Note 8: Convertible Notes Payable | 12 Months Ended |
Nov. 30, 2014 |
Notes | |
Note 8: Convertible Notes Payable | Note 8: Convertible Notes Payable |
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| | November 30, | November 30, |
| | 2014 | 2013 |
Promissory Note #6 | 20,000 | 20,000 |
Promissory Note #7 | 20,000 | 20,000 |
Promissory Note #8 | 20,000 | 20,000 |
Promissory Note #10 | 30,000 | 30,000 |
Promissory Note #13 | 12,710 | 64,060 |
Promissory Note #15 | 88,000 | 88,000 |
Promissory Note #16 | 11,000 | 11,000 |
Promissory Note #17 | 11,000 | 11,000 |
Promissory Note #18 | 50,000 | 50,000 |
Promissory Note #19 | 11,000 | 11,000 |
Promissory Note #20 | 11,000 | 11,000 |
Promissory Note #21 | 16,000 | 16,000 |
Promissory Note #22 | 50,000 | 50,000 |
Promissory Note #23 | 16,000 | - |
Promissory Note #24 | 16,000 | - |
Promissory Note #25 | 16,000 | - |
Promissory Note #26 | 16,000 | - |
Promissory Note #27 | 16,000 | - |
Promissory Note #28 | 16,000 | - |
Promissory Note #29 | 48,000 | - |
Promissory Note #30 | 75,000 | - |
Promissory Note #31 | 220,486 | - |
| | $ 790,196 | $ 402,060 |
| Debt discount | (234,649) | (101,250) |
| Accrued interest | 83,746 | 13,074 |
| Convertible Notes Payable | $ 639,293 | $ 313,884 |
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As at November 30, 2014 and November 30, 2013, convertible notes payable are recorded net of unamortized debt discount of $(234,649) and $(101,250) respectively. |
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Promissory Note #6 |
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On February 15, 2012, the Company received $20,000 cash and the Company issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand. |
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Promissory Note #7 |
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On February 15, 2012, the Company received $20,000 cash and the Company issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand. |
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Promissory Note #8 |
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On February 15, 2012, the Company received $20,000 cash and the Company issued a convertible promissory note in the amount of $20,000. The promissory note is unsecured, interest free and repayable upon demand. |
Promissory Note #10 |
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Promissory Note #10 |
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On March 20, 2012, the Company received $30,000 cash and the Company issued a convertible promissory note in the amount of $30,000. The promissory note is unsecured, interest free and repayable upon demand. |
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The note may be converted at the option of the holder into common stock of the Company. The fixed conversion price is $0.01 per share. Accordingly, the note may be converted into 3,000,000 common shares of the Company. The note also contains a provision whereby should the Company perform a stock split or reverse stock split, the conversion price of the note reverts to the lesser of 40% of market value at the time of conversion, or $0.01 per share. Accordingly, subsequent to the period end on June 14, 2013, this conversion provision was triggered. |
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The Company determined that Promissory notes # 6, 7, 8, and 10 should be accounted for in accordance with FASB ASC 470-20, which addresses “Accounting for Convertible Securities with Beneficial Conversion Features". The intrinsic value of the conversion feature is calculated as the difference between the conversion price $0.01 and the fair value of the common stock into which the debt is convertible at the commitment date (being $0.05 for notes # 6, 7 and 8 and $0.02 for note 10), multiplied by the number of shares into which the debt is convertible. The valuation of the beneficial conversion feature is calculated as pro rata portion of the proceeds from issuance of the convertible debt, being equal to proceeds received multiplied by intrinsic value divided by the total value received (i.e. the aggregate of proceeds and intrinsic value). This beneficial conversion feature is allocated to debt discount and additional paid in capital. Because the debt is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of convertible notes of $0 (year ended November 30, 2013 - $0) was recorded in the financial statements, with a corresponding increase to additional paid in capital. |
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Promissory Note #13 |
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On September 12, 2012, the Company received $75,000 cash and the Company issued a convertible promissory note in the amount of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 14, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. During the year ended November 30, 2014, the Company accrued $7,393 (year ended November 30, 2013 - $5,882) in interest expense. |
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After 180 days the note may be converted at the option of the holder into Common stock of the Company. The conversion price is defined as “50% multiplied by market price where market price is determined as the average of the lowest three bid prices during the ten trading days prior to the date of conversion”. The Company determined that the embedded conversion feature would be a derivative liability based upon its variable conversion terms once the holder’s conversion rights were triggered. |
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In March 2013, upon the holders option to convert becoming active, the Company recorded debt discount of $75,000, charged $1,800 to interest expense and also recorded a derivative liability of $76,800 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term on the note or to the date of conversion. The derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. |
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During the year ended November 30, 2014, the Company recorded a loss of $21,772 (year ended November 30, 2013 – loss of $33,869) due to the change in value of the derivative liability during the period. |
