RE: Anyone know who the director is ? Thanks. How is it working out for for WPX shareholders ?
(a) Discovery Harbour Resources Corp.
On June 1, 2010, the Company advanced an unsecured line of credit of up to $2,300,000 bearing
6% interest rate per annum to Discovery Harbour Resources Corp., a private company, related
through a common director. On June 8, 2010 and September 1, 2010, the Company advanced an
unsecured line of credit of up to $800,000 bearing 11% interest rate per annum to Discovery
Harbour Resources Corp. The loans were due on demand within forty five calendar days from the
date written notice was delivered to the corporate offices of Discovery Harbour Resources Corp.
The loans were measured at amortized cost which approximated its carrying value due to its short
term nature for the year ended September 30, 2010. During the year ended September 30, 2011,
the Company advanced an unsecured line of credit of up to $1,350,000 to Discovery Harbour
Resources Corp. On January 1, 2011 and amended on November 15, 2011, the Company and
Discovery Harbour Resources Corp. entered into a convertible debenture agreement whereby the
Company may, at its sole option, at any time until December 31, 2013, convert a total outstanding
principal in an amount of $4,450,000 and any interest accrued from June 1, 2010 to December 31,
2010 in an amount of $56,964 into common shares of Discovery Harbour Resources Corp. at a
price of
.35 per share. Under the terms, the convertible debenture is not interest-bearing and is
secured by all present and subsequently acquired personal property of Discovery Harbour
Resources Corp. As the convertible debenture is classified as financial asset at fair value through
profit or loss, it is measured at fair value with unrealized loss of $1,078,967 recognized in net loss
for the year ended September 30, 2011. The present value technique was used by the Company to
estimate the fair value of the convertible debenture using the market rate of interest 13% for debt
with similar risk characteristics. If these assumptions were to change, the fair value of the
convertible debenture could change significantly.
Reconciliation of level 3 fair value measurement of convertible debenture is as follows:
Opening balance, October 1, 2010 $ -
Convertible debentures 4,506,964
Unrealized loss (977,560)
Closing balance, September 30 & December 31, 2011 $ 3,529,404