Note 8 – Financing Arrangement

During the year ended December 31, 2022, the Company entered into five non-recourse agreements for the sale of future receipts receiving gross proceeds of $528,984 which provided the Company with the ability to convert its account receivables into cash. Under the terms of the agreements, the Company must pay a specified amount each day until the financed receivables are fully paid. The agreements have an effective interest rate within the range of approximately 36% and 40%, which includes a discount of $143,446. The outstanding balance is secured by an interest in virtually all assets of the Company, with a first security interest on accounts receivable.

During the period ended March 31, 2023, the Company entered into two non-recourse agreements for the sale of future receipts for net proceeds of $571,500, receiving $449,000 in cash, which provided the Company with the ability to convert its account receivables into cash. These two loans were fully reimbursed prior to March 31, 2023.

The Company accounts for these agreements as a financing arrangement, with the purchase price recorded as a liability and daily repayments made are a reduction of the liability. As of March 31, 2023, there was an outstanding balance of $113,515 (December 31, 2022 - $292,636) which is presented net of a discount of $35,268 (December 31, 2022 - $78,387).