| Convertible Notes Payable | 12. Convertible Notes Payable:
June 30, 2015 September 30, 2014
Convertible Note (a) $ 857,577 $ 916,185
Convertible Note (b) - 923
Convertible Note (c) 862 -
$ 858,439 $ 917,108 These convertible notes outstanding
as at June 30, 2015 and September 30, 2014 are classified as current in accordance with their terms of maturity. Convertible Notes (a) The details of the convertible notes
outstanding as at June 30, 2015 are as follows: On September 30, 2012, the Company entered
into convertible notes with Incendia Management Group Inc. in the amount of CDN $266,445 (US $241,053), Siderion Capital Group
Inc. in the amount of CDN $295,163 (US $267,034), and Seagel Investment Corp. in the amount of CDN $49,000 (US $47,559). Each of
these September 30, 2012 convertible notes had a two (2) year term and had an interest rate of 10% per annum. They have been extended
for one year to September 30, 2015. On October 31, 2012 the Company entered
into convertible notes with Incendia Management Group Inc. in the amount of CDN $7,000 (US $5,520), Siderion Capital Group Inc.
in the amount of CDN $20,000 (US $15,770), Seagel Investment Corp. in the amount of CDN $2,500 (US $1,971), and Seagel Investment
Ltd. in the amount of US $345,080. Each of these October 31, 2012 convertible notes had a term of two (2) years and had an interest
rate of 10% per annum. They have been extended for one year to October 31, 2015. All of the convertible notes referred
to above may be converted, at any time at the option of the holder, into shares of the common stock of the Company at the lower
of $1.00 per share, the initial listing price of $0.55 less 20% discount of the price of the public shares, or any financing that
is done by the Company by way of a registration statement. These convertible notes and Drawn Down
Loan Payable are secured against the assets of the TrioResources AG Inc. until the convertible notes are converted to shares or
the convertible notes are redeemed. As at June 30, 2015, all of the convertible notes and the Draw Down Facility remain outstanding
and none have been converted to common shares. The convertible notes may be repaid
at any time without penalty or bonus. Subsequent to year end and up to the date of this filing, none of the above notes were either
paid or converted into common stocks of the Company. Interest expense of $27,863 and $83,158
has been recognized and accrued for the three and nine months ended June 30, 2015 (2014 - $36,508 and $114,091). Convertible Notes (b) On November 27, 2013, the Company entered
into a convertible promissory note agreement (the Note) whereby the investor may purchase up to $335,000 face value
convertible notes. The consideration is equal to $300,000 resulting in an original issue discount of $30,000 (approximately 10%).
Pursuant to this agreement, the Company received $50,000 (face value of $55,833) on November 27, 2013 and $25,000 (face value of
$27,917) on March 14, 2014 (together, the Initial Tranche). If the Company elects to repay the consideration received
within 90 days from the effective date of the consideration, there is no interest due on the note. However, if the consideration
is not repaid within 90 days of the effective date, there is a one-time interest charge equal to 12% of the outstanding principal
balance. The note is convertible into common stock at the lenders option, at the lower (a) $0.10 or (b) 60% of the lowest
trade price in the 25 trading days previous to the conversion. The Note provides for redemption upon
the occurrence of an event of default. Default conditions include non-servicing of the debt and certain other credit risk related
conditions. Default conditions also include certain equity indexed events including failures to file public information documents
and failure to comply with Rule 144 requirements. The remedy to the lender for an event of default is payment of the greater of
(i) the outstanding balance of the Note divided by the conversion price on the date the default amount is either demanded or paid
in full, whichever has a lower conversion price multiplied by the VWAP on the date the default amount is either demanded or paid
in full, whichever has a higher VWAP, or (ii) 150% of the outstanding balance of the note. Accounting Considerations The Company has accounted for the Initial
Tranche issued for cash as a financing transaction, wherein the net proceeds that were received were allocated to the financial
instrument issued. Prior to making the accounting allocation, the Company evaluated the Initial Tranche under ASC 815 Derivatives
and Hedging (ASC 815). ASC 815 generally requires the analysis embedded terms and features that have characteristics
of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics
are not clearly and closely related to the risks of the host contract. The material embedded derivative features consisted of the
conversion option and certain redemption rights that were indexed to equity risks (Default Put). The conversion option
along with the redemption features bearing risks of equity, were not clearly and closely related to the host debt agreement and
required bifurcation. Current accounting principles that are also provided in ASC 815 do not permit an issuer to account separately
for individual derivative terms and features that require bifurcation and liability classification (see Note 11). Rather, such
terms and features must be and were bundled together and fair valued as a single, compound embedded derivative. Based on the previous conclusions, the
Company allocated the cash proceeds first to the derivative component at its fair value with the residual allocated to the host
debt contract, as follows:
Allocation
$50,000 Note $25,000 Note
Compound embedded derivative $ 62,007 $ 29,461
Financing costs expense (5,000 ) (2,500 )
Day-one derivative loss (7,007 ) (1,961 )
$ 50,000 $ 25,000 The proceeds were allocated to between
the compound embedded derivative and the financing costs expense. These resulted in day-one derivative losses and therefore, there
was no value allocated to these notes on the inception date. These Notes were to be accreted up to their face value over the life
of the Notes based on an effective interest rate of 21.15%. During the year ended September 30,
2014, the convertible note of $50,000 and accrued interest of $5,560 was converted into 7,700,000 shares of common stock in accordance
with the conversion option as explained above. Further, during the nine months ended June 30, 2015, the remaining convertible note
of $25,000 with accrued interest of $3,190 up to the date of conversion was converted into 22,490,731 shares of common stock in
accordance with the conversion option as explained above. Amortization expense of $nil was recorded for the three and nine month
periods ended June 30, 2015. The total carrying values of these Notes as of June 30, 2015 amounted to $nil. Convertible Notes (c) On February 23, 2015, the Company entered
into convertible note with Vis Vires Group, Inc. in the amount of $30,000. The convertible note has a 9 month term and has an
interest rate of 8% per annum. |
