6. Derivative Liabilities

3 Months Ended

Dec. 31, 2019

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 period ended December 31, 2019, the Company recorded a loss on the change in the fair value of derivative liability of $876,960 (December 31, 2018 - $708,155). As at December 31, 2019, the Company recorded a derivative liability of $4,240,914 (September 30, 2019 - $3,437,200).

The following inputs and assumptions were used to value the derivative liabilities outstanding as at December 31, 2019 and September 30, 2019:

	December 31, 2019	September 30, 2019
Expected volatility	111-200%	75-151%
Risk free rate	1.60%	1.75%
Expected life (in years)	0.2-1.0	0.2-1.0

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

	$
Balance, September 30, 2019	3,437,200
Derivative additions associated with convertible notes	742,753
Adjustment for conversion	(646,588)
Mark-to-market adjustment at December 31, 2019	707,549
Balance, December 31, 2019	4,240,914