Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Dec. 31, 2014 | Feb. 14, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | Algae Dynamics Corp. | |
Entity Central Index Key | 1607679 | |
Document Type | 10-Q | |
Document Period End Date | 31-Dec-14 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -28 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 9,213,710 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2015 |
Condensed_Interim_Balance_Shee
Condensed Interim Balance Sheets (CAD) | Dec. 31, 2014 | Mar. 31, 2014 |
Current Assets | ||
Cash | 7,485 | 64,674 |
Prepaid expenses | 12,371 | 12,124 |
Amounts receivable | 28,325 | 7,875 |
Total Current Assets | 48,181 | 84,673 |
Equipment and leasehold improvements (Note 3) | 77,238 | 33,318 |
Intangible assets (Note 4) | 13,740 | 7,141 |
Total Assets | 139,159 | 125,132 |
Current Liabilities | ||
Accounts payable and accrued liabilities (Note 9) | 253,086 | 87,530 |
Advances from shareholders (Note 5) | 423,896 | 431,406 |
Warrant liability (Note 6b) | 360,462 | 0 |
Total Current Liabilities | 1,037,444 | 518,936 |
STOCKHOLDERS' (DEFICIENCY) | ||
Common stock (Note 6a), $Nil par value, unlimited amount authorized, 9,238,710 issued and outstanding as of December 31, 2014, (March 31, 2014 - 8,606,250) | 518,536 | 100 |
Additional paid in capital (Note 6c) | 234,066 | 0 |
Warrants (Note 6b) | 190,198 | 0 |
Equity to be issued (Note 6a) | 30,000 | 328,180 |
Accumulated deficit | -1,871,085 | -722,084 |
Total Stockholders' (Deficiency) | -898,285 | -393,804 |
Total Liabilities and Stockholders' (Deficiency) | 139,159 | 125,132 |
Condensed_Interim_Balance_Shee1
Condensed Interim Balance Sheets (Parenthetical) | Dec. 31, 2014 | Mar. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common Stock Issued | 9,238,710 | 8,606,250 |
Common Stock Outstanding | 9,238,710 | 8,606,250 |
Condensed_Interim_Statements_o
Condensed Interim Statements of Operations and Comprehensive Loss (Unaudited) (CAD) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING EXPENSES | ||||
Amortization expense (Note 3) | 5,516 | 1,005 | 14,192 | 1,005 |
Business development | 4,667 | 4,860 | 20,480 | 12,031 |
Management and contract fees | 92,875 | -2,500 | 212,750 | 10,000 |
Occupancy costs | 8,904 | 5,812 | 30,388 | 8,118 |
Office and general | 7,898 | 1,384 | 23,681 | 3,176 |
Professional fees (Note 6b) | 192,491 | 9,104 | 548,458 | 15,265 |
Research and development | 15,153 | 417 | 29,691 | 1,847 |
Stock based compensation (Note 6c) | 234,066 | 0 | 234,066 | 0 |
Telephone and internet services | 3,318 | -4,233 | 9,642 | 0 |
Travel | 4,018 | 632 | 25,653 | 5,651 |
Total Operating Expenses | 568,906 | 16,481 | 1,149,001 | 57,093 |
Net Loss and Comprehensive Loss for the period | 568,906 | 16,481 | 1,149,001 | 57,093 |
Net loss per common share - | ||||
Basic and diluted | 0.06 | 0 | 0.13 | 0.01 |
Weighted average common shares outstanding - basic and diluted | 9,238,710 | 8,606,250 | 9,027,555 | 8,606,250 |
Condensed_Interim_Statements_o1
Condensed Interim Statements of Stockholders' Equity (Deficiency) (Unaudited) (CAD) | Common Stock | Warrants | Additional Paid-In Capital | Equity to be Issued | Accumulated Deficit | Total |
Beginning Balance, Amount at Mar. 31, 2013 | 100 | 0 | 0 | 0 | -489,128 | -489,028 |
Beginning Balance, Shares at Mar. 31, 2013 | 8,606,250 | |||||
Net loss and comprehensive loss | -232,956 | -232,956 | ||||
Ending Balance, Amount at Mar. 31, 2014 | 100 | 0 | 0 | 328,180 | -722,084 | -393,804 |
Beginning Balance, Shares at Mar. 31, 2014 | 8,606,250 | |||||
Unit subscriptions received | 30,000 | 30,000 | ||||
Unit subscriptions issued, shares | 315,335 | |||||
Unit subscriptions issued, amount | 328,180 | -328,180 | ||||
Unit subscriptions received and issued, shares | 292,125 | |||||
Unit subscriptions received and issued, amount | 328,876 | 328,876 | ||||
Valuation of warrants | -171,308 | 171,308 | ||||
Warrants granted for sevices | 19,290 | 19,290 | ||||
Unit issue costs | -1,100 | -400 | -1,500 | |||
Warrants exercised, shares | 25,000 | |||||
Warrants exercised, amount | 1,113 | 1,113 | ||||
Warrant liability valuation transferred | 32,675 | 32,675 | ||||
Stock options | 234,066 | 234,066 | ||||
Ending Balance, Amount at Dec. 31, 2014 | 518,536 | 190,198 | 234,066 | 30,000 | -1,871,085 | -898,285 |
Ending Balance, Shares at Dec. 31, 2014 | 9,238,710 | -1,149,001 | -1,149,001 |
Condensed_Interim_Statements_o2
Condensed Interim Statements of Cash Flows (Unaudited) (CAD) | 9 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Operating activities | ||
Net loss for the period | -1,149,001 | -57,093 |
Items not affecting cash | ||
Amortization | 14,192 | 1,005 |
Stock based compensation | 644,432 | 0 |
Items not affecting cash | ||
Prepaid expenses | -247 | -4,000 |
Accounts receivable | -20,450 | -3,232 |
Accounts payable | 176,812 | 0 |
Net cash flows used in operating activities | -334,262 | -63,320 |
Financing activities | ||
Advances from shareholders | -7,510 | -53,762 |
Unit subscriptions received | 349,680 | 213,000 |
Unit issue costs | -1,500 | 0 |
Warrants exercised | 1,113 | 0 |
Net cash flows from financing activities | 341,783 | 159,238 |
Investing activities | ||
Investment in equipment and leasehold improvements | -58,112 | -5,948 |
Investment in patents | -6,598 | 0 |
