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The loan is secured by a general security agreement covering all present and after acquired personal property. The Company is in compliance with all terms and conditions of the new agreement. 

## 7. ROYALTIES PAYABLE 

a) In the year ended December 31, 2004, the Company’s wholly-owned subsidiary, Ceapro Technology Inc. (CTI), received a commitment for financial assistance totaling $250,000 for pre-market activities of CeaProve GLYPH<H23006> (a health and wellness product) upon completion of project objectives as outlined and agreed to by both parties. As at December 31, 2012, $225,000 (2011 – $225,000) of this commitment has been received and the remaining $25,000 was decommitted. CTI is obligated to pay a royalty (to a maximum of two times the financial assistance received) on sales generated from CeaProve GLYPH<H23006> on the following basis: 0% of revenues earned to December 31, 2005, 2.5% of revenues earned to December 31, 2006, and 5% thereafter until repaid. No royalties have been paid or accrued during the current or prior years. CTI has repaid at December 31, 2012 $nil (2011 – $nil) of this obligation. Upon completion of the repayment of the financial assistance received, CTI will also be required to repay $19,750 advanced during the year ended December 31, 2002. The portion of this obligation paid or accrued as at December 31, 2012 was $nil (2011 – $nil). The potential amount payable per agreement as at December 31, 2012 is $469,750 (2011 – $469,750) (see note 7(e)). 

b) On December 28, 2005, the Company sold a 2.285% royalty interest in the Company’s future sales and licensing of certain active ingredients, animal health, and CeaProve GLYPH<H23006> products for $457,000. The maximum royalties payable are two times the amount invested or $914,000. The portion of this obligation paid or accrued as at December 31, 2012 was $666,407 (2011 – $570,157). During the year, the Company repaid $104,579 through cash payments (2011 – $244,628). The balance of royalties payable under this offering as at December 31, 2012 totaled $25,037 (2011 – $33,366). The potential amount payable per agreement as at December 31, 2012 is $247,593 (2011 – $343,843) (see note 7(e)). The balance outstanding was set up as a royalty financial liability which results in a discounted liability of $205,309 (2011 – $263,623). 

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