| Convertible Promissory Notes | Note
7 Convertible Promissory Notes On
February 6, 2014, the Company entered into a securities purchase agreement to issue an unsecured convertible promissory note with
a principal amount of US$16,500 (C$18,259). This promissory note bears interest at an annual rate of 8% which is to be paid with
principal in full on the maturity date of November 10, 2014. The principal amount of the Note together with interest may be converted
into shares of common stock, par value of $0.0001 at the option of the lender at a conversion price equal to thirty five percent
at the market price, calculated as the average of the lowest three trading prices during the 10 trading days prior to the conversion.
As the note was not repaid on November 10, 2014, a penalty of US$5,473 (C$6,211) has been added to the principal balance of the
note. As of September 30, 2015, conversions totaling US$21,113 (C$25,707) have been recorded and 26,828,386 shares of the Companys
common stock have been issued as a result of the conversion. On
April 7, 2014, the Company entered into a securities purchase agreement to issue an unsecured convertible promissory note with
a principal amount of US$32,500 (C$35,656). This promissory note bears interest at an annual rate of 8% which is to be paid with
principal in full and interest on the maturity date of January 9, 2015. The principal amount of the note together with interest
may be converted into shares of common stock, at the par value of $0.0001 at the option of the lender at a conversion price equal
to forty one percent at the market price, which is the average of the lowest three trading prices during the 10 days prior to
the conversion. The note has matured unpaid. As a result, a penalty of US$16,250 (C$18,445) has been added to the principal balance
of the note. On
April 9, 2014, the Company entered into a securities purchase agreement to issue an unsecured convertible promissory note with
a principal amount of US$42,000 (C$45,793). This promissory note bears interest at an annual rate of 8% which is to be paid with
principal in full on the maturity date of April 9, 2015. The principal amount of the note together with interest may be converted
into shares of common stock, at the par value of $0.00001 at the option of the lender at a conversion price equal to fifty percent
of the lowest closing price bid during the 18 days prior to the conversion. As the note was not repaid on April 9, 2015, a penalty
of US$4,240 (C$5,334) has been added to the principal balance of the note. As of September 30, 2015, conversions totaling US$11,712
(C$14,156) have been recorded and 35,627,097 shares of the Companys common stock have been issued as a result of the conversion. On
May 27, 2014, the Company entered into a securities purchase agreement to issue two unsecured convertible promissory notes with
a principal amount of US$25,000 (C$27,173) each. These promissory notes bear interest at an annual rate of 8% which is to be paid
with principal and interest on the maturity date of May 27, 2015. The principal amount of the note together with interest may
be converted into shares of common stock, at the par value of $0.00001 at the option of the lender at a conversion price equal
to fifty percent of the lowest closing price bid during the 18 days prior to the conversion. As of September 30, 2015, conversions
totaling US$2,423 (C$3,114) have been recorded and 5,246,000 shares of the Companys common stock have been issued as a result
of the conversion. On
August 1, 2014, the Company entered into a securities purchase agreement to issue an unsecured convertible promissory note with
a principal amount of US$147,500 (C$161,055). This promissory note represents consulting fees paid for investor relation services
up to July 31, 2014 and has been recorded as consulting expense. This promissory note bears interest at an annual rate of 8% which
is to be paid with principal in full and interest on the maturity date of August 1, 2015. The principal amount of the note together
with interest may be converted into shares of common stock at the lower of (i) fifty percent of the lowest market price during
the 20 days prior to the conversion or (ii) US$0.00005 per share if the stock trades below US$0.001. On August 20, 2015, a principal
amount of $25,000 was transferred to another holder (See August 20, 2015 note). As of September 30, 2015, conversions totaling
US$3,175 (C$3,874) have been recorded and 2,334,375 shares of the Companys common stock have been issued as a result of
the conversion. On
November 18, 2014, the Company entered into a securities purchase agreement to issue an unsecured convertible promissory note
with a principal amount of US$18,000 (C$20,362). This promissory note bears interest at an annual rate of 8% which is to be paid
with principal in full on the maturity date of November 18, 2015. The principal amount of the note together with interest may
be converted into shares of common stock, at the par value of $0.001 at the option of the lender. On
February 20, 2015, the Company issued a convertible debenture for the gross proceed of US$25,000 (C$31,265). The debenture matures
on February 20, 2016. The terms of the debenture requires the Company to pay the debenture investor a principal sum of US$37,500
with 8% annual interest upon maturity. The principal amount of the debenture together with interest may be converted into shares
of common stock at the lower of (i) fifty percent of the lowest market price during the 20 days prior to the conversion or (ii)
US$0.00005 per share if the stock trades below US$0.001. On
March 16, 2015, the Company issued a convertible debenture for the gross proceed of US$15,000 (C$19,157). The debenture matures
on March 16, 2016. The terms of the debenture requires the Company to pay the debenture investor a principal sum of US$22,500
with 8% annual interest upon maturity. The principal amount of the debenture together with interest may be converted into shares
of common stock at the lower of (i) fifty percent of the lowest market price during the 20 days prior to the conversion or (ii)
US$0.00005 per share if the stock trades below US$0.001. On
May 28, 2015, the Company issued a convertible debenture for the gross proceed of US$25,000 (C$31,193). The debenture matures
on May 28, 2016. The terms of the debenture requires the Company to pay the debenture investor a principal sum of US$25,000 with
5% annual interest upon maturity. The principal amount of the debenture together with interest may be converted into shares of
common stock equal to fifty percent of the lowest closing price during the 15 days prior to the conversion. As of September 30,
2015, conversions totaling US$6,750 (C$8,504) have been recorded and 14,461,538 shares of the Companys common stock have
been issued as a result of the conversion. On
August 20, 2015, the Company issued a convertible debenture of US$25,000 (C$32,700) as a result of a partial transfer of the August
1, 2014 note to a new holder. The debenture matures on August 20, 2016. The terms of the debenture requires the Company to pay
the debenture investor a principal sum of US$25,000 with 8% annual interest upon maturity. The principal amount of the note together
with interest may be converted into shares of common stock at the lower of (i) fifty percent of the lowest market price during
the 20 days prior to the conversion or (ii) US$0.00005 per share if the stock trades below US$0.001. As of September 30, 2015,
conversions totaling US$432 (C$568) have been recorded and 8,635,000 shares of the Companys common stock have been issued
as a result of the conversion. The
above notes include certain embedded features related to the embedded conversion option being exercisable into a variable number
of shares and the strike price being dominated in a currency other than the Companys functional currency. These features
qualify as derivatives and are bundled as a compound embedded derivative that is measured at fair value. The fair value of the
derivatives as at September 30, 2015 was $3,722,577 (June 30, 2015 - $1,089,160). As the fair value of the embedded conversion
features exceeded the principle value of the promissory notes, the entire amount of the debt has been classified as an embedded
derivative on the consolidated balance sheet. To calculate the fair value of the embedded derivative the following assumptions
were made using the Black-Scholes pricing model:
2015 2014
Risk-free
interest rate 0.33 % 0.49 %
Expected life 1-2 years 1-2 years
Share price 0.0004 $ 0.003
Volatility 533 % 519 %
Forfeiture rate 0 % 0 % As
at September 30, 2015, accrued interest recorded in accounts payable and accrued liabilities relating to the convertible promissory
notes totaled $42,092 (June 30, 2015 - $31,174). |
