| PROMISSORY NOTES |
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| 7. |
PROMISSORY
NOTES |
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As
at August 31, 2011, the Company had $1,014,057 (February 28, 2011 - $884,022) of promissory notes outstanding, comprising
the following: |
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(a) |
During
the year ended February 29, 2008, the Company converted accounts payable of $465,994 (Swiss Franc (“CHF”) 565,000)
into promissory notes. The Company had an implied obligation to pay the accounts payable in CHF as the funds to pay the expense
came from Swiss investors in CHF. Accordingly, the promissory notes were issued in CHF. The notes consisted of one warrant
for each CHF 5.00 of notes issued, exercisable at $1.00 each. The principal and interest on the notes became due and payable
on April 30, 2008. The Company has not repaid the promissory notes as of August 31, 2011 and is in default. The principal
and interest on the notes due and payable as of August 31, 2011 was $975,587. The interest rate payable during the default
period is 12%. |
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(b) |
During
the six months ended August 31, 2011, the Company entered into an agreement to convert $17,778 of the promissory notes including
accrued interest by issuing 55,000 shares of the Company’s common stock (note 10). |
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(c) |
$10,358
of promissory notes is due to related parties that were to be repaid over a 12 month period as part of a debt settlement agreement.
These notes bear no interest (note 13). The Company has not made the monthly payments according to the settlement agreement
and is in default. |
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(d) |
$12,049
of promissory notes is due to an associate of a related party that bear no interest and have no repayment terms. |
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(e) |
$16,064
of promissory notes bear no interest and have no repayment terms. |
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