Convertible Debentures | 9 Months Ended |
Sep. 30, 2014 |
Convertible Debentures [Abstract] | |
Convertible Debentures | 5. Convertible Debentures |
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| a) | On December 6, 2012, the Company entered into a convertible promissory note agreement for $150,000. Pursuant to the agreement, the loan is unsecured, bears interest at 10% per annum, and is due on December 5, 2014. The note is also convertible into common shares at a conversion price equal to 25% of the average of the three lowest closing prices for the Company’s common shares in the ten trading days prior to conversion, at the option of the note holder, commencing on December 6, 2012. |
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| | In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the fair value of the derivative was calculated using a multi-nominal lattice model performed by an independent qualified business valuator. 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 period ended March 31, 2014, the Company recorded a loss on the change in fair value of derivative liability of $653,253 (2013 - $320,100). As at September 30, 2014, the Company recorded a derivative liability of $nil (2013 - $653,253). |
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| | On March 31, 2014, the Company entered into a debt forgiveness agreement, whereby the lender forgave the convertible note of $150,000 and accrued interest payable of $19,726. The Company recorded $169,726 as gain on forgiveness of debt. |
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| b) | On January 23, 2014, the Company issued a $53,000 convertible note which is unsecured, bears interest at 8% per annum and due on October 23, 2014. The Company received $50,000, net of issuance fee of $3,000. The note was convertible into shares of common stock 180 days after the date of issuance (July 22, 2014) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum. As at September 30, 2014, accrued interest of $2,641 (December 31, 2013 - $nil) has been recorded in accounts payable and accrued liabilities. |
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| | In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $53,000. On July 22, 2014, the note became convertible resulting in the Company recording a derivative liability of $57,846 with a corresponding adjustment to loss on change in fair value of derivative liabilities. On August 4, 2014, the Company issued 4,081,633 common shares for the conversion of $20,000 of this debenture. On September 26, 2014, the Company issued 5,000,000 common shares for the conversion of $15,000 of this debenture. During the period ended September 30, 2014, the Company had amortized $18,146 (2013 - $nil) of the debt discount to interest expense. As at September 30, 2014, the carrying value of the debenture was $10,412 (December 31, 2013 - $nil) and the fair value of the derivative liability was $20,923 (December 31, 2013 - $nil). |
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| c) | On March 25, 2014, the Company issued a $53,000 convertible note which is unsecured, bears interest at 8% per annum and due on January 2, 2015. The Company received $50,000, net of issuance fee of $3,000. The note is convertible into shares of common stock 180 days after the date of issuance (September 21, 2014) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum. As at September 30, 2014, accrued interest of $2,196 (December 31, 2013 - $nil) has been recorded in accounts payable and accrued liabilities. |
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| | In accordance with ASC 815, “Accounting for Derivative Instruments and Hedging Activities”, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $53,000. On September 21, 2014, the note became convertible resulting in the Company recording a derivative liability of $55,382 with a corresponding adjustment to loss on change in fair value of derivative liabilities. During the period ended September 30, 2014, the Company had amortized $4,839 (2013 - $nil) of the debt discount to interest expense. As at September 30, 2014, the carrying value of the debenture was $2,760 (December 31, 2013 - $nil) and the fair value of the derivative liability was $57,261 (December 31, 2013 - $nil). |
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| d) | On June 13, 2014, the Company issued a $53,000 convertible note which is unsecured, bears interest at 8% per annum and due on March 17, 2015. The Company received $50,000, net of issuance fee of $3,000. The note is convertible into shares of common stock 180 days after the date of issuance (December 10, 2014) at a conversion rate of 58% of the average of the three lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. Upon an event of default, the entire principal balance and accrued interest outstanding is due immediately, and interest shall accrue on the unpaid principal balance at 22% per annum. As at September 30, 2014, accrued interest of $1,266 (December 31, 2013 - $nil) has been recorded in accounts payable and accrued liabilities. As the note does not become convertible until December 10, 2014, the Company has not yet recognized any derivative liability associated with this note. |
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| e) | On June 20, 2014, the Company entered into a consulting agreement for consulting services. Pursuant to the agreement, the Company is to pay the consultant a commencement fee of $250,000. On June 23, 2014, the Company issued a $250,000 convertible note which is unsecured, non-bearing interest and due on June 22, 2015. The note is convertible into shares of common stock 180 days after the date of issuance (December 17, 2014) at a conversion rate of 90% of the lowest closing bid prices of the Company’s common stock for the ten trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As the note does not become convertible until December 17, 2014, the Company has not yet recognized any derivative liability associated with this note. |
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| f) | On June 23, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 22, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 20, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company’s common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2014, accrued interest of $1,085 (December 31, 2013 - $nil) has been recorded in accounts payable and accrued liabilities. As the note does not become convertible until December 20, 2014, the Company has not yet recognized any derivative liability associated with this note. |
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| g) | On June 23, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 22, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 20, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company’s common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2014, accrued interest of $1,085 (December 31, 2013 - $nil) has been recorded in accounts payable and accrued liabilities. As the note does not become convertible until December 20, 2014, the Company has not yet recognized any derivative liability associated with this note. |
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| h) | On June 25, 2014, the Company issued a $50,000 convertible note which is unsecured, bears interest at 8% per annum and due on June 24, 2015. The Company received $49,400, net of issuance fee of $600. The note is convertible into shares of common stock 180 days after the date of issuance (December 22, 2014) at a conversion rate of 60% of the lowest closing bid prices of the Company’s common stock for the five trading days ending one trading day prior to the date the conversion notice is sent by the holder to the Company. As at September 30, 2014, accrued interest of $1,063 (December 31, 2013 - $nil) has been recorded in accounts payable and accrued liabilities. As the note does not become convertible until December 22, 2014, the Company has not yet recognized any derivative liability associated with this note. |
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