As discussed in note 2, the Company’s functional currency is the Canadian dollar and as discussed in note 13, the Convertible Notes’ conversion price is approximately $1.73 per common share.  Because the conversion option is priced in U.S. dollars, relative to the Company’s functional currency, US GAAP requires the embedded conversion option to be bifurcated and accounted for as a stand-alone derivative instrument (the "Conversion Option Derivative"). The Conversion Option 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.  The Convertible Notes were initially recorded at their face amount of $120.0 million less debt issuance costs of $5.2 million and the fair value of the Conversion Option Derivative, which was determined to be $49.1 million.

The fair value of the Conversion Option Derivative liability was $49.1 million and $52.3 million as of the December 15, 2025 Convertible Notes’ issuance date and December 31, 2025, respectively, which resulted in a $3.2 million mark-to-market loss for the year ended December 31, 2025.  The components of changes to the fair value of the Conversion Option Derivative for the periods presented is summarized below:

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Fair value was determined using a binomial lattice model utilizing Level 3 inputs of the fair value hierarchy under US GAAP with the following assumptions:

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