Quarterly report pursuant to Section 13 or 15(d)

Convertible Debenture

Convertible Debenture
3 Months Ended
Jun. 30, 2017
Convertible Debenture [Abstract]  
Convertible Debenture
6. Convertible Debenture


On November 10, 2015, the Company entered into a $110,000 convertible debenture with a non-related party, in exchange for $100,000, net of $10,000 for legal fees which have been deferred and will be amortized over the term of the debenture. Under the terms of the debenture, the amount is unsecured, bears interest at 10% per annum, and is due on November 10, 2016. The note is convertible into shares of common stock of the Company equal to the lower of: (a) $0.40 or (b) 60% of the lowest trading price of the Company’s common stock during the 20 consecutive trading days prior to the date of conversion. As at June 30, 2017, the Company recorded accrued interest of $21,649 (March 31, 2017 - $17,164), which has been included in accounts payable and accrued liabilities.


The Company analyzed the conversion option under ASC 815, and determined that the conversion feature should be classified as a liability and recorded at fair value due to there being no explicit limit to the number of shares to be delivered upon settlement of the conversion option. In accordance with ASC 815, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $110,000. During the three months ended June 30, 2017, the Company had amortized $nil (2016 - $12,420) of the debt discount to interest expense. On February 22, 2017, the Company issued 50,000 shares of common stock for the conversion of $20,000 of this debenture. As at June 30, 2017, the carrying value of the debenture was $90,000 (March 31, 2017 - $90,000) and the fair value of the derivative liability was $297,346 (March 31, 2017 - $192,286). Refer to Note 15(c).