6. Derivative Liabilities

3 Months Ended

Dec. 31, 2018

Notes

6. Derivative Liabilities

6.    Derivative Liabilities

The Company records the fair value of the conversion price of the convertible debentures as disclosed in Note 4 in accordance with ASC 815, Derivatives and Hedging.  The fair value of the derivatives was calculated using a multi-nominal lattice model.  The fair value of the derivative liabilities is revalued on each balance sheet date with corresponding gains and losses recorded in the consolidated statement of operations.  For the three months ended December 31, 2018, the Company recorded a loss on the change in the fair value of derivative liability of $708,155 (2017 - $nil).  As at December 31, 2018, the Company recorded a derivative liability of $2,136,970 (September 30, 2018 - $800,973).

The following inputs and assumptions were used to value the derivative liabilities outstanding during the periods ended December 31, 2018 and September 30, 2018:

	December 31, 2018	September 30, 2018
Expected volatility	79-185%	133-156%
Risk free rate	2.63%	2,59%
Expected life (in years)	0.5-1.0	0.5-1.0

A summary of the activity of the derivative liability is shown below:

	$
Balance, September 30, 2018	800,973
Derivative additions associated with convertible notes	890,618
Adjustment for conversion	(262,776)
Mark to market adjustment at December 31, 2018	708,155
Balance, December 31, 2018	2,136,970