| Convertible debentures [Text Block] |
11. Convertible debentures
The Company issues three types of convertible debentures: USD denominated convertible debentures with an equity component, Canadian dollar ("CAD") denominated convertible debentures with an embedded derivative due to variable consideration payable upon conversion caused by foreign exchange, and USD denominated convertible debentures with an embedded derivative caused by variable conversion prices.
All loan principal amounts and conversion prices are expressed in original currency and all remaining dollar amounts are expressed in USD.
(a) Current period information presented in the consolidated financial statements
Convertible debentures outstanding as at October 31, 2025:
| *Denominated in CAD |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Loan principal outstanding |
$ |
1,717,541 |
|
$ |
2,158,314 |
* |
$ |
488,750 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Terms of loan |
|
|
|
|
|
|
|
|
|
|
|
|
| Annual stated interest rate |
|
12% - 24% |
|
|
12% - 24% |
|
|
2% - 4% |
|
|
|
|
| Effective annual interest rate |
|
24% |
|
|
23% - 24% |
|
|
24% - 176% |
|
|
|
|
| Conversion price to common shares |
|
$0.03 - $0.04 |
|
|
$0.05 - $0.10 |
|
|
|
|
|
|
|
| Remaining life (in months) |
|
0 - 4
|
|
|
0 - 6
|
|
|
0 - 12
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Statement of Financial Position |
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying value of loan principal |
$ |
1,717,541 |
|
$ |
1,494,980 |
|
$ |
185,858 |
|
$ |
3,398,379 |
|
| Interest payable |
|
326,127 |
|
|
533,990 |
|
|
36,063 |
|
|
896,180 |
|
| Convertible debentures |
$ |
2,043,668 |
|
$ |
2,028,970 |
|
$ |
221,921 |
|
$ |
4,294,559 |
|
| Derivative liabilities |
$ |
- |
|
$ |
191,039 |
|
$ |
230,370 |
|
$ |
421,409 |
|
| Equity component of convertible debentures |
$ |
1,898,142 |
|
$ |
- |
|
$ |
- |
|
$ |
1,898,142 |
|
| For the year ended October 31, 2025: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Consolidated Statement of Operations and Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
| Accretion expense |
$ |
5,636 |
|
$ |
143,047 |
|
$ |
141,525 |
|
$ |
290,208 |
|
| Interest expense |
$ |
364,137 |
|
$ |
235,626 |
|
$ |
12,535 |
|
$ |
612,298 |
|
| Loss (gain) on revaluation of derivative liabilities |
$ |
- |
|
$ |
(1,317,070 |
) |
$ |
(43,393 |
) |
$ |
(1,360,463 |
) |
| Loss (gain) on conversion of convertible debentures |
$ |
- |
|
$ |
- |
|
$ |
9,821 |
|
$ |
9,821 |
|
| Loss (gain) on repayment of convertible debentures |
$ |
- |
|
$ |
(9,522 |
) |
$ |
15,006 |
|
$ |
5,484 |
|
| Loss (gain) on extinguishment of convertible debentures |
$ |
(5,636 |
) |
$ |
(16,358 |
) |
$ |
129,355 |
|
$ |
107,361 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Statement of Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Amount of principal converted to common shares |
$ |
- |
|
$ |
66,000 |
* |
$ |
103,275 |
|
|
|
|
| Amount of interest converted to common shares |
$ |
44,106 |
|
$ |
84,000 |
* |
$ |
2,025 |
|
|
|
|
| Number of common shares issued on conversion of convertible |
|
|
|
|
|
|
|
|
|
|
|
|
| debentures |
|
1,600,588 |
|
|
- |
|
|
3,073,940 |
|
|
4,674,528 |
|
(a) Current period information presented in the consolidated financial statements
| |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
| Amount of principal repaid in cash |
$ |
16,000 |
|
$ |
17,596 |
|
$ |
384,319 |
|
$ |
417,915 |
|
| Amount of interest repaid in cash |
$ |
8,209 |
|
$ |
59,714 |
|
$ |
7,087 |
|
$ |
75,010 |
|
(i) Conversion price defined as 75% multiplied by the average of the lowest 3 closing stock prices for the 10 trading days prior to conversion date.
(b) Comparative information presented in the consolidated financial statements
Convertible debentures outstanding as at October 31, 2024:
| *Denominated in CAD |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Loan principal outstanding |
$ |
1,413,245 |
|
$ |
1,523,657 |
* |
$ |
231,250 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Terms of loan |
|
|
|
|
|
|
|
|
|
|
|
|
| Annual stated interest rate |
|
12% - 24% |
|
|
12% - 24% |
|
|
2% - 4% |
|
|
|
|
| Effective annual interest rate |
|
24% |
|
|
14% - 270% |
|
|
24% - 176% |
|
|
|
|
| Conversion price to common shares |
|
$0.03 - $0.04 |
|
|
$0.05 - $0.10 |
* |
|
(i) - (ii) |
|
|
|
|
| Remaining life (in months) |
|
0 - 4
|
|
|
0 - 6
|
|
|
0 - 12
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Statement of Financial Position |
|
|
|
|
|
|
|
|
|
|
|
|
| Carrying value of loan principal |
$ |
1,413,245 |
|
$ |
1,461,356 |
|
$ |
106,347 |
|
$ |
2,980,948 |
|
| Interest payable |
|
333,000 |
|
|
506,685 |
|
|
32,640 |
|
|
872,325 |
|
| Convertible debentures |
$ |
1,746,245 |
|
$ |
1,968,041 |
|
$ |
138,987 |
|
$ |
3,853,273 |
|
| Derivative liabilities |
$ |
- |
|
$ |
1,444,932 |
|
$ |
125,743 |
|
$ |
1,570,675 |
|
| Equity component of convertible debentures |
$ |
696,671 |
|
$ |
- |
|
$ |
- |
|
$ |
696,671 |
|
(i) Conversion price defined as 75% multiplied by the average of the lowest 3 closing stock prices for the 10 trading days prior to conversion date.
