Debentures and Convertible Notes |
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Sep. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes to Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debentures and Convertible Notes |
12. Debentures and Convertible Notes
Debentures and convertible notes outstanding include the following:
February 29, 2016 and April 4, 2016 Convertible Notes
On February 29, 2016, the Company closed a Securities Purchase Agreement with an unaffiliated private investor, to raise up to $750,000. The Company received gross proceeds from the initial private placement of $600,000. On April 4, 2016, the Company received the balance of gross proceeds of $150,000, less legal expenses of $15,000. Also, the company paid $75,000 in commissions for these notes. As part of the purchase agreement, the Company also issued a warrant to purchase 163,044 shares of Company’s common stock at $1.15 per share. These notes bear an interest rate of 12% per annum and were due in one year. The company continued to accrue interest at 22% past the due date. The notes were guaranteed by Confidi Union Impresa, an unrelated party.
The Company repaid a total of $125,000 in the nine months ended September 30, 2017. These payments were applied to the interest accrued at the date of the payments with the remainder applied towards the accrued penalty.
Accounts payable and accrued liabilities included a penalty and accrued interest on this Note of $193,244 and $33,756 at September 30, 2017 and September 30, 2016, respectively. See also Note 19.
January 24, 2017 Debenture
On January 24, 2017, the Company received gross proceeds from the initial private placement of CDN $180,000 (approximately U.S. $136,788) with a group of accredited investors. The Company incurred a total of CDN $14,400 (approximately U.S. $10,943) in finder’s fees to facilitate this transaction for net proceeds of CDN $165,600 (approximately U.S. $125,845). The debenture bears an interest rate of 10% per annum and is due in two years. As part of the purchase agreement, the Company also issued a warrant to purchase 18,000 of the Company’s common stock at $1.00 per share up to January 24, 2019.
March 27, 2017 Convertible Debenture
On March 27, 2017, the Company received gross proceeds from the initial private placement of CDN $150,000 (approximately U.S. $113,000) with a group of accredited investors. The Company incurred a total of CDN $5,000 (approximately U.S. $3,765) in finder’s fees to facilitate this transaction for net proceeds of CDN $145,000 (approximately U.S. $109,235). The convertible debenture bears an interest rate of 10% per annum and is due in two years. The debenture is convertible to shares of common stock of the Company at a price of $1.50 per share at any time up to March 27, 2019. As part of the purchase agreement, the Company also issued a warrant to purchase 15,000 of the Company’s common stock at $1.00 per share up to March 27, 2019.
June 5, 2017, and June 9, 2017 Convertible Debentures
On June 5, 2017, the Company received gross proceeds from the initial private placement of CDN $150,000 (approximately U.S. $115,470) with a group of accredited investors. The Company incurred a total of CDN $7,500 (approximately U.S. $5,774) in finder’s fees to facilitate this transaction for net proceeds of CDN $142,500 (approximately U.S. $109,696). The Debenture is convertible to shares of common stock of the Company at a price of $1.50 per share at any time up to June 5, 2019. As part of the purchase agreement, the Company also issued a warrant to purchase 15,000 of the Company’s common stock at $1.00 from November 5, 2017 to June 5, 2019.
On June 9, 2017, The Company received additional gross proceeds of CDN $75,000 (approximately U.S. $57,735) in connection with the June 5, 2017 Securities Purchase Agreement. The Company incurred a total of CDN $3,750 (approximately U.S. $2,887) in finder’s fees to facilitate this transaction for net proceeds of CDN $71,250 (approximately U.S. $54,848). The debenture is convertible to shares of common stock of the Company at a price of $1.50 per share at any time up to June 5, 2019. As part of the purchase agreement, the Company also issued a warrant to purchase 7,500 of the Company’s common stock at $1.00 from November 9, 2017 to June 9, 2019.
The Company has determined that the conversion feature embedded in the convertible notes and debentures constitutes a derivative and has been bifurcated from the note and recorded as a derivative liability, with a corresponding discount recorded to the associated debt, on the accompanying balance sheet, and revalued to fair market value at each reporting period. See Note 16.
The commissions and finders' fees related to the notes and debentures were amortized over the life of the notes.
Warrants issued in relation to the debentures and promissory notes are discussed in Note 15. |