Quarterly report pursuant to Section 13 or 15(d)

Derivative Liabilities

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Derivative Liabilities
3 Months Ended
Jun. 30, 2017
Derivative Liabilities [Abstract]  
Derivative Liabilities
7. Derivative Liabilities

 

The Company records the fair value of the conversion price of the convertible debenture 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 three months ended June 30, 2017, the Company recorded a loss on the change in fair value of derivative liabilities of $105,060 (2016 - gain of $257,237). As at June 30, 2017, the Company recorded derivative liabilities of $297,346 (March 31, 2017 - $192,286).

 

The following inputs and assumptions were used to calculate the fair value of the beneficial conversion feature of the convertible debenture outstanding as at June 30, 2017, assuming no expected dividends:

 

      June 30,
2017
 
         
  Estimated common stock issuable upon extinguishment     405,996  
  Estimated exercise price per common share     0.28  
  Risk-free interest rate     1.03 %
  Expected volatility     161 %
  Expected life (in years)     0.25  

 

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

 

      $  
         
  Balance, March 31, 2017     192,286  
           
  Mark-to-market adjustment     105,060  
           
  Balance, June 30, 2017     297,346