Loan Payable [Text Block] |
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Carrying amounts
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Original amounts
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Notes
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Nature
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August 31, 2015
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August 31, 2014
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$
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$
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$
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a) |
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Promissory Note |
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75,000
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-
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75,000
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b) |
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Convertible debentures |
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620,000
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58,666
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c) |
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Convertible debentures |
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200,000
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-
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56,667
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d) |
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Promissory Note |
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50,000
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-
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50,000
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e) |
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Promissory Note |
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657,447
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-
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536,603
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Total Outstanding
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1,698,690
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776,936
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Loan payable – current
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1,698,690
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-
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776,936
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Loan payable - long term
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-
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0
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-
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All outstanding debts were paid as at December 5, 2014 through the sale of Belmont Lake by the purchaser by the close of the transaction.
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a) |
On April 1, 2010, the Company entered into a purchase agreement with CAB Financial Services Ltd., a company controlled by Christopher Bunka, our President, Chief Executive Officer and Director, (“Purchaser”) for a non-secured promissory note in the amount of $75,000
(the “Promissory Note”). The Purchaser agreed to purchase a non-secured
18% interest bearing Promissory Note of our company subject to and upon the terms and conditions of the Purchase Agreement. The Promissory Note is due and payable on April 1, 2012. The Promissory Note may be prepaid in whole or in part at any time prior to April 1, 2012 by payment of
108% of the outstanding principal amount including accrued and unpaid interest. Upon the mature of the Promissory Note, it has been renewed to a month to month basis.
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As long as the Promissory Note is outstanding, the Purchaser may voluntarily convert the Promissory Note including accrued and unpaid interest to common shares of our Company at the conversion price of $0.30
per common share.
This debt has been paid through the Purchase and Sale Agreement of Belmont Lake.
The Company did not incur beneficiary conversion charges as the conversion price is greater than the fair value of the Company’s equity at the time of issuance.
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b) |
On November 30, 2010, we closed the first tranche of a private placement offering of convertible debentures in the aggregate amount of $450,000. The convertible debentures mature on November 30,2012, subject to forced conversion as set out in the convertible debenture certificate. The convertible debentures pay an interest rate of
12% per annum (on a simple basis) and are convertible at $0.35
per unit. Each unit is comprised of one share of our common stock and one share purchase warrant. Each warrant entitles the holder thereof to purchase one share at a price of $0.40
per share up to the earlier of the maturity date of the convertible debenture or one year from conversion of the convertible debenture.
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We also entered into a general security agreement with the subscribers, whereby the obligations to repay the convertible debenture are secured by the Company’s working interest and production in and only in two oil wells located at Belmont Lake, Mississippi, with carrying value of $1,000,000
as of October 31, 2012. One director of the Company and Emerald Atlantic LLC, solely owned by the director, subscribed the convertible debentures with amount of $50,000.
On December 16, 2010, the Company closed the second tranche of a private placement offering of convertible debentures in the aggregate amount of $170,000. The convertible debentures mature on November 30, 2012, subject to forced conversion as set out in the convertible debenture certificate. The convertible debentures pay an interest rate of
12% per annum (on a simple basis) and are convertible at $0.35
per unit. Each unit is comprised of one share of our common stock and one share purchase warrant. Each warrant entitles the holder thereof to purchase one share at a price of $0.40
per share up to the earlier of the maturity date of the convertible debenture or one year from conversion of the convertible debenture. We also entered into a general security agreement with the subscribers, whereby the obligations to repay the convertible debenture are secured by the same assets for the first tranche of the private placement offering on November 30, 2010. One director of the Company and Emerald Atlantic LLC, solely owned by the director, subscribed the convertible debentures with amount of $120,000.
The aggregate principal value of the above convertible debentures was $620,000
and was allocated to the individual components on a relative fair value basis. In addition, because the effective conversion price of the convertible debentures was below the current trading price of the Company’s common shares at the date of issuance, the Company recorded a beneficial conversion feature of approximately $20,000. The value of the warrants and beneficial conversion feature has been recorded as additional paid in capital.
On November 13, 2013, the Company entered into an Amendment agreement to refinance and extend repayment terms on the loan, please refer to Note 8f for details. On April 1, 2014, three of the parties converted their balance of $193,333
of principal remaining into
552,350
common shares at a price of $0.35
per share. On December 4, 2015, the Company has paid down all of the debt outstanding of $58,666
(August 31, 2014: $354,665).
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c) |
On December 1, 2011, the Company closed a private placement offering of convertible debentures in the aggregate amount of $200,000. The convertible debentures mature on December 1, 2012, subject to forced conversion as set out in the convertible debenture certificate. The convertible debentures pay an interest rate of
12% per annum (on a simple basis) and are convertible at $0.35
per unit. Each unit is comprised of one share of our common share and one share purchase warrant. Each warrant entitles the holder thereof to purchase one share at a price of $0.40
per share up to the earlier of the maturity date of the convertible debenture or one year from conversion of the convertible debenture. We also entered into a general security agreement with the subscribers, whereby the obligations to repay the convertible debenture are secured by the Company’s working interest and production in and only in two oil wells located at Belmont Lake, Mississippi, with carrying value of $1,000,000
as of October 31, 2012. Two directors of the Company, David DeMartini and Christopher Bunka, via CAB Financial Services Ltd, solely owned by the director, subscribed to the convertible debentures with the amount of $200,000.