Net cash flows used in investing activities | -64,710 | -5,948 |
Net change in cash | -57,189 | 89,967 |
Cash position - beginning of period | 64,674 | 4,001 |
Cash position - end of period | 7,485 | 93,968 |
1_Nature_of_the_Business_and_G
1. Nature of the Business and Going Concern | 9 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
1. Nature of the Business and Going Concern | Algae Dynamics Corp. (the “Company”) was incorporated under the Canada Business Corporations Act on October 7, 2008 as Converted Carbon of Canada Corp. On November 19, 2010, the Company amended its Articles of Incorporation to change its name to Converted Carbon Technologies Corp. On August 28, 2014, the Company further amended its Articles of Incorporation to change its name to Algae Dynamics Corp. |
The Company is a nutrient ingredient company and has developed a scalable Pure-BioSilo™ for sanitary cultivation of microalgae targeted to the functional food and beverage additives and supplement markets. The Company’s planned principal operations are the design, engineering and manufacturing of a proprietary algae cultivation system for the high volume production of pure contaminant-free algae biomass. The Company is currently conducting research and development activities to operationalize certain technology currently in the patent application stage, so it can produce pure contaminate-free algae biomass. | |
The Company’s activities are subject to significant risks and uncertainties, including failing to obtain patents and failing to secure additional funding to operationalize the Company’s current technology before another company develops similar technology. | |
These condensed interim financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company is in the development stage and has not yet realized profitable operations and has relied on non-operational sources to fund operations. The Company has suffered recurring losses and additional future losses are anticipated as the Company has not yet been able to generate revenue. In addition, as of December 31, 2014, the Company has a working capital deficiency of $989,262 (March 31, 2014 - $434,263) and an accumulated deficit of $1,871,085 (March 31, 2014 - $722,084). The Company’s ability to continue as a going concern is dependent on successfully executing its business plan, which includes the raising of additional funds. The Company will continue to seek additional forms of debt or equity financing, but it cannot provide assurances that it will be successful in doing so (See Note 11). These circumstances raise substantial doubt as to the ability of the Company to meet its obligations as they come due and accordingly, the appropriateness of the use of accounting principles applicable to a going concern. The accompanying condensed interim financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Such adjustments could be material. |
2_Presentation_of_Financial_St
2. Presentation of Financial Statements | 9 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
2. Presentation of Financial Statements | Basis of Presentation |
These unaudited condensed interim financial statements should be read in conjunction with the financial statements for the Company’s most recently completed fiscal year ended March 31, 2014. These condensed interim financial statements do not include all disclosures required in annual financial statements, but rather are prepared in accordance with recommendations for interim financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). These unaudited condensed interim financial statements have been prepared using the same accounting policies, and methods as those used by the Company in the annual audited financial statements for the year ended March 31, 2014, except when disclosed below. | |
The unaudited condensed interim financial statements contain all adjustments (consisting of only normal recurring adjustments) which are necessary to present fairly the financial position of the Company as at December 31, 2014, and the results of its operations for the three and nine month periods ended December 31, 2014 and 2013 and its cash flows for the nine month periods ended December 31, 2014 and 2013. Note disclosures have been presented for material updates to the information previously reported in the annual audited financial statements. | |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10 “ASU 2014-10” to eliminate certain financial reporting requirements for development stage entities. The amendments in ASU 2014-10 remove the incremental financial reporting requirements from US GAAP for development stage entities, including the presentation of inception-to-date information in the statements of income, cash flows and shareholder equity, and disclosure of the financial statements as those of a development stage entity. | |
Estimates | |
The preparation of these condensed interim financial statements has required management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of the revenues and expenses during the reporting period. | |
On an ongoing basis, the Company evaluates its estimates, including those related to provision for doubtful accounts, accrued liabilities, income taxes, stock based compensation and intangible assets. The Company bases its estimates on historical experiences and on various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. As adjustments become necessary, they are reported in earnings in the period in which they become known. |
