CONVERTIBLE DEBENTURES |
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14. |
CONVERTIBLE DEBENTURES |
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|
Principal
due |
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|
Principal
due |
|
Lender |
|
Maturity
Date |
|
Interest
Rate |
|
|
August 31,
2020 |
|
|
August 31,
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
GS Capital Partners |
|
January 15, 2020 |
|
|
10.00 |
% |
|
|
- |
|
|
|
143,750 |
|
Calvary Fund I LP |
|
September 4, 2019 |
|
|
10.00 |
% |
|
|
- |
|
|
|
250,000 |
|
|
|
July 31, 2021 |
|
|
12.00 |
% |
|
|
250,000 |
|
|
|
250,000 |
|
|
|
July 31, 2021 |
|
|
12.00 |
% |
|
|
480,000 |
|
|
|
480,000 |
|
|
|
August 7, 2021 |
|
|
0 |
% |
|
|
150,000 |
|
|
|
- |
|
SBI Investments LLC |
|
December 15, 2020 |
|
|
10.00 |
% |
|
|
250,000 |
|
|
|
250,000 |
|
|
|
January 16, 2021 |
|
|
10.00 |
% |
|
|
55,000 |
|
|
|
- |
|
Bay Private Equity, Inc. |
|
March 31, 2021 |
|
|
5.00 |
% |
|
|
3,661,874 |
|
|
|
2,900,000 |
|
|
|
February 20, 2021 |
|
|
5.00 |
% |
|
|
2,400,000 |
|
|
|
2,400,000 |
|
Cantone Asset Management LLC |
|
October 19, 2020 |
|
|
7.00 |
% |
|
|
300,000 |
|
|
|
300,000 |
|
|
|
December 17, 2020 |
|
|
7.00 |
% |
|
|
240,000 |
|
|
|
- |
|
|
|
January 14, 2021 |
|
|
7.00 |
% |
|
|
240,000 |
|
|
|
- |
|
Private lender |
|
October 29, 2020 |
|
|
10.00 |
% |
|
|
200,000 |
|
|
|
- |
|
Petroleum Capital Funding LP. |
|
November 26, 2023 |
|
|
10.00 |
% |
|
|
318,000 |
|
|
|
- |
|
|
|
December 4, 2023 |
|
|
10.00 |
% |
|
|
432,000 |
|
|
|
- |
|
|
|
March 30, 2024 |
|
|
10.00 |
% |
|
|
471,000 |
|
|
|
- |
|
Power Up Lending Group LTD |
|
May 7, 2021 |
|
|
12.00 |
% |
|
|
64,300 |
|
|
|
- |
|
|
|
June 4, 2021 |
|
|
12.00 |
% |
|
|
69,900 |
|
|
|
- |
|
|
|
June 19, 2021 |
|
|
12.00 |
% |
|
|
82,500 |
|
|
|
- |
|
EMA Financial, LLC |
|
April 22, 2021 |
|
|
8.00
|
% |
|
|
150,000 |
|
|
|
- |
|
Morison Management S.A |
|
July 31, 2021 |
|
|
10.00 |
% |
|
|
192,862 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
10,007,436 |
|
|
|
6,973,750 |
|
Unamortized debt discount |
|
|
|
|
|
|
|
|
(1,173,112 |
) |
|
|
(644,281 |
) |
Total loans |
|
|
|
|
|
|
|
$ |
8,834,324 |
|
|
$ |
6,329,469 |
|
The maturity date of the convertible
debentures are as follows:
|
|
August 31, 2020 |
|
|
August 31, 2019 |
|
|
|
|
|
|
|
|
Principal classified as repayable within one year |
|
$ |
8,227,257 |
|
|
$ |
6,188,872 |
|
Principal classified as repayable later than one year |
|
|
607,067 |
|
|
|
140,597 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,834,324 |
|
|
$ |
6,329,469 |
|
On December 28, 2018, the Company
issued a convertible debenture to GS Capital Partners (“GS”)of $143,750 including an Original Issue Discount (“OID”)
of $18,750, together with warrants exercisable for 260,416 shares of common stock at an exercise price of $0.48 per share with
a maturity date of April 29, 2019. The debenture has a term of four months and one day and bears interest at a rate of 10% per
annum payable at maturity and at the option of the holder the purchase amount of the debenture (excluding the original issue discount
of 15%) is convertible into 260,416 common shares of the Company at $0.48 per share in accordance with the terms and conditions
set out in the debenture.
