| Capital Stock | 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 May 18, 2016, 44,500 common
shares purchase warrants were exercised at USD$0.04 ($0.052) per warrant for total cash proceeds of USD$1,780 ($2,318). On May 15, 2016, 13,874 shares
to be issued were issued as common shares. On June 22, 2016, 15,264 shares
to be issued were issued as common shares. On June 30, 2016, 66,667 common
shares were issued to a consultant in settlement of a debt at a value of $64,585 based upon an estimated fair market value of USD$0.75
($0.97) per share at the time of issuance. On June 30, 2016, 250,000
common shares were issued to a consulting firm as a portion of the compensation for services initiated on June 24, 2016 and to
be provided over a 6 month period at a value of $201,481 based upon an estimated fair market value of USD$0.62 ($0.81) per share
at the date of issue. This amount was expensed during the six months ended September 30, 2016 as professional fees on the condensed
interim statements of operations. Equity to be issued On May 19, 2016, the Company
signed a letter of engagement with an agent in connection with proposed placements of up to USD$10,000,000 ($13,117,000) which
included as part of the fee the issuance of 100,000 common shares as a non-refundable retainer at a value of $101,579 based upon
an estimated fair market value of USD$0.78 ($1.02) per share at the time of the agreement (See Note 8). The retainer has been recorded
as a prepaid expense on the condensed interim balance sheet as at September 30, 2016. On April 18, 2016, the Company
signed an agreement with a consultant pursuant to which it has committed to issue 250,000 common shares of the Company as compensation
for services to be rendered over a period of 5 months. Two directors and officers of the Company transferred 250,000 of their personal
shares to the consultant and as such the Company has agreed to reimburse the directors and officers for these common shares transferred
by issuance of common shares from treasury. The commitment was valued at $86,380 based upon an estimated fair market value of USD$0.27
($0.35) per share at the date of issue and was expenses during the six months ended September 30, 2016 as professional fees on
the condensed interim statements of operations. On July 6, 2016, the Company
committed to issue 20,000 common shares to a consultant in settlement of a debt at a value of $19,500 (USD$15,000) based upon an
estimated fair market value of USD$0.75 ($0.97) per share at the time of commitment. These shares were issued subsequent to September
30, 2016 (See Note 11). Additionally, 250,000 common
shares were to be issued on August 24, 2016 at a value of $113,225 based upon an estimated fair market value of $USD$0.35 ($0.45)
per share at the date of issue to a consulting firm as a portion of the compensation for services initiated on June 24, 2016 and
to be provided over a 6 month period. These shares were issued subsequent to September 30, 2016 (See Note 11). The amount has been
recorded as a prepaid expense on the condensed interim balance sheet as at September 30, 2016 of which the Company amortized $27,683
of this prepaid expense, which was recorded as professional fees on the condensed interim statements of operations.
Common shares to be issued Value ($)
Balance, March 31, 2016 146,603 339,949
Equity issued (29,138 ) (60,325 )
Equity to be issued as compensation 620,000 320,684
Balance, September 30, 2016 737,465 600,308 Equity Purchase Agreement
(EPA) On September 10, 2015 the
Company entered into the EPA. The holder of the EPA is committed to purchase up to USD$750,000 worth of the Companys common
shares (the Put Shares) over the 12 month term of the EPA. The Company paid to the holder of the EPA a commitment
fee for entering into the EPA equal to 50,000 restricted common shares of the Company, valued at $67,195, based on the stock price
in the most recent private placement as the Companys shares had not yet begun to trade on a public market. From time to time over the
EPA, commencing on the trading day immediately following the date on which the registration statement covering the resale of the
Put Shares (the Registration Statement) is declared effective by the Securities and Exchange Commission (the Commission),
the Company may, in its sole discretion, draw upon the EPA periodically during the term by the Companys delivery to the
holder of the EPA, a written notice requiring the holder to purchase a dollar amount in common shares (the Draw Down Notice).
The shares issuable pursuant to a Draw Down Notice, when aggregated with the shares then held by the holder on the date of the
draw down may not exceed the lessor of (i) 4.99% of the Companys outstanding common shares, (ii) USD$62,500 in any 30 days
period or (iii) 100% of the aggregate trading volume for the 10 trading days immediately preceding the date of the Draw Down Notice
without the prior written consent of the holder. The purchase price per common share purchased under the EPA shall equal 65% of
the lowest closing bid for the 10 days immediately preceding the date of the Draw Down Notice. The Registration Statement was filed
with the Commission on October 1, 2015 and was declared effective by the Commission on March 3, 2016. On June 23, 2016, the Company
agreed in conjunction with RY Capital Group, LLC and GHS Investments, LLC to assign the EPA to GHS Investments, LLC. The change
made to the EPA include increasing the share purchase price per common share to 80% from 65% of the lowest closing bid for the
10 trading days immediately preceding the date of the draw down notice, increasing the upper limit on individual draws to USD$75,000
from USD$62,500 and including a true-up feature whereby if the lowest volume-weighted average price (VWAP) for the
ten trading days following a draw down (the Trading Period) is less than 85% of the purchase price of the common
shares issued in connection with a draw down, then the Company shall issue such additional common shares as maybe necessary to
adjust the purchase price for such draw down to equal the VWAP during the Trading Period. See also Note 11. (b) Warrants As at September 30, 2016,
the following warrants were outstanding:
Expiration Date
Number of Warrants
Number of Warrants Exercisable Weighted Average Exercise Price
Grant Date Fair Value Equity Fair Value - at September 30, 2016 of Vested Warrants - Liability
June 6, 2017 22,500 22,500 $ 1.12 $ 16,110 $
April 1, 2017 325,000 - USD $0.04 -
($ 0.052 )
October 22, 2016* 3,350 3,350 USD $1.50 -
($ 1.97 )
November 30, 2016 8,850 8,850 8,850 USD $2.00 -
($ 2.62 )
359,700 34,700 $ 0.20 $ 16,110 $ $ * Subsequent to September 30, 2016, these warrants
expired unexercised.
