Quarterly report pursuant to Section 13 or 15(d)

Derivative Liability

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Derivative Liability
9 Months Ended
Dec. 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liability
12. Derivative Liability

 

The Company records the fair value of the conversion feature of the convertible debenture disclosed in Note 11 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 and nine-month periods ended December 31, 2019, the Company recorded a gain (loss) on the change in fair value of derivative liability of $57,520, and ($13,887) (December 31, 2018- ($118,236) and ($299,102)). As at December 31, 2019, the Company recorded a derivative liability of $445,473 (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 December 31, 2019 and March 31, 2019, assuming no expected dividends:

 

    As at
December 31,
2019
    As at
March 31,
2019
 
             
Estimated common stock issuable upon conversion     174,593       165,843  
Estimated exercise price per common share     0.40       0.40  
Risk-free interest rate     1.5 %     2.4 %
Expected volatility     153 %     62 %
Expected life (in years)     0.25       0.25  

 

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

 

    Three Months Ended
December 31, 2019
$
    Three Months Ended
December 31, 2018
$
    Nine Months Ended
December 31
2019
$
    Nine Months Ended
December 31,
2018
$
 
                         
                         
Balance, beginning of period     (502,993 )     (256,371 )     (431,586 )     (75,505 )
Mark to market adjustment     57,520       (118,236 )     (13,887 )     (299,102 )
                                 
Balance, end of period     (445,473 )     (374,607 )     (445,473 )     (374,607 )