On August 26, 2020, the convertible
debenture in the aggregate principal sum of $143,750 together with accrued interest and penalty interest thereon of $49,112 was
purchased and assigned to Morison Management S.A. (“Morison”) The Company cancelled the convertible debenture issued
to GS and issued a replacement convertible debenture to Morison in the aggregate principal sum of $192,862 with a maturity date
of August 26, 2021 and bearing interest at 10% per annum. The note is convertible into common shares at a conversion price equal
to 50% of the lowest trading price on the preceding 20 days prior to the notice of conversion.
|
|
(i) |
On September 4, 2018, the Company
issued units to Cavalry Fund I LP (”Cavalry”) for $250,000, which was originally advanced on August 9, 2018.
The units consist of 250 units of $1,000 convertible debentures and a common share purchase warrant exercisable for 1,149,424
shares. The convertible debenture bore interest at 10% per annum and matured on September 4, 2019 and was convertible
into common shares of the Company at a price of $0.87 per common share. The common share purchase warrants entitle the
holder to acquire additional common shares of the Company at a price of $0.87 per share and expired on September 4, 2019.
On September 9, 2019, the Company
repaid $75,000 of principal and $1,096 in interest in partial settlement of the convertible debenture. On September 19,
2019, the Company entered into an agreement with Calvary Fund, whereby the remaining principal and interest of $200,000
was settled by the issue of 1,111,111 common shares and a warrant exercisable for 1,111,111 common shares at an exercise
price of $0.23 per share.
On August 7, 2020 the Company
entered into an Amended and Restated Amending Agreement (“ARA”) with Cavalry whereby the maturity
date of the warrant exercisable for 1,111,111 common shares was extended to July 31, 2021 and the exercise price was amended
to $0.0412 per share.
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|
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(ii) |
On October 12, 2018, the Company
issued 250 one year units to Cavalry for gross proceeds of $250,000, each unit consisting of a $1,000 principal convertible
unsecured debenture, bearing interest at 10% per annum and convertible into common shares at $0.86 per share, and a common
share purchase warrant exercisable for 290,500 shares at an exercise price of $0.86 per share, which warrant expired on
October 12, 2019.
During December 2019, the maturity
date of the convertible debenture was amended to October 12, 2020 and the conversion price was amended to $0.18 per share. In
terms of the ARA entered into on August 7, 2020, the maturity date of the convertible debenture was amended to July 31, 2021,
the interest rate was amended to 12% per annum and the conversion price was amended to $0.0412 per share.
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|
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(iii) |
On August 19, 2019, the Company
issued a convertible debenture to Calvary for an aggregate principal amount of $480,000, including an original issue discount
of $80,000, for net proceeds of $374,980 after certain legal expenses, and a warrant exercisable for 2,666,666 common
shares at an exercise price of $0.15 per share. The convertible debenture bore interest at 3.3% per annum and matured
on August 29, 2020. The convertible debenture may be converted into common shares of the Company at a conversion price
of $0.17 per share.
In terms of the ARA entered into
on August 7, 2020, the maturity date of the convertible debenture was amended to July 31, 2021 and the conversion price
was amended to $0.0412 per share and the exercise price of the warrant was amended to $0.0412 per share and the maturity
date was amended to July 31, 2021.
