7. Derivative Liabilities

3 Months Ended

Sep. 30, 2020

Notes

7. Derivative Liabilities

7.Derivative Liabilities 

The Company records the fair value of the conversion price of the convertible debentures 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 September 30, 2020, the Company recorded a loss on the change in the fair value of derivative liability of $773,886 (2019 - $62,554).  As at September 30, 2020, the Company recorded a derivative liability of $2,777,634 (June 30, 2020 - $4,519,654).

The following inputs and assumptions were used to value the derivative liabilities outstanding at September 30, 2020 and June 30, 2020:

	September 30, 2020	June 30, 2020
Expected volatility	134-235%	158-240%
Risk free rate	0.11-0.18%	0.16%
Expected life (in years)	0.375-1.0	0.5-1.0

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

	$
Balance, June 30, 2020	4,519,654
Derivative additions associated with convertible notes	275,000
Adjustment for conversion/prepayment	(2,790,906)
Mark-to-market adjustment	773,886
Balance, September 30, 2020	2,777,634