3_Property_and_Equipment
3. Property and Equipment | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||
3. Property and Equipment | |||||||||||||||||
31-Dec-14 | March 31, 2014 | ||||||||||||||||
Cost | Accumulated | Cost | Accumulated | ||||||||||||||
Amortization | Amortization | ||||||||||||||||
Computer equipment | $ | 3,558 | $ | 1,234 | $ | 1,865 | $ | 560 | |||||||||
Production equipment | 70,309 | 15,177 | 27,236 | 5,447 | |||||||||||||
Leasehold improvements | 24,300 | 4,518 | 10,954 | 730 | |||||||||||||
Total | $ | 98,167 | $ | 20,929 | $ | 40,055 | $ | 6,737 | |||||||||
Net carrying amount | $ | 77,238 | $ | 33,318 | |||||||||||||
During the three and nine month periods ended December 31, 2014, the Company recorded total amortization of $5,516 and $14,192 respectively, (2013 - $1,005 and $1,005, respectively) which was recorded to amortization expense on the statements of operations. |
4_Intangible_Assets
4. Intangible Assets | 9 Months Ended |
Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
4. Intangible Assets | The Company has patents pending with a cost of $13,740 as at December 31, 2014 (March 31, 2014 - $7,141) that are not currently being amortized and accordingly, the Company did not record amortization expense relating to its intangible assets for the three and six month periods ended December 31, 2014 and 2013. |
5_Advances_from_Shareholders
5. Advances from Shareholders | 9 Months Ended |
Dec. 31, 2014 | |
Advances From Shareholders | |
5. Advances from Shareholders | As at December 31, 2014, the Company had received cumulative working capital advances in the amount of $423,896 (March 31, 2014 - $431,406) from two shareholders who are also officers and directors of the Company. These advances are unsecured, non-interest bearing and payable upon demand. |
6_Capital_Stock
6. Capital Stock | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||
6. Capital Stock | (a) Common Shares | ||||||||||||||||||||
Authorized | |||||||||||||||||||||
The Company is authorized to issue an unlimited number of common shares with no par value. | |||||||||||||||||||||
Issued and Outstanding | |||||||||||||||||||||
On June 6, 2014, the Company closed a private placement for gross proceeds of $647,860 of which $328,180 was received as at March 31, 2014 and reflected as equity to be issued. Pursuant to the private placement, the Company issued 556,125 units at $1.12 per unit for gross proceeds of $622,860 and 44,642 units at $0.56 per unit for gross proceeds of $25,000, with each unit comprised of one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant is exercisable at $1.68 per share within the first twelve months of the close of the private placement and $2.24 per share for the second twelve month period to expiration. Immediate family members of management subscribed for 57,000 units for gross proceeds of $63,840 pursuant to this private placement. | |||||||||||||||||||||
On October 22, 2014, a consultant was issued 6,700 units in settlement of a debt owed in the amount of USD$10,050 ($11,256), each unit comprised of one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant is exercisable at USD$1.50 ($1.74) per share within twenty-four (24) months of the date of issuance. | |||||||||||||||||||||
In November 2014, the Company initiated a further private placement of units at USD$1.50 per unit, each unit comprising one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant will be exercisable at USD$2.00 per share for a period of twenty-four months. As at December 31, 2014, USD$26,550 ($30,000) in subscription proceeds had been received and as the private placement had not closed as at December 31, 2014, the funds raised have been classified as equity to be issued. See Note 11. | |||||||||||||||||||||
Additionally, on November 22, 2014, 25,000 common share purchase warrants were exercised at USD$0.04 ($0.046) per warrant for total cash proceeds of USD$1,000 ($1,113). | |||||||||||||||||||||
(b) Warrants | |||||||||||||||||||||
As at December 31, 2014, the following warrants were outstanding: | |||||||||||||||||||||
Number of | Number of | Weighted Average | Grant Date | Fair Value at | |||||||||||||||||
Expiry Date | Warrants | Warrants Exercisable | Exercise Price | Fair Value - Equity | December 31, 2014 of | ||||||||||||||||
Vested Warrants - Liability | |||||||||||||||||||||
June 6, 2016 | 300,383 | 300,383 | $ | 1.68 | * | $ | 170,908 | $ | - | ||||||||||||
June7,2016 | 5,000 | 5,000 | $ | 1.12 | 3,180 | - | |||||||||||||||
June 6, 2017 | 22,500 | 22,500 | $ | 1.12 | 16,110 | - | |||||||||||||||
1-Apr-17 | 600,000 | 275,000 | USD $0.04 | - | 358,325 | ||||||||||||||||
22-Oct-16 | 3,350 | 3,350 | USD $1.50 | - | 2,137 | ||||||||||||||||
931,233 | 606,233 | $ | 0.61 | $ | 190,198 | $ | 360,462 | ||||||||||||||
*Exercisable at $1.68 during the first year and at $2.24 during the second year. | |||||||||||||||||||||