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|
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(i) |
On October 15, 2018, the Company
entered into an agreement with SBI Investments, LLC (“SBI”) whereby the Company issued 250 one year units
for proceeds of $250,000, each debenture consisting of a $1,000 principal convertible unsecured debenture, bearing interest
at 10% per annum and convertible into common shares at $0.86 per share, and a warrant exercisable for 1,162 shares of
common stock at an exercise price of $0.86 per share.
The warrants expired on October
15, 2019 unexercised.
During December 2019, the maturity
date of the convertible loan was extended to October 12, 2020 and the conversion price of the note was reset to $0.18
per share.
Subsequent to year end, the Company
repaid $50,000, and the maturity date of the loan has been extended to December 15, 2020.
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|
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(ii) |
On January 16, 2020, the Company entered into an agreement with
SBI whereby the Company issued a convertible promissory note for $55,000 for gross proceeds of $50,000, bearing interest at
10% per annum and convertible into common shares at $0.14 per share. The convertible note matures on January 16, 2021. In
conjunction with the convertible promissory note, the Company issued a warrant exercisable for 357,142 shares of common stock
at an exercise price of $0.14 per share, expiring on January 16, 2021. |
|
(d) |
Bay Private Equity,
Inc. |
|
|
(i) |
On September 17, 2018, the Company
issued 3 one year convertible units of $1,100,000 each to Bay Private Equity, Inc. (“Bay”), including an OID
of $100,000 per unit, for net proceeds of $2,979,980. These units bear interest at 5% per annum and matured one year from
the date of issue. Each unit consists of one senior secured convertible debenture of $1,100,000 and 250,000 common share
purchase warrants. Each convertible debenture may be converted to common shares of the Company at a conversion price of
$1.00 per share. Each common share purchase warrant entitles the holder to purchase an additional common share of the
Company at a price of $1.10 per share for one year after the issue date.
On January 23, 2019, $400,000
of the principal outstanding was repaid out of the proceeds raised on the January 16, 2019 Bay convertible debenture,
see (ii) below.
On September 17, 2019, the warrants
expired, unexercised.
During December 2019, the maturity date was extended to January
15, 2020. The maturity date was not extended further during the year and the note was in default as at August 31, 2020.
Subsequent to year end on September 1, 2020, the convertible
debenture was assigned to Bellridge Capital, LP (“Bellridge”). Bellridge enforced the penalty provisions of the
original agreement, resulting in an increase in the capital due under the debenture by $610,312 , and an increase of 10% to the
interest rate, from the date of original default which was September 19, 2019.
On September 23, 2020, in accordance with the terms of the amended
agreement entered into with Bellridge, the maturity date was extended to March 31, 2021 and the conversion price was amended to
$0.055 per share.
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(ii) |
On January 16, 2019, the Company
issued a convertible debenture of $2,400,000, including an OID of $400,000, for net proceeds of $2,000,000. The convertible
debenture bears interest at 5% per annum and matured on October 15, 2019. The convertible debenture may be converted to
5,000,000 common shares of the Company at a conversion price of $0.40 per share. $400,000 of the proceeds raised was used
to repay a portion of the $3,300,000 convertible debenture issued to Bay Private Equity on September 17, 2018 (Note 14(d)(i)).
On August 20, 2020, in accordance with the terms of an amendment
entered into with Bay, the maturity date was extended to February 20, 2021.
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(e) |
Cantone Asset Management,
LLC |
|
|
(i) |
On July 19, 2019, the Company
issued a convertible debenture to Cantone Asset Management, LLC (“Cantone”) in the aggregate principal amount
of $300,000, including an OID of $50,000 for net proceeds of $234,000 after certain issue expenses. The convertible debenture
bears interest at 7% per annum and the gross proceeds, less the OID, of $250,000 is convertible into common shares at
a conversion price of $0.19 per share, and matured on October 19, 2020.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 1,315,789 common shares at an exercise price of $0.24 per share,
expiring on October 19, 2020.
