Convertible Debentures

9 Months Ended

Mar. 31, 2012

7.	Convertible Debentures

	September 25, 2009 / April 29, 2010 issuance

	On November 25, 2009 the Company issued $992,300 of convertible debt in a subscription agreement between the Company and a group of investors. The debt carries an interest rate of 10% annually, due upon the maturity date, November 30, 2010. The debt may be converted into shares of common stock at a conversion price of $0.70 per share. In conjunction with the debt, the Company also issued warrants to purchase 1,000,000 warrants with an exercise price of $1.00 per share that expire on November 30, 2011. The debt carries a beneficial conversion feature, which along with the relative fair value of the warrants, resulted in a debt discount of $967,076 which was recorded against the convertible debt and offset in additional paid in capital.

	On April 29, 2010, the Company agreed to modify the terms of the convertible debentures listed above. Under the modified debentures, the conversion price of the debentures was reduced to $0.40 per share. In addition, the warrant exercise price was reduced to $0.50 per share and the expiry date of the warrants was extended to November 30, 2012.

	The discount on this debt is fully accreted at September 30, 2011, and the remaining debt of $300,000 is past due. The Company accrued a further $7,479 in interest expense for this debt during the period. Total accrued interest for this debt at March 31, 2012 is $70,438.

	March 31, 2010 issuance

	On March 31, 2010 the Company issued $275,000 of convertible debt in a subscription agreement between the Company and a group of investors. The debt carries an interest rate of 10% annually, due upon the maturity date, March 31, 2011. The debt may be converted into shares of common stock at a conversion price of $0.40 per share. In conjunction with the debt, the Company also issued warrants to purchase 575,000 common shares with an exercise price of $0.75 per share that expire on March 31, 2012. The debt carries a beneficial conversion feature, which along with the relative fair value of the warrants, resulted in a debt discount of $214,421 which was recorded against the convertible debt and offset in additional paid in capital. The discount on this debt is fully accreted at September 30, 2011.

	The Company repaid $60,000 of this debt during the period ending September 30, 2011 and $25,000 remains past due at March 31, 2012. The Company accrued a further $623 in interest expense for this debt during the period. Total accrued interest for this debt at March 31, 2012 is $5,048.

	September 30, 2011 issuance

	On September 30, 2011, the Company issued $200,000 of convertible debt in a subscription agreement between the Company and a group of investors. The debt carries an interest rate of 10% annually, due upon the maturity date, September 30, 2014. The debt may be converted into shares of common stock at a conversion price of $0.23 per share. In conjunction with the debt, the Company also issued warrants to purchase 860,000 common shares with an exercise price of $0.50 per share that expire on September 30, 2014. The debt carries a beneficial conversion feature, which along with the relative fair value of the warrants, resulted in a debt discount of $21,971 which was recorded against the convertible debt and offset in additional paid in capital. During the period ending March 31, 2012 $1,830 of the discount has been accreted.

	The above three convertible debenture liabilities are as follows:


		March 31, 2012			June 30, 2011
March 31, 2010 convertible debentures payable	$	275,000		$	275,000
April 29, 2010 convertible debentures payable		992,300			992,300
September 30, 2011 convertible debentures payable		200,000			-
Conversion of March 31, 2010 convertible debentures		(150,000	)		(150,000	)
Conversion of April 29, 2010 convertible debentures		(492,300	)		(492,300	)
Repayment of April 29 2010 convertible debentures		(200,000	)		(200,000	)
Repayment of March 31, 2010 convertible debentures		(100,000	)		(40,000	)
Total convertible debentures payable		525,000			385,000
Less: Unamortized discount on convertible debentures payable		(18,291	)		-
Net convertible debentures payable	$	506,709		$	385,000

Wind Works Power Corp. 10-Q