XML 21 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Note 7 - Promissory Notes
 12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Debt Disclosure [Text Block]
7.
  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.
 
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.
 
During the year ended
December 31, 2018,
the promissory notes were settled in exchange for the exercise of warrants and the notes were extinguished. Since the extinguishment of the promissory note is with related parties, then in accordance with ASC
470
-
50
-
40
-
2,
the extinguishment transactions is in essence a capital transaction. Therefore, the Company recognized a reduction of
$65,955
from equity of the Company.
 
During the year ended
December 31, 2017,
the Company issued
$188,135
promissory notes and recognized a discount on the promissory notes of
$23,461.
 
The Company recognized interest accretion of
$31,966
(
2017
-
$72,844
) of interest accretion.
 
   
2018
    
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
 )
                 
Reduction of capital on extinguishment of promissory notes with related parties
    
65,955
      
-
  
                 
Extinguishment of promissory notes to related parties
    
(605,358
 )    
(418,181
 )
                 
Reissuance of promissory notes to related parties
    
-
      
418,181
  
                 
Accrued interest
    
5,124
      
11,288
  
                 
Interest accretion
    
31,966
      
72,844
  
                 
Closing balance
   $
-
     $
502,313