i) | In connection with a private placement offering completed during the nine month period ended December 31, 2014, the Company granted an aggregate of 300,383 share purchase warrants, each exercisable into one common share at $1.68 during the first year and at $2.24 during the second year. The fair value of the warrants at the date of grant was $170,908 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; expected volatility of 173%; risk free interest rate of 1.06%; and expected term of 2.00 years. | ||||||||||||||||||||
ii) | During the nine month period ended December 31, 2014, the Company also issued 27,500 warrants to consultants of the Company valued at $19,290 of which 22,500 warrants were granted to an officer of the Company for consulting services. The compensation has been included in professional fees on the condensed interim statements of operations. Each warrant entitles the holder to purchase one common share at an exercise price of $1.12 for a period ranging from 2.15 to 3 years after the date of issuance. The fair value of the warrants at the date of grant was $19,290 and was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; risk free interest rate of 1.14%; expected volatility of 182%; and expected term of 2.85 years. | ||||||||||||||||||||
iii) | In connection with a consulting agreement (see Note 8), the Company granted 625,000 common share purchase warrants with each warrant entitling the grantee to acquire one common share in the capital of the Company at an exercise price of USD$0.04 ($0.046) at any time prior to April 1, 2017. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($290,025) raised in an offering, fully vesting upon USD$1,500,000 ($1,740,150) being raised. The fair value of the 625,000 warrants at the date of grant was $500,000 and was estimated using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 159%; risk free interest rate of 1.25%; and expected term of 3 years. | ||||||||||||||||||||
For the three and nine month periods ended December 31, 2014, the Company recorded $Nil and $358,325, respectively (2013 - $Nil and $Nil) as compensation expense for warrants issued to a consultant for service, net of a mark to market adjustment for the three and nine month periods ended December 31, 2014 of $141,000 and $151,000, respectively. This expense was recorded as professional fees on the condensed interim statements of operations and comprehensive loss. | |||||||||||||||||||||
iv In connection with the unit issuance completed October 22, 2014 in settlement of a debt, the Company granted 3,350 share purchase warrants exercisable into one common share at USD$1.50 ($1.74) per share for a period of 2 years from the date of issuance. The fair value of the warrants at the date of grant was $2,060 and was estimated using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 123%; risk free interest rate of 0.99%; and expected term of 2 years. | |||||||||||||||||||||
ASC 815 "Derivatives and Hedging" indicates that warrants with exercise prices denominated in a currency other than an entity's functional currency should not be classified as equity. As a result, these warrants have been treated as derivatives and recorded as liabilities carried at their fair value, with period-to period changes in the fair value recorded as a gain or loss in the condensed interim statements of operations and comprehensive loss. | |||||||||||||||||||||
As at December 31, 2014, the fair value of the 603,350 warrants exercisable in USD, remaining after an exercise of 25,000 warrants, was $783,937 which was estimated using the Black-Scholes option pricing model based on the following weighted average assumptions: expected dividend yield of 0%; expected volatility of 1.06%; risk free interest rate of 1.06% and expected term of 2.25 years. Of this amount, $360,462 was reflected as a liability as at December 31, 2014, representing the percentage of the fair value of the warrants that is equal to the percentage of the requisite service that has been rendered at December 31, 2014. | |||||||||||||||||||||
The warrant liability is classified as Level 3 within the fair value hierarchy (See Note 10). The Company’s computation of expected volatility for the period ended December 31, 2014 is based on the market close price of comparable public entities over the period equal to the expected life of the warrants. The Company’s computation of expected life is calculated using the contractual life. | |||||||||||||||||||||
(c) Stock-based compensation | |||||||||||||||||||||
The Company’s stock-based compensation program ("Plan") includes stock options in which some options vest based on continuous service. For those equity awards that vest based on continuous service, compensation expense is recorded over the service period from the date of grant. | |||||||||||||||||||||
During the three and nine month periods ended December 31, 2014, 505,000 options, granted to officers, employees and consultants of the Company (2013 – nil and nil, respectively). The exercise price of these options is $1.73. Of this grant, 420,000 options vest: as to one-third on the date of grant and one-third vesting on each of the first anniversary and the second anniversary of the grant date; 60,000 options vest as to one quarter vesting on date of grant and one quarter vesting at 90 days, 180 days and 270 days from the grant date; and 25,000 options vesting immediately. Since stock-based compensation is recognized only for those awards that are ultimately expected to vest, the Company has applied an estimated forfeiture rate (based on historical experience and projected employee turnover) to unvested awards for the purpose of calculating compensation expense. The grant date fair value of these options was estimated as $1.18 using the Black-Scholes option pricing model, based on the following assumptions: expected dividend yield of 0%; expected volatility of 144%; expected risk free interest rate of 1.39%; and expected term of 5 years. | |||||||||||||||||||||