On July 7, 2020, the Company entered
into an Amending Agreement (“the Amendment”) whereby the conversion price of the convertible debenture was
amended to $0.037 per share and the warrant exercise price was amended to $0.03 per share.
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|
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(ii) |
On September 19, 2019, the Company
issued a convertible debenture to Cantone in the aggregate principal amount of $240,000, including an original issue discount
of $40,000, for net proceeds of $200,000. The convertible debenture bears interest at 7% per annum and the gross proceeds
less the OID, of $200,000 is convertible into common shares at a conversion price of $0.21 per share, and matures on December
17, 2020.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 952,380 common shares at an exercise price of $0.26 per share,
expiring on December 17, 2020.
In accordance with the terms of the Amendment entered into on
July 7, 2020, the conversion price was amended to $0.037 per share and the warrant exercise price was amended to $0.03 per share.
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|
|
(iii) |
On October 14, 2019, the Company
issued a convertible debenture to Cantone in the aggregate principal amount of $240,000, including an original issue discount
of $40,000, for net proceeds of $200,000. The convertible debenture bears interest at 7% per annum and the gross proceeds
less the OID, of $200,000 is convertible into common shares at a conversion price of $0.17 per share, and matures on January
14, 2021.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 1,176,470 common shares at an exercise price of $0.17 per share,
expiring on January 16, 2021.
In accordance with the terms of the Amendment entered into on
July 7, 2020, the conversion price of the convertible debenture was amended to $0.037 per share and the warrant exercise price
was amended to $0.03 per share.
|
On October 29, 2019, the Company
issued a convertible debenture to a private lender in the aggregate principal amount of $200,000. The convertible debenture bears
interest at 10.0% per annum and matured on October 29, 2020. The convertible debenture may be converted into common shares of
the Company at a conversion price of $0.18 per share. The Company is currently renegotiating the terms of the convertible debenture
with the lender.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 555,555 common shares at an exercise price of $0.18 per share, which warrant
expired on October 29, 2020.
|
(g) |
Petroleum Capital Funding
LP. |
All of the convertible notes
issued to Petroleum Capital Funding LP. (“PCF”) are secured by a first priority lien on all bitumen reserves at the
Asphalt Ridge property consisting of 8,000 acres.
The Company may force the conversion
of all of the convertible debentures if the trading price of the Company’s common shares on the TSXV Venture Exchange is
above $0.40 for 20 consecutive trading days, with an average daily volume of greater than 1 million common shares, and has agreed
to certain restrictions on paying dividends, registration rights and rights of first refusal on further debt and equity offerings.
|
|
(i) |
On November 26, 2019, further to a term sheet entered into with
PCF, the Company issued a convertible debenture in the aggregate principal amount of $318,000, including an OID of $53,000 for
net proceeds of $226,025 after certain issue expenses. The convertible debenture bears interest at 10% per annum and the gross
proceeds less the OID of $265,000 is convertible into common shares at a conversion price of $0.21 per share, and matures on November
26, 2023.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 1,558,730 common shares and a brokers warrant exercisable for
124,500 common shares, at an exercise price of $0.17 per share, expiring on November 26, 2023.
Subsequent to year end, on September
22, 2020, the Company entered into an Amending Agreement, whereby the conversion price of the convertible debenture was
amended to $0.055 per share and the exercise price of the warrant exercisable for 1,558,730 shares was amended to $0.055
per share.
|
|
|
(ii) |
On December 4, 2019, the Company
concluded its second closing as contemplated by the term sheet entered into with PCF per (i) above and issued a convertible
debenture in the aggregate principal amount of $432,000, including an OID of $72,000 for net proceeds of $318,600 after
certain issue expenses. The convertible debenture bears interest at 10% per annum and the gross proceeds less the OID of
$360,000 is convertible into common shares at a conversion price of $0.21 per share, and matures on December 4, 2023.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 2,117,520 common shares and a brokers warrant exercisable for
169,200 common shares, at an exercise price of $0.17 per share, expiring on December 4, 2023.
