| CONVERTIBLE DEBT | 5. CONVERTIBLE DEBT Details of the Companys convertible notes, which are measured at their fair value are as follows: a) 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, was 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 May 31, 2016, the principal remaining of this note was $58,250 with a fair value of $129,444 based on the value of the common shares that would be issued if converted on May 31, 2016. b) 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), carried an interest at 8%, and was 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 could convert the entire note 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 was convertible into shares after the second note has been received by the Company. The Company issued 2,453,467 common stock with a fair value of $147,769 on conversion of the notes issued in March 2015 and November 2015. c) On April 30, 2015, the Company issued a convertible unsecured note in the amount of $62,000 (including $7,000 of financing fees). The note carries an interest rate of 12% (22% default rate), and was due on January 30, 2016. During the year ended August 31, 2015, $2,507 of interest was accrued on this note. The fair value of the note as at August 31, 2015 was $92,407. During the period ended May 31, 2016, the Company issued 3,373,329 common stock with a fair value of $222,578 on conversion of this convertible debt. d) On June 10, 2015, the Company issued a convertible unsecured note in the amount of $58,000 (including $8,000 of financing fees). The note carries an interest rate of 12% (22% default rate), and was due on March 10, 2016. During the year ended August 31, 2015, $1,565 of interest was accrued on this note. The fair value of the note as at August 31, 2015 was $79,865. During the period ended May 31, 2016, the Company issued 2,981,396 common stock with a fair value of $137,144 on conversion of this convertible debt. e) On July 6, 2015, the Company issued a convertible unsecured note in the amount of $85,500 (including $10,500 of financing fees). The note carries an interest rate of 12% (22% default rate), and was due on April 6, 2016. During the year ended August 31, 2015, $1,574 of interest was accrued on this note. The fair value of the note as at August 31, 2015 was $112,724. During the period ended May 31, 2016, the Company issued 9,694,291 common stock with a fair value of $238,360 on conversion of this convertible debt. f) On August 10, 2015, the Company issued a convertible unsecured note in the amount of $85,500 (including $10,500 of financing fees). The note carries an interest rate of 12% (22% default rate), and is due on May 10, 2016. During the year ended August 31, 2015, $590 of interest was accrued on this note. The fair value of the note as at August 31, 2015 was $107,465. During the period ended May 31, 2016, the Company issued 11,210,437 common stock with a fair value of $228,369 on conversion of this convertible debt. The loans c) f) above were convertible 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. g) 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 Company may prepay the note 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 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. During the period ended May 31, 2016, the Company issued 9,850,000 common stock with a fair value of $134,050 on conversion of $63,514 of principal of this convertible debt. During the period ended May 31, 2016, $2,722 of interest was accrued on this note. As at May 31, 2016, the remaining principal of this note of $31,486 has a fair value of $69,116 determined based on the fair value of the shares would be converted at May 31, 2016. h) On December 9, 2015, the Company issued a convertible unsecured note in the amount of $100,000 (including $10,000 of finance fees). The note carries an interest rate of 12% (22% default rate), and is due on September 9, 2016. During the period ended May 31, 2016, $5,721 of interest was accrued on this note. As at May 31, 2016, the remaining principal of this note of $100,000 has a fair value of $207,087 determined based on the fair value of the shares would be converted at May 31, 2016. i) On February 19, 2016, the Company issued a convertible unsecured note in the amount of $108,000 (including $8,000 of finance fees). The note carries an interest rate of 12% (22% default rate), and is due on November 19, 2016. During the period ended May 31, 2016, $3,622 of interest was accrued on this note. As at May 31, 2016, this note had a fair value of $223,654 determined based on the fair value of the shares would be converted at May 31, 2016. j) On April 1, 2016, the Company issued a convertible unsecured note in the amount of $108,000 (including $8,000 of finance fees). The note carries an interest rate of 12% (22% default rate), and is due on January 1, 2017. During the period ended May 31, 2016, $2,130 of interest was accrued on this note. As at May 31, 2016, this note had a fair value of $223,654 determined based on the fair value of the shares would be converted at May 31, 2016. The Company may prepay the loans h) j) 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 lender may convert the note h) j) after 90 days following issuance 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 53% at any time after the maturity day. k) On June 26, 2015, the Company issued a convertible unsecured note in the amount of $50,000. The note carried an interest rate of 10% (18% default rate), and was due on March 26, 2016. The lender could convert the entire note 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%. During the year ended August 31, 2015, $904 of interest was accrued on this note. The fair value of the note as at August 31, 2015, was determined based on the amount the Company would settle the note by prepayment, was $65,904 During the period ended May 31, 2016, the Company issued 3,405,845 common stock with a fair value of $97,878 on conversion of this convertible debt. l) 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. The entire note was convertible 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. During the period ended May 31, 2016, the Company issued 20,228,950 common stock with a fair value of $318,879 on conversion of this convertible debt. m) On January 14, 2016, the Company issued a convertible unsecured note in the amount of $57,000 (including $7,000 of finance fees). The note carries an interest of 10% (18% default rate), and is due on October 14, 2016 (Maturity Date). The Company may repay the note up to 180 days after its issuance, with approval from the lender, with the following penalties: Number of days after issuance Penalty < 90 days 135% of principal plus accrued interest 91 120 days 140% of principal plus accrued interest 121 180 days 145% of principal plus accrued interest > 180 days 150% of principal plus accrued interest The entire note may be converted into shares of the Companys 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 53% at any time after the Maturity Date. During the period ended May 31, 2016, $2,155 of interest was accrued on this note. As at May 31, 2016, this note has a fair value of $82,650 determined based on the amount the Company would settle this note by prepayment. n) On January 25, 2016, the Company issued a convertible unsecured note in the amount of $555,000. The note carries an original interest discount (OID) of $50,000 and the Company agrees to pay $5,000 of the finance fees. The Company receives the payments in five tranches, of which the initial tranche equals to the amount of $115,000 (including OID of $10,000 and finance fees of $5,000) and the remainder is delivered in four instalments in the amount of $110,000 (including OID of $10,000) each. The note carries an interest rate of 10% (22% default rate), and is due on May 25, 2017. As of May 31, 2016, the Company received the initial tranche of $115,000 (including OID and finance fees) and the second tranche of $110,000 (including OID and finance fees). 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 60% at any time after 180 days after the cash was delivered. The Company may prepay any outstanding balance of note, upon delivering an optional prepayment notice; provided that, the date of prepayment is not less the five trading days for the optional prepayment notice. Number of days after issuance Penalty Any time after determined date of prepayment 125% of principal plus accrued interest During the period ended May 31, 2016, $7,829 of interest was accrued on this note. As at May 31, 2016, this note has a fair value of $281,250 determined based on the amount the Company would settle this note by prepayment. |