The total number of options outstanding as at December 31, 2014 was 505,000 (March 31, 2014 – nil). The weighted average grant date fair value of the options granted during the three and nine month periods ended December 31, 2014, was $1.18 (2013 - $nil and $nil, respectively). The maximum number of options that may be issued under the Plan is floating at an amount equivalent to 15% of the issued and outstanding common shares, or 1,385,807 as at December 31, 2014 (March 31, 2014 – n/a). |
7_Income_Taxes
7. Income Taxes | 9 Months Ended |
Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
7. Income Taxes | The Company has no taxable income under Canadian Federal and Provincial tax laws for the three and nine month periods ended December 31, 2014 and 2013. The Company has non-capital loss carryforwards at December 31, 2014 totalling approximately $1,209,500, which may be offset against future taxable income. If not used, the loss carryforwards will expire between 2029 and 2035. |
8_Commitments_and_Contingencie
8. Commitments and Contingencies | 9 Months Ended | ||
Dec. 31, 2014 | |||
Commitments and Contingencies Disclosure [Abstract] | |||
8. Commitments and Contingencies | The Company entered into a five (5) year operating lease for office and production facilities. The lease commenced on December 1, 2013 and expires on November 30, 2018. The base monthly rental is $1,362 plus the Company’s estimated portion of property taxes and operating expenses which are currently $782 per month. The future commitments pursuant to this lease arrangement, including property taxes and operating expenses for the fiscal periods ending March 31 are: | ||
2015 | $ 6,433 | ||
2016 | 25,732 | ||
2017 | 25,732 | ||
2018 | 26,064 | ||
2019 | 17,376 | ||
For the three and nine month periods ended December 31, 2014, rental expenses related to this lease were $6,433 and $19,299, respectively (2013 - $1,362 and $1,362, respectively). | |||
On March 11, 2014, and as amended on July 18, September 3, 2014 and again on September 5, 2014, the Company entered into a consulting agreement to assist and advise the Company in matters concerning corporate finance and the Company’s current and proposed financing activities for the period commencing April 1, 2014 and ending December 31, 2014. The Company and Connectus intend to extend the contract until all efforts to complete the capital raise have been completed. Pursuant to this agreement, the Company agreed to issue to this consulting corporation (the “Consultant”), 625,000 warrants of the Company. Each warrant is exercisable at USD$0.04 ($0.046) per share for a period of three years. Of the warrants granted, 300,000 vested on September 3, 2014 with the unvested portion vesting pro-rata for each USD$250,000 ($290,025) raised in an offering, fully vesting upon USD$1,500,000 ($1,740,150) being raised. On November 21, 2014, 25,000 of the vested warrants were exercised. During the nine month period ended December 31, 2014, the President of the Consultant became a director of the Company. | |||
On April 23, 2014, the Company entered into employment agreements with three officers of the Company effective July 1, 2014. The initial contracts contain minimum aggregate commitments of approximately $427,000 per year for three years and additional contingent payments of up to approximately $600,000 in aggregate upon the occurrence of a change of control. As a triggering event has not taken place, the contingent payments have not been reflected in these condensed interim financial statements. |
9_Related_Party_Transactions
9. Related Party Transactions | 9 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
9. Related Party Transactions | Included in accounts payable and accrued liabilities as at December 31, 2014 is $156,405 (March 31, 2014 - $64,030) owing to two directors who are also officers and significant shareholders of the Company, and an officer for unpaid management fees. This balance is unsecured, non-interest bearing and due on demand. |
See also Notes 6a, 6b and 8. |
10_Financial_Instruments
10. Financial Instruments | 9 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Investments, All Other Investments [Abstract] | |||||||
10. Financial Instruments | (a) | Liquidity risk | |||||
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Company’s liquidity and operating results may be adversely affected if its access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its financing activities and advances from shareholders. As at December 31, 2014, the Company had cash of $7,485 (March 31, 2014 - $64,674) to settle current liabilities of $1,037,444 (March 31, 2014 - $518,936). All of the Company's financial liabilities other than the warrant liability of $360,462 have contractual maturities of less than 30 days and are subject to normal trade terms. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity. | |||||||