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The aggregate principal value of the above convertible debentures was $200,000
and was allocated to the individual components on a relative fair value basis. Because the effective conversion price of the convertible debentures was above the current trading price of the Company’s common shares at the date of issuance, beneficial conversion feature is $Nil, therefore, the amount of $200,000
was recorded under loan payable.
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On November 13, 2013, the Company entered into an Amendment agreement to refinance and extend repayment terms on the terms on the loan, please refer to Note 10f for details. On December 4, 2014, the Company has paid down all of the debt outstanding of $56,667
(August 31, 2014: $85,001).
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d) |
On March 30, 2012, the Company entered into a loan agreement with Christopher Bunka, our President, Chief Executive Officer and Director, (“Lender”) for a non-secured promissory note in the amount of $50,000
(the “Promissory Note”). The Lender agreed to purchase a non-secured
12% interest bearing Promissory Note of our company subject to and upon the terms and conditions of the agreement. The Promissory Note has a month to month term. This debt was been repaid in full during November 2014.
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e) |
On October 27, 2008 the Company entered into a Purchase Agreement in the amount of CAD$900,000
of Notes being purchased by the President (CAD$400,000), the President’s wholly-owned company (CAD$300,000) and a shareholder (CAD$200,000) of the Company (“Purchasers”). The Purchasers agreed to purchase an
18% interest bearing Promissory Note of the Company subject to and upon the terms and conditions of the Purchase Agreement. The Company’s obligations to repay the Promissory Note will be secured by certain specified assets of the Company pursuant to a Security Agreement. As long as the Promissory Note is outstanding, the Purchasers may voluntarily convert the Promissory Note to Common Shares at the conversion price of $0.45
per share of Common Stock. The Promissory Note matures on October 27, 2010 or by mutual agreement by all parties on October 27, 2009.
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In connection with the Purchase Agreement, the Company issued a total of
390,000
(
1,560,000
pre-consolidation) warrants which two warrants entitle a holder to purchase a common share of the Company of which
195,000
(
780,000
pre-consolidation) warrants are eligible at $0.05
(adjusted price) and
195,000
(
780,000
pre-consolidation) warrants are eligible at $0.05
(adjusted price) per share and expire October 27, 2009 and October 27, 2010, respectively.
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The Company did not incur beneficiary conversion charges as the conversion price is greater than the fair value of the Company’s equity.
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As at the date of the issuance of the above noted Promissory Note, the Company allocated CAD$21,321
and CAD$683,559
to warrants (additional paid-in capital) and Promissory Note based on their relative fair value.
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On July 10, 2009 the Purchasers converted $45,000
of the Promissory Note into equity at $0.05
per share.
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On October 27, 2009,
191,000
warrants were exercised for
95,500
common shares.
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On October 21, 2010, the Company settled a portion of the debt, namely $1,625
with the President’s wholly-owned company by converting
65,000
warrants into
32,500
common shares of the Company as per Purchase Agreement dated October 27, 2008 at a price of $0.05
per share.
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On October 21, 2010, the Company settled a portion of the debt, namely $2,167
with the President by converting
86,667
warrants into
43,333
common shares of the Company as per Purchase Agreement dated October 27, 2008 at a price of $0.05
per share.
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On October 21, 2010, the Company entered into an amendment with loan holders to extend the loan to be on a month-to-month basis with the same terms and conditions as pursuant to the amendment.
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On December 1, 2012, the Company entered into an Amendment to existing debt agreement with a shareholder of the Company, whereby the lender has agreed to modify terms of the earlier agreements and provide for a debt repayment schedule ending on December 1, 2013. The Company was scheduled to repay the debt in twelve equal monthly principal payment, plus interest on the monthly declining balances. The interest rates of the amendment debt are the same as the existing debt agreement. On November 13, 2013, the Company entered into an Amendment agreement to refinance and extend repayment terms on the loan, please refer to Note f for details.
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On December 4, 2014, the Company has paid down all of the debt outstanding of CAD$563,108
(August 31, 2014: $44,917).
On November 13, 2013, the Company refinanced and extended repayment terms on all debt that was otherwise due to mature in December 2013 with CAB Financial Services Ltd., David DeMartini, Emerald Atlantic LLC, and other debt holders of the Company. Per the Amendment Agreements, a) the loan repayment schedule will be converted, with an effective date of December 1, 2013, to a new one year term loan with monthly interest payments at
18% on any declining balance, in arrears and all principal amounts not paid before then due in full on December 1, 2014; b) the first payment of interest shall be due on January 1, 2014; c) the Company will make ten (10) monthly principal payments, each of which is 1/10th of the principal amount owing at the time this Agreement goes into effect, beginning on March 1 2014 and repeating on the first day of each month thereafter until all the principal is paid; d) the Company grants to the lenders new collateral specifically limited to the lender’s pro-rata portion (the original initial balance owing to the lender shall form the numerator and $930,000
shall form the denominator) of the Company’s portion of the net revenue from the new
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well required to keep the terms of this Agreement in good standing at any given monthly due date. On April 1, 2014, three of the parties converted their balance of $193,333
of principal remaining into
552,350
common shares at a price of $0.35
per share.
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