Note 12: Bank Indebtedness and Production Facilities

The Company has certain credit facilities that are comprised of the following:

Revolving Demand Facility

In the first quarter of 2024, the Company amended the revolving demand facility to allow for draws of up to $0.7 million (CAD 1.0 million) to be made by way of CAD prime rate loans, CAD overdrafts, USD base rate loans or letters of credit up to a maximum of $200,000 in either CAD or USD and having a term of up to 1 year. The CAD prime borrowings and overdrafts bear interest at a rate equal to bank prime plus 2.00% per annum. The USD base rate borrowings bear interest at a rate equal to bank base rate plus 2.00% per annum. As of December 31, 2023, the revolving demand facility allowed for draws of up to $5.6 million (CAD 8.0 million).

On December 19, 2024, the Company fully repaid its outstanding revolving demand facility balance and its revolving demand facility with the lender was terminated. The final payment to close out the revolving demand facility was $0.6 million (CAD 0.8 million).

As of December 31, 2023, the Company had an outstanding balance of $2.9 million (CAD 3.8 million) on the revolving demand facility by way of bank prime rate loan draws, included as Bank Indebtedness within current liabilities on the Company’s consolidated balance sheets.

Equipment Lease Line

Under the equipment lease line, the Company could borrow up to $2.8 million (CAD 4.0 million) in total for equipment leases. Each transaction under the equipment lease line has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and payment terms. In the first quarter of 2024, the equipment lease line was terminated, however, the Company continued to make the regular principal and interest payments under the specific financing terms of the existing equipment lease agreements. In the third quarter of 2024, the lender and the Company reached an agreement for the early repayment of certain equipment leases under the equipment lease line to be completed within the fourth quarter of 2024. On November 29, 2024, the Company made equipment lease line repayments of $0.6 million (CAD 0.8 million) in total to extinguish the remaining equipment lease line obligations.

As of December 31, 2023, the Company had an outstanding balance of $1.2 million (CAD 1.6 million) under the equipment lease line, included within current and noncurrent Finance Lease Liabilities on the Company’s consolidated balance sheets.

Treasury Risk Management Facility

The treasury risk management facility allows for advances of up to $0.3 million (CAD 0.5 million) for foreign exchange forward contracts and interest rate swaps. During March 2024, an amendment was entered into that removed the treasury risk management facility. As of December 31, 2024 and December 31, 2023, there were no outstanding amounts drawn under the treasury risk management facility.

Production Facilities, net

The production facilities are used for financing specific productions. The Company’s production facilities bear interest at rates ranging from bank prime plus 1.00% - 1.25% per annum. The production facilities are generally repayable on demand. Any borrowings under the production facilities are collateralized by a security interest in substantially all of the relevant production company’s tangible and intangible assets, including a combination of federal and provincial tax credits, other government incentives, production service agreements and license agreements as well as those of certain of our subsidiaries and related entities acting as guarantors of the production facilities.

As of December 31, 2024 and December 31, 2023, the Company had an outstanding net balance of $9.2 million (CAD 13.3 million), including $0.8 million (CAD 1.2 million) of interest and $15.3 million (CAD 20.3 million), including $1.4 million (CAD 1.9 million) of interest, respectively, recorded as Production Facilities, net within current liabilities on the Company’s consolidated balance sheets.

As of December 31, 2024 and December 31, 2023, Production Facilities, net includes unamortized debt issuance costs related to the issuance of production facilities of $0.1 million, which were included as a reduction to the carrying amount of production facilities.

Equipment Lease Facility

In the fourth quarter of 2022, the Company entered into an equipment lease agreement with a Canadian bank. This additional equipment lease facility allows the Company to finance equipment purchases of up to $1.0 million (CAD 1.4 million) in total. Each transaction under the equipment lease facility has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and payment terms.

As of December 31, 2024, the Company has two leases remaining under this facility with finance rates of 7.52% and 8.20%, and remaining lease terms of 11 months and 20 months.

As of December 31, 2024 and December 31, 2023, the outstanding balances, net of repayments, of $0.3 million (CAD 0.4 million) and $0.6 million (CAD 0.8 million), respectively, were included within current and noncurrent Finance Lease Liabilities, net on the Company’s consolidated balance sheets.

Loan Covenants, Violations and Waiver

The Company was subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements. In the second and third quarter of 2024, the Company was not in compliance with financial covenant calculations. As a result of these financial covenant violations, the Company and the lender agreed to an early repayment of the equipment leases under the equipment lease line and the revolving demand facility in the fourth quarter of 2024. As of December 31, 2024, the Company is no longer subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements that were repaid in full and terminated in the fourth quarter of 2024.

As of December 31, 2023, the Company was in technical violation of two financial covenants requiring a minimum fixed charge ratio and a maximum senior funded debt to EBITDA ratio as part of its loan covenants for the revolving demand facility, equipment lease line, and treasury risk management facility.