i) In connection with a private placement offering completed during the year ended March 31, 2015, the Company granted an aggregate of 8,850 share purchase warrants each exercisable into one common share at USD$2.00 ($2.62) until November 30, 2016. The fair value of the warrants at the date of grant of $6,213 was estimated using the Black-Scholes option pricing model, based on the following weighted average assumptions: expected dividend yield of 0%; expected volatility of 124%; risk free interest rate of 1.02%; and expected term of 2 years.
ii) During the year ended March 31, 2015, the Company also issued 27,500 warrants of the Company valued at $19,290 for services rendered of which 22,500 warrants were granted to an officer of the Company. The compensation expense has been included in professional fees on the 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 of $19,290 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 the unit issuance completed October 22, 2014 in settlement of debt, the Company granted 3,350 share purchase warrants exercisable into one common share at USD$1.50 ($1.97) per share for a period of 2 years from the date of issuance. The fair value of the warrants at the date of grant of $2,060 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.
iv) 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 ($0.052) 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 ($327,925) raised in an offering, fully vesting upon USD$1,500,000 ($1,967,550) being raised. The fair value of the 625,000 warrants at the date of grant of $500,000 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 six month period ended
September 30, 2016, the Company recorded $Nil, (2015 - $Nil) as compensation expense for warrants issued to a consultant for service,
net of a market adjustment for the six months period ended September 30, 2016 of $16,042 (2015 - $Nil). The expense was recorded
as professional fees on the statements of operations. ASC 815 Derivatives
and Hedging indicates that warrants with exercise prices denominated in a currency other than an entitys functional
currency should not be classified as equity. As a result, warrants with a USD exercise price 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 statements of operations. The continuity of warrants
for the period ended September 30, 2016 is as follows:
Number of Warrants Weighted Average Exercise Price
Balance, March 31, 2016 709,583 $ 1.06
Exercised (44,500 ) 0.05
Expired, unexercised (305,383 ) 2.22
Balance, September 30, 2016 359,700 $ 0.20 As at September 30, 2016,
the fair value of the 337,200 (March 31, 2016 381,700) warrants exercisable in US dollars was $156,000 (March 31, 2016
- $222,803) which was estimated using the Black-Scholes option pricing model based on the following weighted average assumptions:
expected dividend yield of 0% (March 31, 2016 - 0%); expected volatility of 227% (March 31, 2016 150%); risk-free interest
rate of 0.52% (March 31, 2016 0.54%) and expected term of 0.49 years (March 31, 2016 0.99 years). Of this amount,
$Nil (March 31, 2016 - $27,479) was reflected as a liability as at September 30, 2016, 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 September 30, 2016. The warrant liability is classified
as Level 3 within the fair value hierarchy (See Note 10). The Companys computation of expected volatility during the periods
ended September 30, 2016 and 2015 is based on the market close price of comparable public entities over the period equal to the
expected life of the warrants. The Companys computation of expected life is calculated using the contractual life. (c) Stock-based compensation The Companys stock-based
compensation program (the 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. The total number of options
outstanding as at September 30, 2016 was 930,000 (March 31, 2016 930,000). The weighted average grant date fair value of
options granted during the periods ended September 30, 2016 was $n/a (2015 - $n/a). 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 1,513,703 as at September
30, 2016 (March 31, 2016 1,455,158). The activities in options
outstanding are as noted below:
Number of Options Granted Weighted Average Exercise Price
Balance, March 31, 2016 930,000 $ 2.05
Granted - $ -
Balance, September 30, 2016 930,000 $ 2.05 The following table presents
information relating to stock options outstanding and exercisable at September 30, 2016.
Options Outstanding Options Exercisable
Exercise Price Number of Options Weighted Average Remaining Contractual Life (Years) Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Years)
$ 1.73 505,000 3.20 398,333 $ 1.73 3.20
$ 2.43 425,000 4.25 177,083 $ 2.43 4.25
$ 2.05 930,000 3.57 575,416 $ 1.93 3.52 For the three and six month
periods ended September 30, 2016, the Company recorded $126,449 and $277,554, respectively (2015 - $112,976 and $188,026 respectively)
as Additional Paid in Capital for options issued to directors, officers and consultants based on continuous service. This expense
was recorded as stock based compensation on the statements of operations. Additionally for the three and six month periods ended
September 30, 2016, the Company recorded $315,543 (2015 - $nil) as professional fees for services rendered. |