Subsequent to year end, on September
22, 2020, the Company entered into an Amending Agreement, whereby the conversion price of the convertible debenture was amended
to $0.055 per share and the exercise price of the warrant exercisable for 2,117,520 shares was amended to $0.055 per share.
|
|
|
(iii) |
On March 30, 2020, the Company
concluded its third closing as contemplated by the term sheet entered into with PCF per (i) above and issued a convertible
debenture in the aggregate principal amount of $471,000, including an OID of $78,500 for net proceeds of $347,363 after
certain issue expenses. The convertible debenture bears interest at 10% per annum and the gross proceeds less the OID of
$392,500 is convertible into common shares at a conversion price of $0.21 per share, and matures on March 30, 2024.
In conjunction with the convertible
debenture, the Company issued a warrant exercisable for 4,906,250 common shares and a brokers warrant exercisable for
392,500 common shares, at an exercise price of $0.17 per share, expiring on March 30, 2024.
Subsequent to year end, on September
22, 2020, the Company entered into an Amending Agreement, whereby the conversion price of the convertible debenture was
amended to $0.055 per share and the exercise price of the warrant exercisable for 4,906,250 shares was amended to $0.055
per share.
|
|
(h) |
Power Up Lending Group
LTD. |
|
|
(i) |
On October 11, 2019, the Company
issued a convertible promissory note to Power Up Lending Group LTD (“Power Up”) in the aggregate principal
sum of $158,000, including an original issue discount of $15,000, for net proceeds of $140,000 after certain expenses.
The note bore interest at 12% per annum and matured on October 17, 2020. The note could be prepaid subject to certain
prepayment penalties ranging from 110% to 130% based on the period of prepayment. The outstanding principal amount of
the note was convertible at any time and from time to time at the election of the holder into shares of the Company’s
common stock at a conversion price equal to 75% of the average of the lowest three trading bid prices during the previous
fifteen prior trading days.
Between May 5, 2020 and June 8,
2020, Power Up converted the aggregate principal sum of $158,000, including interest thereon of $8,580 into 6,861,225
common shares at an average conversion price of $0.024 per share, thereby extinguishing the note.
|
|
|
(ii) |
On December 17, 2019, the Company
issued a convertible promissory note to Power Up in the aggregate principal sum of $81,000, including an original issue
discount of $8,000, for net proceeds of $70,000 after certain expenses. The note bears interest at 12% per annum and matures
on December 17, 2020. The note may be prepaid subject to certain prepayment penalties ranging from 110% to 130% based
on the period of prepayment. The outstanding principal amount of the note is convertible at any time and from time to
time at the election of the holder into shares of the Company’s common stock at a conversion price equal to 75%
of the average of the lowest three trading bid prices during the previous fifteen prior trading days.
Between June 18, 2020 and June
25, 2020, Power Up converted the aggregate principal sum of $81,000, including interest thereon of $3,960 into 4,317,500
common shares at an average conversion price of $0.020 per share, thereby extinguishing the note.
|
|
|
(iii) |
On May 7, 2020, the Company issued
a convertible promissory note to Power Up in the aggregate principal sum of $64,300, including an original issue discount
of $6,300, for net proceeds of $55,000 after certain expenses. The note bears interest at 12% per annum and matures on
May 7, 2021. The note may be prepaid subject to certain prepayment penalties ranging from 110% to 130% based on the period
of prepayment. The outstanding principal amount of the note is convertible at any time and from time to time at the election
of the holder into shares of the Company’s common stock at a conversion price equal to 75% of the average of the
lowest three trading bid prices during the previous fifteen prior trading days.
