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4. Lines of Credit
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Dec. 31, 2012
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| Linesof Credit Related Party |
4. Lines
of Credit
The
Company has two lines of credit as follows:
On
May 25 2010, the Company finalized negotiations with the wife
of the Chairman for a line of credit borrowing arrangement of
$1M. All funds borrowed bear interest at 1% per month, are
due on demand and are secured by all the assets of the
Company. On January 3, 2011, the Company entered into an
agreement with this creditor to increase the borrowing limit
from $1,000,000 to $2,000,000.
During
the year ended December 31, 2012, the Company borrowed a
total of $389,070 (2011 - $765,366) from this creditor and
incurred interest expense of $238,184 (2011 - $154,349) to
bring the total amounts borrowed to date to $2,000,000 (2011
- $1,610,930) and accrued interest to $296,385 (2011-
$197,986).
On
March 6, 2011, the Chairman of the Company established a line
of credit of up to $2,500,000, increased to $4,000,000 on
January
29, 2013, with the Company for the exclusive purpose
of funding the costs of a comprehensive sales and marketing
campaign. To date and during the year ended December 31,
2012, the Company has borrowed $2,093,966 (2011 - $953,061)
for its sales and marketing program and incurred interest of
$143,936 (2011 - $50,218).
As
consideration for the two lines of credit, the Company has
granted 124,250,000 options (note 5(c)).
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