7. Derivative Liabilities

Jun. 30, 2020

Notes

7. Derivative Liabilities

7.Derivative Liabilities 

The Company records the fair value of the conversion price of the convertible debentures as disclosed in Note 3 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 nine months ended June 30, 2020, the Company recorded a loss on the change in the fair value of derivative liability of $5,863,127 (year ended September 30, 2019 - $218,922). As at June 30, 2020, the Company recorded a derivative liability of $4,519,654 (September 30, 2019 - $3,437,200). The following inputs and assumptions were used to value the derivative liabilities outstanding during the periods ended June 30, 2020 and September 30, 2019:

	June 30, 2020	September 30, 2019
Expected volatility	158-240%	75-151%
Risk free rate	0.16%	1.75%
Expected life (in years)	0.5-1.0	0.2-1.0

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

	$
Balance, September 30, 2018	800,973
Derivative additions associated with convertible notes	3,772,666
Adjustment for conversion/prepayment	(1,355,361)
Mark-to-market adjustment	218,922
Balance, September 30, 2019	3,437,200
Derivative additions associated with convertible notes	2,591,119
Adjustment for conversion/prepayment	(7,371,792)
Mark to market adjustment	5,863,127
Balance, June 30, 2020	4,519,654