| Interest Advancesand Promissory Notes Payable |
3. Interest, advances and promissory notes payable
a) Interest payable
A summary of the interest payable activity is as follows:
|
Balance, December 31, 2011
|
|
$
|
1,930,695
|
|
|
Interest incurred on promissory notes payable
|
|
|
505,571
|
|
|
Repayment of interest payable through line of credit
|
|
|
(6,500
|
)
|
|
Repayment of interest payable through exercise of options
|
|
|
(860,244
|
)
|
|
Other
|
|
|
(201
|
)
|
|
Balance, December 31, 2012
|
|
$
|
1,569,321
|
|
|
Interest incurred on promissory notes payable
|
|
|
505,571
|
|
|
Other
|
|
|
125
|
|
|
Balance, December 31, 2013
|
|
$
|
2,075,017
|
|
Interest payable is to the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Relatives of directors
|
|
$
|
1,046,523
|
|
|
$
|
586,697
|
|
|
Non-related parties
|
|
|
1,028,494
|
|
|
|
982,624
|
|
|
|
|
$
|
2,075,017
|
|
|
$
|
1,569,321
|
|
All interest payable incurred is from interest incurred at the stated rate of promissory notes issued by the Company. The payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.
b) Advances Payable
A summary of the advances payable activity is as follows:
|
Balance, December 31, 2011
|
|
$
|
100,527
|
|
|
Advances accrued
|
|
|
60,000
|
|
|
Advances repaid from proceeds of line of credit
|
|
|
(54,914
|
)
|
|
Balance, December 31, 2012
|
|
$
|
105,613
|
|
|
Advances accrued
|
|
|
30,000
|
|
|
Advances repaid from proceeds of line of credit
|
|
|
(20,000
|
)
|
|
Transfer of balance to accounts payable
|
|
|
(115,613
|
)
|
|
Balance, December 31, 2013
|
|
$
|
-
|
|
Advances payable are to the following:
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Advances payable to:
|
|
|
|
|
|
|
|
Companies controlled by directors
|
|
$
|
-
|
|
|
$
|
65,488
|
|
|
Current and former directors
|
|
|
-
|
|
|
|
40,125
|
|
|
|
|
$
|
-
|
|
|
$
|
105,613
|
|
Advances payable are unsecured, have no stated terms of interest and are due on demand.
c) Promissory notes payable
A summary of the promissory notes payable activity is as follows:
|
Balance, December 31, 2013 and 2012
|
|
$
|
2,424,353
|
|
|
Unrelated Lenders
|
|
December 31,
2013
|
|
December 31,
2012
|
|
|
|
|
|
|
|
Unsecured promissory notes payable to unrelated lenders:
|
|
|
|
|
|
|
|
|
|
|
|
Interest at 1% per month, repayable on March 31, 2009,
due on demand
|
$
|
450,000
|
$
|
450,000
|
|
|
|
|
|
|
|
Interest at 1% per month, with $50,000 repayable on
December 31, 2004, $75,000 repayable on August 18, 2007,
$75,000 repayable on November 19, 2007 and the balance
due on demand. All are due on demand, accruing interest at
the same rate.
|
|
887,455
|
|
887,455
|
|
|
|
|
|
|
|
Interest at 0.625% per month, with $50,000 repayable on
October 5, 2004, $40,000 repayable on December 31, 2004,
and $60,000 repayable on July 28, 2006, all due on demand
|
|
150,000
|
|
150,000
|
|
|
|
|
|
|
|
Non-interest-bearing, repayable on July 17, 2005, due on
demand
|
|
270,912
|
|
270,912
|
|
|
|
|
|
|
|
Non-interest-bearing loan repayable at $25,000 per month
beginning October 2009, none repaid to date
|
|
310,986
|
|
310,986
|
|
|
|
|
|
|
|
Non-interest-bearing loan, due January 15, 2011 (Unpaid)
|
|
125,000
|
|
125,000
|
|
|
|
|
|
|
|
Promissory notes payable, secured by a guarantee from a director
and relative of a director, bearing interest at 1% per month, with
$200,000 repayable on July 31, 2003, all due on demand
|
|
230,000
|
|
230,000
|
|
Total Arms Length Promissory Notes
|
$
|
2,424,353
|
$
|
2,424,353
|
d) Promissory notes payable to related parties:
A summary of the promissory notes payable activity is as follows:
|
Balance, December 31, 2013 and 2012
|
|
$
|
2,861,966
|
|
|
Relatives of Directors
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
|
Promissory notes payable to relatives of directors collateralized by a
general security agreement on all the assets of the Company, due on
demand:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest at 1% per month
|
|
$
|
845,619
|
|
|
$
|
845,619
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest at 1.25% per month
|
|
|
51,347
|
|
|
|
51,347
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest at the U.S. bank prime rate plus 1%
|
|
|
500,000
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Promissory notes payable, unsecured, to relatives of a director,
bearing interest at 1% per month, due on demand
|
|
|
1,465,000
|
|
|
|
1,465,000
|
|
|
Total Related Promissory Notes
|
|
$
|
2,861,966
|
|
|
$
|
2,861,966
|
|
e) Interest expense
During the year ended December 31, 2013, the Company incurred interest expense of $1,339,399 (2012: $6,461,210) substantially as follows:
|
-
|
$505,571 (2012: $505,571) incurred on promissory notes (note 3(c)) and other payables;
|
|
-
|
$578,039 (2012: $406,732) incurred on lines of credit payable as shown in note 4;
|
|
-
|
$183,988 (2012: $169,248) incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and promissory notes payable, which had no stated interest rate; and
|
|
-
|
$70,000 (2012: $nil) incurred on interest and penalties due to the Internal Revenue Service for which Company is seeking relief
|
|
-
|
$nil (2012: $5,377,907) incurred on stock options granted to creditors (note 5 (c)).
|
|