Secured and Unsecured Loan Payable [Text Block] |
8.
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Secured loan payable
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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.
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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 $2,1675
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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During the year ended October 31, 2011, the Company has paid down the debt by CAD$185,000
and the carrying amount of the secured loan is $673,998
as of April 30, 2012.
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Interest
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Effective Int. Date
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Due Date
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Amount
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%
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Interest
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Third Party |
December 1, 2010 |
December 1, 2012 |
50,000
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@
12%
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6,000/an
num
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Third Party |
December 1, 2010 |
December 1, 2012 |
250,000
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@
12%
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30,000/an
num
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David DeDemartini |
December 2, 2010 |
December 1, 2012 |
50,000
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@
12%
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6,000/an
num
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Emerald Atlantic |
December 16, 2010 |
December 1, 2012 |
120,000
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@
12%
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14,400/an
num
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Third Party |
December 1, 2010 |
December 1, 2012 |
100,000
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@
12%
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12,000/an
num
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Third Party |
December 13, 2010 |
December 1, 2012 |
50,000
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@
12%
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6,000/an
num
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CAB Financial |
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Month to month |
75,000
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@
18%
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1,125/mo
nth
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CAB Financial |
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Month to month |
151,525
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@
18%
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2,273/mo
nth
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Third Party |
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Month to month |
110,000
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@
18%
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1,650
/month
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Chris Bunka |
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Month to month |
395,988
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@
18%
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5,940/mo
nth
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CAB Financial |
December 1, 2011 |
December 1, 2012 |
100,000
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@
12%
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12,000/an
num
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David DeDemartini |
December 1, 2011 |
December 1, 2012 |
100,000
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@
12%
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12,000/an
num
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Chris Bunka |
March 30, 2012 |
Month to month |
50,000
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@
12%
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6,000/mo
nth
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Total Outstanding
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1,602,513
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7.
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(a) Secured loan payable
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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.
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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 companyby 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 $2,166.65
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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During the year ended October 31, 2011, the Company has paid down the debt by CAD$185,000
and the carrying amount of the secured loan is $679,504
as of year end.
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(b)
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Unsecured Loan Payable
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On September 13, 2010, we entered into a demand loan agreement and promissory note with CAB Financial Services Ltd. (the “Lender” or “CAB”), a company controlled by the President of our company. The principal amount of the note is $90,000. The loan agreement and promissory note provides that the debt be payable on demand. The note has an interest rate of
12% per annum.
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On January 31, 2011, the Company had paid back the loan for the full amount of $90,000
to CAB and accrued interest of $3,884.
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On April 1, 2010, the Company entered into a purchase agreement with a company controlled by the President (the “Purchaser”), for a non-secured promissory note in the amount of US$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.
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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.
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The Company did not incur beneficiary conversion charges as the conversion price is great than the fair value of the Company’s equity. As of October 31, 2011, the carrying amount of the unsecured loan is $75,000.
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