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CONVERTIBLE DEBT

9 Months Ended

Mar. 31, 2018

6.	CONVERTIBLE DEBT

	As of
	March 31, 2018		June 30, 2017
Convertible debt, current portion	$	710	$	2,161
Noncurrent:
Convertible notes	$	—	$	592
Convertible security		4,580		1,304
	$	4,580	$	1,896

Convertible Security Funding

Changes in the Lind Asset Management IV, LLC (“Lind”) convertible security (the “Convertible Security”) balance are comprised of the following:

	Convertible Security
Balance, June 30, 2017	$	3,465
Additional debt drawdown		3,500
Conversions, at fair value		(3,693	)
Change in fair market value		1,308
Balance, March 31, 2018	$	4,580

On August 10, 2017, Lind provided notice to the Company of its election to advance an additional $1,000 in funding under the Convertible Security pursuant to its right under the Convertible Security Funding Agreement, dated December 14, 2015, between the Company and Lind (the “Lind Agreement”). As a result, upon payment of the additional $1,000 in funding by Lind to the Company, the face value of the Convertible Security was increased by $1,200 ($1,000 in additional funding plus implied interest), and the Company issued warrants (“Warrants”) to Lind, as follows:

						Black Scholes Pricing Model Inputs
Funding Date	Face Value¹		Warrants Issued²	Issue Price³	Warrant Expiry Date	Risk-free Rate	Yield	Volatility	Expected Life
August 15, 2017	$	300	260,483	C$0.73	August 15, 2020	1.23%	0%	49.6%	3 years
September 28, 2017		300	283,413	C$0.66	September 28, 2020	1.23%	0%	47.7%	3 years
October 31, 2017		300	308,901	C$0.62	October 31, 2020	1.59%	0%	47.0%	3 years
December 6, 2017		300	355,132	C$0.54	December 6, 2020	1.59%	0%	48.9%	3 years
Total	$	1,200	1,207,929

Includes implied interest.

The value of warrants issued totaled $127, which was expensed to Change in Financial Instrument Fair Value.

The price to convert one warrant into one common share of the Company (“Common Share”).

On January 23, 2018, Lind provided notice to the Company of its election to advance an additional $2,500 in funding (the “Initial Second Tranche Increase”) under the Convertible Security pursuant to its right under the Lind Agreement. As a result, upon payment of the additional $2,500 in funding by Lind to the Company, the face value of the Convertible Security was increased by $3,000 ($2,500 in additional funding plus implied interest), and the Company issued Warrants to Lind, as follows:

						Black Scholes Pricing Model Inputs
Funding Date	Face Value¹		Warrants Issued²	Issue Price³	Warrant Expiry Date	Risk-free rate	Yield	Volatility	Expected Life
January 30, 2018	$	1,800	1,546,882	C$0.72	January 30, 2021	1.78%	0%	56.5%	3 years
February 5, 2018		600	529,344	C$0.70	February 5, 2021	1.78%	0%	56.6%	3 years
February 7, 2018		600	541,435	C$0.69	February 7, 2021	1.78%	0%	56.7%	3 years
Total	$	3,000	2,617,661

Includes implied interest.

The value of warrants issued totaled $425, which was expensed to Change in Financial Instrument Fair Value.

The price to convert one warrant into one Common Share.

On March 27, 2018, the Company provided notice to Lind of its election to call an additional $1,000 in funding under the Convertible Security pursuant to its right under the Lind Agreement (together with the Initial Second Tranche Increase, the “Second Tranche Increase”). This amount was funded by Lind on April 5, 2018, and the face amount of the Convertible Security was increased by $1,200 ($1,000 in additional funding and $200 in implied interest). In connection with the funding, the Company issued 1,058,872 Warrants to Lind, with each Warrant entitling the holder to acquire one Common Share at a price of C$0.72 per share until April 5, 2021.

The Convertible Security is convertible into Common Shares at a conversion price equal to 85% of the volume weighted average trading price (“Volume Weighted Average Price”) of the Common Shares (in Canadian dollars) on the Toronto Stock Exchange (the “TSX”) for the five consecutive trading days immediately prior to the date on which Lind provides the Company with notice of its intention to convert an amount of the Convertible Security from time to time. During the nine-month period ended March 31, 2018, $3,000 principal amount of the Convertible Security was converted into 8,037,767 Common Shares.

The Convertible Security contains financial and non-financial covenants customary for a facility of its size and nature, and includes a financial covenant defining an event of default as all present and future liabilities of the Company or any of its subsidiaries, exclusive of related party loans, for an amount or amounts exceeding $2,000 and which have not been satisfied on time or within 90 days of invoice, or have become prematurely payable as a result of its default or breach. The Company was in compliance with these covenants as of March 31, 2018.

Convertible Notes

Changes in the Company’s outstanding convertible promissory notes (the “Convertible Notes”) balance are comprised of the following:

	Convertible Notes
Balance, June 30, 2017	$	592
Accreted interest, net of interest paid		118
Balance, March 31, 2018	$	710

The changes in the derivative liability related to the conversion feature of the Convertible Notes are as follows:

	Derivative Liability
Balance, June 30, 2017	$	82
Change in fair value of derivative liability		(41	)
Balance, March 31, 2018	$	41