v3.22.1
Interest, advances and promissory notes payable
 12 Months Ended
Dec. 31, 2021
Interest Advances And Promissory Notes Payable  
Interest, advances and promissory notes payable

4.       Interest, advances and promissory notes payable

 

a)       Promissory notes payable to related parties

 

A summary of activities of promissory notes payable to related parties is as follows:

 

     
Promissory Notes Payable to Related Parties  Carrying Value
Balance, December 31, 2019 and 2020  $3,031,966 
Transferred from promissory notes payable pursuant to private transaction   10,000 
Balance, December 31, 2021  $3,041,966 

 

A summary of the promissory notes payable to related parties is as follows:

 

          
Promissory Notes Payable to Related Parties  December 31,
2021		  December 31, 2020
Promissory notes payable to relatives of directors collateralized by a general security agreement over all the assets of the Company, past maturity:          
i.        Interest at 1% per month  $720,619   $720,619 
ii.      Interest at 1.25% per month   51,347    51,347 
iii.    Interest at the U.S. bank prime rate plus 1%   100,000    100,000 
iv.     Interest at 0.5% per month   695,000    695,000 
           
Promissory notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, past maturity   1,475,000    1,465,000 
Total Promissory Notes Payable to Related Parties  $3,041,966   $3,031,966 

 

All amounts past maturity continue to accrue interest at their stated rate and are considered due on demand.

 

b)       Promissory notes payable to unrelated parties

 

A summary of activities of promissory notes payable to unrelated parties is as follows:

 

     
Promissory Notes Payable to Unrelated Parties  Carrying
Value
Balance, December 31, 2019 and 2020  $2,254,353 
Reclassified to interest payable   (10,985)
Extinguished through issuance of shares of common stock (note 6)   (20,000)
Transferred to promissory notes payable pursuant to private transaction   (10,000)
Balance, December 31, 2021  $2,213,368 

 

A summary of the promissory notes payable to unrelated parties is as follows:

 

          
Promissory Notes Payable to Unrelated Parties  December 31,
2021		  December 31, 2020
Unsecured promissory notes payable to unrelated lenders, past maturity:          
i.        Interest at 1% per month  $1,317,456   $1,337,456 
ii.      Interest at 0.667% per month   425,000    435,985 
iii.    Interest at 0.625% per month   150,000    150,000 
iv.     Non-interest-bearing   270,912    270,912 
           
Promissory notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month, past maturity   50,000    60,000 
Total Promissory Notes Payable to Unrelated Parties  $2,213,368   $2,254,353 

 

All amounts past maturity continue to accrue interest at their stated rate and are considered due on demand.

 

c)       Interest payable

 

A summary of interest payable activity is as follows:

 

     
Interest Payable  Carrying
Value
Balance, December 31, 2019  $5,364,997 
Interest incurred on promissory notes payable   528,871 
Interest payable retired through issuance of shares   (2,318,542)
Balance, December 31, 2020   3,575,326 
Reclassified from promissory notes payable   10,985 
Interest incurred on promissory notes payable   527,336 
Interest payable retired through issuance of shares   (3,000)
Balance, December 31, 2021  $4,110,647 

 

Interest payable is due to related and unrelated parties as follows:

 

          
Interest Payable  December 31,
2021		  December 31, 2020
Related parties  $1,200,170   $873,666 
Non-related parties   2,910,477    2,701,660 
Interest payable  $4,110,647   $3,575,326 

 

The payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.

 

d)       Interest expense

 

During the year ended December 31, 2021, the Company incurred interest expense of $5,468,328 (2020 - $2,116,466) as follows:

 

·$3,425,120 (2020 - $nil 0) incurred related to 1) the grant of options as consideration for receiving an increase to the borrowing limit on the line of credit between the Company and the spouse of the Chairman (note 7), and 2) the modification of options held by the Chairman and his spouse that were granted in connection with financing provided to the Company (note 7);
·$1,402,187 (2020 - $1,464,077) incurred on lines of credit payable, as shown in note 5;
·$527,336 (2020 - $528,871) incurred on promissory notes (notes 4(a) and 4(b));
·$112,339 (2020 - $123,518) 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
·$1,346 (2020 - $nil 0) incurred on other items.