Quarterly report pursuant to Section 13 or 15(d)

DERIVATIVE LIABILITY

v3.7.0.1
DERIVATIVE LIABILITY
3 Months Ended
Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE LIABILITY
10 DERIVATIVE LIABILITY

 

The short-term convertible notes disclosed in note 9 above, have variable priced conversion rights with no fixed floor price and will re-price dependent on the share price performance over varying periods of time. This gives rise to a derivative financial liability, which was initially valued at inception of the convertible note using a Black-Scholes valuation model. The value of this derivative financial liability was re-assessed at March 31, 2017 and March 31, 2016, and $247,770 and $0 was charged to the statement of operations and comprehensive loss, respectively. The value of the derivative liability will be re-assessed at each financial reporting period, with any movement thereon recorded in the statement of operations in the period in which it is incurred.

 

The following assumptions were used in the Black-Scholes valuation model:

 

    Three        
    Months Ended     Year ended  
    March 31,     December 31,  
    2017     2016  
Conversion price   $    0.11 to 0.22     $ 0.22 to 0.23  
Risk free interest rate        0.63 to 1.04 %     0.85 %
Expected life of derivative liability     4 to 11 months       9 months  
expected volatility of underlying stock     132.56 to 138.19 %     133.0 %
Expected dividend rate     0 %     0 %

 

The movement in derivative liability is as follows:

 

    March 31, 2017     December 31, 2016  
             
Opening balance   $ 113,074     $ -  
Derivative financial liability arising from convertible note     458,000       77,000  
Fair value adjustment to derivative liability     247,770       36,074  
    $ 818,844     $ 113,074