Note 5 - Promissory Notes

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

5.

  Promissory notes:

The Company has issued unsecured promissory notes from shareholders of the Company. The notes were repayable on

March 31, 2018.

The interest on the notes are

2%

per annum, calculated and compounded annually and paid annually.  Interest in arrears shall accrue interest. The unpaid principal amount due hereunder

may

be reduced to

zero

from time to time without affecting the validity of this note.

The promissory notes are accounted for by discounting the notes in a manner that reflects the entity's borrowing rate when interest cost is recognized in subsequent periods. The Company applied an estimated market rate of

15%

to the promissory notes. In doing so, the Company used the discounted cash flow approach to value the present value of the notes. The cash flow stream from the coupon interest payments and the final principal payment were discounted at

15%

to arrive at the valuations. The Company used a deemed rate of

15%

as the appropriate discount rate after examining the interest rates for similar instruments issued in the same time frame for similar companies without the conversion feature.

During the quarter ended

March 31, 2018,

there were

no

additional promissory notes issued. The Company recognized interest accretion of

$15,895.

During the quarter ended

March 31, 2017,

the Company issued

$188,135

promissory notes and recognized a discount on the promissory notes of

$23,461

and

$15,615

of interest accretion. These notes were issued with the same terms and conditions as the promissory notes issued in the year ended

December 31, 2016.

On

March 31, 2017,

the maturity date on the promissory notes was extended to

April 1, 2020.

The Company treated the change as an extinguishment and reissuance of the notes. The Company recognized a discount on the promissory notes of

$94,191

from the extinguishment and reissuance of the notes.

	March 31, 2018		December 31, 2017
Opening balance	$	502,313	$	347,698
Promissory note issued		-		188,135
Discount on promissory note		-		(23,461	)
Gain on extinguishment and reissuance of promissory notes with related parties		-		(94,191	)
Extinguishment of promissory notes to related parties		-		(418,181	)
Reissuance of promissory notes to related parties		-		418,181
Accrued interest		2,901		11,288
Interest accretion		15,895		72,844
Closing balance	$	521,109	$	502,313