How does this financing structure affect the overall valuation of Fort Technology and the 75.02% stake held by Jeffs’ Brands?

Valuation impact – The CAD 5 million private‑placement of convertible debentures implies a post‑money equity value of roughly CAD 27 million for Fort Technology (the conversion‑price implied by the deal). For Jeff & Co., which owns 75.02 % of Fort, the implied equity stake is worth about CAD 20.3 million (75 % × CAD 27 m). The debenture is a non‑dilutive, debt‑like instrument until conversion, so the current enterprise value of Fort remains unchanged at ~CAD 27 m; however, the recorded debt on Fort’s balance sheet will increase by the CAD 5 m principal, raising the leverage ratio. If the holder exercises the conversion option, the debenture will be turned into new Fort Units, diluting the existing 75 % stake and potentially lowering the per‑share value. The net effect on the parent’s valuation therefore hinges on two “what‑ifs”: (1) the conversion price relative to the current market price (if conversion is at a discount, the equity stake could be eroded; if at a premium, dilution is limited), and (2) the use of proceeds (whether the cash funds growth‑producing projects that boost earnings and the enterprise multiple).

Trading implications – From a technical standpoint, Fort’s (TSXV: FORT) price will likely test the mid‑range of its recent 50‑day EMA as the market prices in the new debt and the dilution risk. Traders should watch for sharp moves in the 2‑year horizon (the debenture’s maturity) and any announcement of conversion or refinancing that could trigger a spike in implied dilution. For Jeff’s Brands (NASDAQ: JFBR), the effective exposure of ~CAD 20 m should be reflected in its own market cap; the news may cause a modest re‑rating of the “subsidiary exposure” factor in analysts’ models. A practical approach is to remain long‑biased on Fort only if the conversion price is set well above the current trading level (i.e., the debenture is “out‑of‑the‑money” for the holder), which would preserve Jeff’s 75 % stake and provide cash‑flow upside. Conversely, if the conversion price is near‑or‑below current price, the market may price in future dilution, making a short‑term pull‑back on both Fort and Jeff’s Brands viable until the conversion window closes. In practice, monitor the conversion‑price filing, quarterly interest payments (10% p.a. quarterly), and any covenant‑related news; a break‑out above the recent resistance line could be a buying cue, while a break‑down below support could signal the need to hedge the exposure to Jeff’s Brands’ subsidiary risk.