Quarterly report pursuant to Section 13 or 15(d)

Derivative Liabilities

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Derivative Liabilities
9 Months Ended
Dec. 31, 2016
Derivative Liabilities [Abstract]  
Derivative Liabilities
7. Derivative Liabilities

 

The Company records the fair value of the conversion price of the convertible debentures disclosed in Note 6 in accordance with ASC 815. The fair value of the derivative liabilities was calculated using a binomial option pricing model. The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations. During the nine months ended December 31, 2016, the Company recorded a gain on the change in fair value of derivative liabilities of $196,091 (2015 - loss of $1,218,229). As at December 31, 2016, the Company recorded derivative liabilities of $620,125 (March 31, 2016 - $816,216).

 

The following inputs and assumptions were used to fair value the convertible debenture outstanding as at December 31 and March 31, 2016, assuming no expected dividends:

 

      November 10, 2015 
Convertible Debenture
 
      As at 
December 31,
2016
   

As at 
March 31,

2016

 
                   
  Estimated common stock issuable upon extinguishment     310,063       302,500  
  Estimated exercise price per common share     0.40       0.40  
  Risk-free interest rate     0.5 %     0.1 %
  Expected volatility     164 %     250 %
  Expected life (in years)     0.25       0.61  

 

A summary of the activity of the derivative liabilities is shown below:

 

      $  
           
  Balance, March 31, 2016     816,216  
           
  Mark-to-market adjustment     (196,091 )
           
  Balance, December 31, 2016     620,125