|
|
|
(iv) |
On June 4, 2020, the Company issued
a convertible promissory note to Power Up in the aggregate principal sum of $69,900, including an original issue discount of $6,900,
for net proceeds of $60,000 after certain expenses. The note bears interest at 12% per annum and matures on June 4, 2021. The
note may be prepaid subject to certain prepayment penalties ranging from 110% to 130% based on the period of prepayment. The outstanding
principal amount of the note is convertible at any time and from time to time at the election of the holder into shares of the
Company’s common stock at a conversion price equal to 75% of the average of the lowest three trading bid prices during the
previous fifteen prior trading days. |
|
|
(v) |
On June 19, 2020, the Company
issued a convertible promissory note to Power Up in the aggregate principal sum of $82,500, including an original issue discount
of $7,500, for net proceeds of $72,000 after certain expenses. The note bears interest at 12% per annum and matures on June 19,
2021. The note may be prepaid subject to certain prepayment penalties ranging from 110% to 130% based on the period of prepayment.
The outstanding principal amount of the note is convertible at any time and from time to time at the election of the holder into
shares of the Company’s common stock at a conversion price equal to 75% of the average of the lowest three trading bid prices
during the previous fifteen prior trading days. |
|
|
(i) |
On November 21, 2019, the Company issued a convertible promissory
note to EMA Financial, LLC (“EMA”) for the aggregate principal sum of $150,000, including an original issue discount
of $22,500, for net proceeds of $123,750 after certain expenses. The note bears interest at 8% per annum and matures on August
20, 2020. The note may be prepaid subject to a prepayment penalty of 130%. The outstanding principal amount of the note is convertible
at any time and from time to time at the election of the holder into shares of the Company’s common stock at a conversion
price equal to the lower of; (i) the lowest trading price of the Company’s common stock during the 15 trading days including
and immediately preceding the issue date; and (ii) 70% of the two lowest average trading price during the fifteen trading days
including and immediately preceding the conversion date.
Between June 8, 2020 and June
30, 2020, EMA converted the aggregate principal sum of $43,021 into 3,800,000 common shares at an average conversion price
of $0.011 per share.
On July 31, 2020, the remaining
principal balance of the note amounting to $106,979, including interest thereon of $8,273 was acquired by Global Business
Partners (“GBP”) and the Company issued a new convertible note to GBP, bearing interest at 8% per annum and
maturing on July 31, 2021. The outstanding principal amount of the note is convertible at any time and from time to time
at the election of the holder into shares of the Company’s common stock at a conversion price equal to 70% of the
two lowest average trading price during the previous fifteen prior trading days.
On August 3, 2020, the convertible
note issued to GBP was assigned to Morison Management S.A. (“Morison”). On the same day, Morison converted
the aggregate principal sum of $106,979, including interest thereon of $8,600 into 13,037,710 common shares at a conversion
price of $0.009 per share, thereby extinguishing the note.
|
|
|
(ii) |
On July 22, 2020, the Company issued a convertible promissory
note to EMA for the aggregate principal sum of $150,000, including an original issue discount of $15,000, for net proceeds of $130,500
after certain expenses. The note bears interest at 8% per annum and matures on April 22, 2021. The note may be prepaid subject
to a prepayment penalty of 130%. The outstanding principal amount of the note is convertible at any time and from time to time
at the election of the holder into shares of the Company’s common stock at a conversion price equal to the lower of; (i)
the lowest trading price of the Company’s common stock during the 15 trading days including and immediately preceding the
issue date; and (ii) 70% of the two lowest average trading prices during the fifteen prior trading days including and immediately
preceding the conversion date. |
|
(j) |
Morison Management S.A. |
On August 26, 2020, the convertible debenture originally issued
to GS Capital Partners in the aggregate principal sum of $143,750 together with accrued interest and penalty interest thereon of
$49,112 was purchased and assigned to Morison Management S.A. (“Morison”). The Company cancelled the convertible debenture
issued to GS and issued a replacement convertible debenture to Morison in the aggregate principal sum of $192,862 with a maturity
date of August 26, 2021 and bearing interest at 10% per annum. The note is convertible into common shares at a conversion price
equal to 50% of the lowest trading price on the preceding 20 days prior to the notice of conversion.
|