Note 3 – Notes Payable

On August 3, 2018, we entered into a Note Purchase Agreement with Robert Salna, an existing shareholder of the Company and prior investor in the Company’s convertible debt securities. Pursuant to the agreement, the Company issued to Mr. Salna a Promissory Note, dated August 3, 2018, in the principal amount of $2,000,000 (the “Note”) in exchange for a loan to the Company of equal principal amount.

The Note bears interest at the rate of nine percent (9.0%) per annum, payable quarterly in arrears. The maturity date of the Note is July 31, 2019. All unpaid principal and accrued interest on the Note will become due and payable on the maturity date. The Note is unsecured and provides for a default interest rate of eighteen percent (18.0%) per annum. The note is repayable in Canadian dollars with a minimum of 2.6 million in Canadian dollars due at maturity. For the three and nine months ended September 30, 2018, we included $26,000 in interest expense.

At December 31, 2017 and September 30, 2017, we had no outstanding notes payable. However, for the three and nine months ended September 30, 2017, we included $14,801 and $310,233, respectively, of interest expense for notes outstanding prior to September 30, 2017.