| 7. Convertibles Debenture |
| (a) |
On
March 30, 2017, the Company issued a convertible debenture to a third party in the principal amount of $50,000 which is unsecured,
bears interest at 12% per annum, calculated monthly and not in advance, and is due on September 30, 2017. Subject to the approval
of the holder of the convertible debenture, the Company may convert any or all of the principal and/or interest at any time
following the six month anniversary of the issuance date of the convertible debenture (September 30, 2017) into common shares
of the Company at a price per share equal to a 20% discount to the fair market value of the Company’s common stock. |
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The
Company analyzed the conversion option under ASC 815, “Derivative and Hedging” (“ASC 815”),
and determined that the conversion feature should be classified as a liability and recorded at fair value due to there being
no explicit limit to the number of shares to be delivered upon settlement of the conversion option. The fair value of the
derivative liability resulted in a discount to the convertible debenture of $32,127. The carrying value of the convertible
debenture will be accreted over the term of the convertible debenture up to the value of $50,000. During the six months ended
June 30, 2017, $11,973 (2016 - $nil) of accretion expense had been recorded. As at June 30, 2017, the carrying value of the
convertible debenture is $29,846 (December 31, 2016 - $nil). |
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| (b) |
On
May 1, 2017, the Company issued two convertible debentures for aggregate proceeds of $50,000 which are unsecured, bear interest
at 12% per annum, calculated monthly and not in advance, and are due on May 1, 2019. Subject to the approval of the holder
of the convertible debenture, the Company may convert any or all of the principal and/or interest at any time following the
six month anniversary of the issuance date of the convertible debenture (November 1, 2017) into common shares of the Company
at a price per share equal to a 20% discount to the fair market value of the Company’s common stock. The fair value
of the derivative liabilities resulted in a discount to the convertible debentures of $45,400. The carrying value of the convertible
debentures will be accreted over the term of the convertible debentures up to the value of $50,000. During the six months
ended June 30, 2017, $910 (2016 - $nil) of accretion expense had been recorded. As at June 30, 2017, the carrying value of
the convertible debentures are $5,510 (December 31, 2016 - $nil). |
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