Convertible debentures [Text Block] | 11. Convertible debentures The Company issues three types of convertible debentures: USD denominated convertible debentures with an equity component, Canadian dollar ("CAD") denominated convertible debentures with an embedded derivative due to variable consideration payable upon conversion caused by foreign exchange, and USD denominated convertible debentures with an embedded derivative caused by variable conversion prices. During the year ended October 31, 2023, the Company incurred $86,352 of financing costs (2022 - $21,000, 2021 - $84,478) which primarily consisted of early repayment and administrative fees, of which $nil (2022 - $nil, 2021 - $nil) was converted into common shares. (a) Convertible debentures outstanding as at October 31, 2023: USD (equity CAD (embedded USD (embedded Total Loan principal outstanding $ 1,261,265 $ 2,146,715 $ 405,001 Terms of loan Annual stated interest rate 24% 12% - 24% 2% - 4% Effective annual interest rate 24% 22 - 131% 24% - 5158% Conversion price to common shares $ 0.03 - $0.04 $ 0.05 - $0.10 (i) - (ii) Remaining life (in months) 0 - 4 0 - 11 0 - 11 Consolidated Statement of Financial Position Carrying value of loan principal $ 1,261,265 $ 1,499,667 $ 77,238 $ 2,838,170 Interest payable 344,993 334,511 30,385 709,889 Convertible debentures $ 1,606,258 $ 1,834,178 $ 107,623 $ 3,548,059 Derivative liabilities $ - $ 783,650 $ 295,743 $ 1,079,393 Equity component of convertible debentures $ 3,220,473 $ - $ - $ 3,220,473 For the year ended October 31, 2023: USD (equity CAD (embedded USD (embedded Total Consolidated Statement of Operations and Comprehensive Loss Accretion expense $ 18,258 $ 243,162 $ 18,414 $ 279,834 Interest expense $ 273,458 $ 254,523 $ 12,948 $ 540,929 Gain on revaluation of derivative liabilities $ - $ (507,186 ) $ (151,317 ) $ (658,503 ) Loss on conversion of convertible debentures $ - $ - $ 21,120 $ 21,120 Loss on repayment of convertible debentures $ - $ - $ 27,243 $ 27,243 (Gain) loss on extinguishment of convertible debentures $ 33,488 $ 1,169,800 $ 197,535 $ 1,400,823 Consolidated Statement of Changes in Equity Amount of principal converted to common shares $ 250,000 $ 455,000 $ 232,700 Amount of interest converted to common shares $ 30,016 $ 204,189 $ 4,654 Number of common shares issued on conversion of convertible debentures 6,406,250 14,391,709 9,548,701 30,346,660 (a) USD (equity CAD (embedded USD (embedded Total Consolidated Statement of Cash Flows Amount of principal repaid in cash $ - $ - $ 270,000 $ 270,000 Amount of interest repaid in cash $ 12,973 $ 47,353 $ 4,353 $ 64,679 (i) (ii) (b) Convertible debentures outstanding as at October 31, 2022: USD (equity CAD (embedded USD (embedded Total Loan principal outstanding $ 1,205,144 $ 2,321,755 $ 347,700 Terms of loan Annual stated interest rate 12% - 24% 12% - 24% 2% - 4% Effective annual interest rate 24% 22 - 131% 24% - 5803% Conversion price to common shares $0.03 - $0.07 $0.05 - $0.08 (i) - (ii) Remaining life (in months) 0 - 6 0 - 10 0 - 11 Consolidated Statement of Financial Position Carrying value of loan principal $ 1,203,478 $ 1,661,742 $ 130,424 $ 2,995,644 Interest payable 380,360 389,617 26,443 796,420 Convertible debentures $ 1,583,838 $ 2,051,359 $ 156,867 $ 3,792,064 Derivative liabilities $ - $ 439,194 $ 202,105 $ 641,299 Equity component of convertible debentures $ 793,140 $ - $ - $ 793,140 (i) (ii) For the year ended October 31, 2022: USD (equity CAD (embedded USD (embedded Total Consolidated Statement of Operations and Comprehensive Loss Accretion expense $ 28,000 $ 1,086,385 $ 65,218 $ 1,179,603 Interest expense $ 230,058 $ 232,211 $ 7,156 $ 469,425 Gain on revaluation of derivative liabilities $ - $ (379,736 ) $ (29,871 ) $ (409,607 ) Loss on conversion of convertible debentures $ - $ - $ 94,326 $ 94,326 Gain on repayment of convertible debentures $ - $ (661 ) $ (47,216 ) $ (47,877 ) (Gain) loss on extinguishment of convertible debentures $ (28,007 ) $ 99,078 $ 129,579 $ 200,650 (b) USD (equity CAD (embedded USD (embedded Total Consolidated Statement of Changes in Equity Amount of principal converted to common shares $ - $ - $ 712,100 Amount of interest converted to common shares $ - $ - $ 12,680 Number of common shares issued on conversion of convertible debentures - - 26,443,820 26,443,820 Consolidated Statement of Cash Flows Amount of principal repaid in cash $ - $ 7,490 $ 56,000 $ 63,490 Amount of interest repaid in cash $ 14,941 $ 73,524 $ - $ 88,465 For the year ended October 31, 2021: USD (equity CAD (embedded USD (embedded Total Consolidated Statement of Operations and Comprehensive Loss Accretion expense $ 28,001 $ 1,003,613 $ 138,307 $ 1,169,921 Interest expense $ 236,519 $ 226,520 $ 32,770 $ 495,809 (Gain) loss on revaluation of derivative liabilities $ - $ (2,718,409 ) $ 171,217 $ (2,547,192 ) (Gain) loss on conversion of convertible debentures $ - $ (47,356 ) $ 37,850 $ (9,506 ) (Gain) loss on extinguishment of convertible debentures $ - $ 1,360,536 $ (341,608 ) $ 1,018,928 Consolidated Statement of Changes in Equity Amount of principal converted to common shares $ - $ 100,000 $ 284,000 Amount of interest converted to common shares $ 30,200 $ 160,064 $ 6,700 Number of common shares issued on conversion of convertible debentures 1,118,519 7,744,774 6,748,559 15,611,852 Consolidated Statement of Cash Flows Amount of principal repaid in cash $ 205,100 $ 31,492 $ 364,370 $ 600,962 Amount of interest repaid in cash $ 25,101 $ 36,052 $ 26,113 $ 87,266 (c) The fair value of the derivative liabilities is determined in accordance with the Black-Scholes or binomial option-pricing models, depending on the circumstances. The underlying assumptions are as follows: As at October 31, As at October 31, 2023 2022 Share price $0.05 $0.03 Exercise price $0.03 - $0.07 $0.02 - $0.07 Volatility factor (based on historical volatility) 114% - 189% 140% - 232% Risk free interest rate 5.11% - 5.48% 3.09% - 4.28% Expected life of conversion features (in months) 0 - 11 0 - 11 Expected dividend yield 0% 0% CDN to USD exchange rate (as applicable) 0.7209 0.7299 Call value $0.01 - $0.08 $0.00 - $0.02 The key unobservable input in these models relates to volatility. Volatility was estimated using the historical volatility of the Company's stock prices for common shares. Changes in these assumptions may affect the fair value estimates of the derivative liabilities. |