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During the year ended November 30, 2014, the Company issued 10,843,624 common shares upon the conversion of $51,350 of the principal balance into common stock, and $91,498 of the derivative liability was re-classified as additional paid in capital upon conversion. |
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As of November 30, 2014, principal balance of $12,710 (November 30, 2013 - $64,060), accrued interest of $14,574 (November 30, 2013 - $7,181) debt discount of $0 (November 30, 2013 - 0) and a derivative liability of $20,571 (November 30, 2013 - $90,297) was recorded. |
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Promissory Note #15 |
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On June 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $88,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2013. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $19,360 (year ended November 30, 2013 - $3,510) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $88,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $481 (year ended November 30, 2013 - $87,519) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $88,000 (November 30, 2013 - $88,000) and accrued interest of $22,870 (November 30, 2013 - $3,510) was recorded. |
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Promissory Note #16 |
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On July 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on January 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $2,285 (year ended November 30, 2013 - $366) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $11,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $1,913 (year ended November 30, 2013 - $9,087) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $11,000 (November 30, 2013 - $11,000) and accrued interest of $2,652 (November 30, 2013 - $366) was recorded. |
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Promissory Note #17 |
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On August 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on February 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $2,154 (year ended November 30, 2013 - $292) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $11,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $3,766 (year ended November 30, 2013 - $7,234) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $11,000 (November 30, 2013 - $11,000) and accrued interest of $2,446 (November 30, 2013 - $292) was recorded. |
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Promissory Note #18 |
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On August 7, 2013 the Company entered into a Convertible Promissory Note with Syndication Capital in the sum of $50,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on February 7, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $9,677 (year ended November 30, 2013 - $1,260) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $50,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $18,750 (year ended November 30, 2013 - $31,250) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $50,000 (November 30, 2013 - $50,000) and accrued interest of $10,938 (November 30, 2013 - $1,260) was recorded. |
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Promissory Note #19 |
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On September 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on March 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $2,033 (year ended November 30, 2013 - $217) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $11,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $5,530 (year ended November 30, 2013 - $5,470) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $11,000 (November 30, 2013 - $11,000) and accrued interest of $2,250 (November 30, 2013 - $217) was recorded. |
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Promissory Note #20 |
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On October 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $11,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $1,905 (year ended November 30, 2013 - $145) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $11,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $7,374 (year ended November 30, 2013 - $3,626) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $11,000 (November 30, 2013 - $11,000) and accrued interest of $2,050 (November 30, 2013 - $145) was recorded. |
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Promissory Note #21 |
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On November 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $2,588 (year ended November 30, 2013 - $102) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $16,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $13,436 (year ended November 30, 2013 - $2,564) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $16,000) and accrued interest of $2,690 (November 30, 2013 - $102) was recorded. |
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Promissory Note #22 |
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On November 30, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $50,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on May 30, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $7,528 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $0 (November 30, 2013 - $50,000) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $50,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $50,000 (November 30, 2013 - $50,000) and accrued interest of $7,528 (November 30, 2013 - $0) was recorded. |
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Promissory Note #23 |
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On December 1, 2013 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on June 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $2,390 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $16,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $16,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $0) and accrued interest of $2,390 (November 30, 2013 - $0) was recorded. |
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Promissory Note #24 |
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On January 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on July 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $2,101 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $16,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $16,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $0) and accrued interest of $2,101 (November 30, 2013 - $0) was recorded. |