(ii) Conversion price defined as 75% multiplied by the lowest stock price for the 20 trading days prior to conversion date.
For the year ended October 31, 2024:
| |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Consolidated Statement of Operations and Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
| Accretion expense |
$ |
5,636 |
|
$ |
174,437 |
|
$ |
92,428 |
|
$ |
272,501 |
|
| Interest expense |
$ |
329,432 |
|
$ |
262,743 |
|
$ |
10,725 |
|
$ |
602,900 |
|
| Loss (gain) on revaluation of derivative liabilities |
$ |
- |
|
$ |
179,315 |
|
$ |
(100,400 |
) |
$ |
78,915 |
|
| Loss (gain) on conversion of convertible debentures |
$ |
- |
|
$ |
- |
|
$ |
45,535 |
|
$ |
45,535 |
|
| Loss (gain) on repayment of convertible debentures |
$ |
- |
|
$ |
(8,269 |
) |
$ |
70,522 |
|
$ |
62,253 |
|
| Loss (gain) on extinguishment of convertible debentures |
$ |
(5,636 |
) |
$ |
376,297 |
|
$ |
81,587 |
|
$ |
452,248 |
|
(b) Comparative information presented in the consolidated financial statements
| |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Consolidated Statement of Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Amount of principal converted to common shares |
$ |
159,106 |
|
$ |
60,197 |
* |
$ |
431,907 |
|
|
|
|
| Amount of interest converted to common shares |
$ |
44,106 |
|
$ |
197 |
* |
$ |
8,469 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Number of common shares issued on conversion of convertible debentures |
|
5,566,285 |
|
|
1,203,945 |
|
|
30,035,070 |
|
|
36,805,300 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
| Amount of principal repaid in cash |
$ |
16,000 |
|
$ |
88,326 |
|
$ |
183,134 |
|
$ |
287,460 |
|
| Amount of interest repaid in cash |
$ |
14,339 |
|
$ |
58,528 |
|
$ |
- |
|
$ |
72,867 |
|
For the year ended October 31, 2023:
| *Denominated in CAD |
|
USD (equity |
|
|
CAD (embedded |
|
|
USD (embedded |
|
|
|
|
| |
|
component) |
|
|
derivative) |
|
|
derivative) |
|
|
Total |
|
| Consolidated Statement of Operations and Comprehensive Loss |
|
|
|
|
|
|
|
|
|
|
|
|
| Accretion expense |
$ |
18,258 |
|
$ |
243,162 |
|
$ |
18,414 |
|
$ |
279,834 |
|
| Interest expense |
$ |
273,458 |
|
$ |
254,523 |
|
$ |
12,948 |
|
$ |
540,929 |
|
| Loss (gain) on revaluation of derivative liabilities |
$ |
- |
|
$ |
(507,186 |
) |
$ |
(151,317 |
) |
$ |
(658,503 |
) |
| Loss (gain) on conversion of convertible debentures |
$ |
- |
|
$ |
- |
|
$ |
21,120 |
|
$ |
21,120 |
|
| Loss (gain) on repayment of convertible debentures |
$ |
- |
|
$ |
- |
|
$ |
27,243 |
|
$ |
27,243 |
|
| Loss (gain) on extinguishment of convertible debentures |
$ |
33,488 |
|
$ |
1,169,800 |
|
$ |
197,535 |
|
$ |
1,400,823 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Statement of Changes in Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Amount of principal converted to common shares |
$ |
250,000 |
|
$ |
455,000 |
* |
$ |
232,700 |
|
|
|
|
| Amount of interest converted to common shares |
$ |
30,016 |
|
$ |
204,189 |
* |
$ |
4,654 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Number of common shares issued on conversion of convertible debentures |
|
6,406,250 |
|
|
14,391,709 |
|
|
9,548,701 |
|
|
30,346,660 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
| Amount of principal repaid in cash |
$ |
- |
|
$ |
- |
|
$ |
270,000 |
|
$ |
270,000 |
|
| Amount of interest repaid in cash |
$ |
12,973 |
|
$ |
47,353 |
|
$ |
4,353 |
|
$ |
64,679 |
|
(c) Fair value of derivative liabilities outstanding
The fair value of the derivative liabilities is determined with option pricing models. The underlying assumptions are as follows:
| |
As at |
|
As at |
| |
October 31, |
|
October 31, |
| |
2025 |
|
2024 |
| Volatility factor (based on historical volatility) |
30% - 129% |
|
140% - 203% |
| Risk free interest rate |
2.22% - 2.28% |
|
3.18% - 3.50% |
| Expected life of conversion features (in months) |
0 - 12
|
|
0 - 12
|
| Expected dividend yield |
0% |
|
0% |
| CDN to USD exchange rate (as applicable) |
0.7134 |
|
0.7186 |
| Call value |
$0.00 - $0.01 |
|
$0.02 - $0.04 |
The key unobservable input in these models relates to volatility. Volatility was estimated using the historical volatility of the Company's stock prices for common shares. Changes in these assumptions may affect the fair value estimates of the derivative liabilities.
|