Convertible Promissory Notes.

6 Months Ended

Jun. 30, 2012

Convertible Promissory Notes.

Convertible Promissory Notes.

Note 14. Convertible Promissory Notes  

a) On February 11, 2010, the Company entered into a Convertible Promissory Note Agreement (the “Convertible Promissory Note Agreement”) with Samyang for $2,000,000 cash (Note 9). The principal balance bears interest at a rate of 6% per annum. All unpaid principal, together with any unpaid and accrued interest is convertible into common shares of the Company at a price of $1.10 per share.

The note was due on February 11, 2012. At present the parties are determining a new mutually agreeable maturity date for the note. 

The balance of the Promissory Note as at June 30, 2012 consists of principal and accrued interest of $2,000,000 and $286,027, respectively (December 31, 2011 - $2,000,000 and $226,192, respectively). 

b) On May 5, 2012, the Company entered into a Convertible Promissory Note Agreement (the “Asher Agreement”) with Asher Enterprises, Inc. (“Asher”) for $17,000 in cash and $20,500 in other payable and accrued liabilities which Asher paid on behalf of the Company, for a total principal balance of $37,500. The principal balance bears interest at a rate of 8% per annum. All unpaid principal, together with any unpaid and accrued interest will be due and payable on December 7, 2012.

The principal balance of $37,500, together with all accrued and unpaid interest, is convertible into common shares of the Company. The conversion price is to be calculated as 58% multiplied by the market price, which is the average of the lowest three closing bid prices on the Over the Counter Bulletin Board (“OTCBB”) during the ten trading day period ending on the latest complete trading day prior to the conversion date. 

The balance of the Promissory Note as at June 30, 2012 consists of principal and accrued interest of $37,500 and $962, respectively.