In the normal course of business, management considers various alternatives to ensure that the Company can meet some of its operating cash flow requirements through financing activities, such as private placements of common stock, preferred stock offerings and offerings of debt and convertible debt instruments as well as through merger or acquisition opportunities. Management may also consider strategic alternatives, including strategic investments and divestitures. As future operations may be financed out of funds generated from financing activities, the Company’s ability to do so is dependent on, among other factors, the overall state of capital markets and investor appetite for investments in the green technology industry and the Company’s securities in particular. Should the Company elect to satisfy its cash commitments through the issuance of securities, by way of either private placement or public offering or otherwise, there can be no assurance that the efforts to obtain such additional funding will be successful, or achieved on terms favorable to the Company or its existing shareholders. If adequate funds are not available on terms favorable to the Company, it may have to reduce substantially or eliminate expenditures or obtain funds through other sources such as divestiture or monetization of certain assets or sublicensing (where permitted) of certain rights to certain of the Company’s technologies or products. | |||||||
(b) | Concentration of credit risk | ||||||
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Cash deposits with a major Canadian chartered bank are insured by the Canadian Deposit Insurance Corporation up to $100,000. As at December 31, 2014, the Company held $7,485 (March 31, 2014 - $64,674) with a major Canadian chartered bank. | |||||||
(c) | Foreign exchange risk | ||||||
The Company principally operates within Canada. The Company’s functional currency is the Canadian dollar and major purchases are transacted in Canadian dollars. Management believes the foreign exchange risk derived from currency conversions is negligible and therefore does not hedge its foreign exchange risk. See also Note 10 (e). | |||||||
(d) | Interest rate risk | ||||||
The Company does not have any interest-bearing debt. The Company invests any cash surplus to its operational needs in investment-grade short-term deposit certificates issued by highly rated Canadian banks. The Company periodically assesses the quality of its investments and is satisfied with the credit rating of the bank. | |||||||
(e) | Derivative liability – warrant liability | ||||||
In connection with a consulting agreement, the Company granted warrants to purchase up to 625,000 common shares of the Company as disclosed in Note 6 (b). The warrants have an exercise price of USD$0.04 ($0.046). The warrants are exercisable at any time prior to April 1, 2017. The warrants are accounted for as derivative liabilities because the exercise price is denominated in a currency other than the Company’s functional currency. | |||||||
In connection with the settlement of a vendor’s account the Company granted warrants to purchase up to 3,350 common shares of the Company as disclosed in Note 6 (b). The warrants have an exercise price of USD$1.50 ($1.74). The warrants are exercisable at any time prior to October 22, 2016. The warrants are accounted for as derivative liabilities because the exercise price is denominated in a currency other than the Company’s functional currency. | |||||||
The table below summarizes the fair value of the Company’s financial liabilities measured at fair value: | |||||||
Fair Value at | |||||||
31-Dec | |||||||
2014 | |||||||
Fair Value Measurement Using | |||||||
Level 1 | Level 2 | Level 3 | |||||
Derivative liability – Warrants | $ 360,462 | $ - | $ - | $360,462 | |||
The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (warrant derivative liability) for the periods ended December 31, 2014 and March 31, 2014: | |||||||
December 31, | March 31, | ||||||
2014 | 2014 | ||||||
Balance at beginning of period | $ | - | $ | - | |||
Additions to derivative instruments, recognized in earnings | |||||||
as professional fees | 240,000 | - | |||||
Additions to derivative instruments recognized as valuation | |||||||
allocation from common stock | 2,060 | - | |||||
Derivative instruments exercised | (32,675 | ) | - | ||||
Change in fair market value, recognized in earnings | |||||||
as professional fees | 151,077 | - | |||||
Balance at end of period | $ | 360,462 | $ | - | |||
These instruments were valued using pricing models that incorporate the price of a share of common stock (based upon the price of the most recent private placement), volatility, risk free rate, dividend rate and estimated life. The Company estimated the value of the warrants using the Black-Scholes model. There were no transfers of assets or liabilities between Level 1, Level 2, or Level 3 during the periods ended December 31, 2014 and March 31, 2014. | |||||||
The following are the key weighted average assumptions used in connection with this computation: | |||||||
December 31, | |||||||
2014 | |||||||
Number of shares underlying the warrants | 603,350 | ||||||
