Quarterly report pursuant to Section 13 or 15(d)

Convertible Debenture and Derivative Liability

v3.20.2
Convertible Debenture and Derivative Liability
6 Months Ended
Sep. 30, 2020
Convertible Debenture And Derivative Liability [Abstract]  
Convertible Debenture and Derivative Liability
9. Convertible Debenture and Derivative Liability

As at September 30, 2020, the carrying value of the debenture was $10,000 (March 31, 2020 - $30,000) and interest expense on the debenture for the three and six months ended September 30, 2020 was recorded as $833 (September 30, 2019 - $1,500) and $2,333 (September 30, 2019 - $3,000). Under the terms of the debenture agreement, $20,000 of the debenture was converted to 50,000 common shares and a reduction of the derivative liability of $42,550 was recorded.


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 six months ended September 30, 2020, the Company recorded a gain on the change in fair value of derivative liability of $58,380 (September 30, 2019- gain of $65,547) and $49,563 (September 30, 2019 – loss of $71,407) respectively. As at September 30, 2020, the Company recorded a derivative liability of $82,371 (March 31, 2020 - $174,484).


The following inputs and assumptions were used to calculate the fair value of the conversion feature of the convertible debenture outstanding as at September 30, 2020, assuming no expected dividends:


    As at
September 30,
2020
    As at
March 31,
2020
 
             
Estimated common stock issuable upon conversion     134,178       178,343  
Estimated exercise price per common share   $ 0.40     $ 0.40  
Risk-free interest rate     0.1 %     0.11 %
Expected volatility     126 %     193.6 %
Expected life (in years)     0.25       0.25  

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


    Three
Months
Ended
September 30,
2020
$
    Three
Months
Ended
September 30,
2019
$
    Six Months Ended September 30,
2020
$
    Six Months Ended September 30,
2019
$
 
                         
Balance, beginning of period     (183,301 )     (568,540 )     (174,484 )     (431,586 )
Conversion     42,550             42,550        
Mark to market adjustment     58,380       65,547       49,563       (71,407 )
                                 
Balance, end of period     (82,371 )     (502,993 )     (82,371 )     (502,993 )