9. Promissory Note

The Company had an outstanding promissory note in the amount of $445,000 (the “Promissory Note”) payable to Matthew Proman (“Proman”), the Company’s former Executive Vice President and Chief Operating Officer (see Note 11). The stated interest rate of the Promissory Note was 0.35%, which was determined to be below the Company’s expected borrowing rate of 4.80%, therefore the Promissory Note was discounted by $10,418 using a 4.45% imputed annual interest rate. The discount was amortized over the term of the Promissory Note as non-cash interest expense in the consolidated statements of operations.

The discount was fully amortized at December 31, 2015. Interest expense amounted to $1,167 for the year ended December 31, 2016.

On November 4, 2016, the Company paid Mr. Proman $300,000 in full satisfaction of the Promissory Note, inclusive of accrued interest. As such, the Company recorded a gain on the settlement of debt of $148,112 in the accompanying consolidated statements of operations.