Fair market value of the stock | $ 1.34 | ||||||
Exercise price | USD$0.05 | ||||||
$0.06 | |||||||
Expected volatility | 126% | ||||||
Risk-free interest rate | 1.06% | ||||||
Expected dividend yield | 0% | ||||||
Expected warrant life (years) | 2.25 | ||||||
11_Subsequent_events
11. Subsequent events | 9 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
11. Subsequent events | |
In November 2014, the Company initiated a further private placement of units at USD$1.50 ($1.74) per unit, each unit comprising one common share and one-half of one (1/2) common share purchase warrant. Each whole warrant will be exercisable at USD$2.00 ($2.32) per share until November 30, 2016. As at December 31, 2014, USD$26,550 ($30,000) in subscription proceeds had been received and as the private placement had not closed as at December 31, 2014, the funds raised have been classified as equity to be issued. Subsequent to December 31, 2014, the Company closed the private placement for gross proceeds of $30,000. |
2_Presentation_of_Financial_St1
2. Presentation of Financial Statements (Policies) | 9 Months Ended |
Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation |
These unaudited condensed interim financial statements should be read in conjunction with the financial statements for the Company’s most recently completed fiscal year ended March 31, 2014. These condensed interim financial statements do not include all disclosures required in annual financial statements, but rather are prepared in accordance with recommendations for interim financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). These unaudited condensed interim financial statements have been prepared using the same accounting policies, and methods as those used by the Company in the annual audited financial statements for the year ended March 31, 2014, except when disclosed below. | |
The unaudited condensed interim financial statements contain all adjustments (consisting of only normal recurring adjustments) which are necessary to present fairly the financial position of the Company as at December 31, 2014, and the results of its operations for the three and nine month periods ended December 31, 2014 and 2013 and its cash flows for the nine month periods ended December 31, 2014 and 2013. Note disclosures have been presented for material updates to the information previously reported in the annual audited financial statements. | |
In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-10 “ASU 2014-10” to eliminate certain financial reporting requirements for development stage entities. The amendments in ASU 2014-10 remove the incremental financial reporting requirements from US GAAP for development stage entities, including the presentation of inception-to-date information in the statements of income, cash flows and shareholder equity, and disclosure of the financial statements as those of a development stage entity. | |
Estimates | Estimates |
The preparation of these condensed interim financial statements has required management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of the revenues and expenses during the reporting period. | |
On an ongoing basis, the Company evaluates its estimates, including those related to provision for doubtful accounts, accrued liabilities, income taxes, stock based compensation and intangible assets. The Company bases its estimates on historical experiences and on various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates. As adjustments become necessary, they are reported in earnings in the period in which they become known. |
3_Property_and_Equipment_Table
3. Property and Equipment (Tables) | 9 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||
Property and Equipment | |||||||||||||||||
31-Dec-14 | March 31, 2014 | ||||||||||||||||
Cost | Accumulated | Cost | Accumulated | ||||||||||||||
Amortization | Amortization | ||||||||||||||||
Computer equipment | $ | 3,558 | $ | 1,234 | $ | 1,865 | $ | 560 | |||||||||
Production equipment | 70,309 | 15,177 | 27,236 | 5,447 | |||||||||||||
Leasehold improvements | 24,300 | 4,518 | 10,954 | 730 | |||||||||||||
Total | $ | 98,167 | $ | 20,929 | $ | 40,055 | $ | 6,737 | |||||||||
Net carrying amount | $ | 77,238 | $ | 33,318 | |||||||||||||
6_Capital_Stock_Tables
6. Capital Stock (Tables) | 9 Months Ended | ||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||
Summary of warrants outstanding | Number of | Number of | Weighted Average | Grant Date | Fair Value at | ||||||||||||||||
Expiry Date | Warrants | Warrants Exercisable | Exercise Price | Fair Value - Equity | December 31, 2014 of | ||||||||||||||||
Vested Warrants - Liability | |||||||||||||||||||||
June 6, 2016 | 300,383 | 300,383 | $ | 1.68 | * | $ | 170,908 | $ | - | ||||||||||||
June7,2016 | 5,000 | 5,000 | $ | 1.12 | 3,180 | - | |||||||||||||||
June 6, 2017 | 22,500 | 22,500 | $ | 1.12 | 16,110 | - | |||||||||||||||
1-Apr-17 | 600,000 | 275,000 | USD $0.04 | - | 358,325 | ||||||||||||||||
22-Oct-16 | 3,350 | 3,350 | USD $1.50 | - | 2,137 | ||||||||||||||||
931,233 | 606,233 | $ | 0.61 | $ | 190,198 | $ | 360,462 | ||||||||||||||
*Exercisable at $1.68 during the first year and at $2.24 during the second year. | |||||||||||||||||||||
8_Commitments_and_Contingencie1
