Here is the math:

In my example you buy 100 debentures for a total of $100,000. You are paid interest on the $100,000 at a rate of 1% per month which is $1000 per month. That interest is paid every month for 2 years or until you convert the debentures into shares at .40 per share for a total of 250,000 shares. At that point you are no longer collecting interest but the warrants become available to exercise (I don’t think there is a hold on the warrants but will have to check)

So if you convert the debentures after 12 months you will have collected $12,000…that the being paid to wait part. You of course are going to be hit taxes equivalent to employment earnings unless the debentures are in a tax sheltered account.

So let’s assume you decided to convert the debentures then exercise the warrants after 1 year. The conversion is at .40 so you receive 250,000 shares once converted and then you exercise the 250,000 warrants which cost you $125,000.

You now have 500,000 shares that cost you a total of $213,000. $100,000 for the original investment which you collected $12,000 interest in year 1 and it costs you $125,000 to exercise the warrants.  

So the 500,000 shares you end up with cost you $100k - $12k (interest) + $125k = $213k or .43 per share.

If the share price after 1 year is $2 and you sell then your profit becomes $787k on the debenture and $525k on shares you bought at .32. The point is you don’t feel compelled to sell since you are getting paid to wait and the longer you wait the higher the share price assuming POET gains market share.