Quarterly report pursuant to Section 13 or 15(d)

Derivative Liability

v3.19.2
Derivative Liability
3 Months Ended
Jun. 30, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liability
11. Derivative Liability

 

The Company records the fair value of the conversion feature of the convertible debenture disclosed in Note 10 in accordance with ASC 815. The fair value of the derivative liability was calculated using a binomial option pricing model. The fair value of the derivative liability 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, 2019, the Company recorded a loss on the change in fair value of derivative liability of $136,954 (June 30, 2018 – $145,147). As at June 30, 2019, the Company recorded a derivative liability of $568,540 (March 31, 2019 - $431,586).

 

The following inputs and assumptions were used to calculate the fair value of the conversion feature of the convertible debenture outstanding as at June 30, 2019, assuming no expected dividends:

 

    As at
June 30,
2019
    As at
March 31,
2019
 
             
Estimated common stock issuable upon conversion     169,592       165,843  
Estimated exercise price per common share     0.40       0.40  
Risk-free interest rate     2.2 %     2.4 %
Expected volatility     79 %     62 %
Expected life (in years)     0.25       0.25  

 

A summary of the changes in derivative liabilities for the three month periods is shown below:

 

    June 30,
2019
$
    June 30,
2018
$
 
             
Balance, beginning of period     431,586       75,505  
Mark to market adjustment     136,954       145,147  
                 
Balance, end of period     568,540       220,652