8. Commitments and Contingencies (Tables) | 9 Months Ended | ||
Dec. 31, 2014 | |||
Commitments and Contingencies Disclosure [Abstract] | |||
Schedule of Future Minimum Rental Payments for Operating Leases | 2015 | $ 6,433 | |
2016 | 25,732 | ||
2017 | 25,732 | ||
2018 | 26,064 | ||
2019 | 17,376 |
10_Financial_Instruments_Table
10. Financial Instruments (Tables) | 9 Months Ended | ||||||
Dec. 31, 2014 | |||||||
Investments, All Other Investments [Abstract] | |||||||
Fair value of financial liabilities | Fair Value at | ||||||
31-Dec | |||||||
2014 | |||||||
Fair Value Measurement Using | |||||||
Level 1 | Level 2 | Level 3 | |||||
Derivative liability – Warrants | $ 360,462 | $ - | $ - | $360,462 | |||
Changes in the fair value of Level 3 financial liabilities | December 31, | March 31, | |||||
2014 | 2014 | ||||||
Balance at beginning of period | $ | - | $ | - | |||
Additions to derivative instruments, recognized in earnings | |||||||
as professional fees | 240,000 | - | |||||
Additions to derivative instruments recognized as valuation | |||||||
allocation from common stock | 2,060 | - | |||||
Derivative instruments exercised | (32,675 | ) | - | ||||
Change in fair market value, recognized in earnings | |||||||
as professional fees | 151,077 | - | |||||
Balance at end of period | $ | 360,462 | $ | - | |||
Fair value assumptions | December 31, | ||||||
2014 | |||||||
Number of shares underlying the warrants | 603,350 | ||||||
Fair market value of the stock | $ 1.34 | ||||||
Exercise price | USD$0.05 | ||||||
$0.056 | |||||||
Expected volatility | 126% | ||||||
Risk-free interest rate | 1.06% | ||||||
Expected dividend yield | 0% | ||||||
Expected warrant life (years) | 2.25 | ||||||
1_Nature_of_the_Business_and_G1
1. Nature of the Business and Going Concern (Details Narrative) (CAD) | Dec. 31, 2014 | Mar. 31, 2014 |
Nature Of Business And Going Concern Details Narrative | ||
Working capital deficiency | 844,985 | 434,263 |
Accumulated deficit | -1,871,085 | -722,084 |
3_Property_and_Equipment_Detai
3. Property and Equipment (Details) (CAD) | Dec. 31, 2014 | Mar. 31, 2014 |
Property and Equipment, gross | 98,167 | 40,055 |
Accumulated Amortization | 20,929 | 6,737 |
Property and Equipment, net | 77,238 | 33,318 |
Computer equipment | ||
Property and Equipment, gross | 3,558 | 1,865 |
Accumulated Amortization | 1,234 | 560 |
Production equipment | ||
Property and Equipment, gross | 70,309 | 27,236 |
Accumulated Amortization | 15,177 | 5,447 |
Leasehold improvements | ||
Property and Equipment, gross | 24,300 | 10,954 |
Accumulated Amortization | 4,518 | 730 |
4_Intangible_Assets_Details_Na
4. Intangible Assets (Details Narrative) (CAD) | Dec. 31, 2014 | Mar. 31, 2014 |
Intangible Assets Details Narrative | ||
Intangible assets | 13,740 | 7,141 |
5_Advances_from_Shareholders_D
5. Advances from Shareholders (Details Narrative) (CAD) | Dec. 31, 2014 | Mar. 31, 2014 |
Advances From Shareholders Details Narrative | ||
Advances from shareholders | 423,896 | 431,406 |
7_Income_Taxes_Details_Narrati
7. Income Taxes (Details Narrative) (CAD) | 9 Months Ended |
Dec. 31, 2014 | |
Income Taxes Details Narrative | |
Non-capital loss carryforwards | 1,209,500 |
Operating loss carryforward, expiry period | The loss carryforwards will expire between 2029 and 2035. |
8_Commitments_and_Contingencie2
8. Commitments and Contingencies (Details) (CAD) | Mar. 31, 2014 |
Commitments and Contingencies Disclosure [Abstract] | |
2015 | 6,433 |
2016 | 25,732 |
2017 | 25,732 |
2018 | 26,064 |
2019 | 17,376 |
8_Commitments_and_Contingencie3
8. Commitments and Contingencies (Details Narrative) (CAD) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments And Contingencies Details Narrative | ||||
Rental expenses | 6,433 | 1,362 | 19,299 | 1,362 |
9_Related_Party_Transactions_D
9. Related Party Transactions (Details Narrative) (CAD) | Dec. 31, 2014 | Mar. 31, 2014 |
Related Party Transactions Details Narrative | ||
Due to related party | 156,405 | 64,030 |
10_Financial_Instruments_Detai
10. Financial Instruments (Details) (CAD) | Dec. 31, 2014 |
Derivative liability - Warrants | 360,462 |
Level 1 | |
Derivative liability - Warrants | 0 |
Level 2 | |
Derivative liability - Warrants | 0 |
Level 3 | |
Derivative liability - Warrants | 360,462 |
10_Financial_Instruments_Detai1
10. Financial Instruments (Details 1) (CAD) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2014 | Mar. 31, 2014 | |
Investments, All Other Investments [Abstract] | ||
Balance at beginning of period | 0 | 0 |
Additions to derivative instruments, recognized in earnings as professional fees | 240,000 | 0 |
Additions to derivative instruments recognized as valuation allocation from common stock | 2,060 | 0 |
Derivative instruments exercised | -32,675 | 0 |
Change in fair market value, recognized in earnings as professional fees | 151,077 | 0 |
Balance at end of period | 360,462 | 0 |
10_Financial_Instruments_Detai2
10. Financial Instruments (Details 2) (CAD) | 9 Months Ended |
Dec. 31, 2014 | |
Investments, All Other Investments [Abstract] | |
Number of shares underlying the warrants | 603,350 |
Fair market value of the stock | 1.34 |
Exercise price | USD$0.05 $0.056 |
Expected volatility | 126.00% |
Risk-free interest rate | 1.06% |
Expected dividend yield | 0.00% |
Expected warrant life (years) | 2 years 3 months |