7.	Convertible Notes payable - related party:

As of December 31, 2012, the Company has a convertible note payable of $502,563 (CDN $500,000) to 2023682 Ontario Inc. This note is due two years from the date of issue and accrues interest at 3% per annum. Should the Company be successful in a 'going public' transaction it is convertible into common shares of the Company at the weighted average of the Company's share price based on the average 5 day bid price, within 30 days of the Company going public. If there are no trades on any given day in the first 30 days after the Company's stock begins to trade then the bid price will be used in determining the weighted average price. This convertible note may be repaid at any time without penalty or bonus. This convertible note is interest free for the first 12 months post-closing of the asset purchase, thereafter, it accrues interest at the rate of 3% per annum This note was discounted resulting in an effective interest rate of 27%. As a result, a $210,415 discount to the note was recorded which is being amortized to interest expense over the term of the note.

Related party interest expense for the three months ended December 31, 2012 was $22,483, representing the accretion in the value of the Convertible note payable-related party.