Call Derivative asset was $16.6 million as of December 15, 2025, the issuance date of the Convertible Notes and Capped Call, and was based on the $16.6 million option premium paid to the counterparty banks.  The Capped Call Derivative fair value was $15.1 million at December 31, 2025, which resulted in a $1.5 million mark-to-market loss for the year ended December 31, 2025.  The Capped Call Derivative fair value was determined using a fair value model with the following assumptions:

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