ITEM 1.01 Entry into a Material Defi nitive Agreement
On May 27, 2016, Discovery Energy Corp. (the "Company") entered into a
Securities Purchase Agreement with an initial investor (the "Original
Purchaser") pursuant to which the Company issued to the Original Purchaser some
of the Company's Senior Secured Convertible Debentures due May 27, 2021 (each a
"Debenture" and collectively the "Debentures"). The Debentures are debt
instruments convertible into the Company's common shares. Eventually a second
investor was made a party to the Securities Purchase Agreement and was also
issued Debentures. Thus far, the Company has issued to these two investors a
total of 14 Debentures having an aggregate original principal amount of
$6,850,000. Interest on the Debentures to date has been accrued and added to
principal, thereby increasing the outstanding balance on the Debentures to
approximately $9,511,300 as of December 31, 2020. Interest will continue to be
accrued until such time as the Debentures are repaid or converted to common
shares. The original terms of the Debentures provided that the principal amount
of and accrued interest on the Debentures were due and payable in a single
balloon payment on or before May 27, 2021 (the "Maturity Date"). For more
information about the Debentures, see the Company's Quarterly Report on Form
10-Q for the fiscal quarter ended November 30, 2020 filed with the U.S.
Securities and Exchange Commission on January 14, 2021 (the "10-Q").
In conjunction with certain issuances of the Debentures, warrants ("Warrants")
were issued to the Original Purchaser that grant to it the right to purchase up
to an aggregate maximum number of 19,125,000 common shares at an initial
per-share exercise price of $0.20. The Warrants have been amended from time to
time to extend their expiration dates (the "Termination Date"). Prior to the
extension discussed below, the Warrants had a Termination Date of February 28,
2021. For more information about the Warrants, see the 10-Q.
On February 4, 2021, the parties to the Debentures and Warrants entered into an
amendment to them providing for the following:
* The Maturity Date of the Debentures was extended to December 31, 2023.
* The Termination Date of the Warrants was also extended to December 31, 2023.
* The Company agreed to issue to the Original Purchaser (promptly after May 27,
2021) additional Warrants to purchase additional common shares at an initial
per-share exercise price of $0.20. The aggregate number of additional common
shares that could be acquired by the exercise of the additional Warrants would
equal the product obtained by multiplying the amount of interest capitalized
and added to the principal balance of the Debentures owing to the Original
Purchaser on May 27, 2021 (approximately $2,333,882), times 3.75, with the
estimated number of additional warrant shares being approximately 8,752,058.
The additional Warrants would have an expiration date of December 31, 2023.
Management believes that the extension of the Debentures under favorable terms,
coupled with the recent extension of the deadlines for the work commitment on
the Company's South Australia oil and gas prospect, has mitigated many of the
issues and concerns affecting the Company caused by the effects of Covid-19 in
the U.S. and Australia.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
All documents pertaining to the extension of the Debentures and Warrants will
be filed with the U.S. Securities and Exchange Commission when required by
the rules and regulations of this agency.
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DISCOVERY ENERGY CORP. 