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Promissory Note #25 |
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On February 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on August 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $1,802 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $16,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $16,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $0), accrued interest of $1,802 (November 30, 2013 - $0) was recorded. |
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Promissory Note #26 |
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On March 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on September 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $1,510 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $16,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $16,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $0) and accrued interest of $1,510 (November 30, 2013 - $0) was recorded. |
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Promissory Note #27 |
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On April 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $1.220 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $16,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $16,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $0) and accrued interest of $1,220 (November 30, 2013 - $0) was recorded. |
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Promissory Note #28 |
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On May 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $16,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on November 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $925 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $16,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $16,000 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $16,000 (November 30, 2013 - $0) and accrued interest of $925 (November 30, 2013 - $0) was recorded. |
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Promissory Note #29 |
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On June 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $48,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on December 1, 2014. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $1,915 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $48,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $47,868 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $48,000 (November 30, 2013 - $0), accrued interest of $1,915 (November 30, 2013 - $0) and debt discount of $132 (November 30, 2013 - $0) was recorded. |
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Promissory Note #30 |
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On October 1, 2014 the Company entered into a Convertible Promissory Note with Direct Capital in the sum of $75,000. The promissory note is unsecured, bears interest at 8% per annum, and matures on April 1, 2015. Any principal amount not paid by the maturity date bears interest at 22% per annum. The Conversion Price shall mean par .001 multiplied by the number of Common Stock converted at the time. The transaction was handled as a private sale exempt from registration under Section 4(2) of the Securities Act of 1933. During the year ended November 30, 2014, the Company accrued $986 (year ended November 30, 2013 - $0) in interest expense. |
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A portion of the proceeds from issuance of the convertible debt, equal to the intrinsic value, is allocated to additional paid-in capital. Because the debt is due on demand and is convertible at the date of issuance, the valuation of the beneficial conversion feature is charged to interest expense at the date of issuance. |
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During the year ended November 30, 2014 interest expense relating to the beneficial conversion feature of this convertible note of $75,000 (November 30, 2013 - $0) was recorded in the financial statements with a corresponding increase to additional paid in capital, and debt discount of $24,725 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal amount of $75,000 (November 30, 2013 - $0), accrued interest of $986 (November 30, 2013 - $0) and debt discount of $50,275 (November 30, 2013 - $0) was recorded. |
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Promissory Note #31 |
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On October 1, 2014, the Company entered into a Convertible Promissory note with New Venture Attorneys, PC in the sum of $220,486. The promissory note is unsecured, bears interest at 8% per annum, and matures on October 1, 2015. The note also contains customary events of default. During the year ended November 30, 2014, the Company accrued $2,900 (year ended November 30, 2013 - $0) in interest expense. |
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Upon the holder’s option to convert becoming active the Company recorded a debt discount and derivative liability of $294,767 being the fair value of the conversion feature which was determined using the Black-Scholes valuation model. The debt discount is accreted to the statement of operations using the effective interest rate method over the term of the note or to the date of conversion, and the derivative liability is revalued at each reporting date to fair value. Any change in fair value is credited or charged to the statement of operations in the period. |
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During the year ended November 30, 2014, the Company recorded a gain of $5,068 (year ended November 30, 2013 - $0) due to the change in value of the derivative liability during the period, and a debt discount of $36,244 (year ended November 30, 2013 - $0) was accreted to the statement of operations. |
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As of November 30, 2014, principal balance of $220,486 (November 30, 2013 - $0), accrued interest of $2,900 (November 30, 2013 - $0), debt discount of $184,242 (November 30, 2013 - $0) and a derivative liability of $289,699 (November 30, 2013 - $0) was recorded. |
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