Loans Payable

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

NOTE 8 - Loans Payable

During the period ended September 30, 2017, the Company entered into a Term Sheet with respect to loans to the Company of up to $500,000 to fund the purchases of inventory. Any advances made pursuant to the Term Sheet will be secured by the wholesale inventory of the Company, all of the shares of the Company held by its majority shareholder and CEO and another asset of the Company’s majority shareholder. Pursuant to the Term Sheet, the Company agrees to pay 1.5% per month on all drawn amounts, an initial due diligence fee of $20,000 upon receipt of the first $220,000 loan amount (the “first tranche”) and a monthly monitoring fee of $5,000 for the first tranche and up to a loan amount of $500,000. The lender can choose to waive payment of the monthly fee in exchange for conversion of the amount into shares of the Company’s common stock at a price of $0.035 per share. Should the price of the Company’s stock increase beyond $0.05 per share, the conversion price will be struck at a 30% discount to the closing price of the volume weighted average price on the OTC market of the previous five trading days. Pursuant to the Term Sheet, the term of the advances made will be for a minimum of two years and the Company shall have the right to increase the credit facility to $1,000,000 provided the minimum term extends to three years. Upon the full and final advance of $500,000, the Company agrees to issue to the lender, 1,000,000 shares of its common stock and 2,000,000 warrants entitling the holder to acquire one share of the Company’s common stock at a price of $0.04 per share. As at September 30, 2017, no amounts had been borrowed pursuant to the Term Sheet.

During the period ended September 30, 2017, the Company borrowed $10,000 pursuant to a loan agreement. The loan bears interest at 12% per annum, payable at a rate of 6% on the semi-annual anniversary and 6% on the repayment date of August 11, 2018.

During the period ended September 30, 2017, the Company borrowed $9,262 (12,000 Canadian Dollars) pursuant to a loan agreement. The loan bears interest at 18% per annum, payable at a rate of 9% on the semi-annual anniversary and 9% on the repayment date of August 15, 2018.