Quarterly report pursuant to Section 13 or 15(d)

Convertible Debenture and Derivative Liability

v3.20.4
Convertible Debenture and Derivative Liability
9 Months Ended
Dec. 31, 2020
Convertible Debenture And Derivative Liability [Abstract]  
Convertible Debenture and Derivative Liability
10. Convertible Debenture and Derivative Liability

As at December 31, 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 nine months ended December 31, 2020 was recorded as $500 (December 31, 2019 - $1,500) and $2,833 (December 31, 2019 - $4,500). During the nine months ended December 31, 2020, $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 nine months ended December 31, 2020, the Company recorded a loss on the change in fair value of derivative liability of $50,869 (December 31, 2019- gain of $57,520) and a loss of $1,306 (December 31, 2019 – loss of $13,887), respectively. As at December 31, 2020, the Company recorded a derivative liability of $133,240 (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 December 31, 2020, assuming no expected dividends:


    As at
December 31,
2020
    As at
March 31,
2020
 
             
Estimated common stock issuable upon conversion     135,430       178,343  
Estimated exercise price per common share   $ 0.40     $ 0.40  
Risk-free interest rate     0.09 %     0.11 %
Expected volatility     174.1 %     193.6 %
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,
2020
$
    Three
Months
Ended
December 31,
2019
$
    Nine months Ended December 31,
2020
$
    Nine months Ended December 31,
2019
$
 
                         
Balance, beginning of period     (82,371 )     (502,993 )     (174,484 )     (431,586 )
Conversion     -       -       42,550       -  
Mark to market adjustment     (50,869 )     57,520       (1,306 )     (13,887 )
                                 
Balance, end of period     (133,240 )     (445,473 )     (133,240 )     (445,473 )