| CONVERTIBLE DEBT | 4. CONVERTIBLE DEBT Details of the Companys convertible notes are as follows: a) On September 11, 2015, the Company issued a convertible unsecured note in the amount of $95,000 (including $11,000 of finance fees). The note carries an interest rate of 12% (22% default rate), and is due on June 11, 2016. The lender may convert the note at a conversion price equal to the average of the three lowest closing bid prices for the common stock for twenty trading days ending on the trading day immediately before conversion multiplied by 50% at any time after the maturity day. The Company may prepay the loan up to 180 days after its issuance with the following penalties: Number of days after issuance Penalty < 30 days 125% of principal plus accrued interest 31 60 days 130% of principal plus accrued interest 61 90 days 135% of principal plus accrued interest 91 120 days 140% of principal plus accrued interest 121 150 days 145% of principal plus accrued interest 151 180 days 150% of principal plus accrued interest As at November 30, 2015, this note had a fair value of $128,250 determined based on the amount the Company would settle this note by prepayment. b) On September 29, 2015, the Company issued a convertible unsecured note in the amount of $150,000 (including $14,760 of finance fees). The note carries an interest rate of 10% (18% default rate), and is due on March 29, 2016 (Maturity Date). The Company may prepay the loan up to 180 days after its issuance, will approval from the lender, with the following penalties: Number of days after issuance Penalty Any time before Maturity 150% of principal plus accrued interest The entire loan may be converted into shares of the Company's common stock, at a conversion price for each share equal to the three lowest closing bid prices for the common stock for the twenty trading days ending on the trading day immediately before the conversion date multiplied by 60% at any time after the Maturity Date. As at November 30, 2015, this note had a fair value of $285,737. c) On October 27, 2014, the Company issued a convertible note in the amount of $165,000 in exchange for consulting services rendered. The note is non-interest bearing, due on October 27, 2015, and is unsecured. The loan may be converted into the Company's common stock, at a conversion price for each share equal to the lowest closing bid price for the common stock for the thirty trading days ending on the trading day immediately before the conversion date multiplied by 50% at any time after April 28, 2015. During the year ended August 31, 2015, $106,650 was converted into 43,314,479 common shares of the Company. As at November 30, 2015, the principal remaining of this note was $58,250 with a fair value of $178,230. d) On March 19, 2015, the Company entered into an agreement for two convertible notes in the amount of $26,500 each. The first note was issued in March 2015, for proceeds of $25,000 (net of $1,500 of financing fees), bears interest at 8%, and is due on March 19, 2016. The second note was paid for by the issuance of an offsetting $26,500 secured note issued to the Company. The second $26,500 note was issued and received in cash on November 13, 2015. The lender may convert the entire loan amount into shares of the Company's common stock, at a conversion price for each share equal to the lowest closing bid price for the common stock for the twenty trading days ending on the trading day immediately before the conversion date multiplied by 50% at any time. The first note is convertible into shares after the second note has been received by the Company. The Company may prepay the loan up to 180 days after its issuance with the following penalties: Number of days after issuance Penalty < 30 days 118% of principal plus accrued interest 31 60 days 124% of principal plus accrued interest 61 90 days 130% of principal plus accrued interest 91 120 days 136% of principal plus accrued interest 121 150 days 142% of principal plus accrued interest 151 180 days 148% of principal plus accrued interest The fair value of the loan as at November 30, 2015, determined based on the amount the Company would settle the note by prepayment, was $31,270. During the three months ended November 30, 2015, the Company issued 1,214,681 common stock with a fair value of $80,332 on conversion of the note issued in March 2015. e) On April 30, 2015, the Company issued a convertible unsecured note in the amount of $62,000 and a $7,000 financing fee was incurred with respect to this note. The note carries an interest rate of 12% (22% default rate), and is due on January 30, 2016. During the year ended August 31, 2015, $2,507 of interest was accrued on this loan. The fair value of the loan (including accrued interest) as at August 31, 2015 was $92,407. During the three month period ended November 30, 2015, the Company issued 3,204,136 common stock with a fair value of $214,667 on conversion of this convertible debt. f) On June 10, 2015, the Company issued a convertible unsecured note in the amount of $58,000 and a $8,000 financing fee was accrued with respect to this note. The note carries an interest rate of 12% (22% default rate), and is due on March 10, 2016. The fair value of the loan (including accrued interest) as at November 30, 2015 was $84,100. g) On July 6, 2015, the Company issued a convertible unsecured note in the amount of $85,500. $10,500 financing fees has been incurred with respect to this note. The note carries an interest rate of 12% (22% default rate), and is due on April 6, 2016. The fair value of the loan (including accrued interest) as at November 30, 2015 was $123,975. h) On July 10, 2015, the Company issued a convertible unsecured note in the amount of $85,500. $10,500 financing fee was incurred with respect to this note. The note carries an interest rate of 12% (22% default rate), and is due on May 10, 2016. The fair value of the loan (including accrued interest) as at November 30, 2015 was $119,700. The Company may prepay the loans e) h) above up to 180 days after its issuance with the following penalties: Number of days after issuance Penalty < 30 days 125% of principal plus accrued interest 31 60 days 130% of principal plus accrued interest 61 90 days 135% of principal plus accrued interest 91 120 days 140% of principal plus accrued interest 121 150 days 145% of principal plus accrued interest 151 180 days 150% of principal plus accrued interest The loans e) h) above may be converted into shares of the Company's common stock, at a conversion price for each share equal to the average of the three lowest closing bid prices for the common stock for the ten trading days ending on the trading day immediately before the conversion date multiplied by 50% at any time after each respective maturity date. As the value of the shares under the conversion option is greater than the face value of the debt, the Company has recognized the lesser of the amount if it can settle the note by prepayment and the value of the shares issuable on conversion. i) On June 30, 2015, the Company issued a convertible unsecured note in the amount of $50,000. The note carries an interest rate of 10% (18% default rate), and is due on March 26, 2016. The Company may prepay the loan up to 180 days after its issuance with the following penalties: Number of days after issuance Penalty < 60 days 125% of principal plus accrued interest 61 120 days 130% of principal plus accrued interest 121 180 days 135% of principal plus accrued interest The lender may convert the entire loan amount into shares of the Company's common stock, at a conversion price for each share equal to the three (3) lowest closing bid prices for the common stock for the ten trading days ending on the trading day immediately before the conversion date multiplied by 65%. The fair value of the loan (including accrued interest) as at November 30, 2015, was determined based on the amount the Company would settle the note by prepayment, was $67,500. As at November 30, 2015, the accrued interest relating to these convertible notes was $19,976. |
