Quarterly report pursuant to Section 13 or 15(d)

Convertible Debenture

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Convertible Debenture
6 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
Convertible Debenture
10. 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 was deferred and amortized over the term of the debenture. Under the terms of the debenture, the amount is unsecured, bears guaranteed interest at 10% and default interest at 20% per annum, and was due on November 10, 2016. The note remained unpaid and outstanding at maturity. 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.

 

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. On February 22, 2017, the Company issued 50,000 shares of common stock for the conversion of $20,000 of this debenture. On September 19, 2017, the Company issued 100,000 shares of common stock for the conversion of $20,000 of this debenture. On October 4, 2017, the Company issued 320,000 shares of common stock for the conversion of $40,000 of this debenture. As at September 30, 2019, the carrying value of the debenture was $30,000 (March 31, 2019 - $30,000) and the fair value of the derivative liability was $502,993 (March 31, 2019 - $431,586) as further discussed in Note 11.

 

Interest expense on the debenture for the three and six month periods ended September 30, 2019 was recorded as $1,500 (September 30, 2018 - $1,500) and $3,000 (September 30, 2018 - $3,000), respectively.