SECURED
      DEMAND
      LOAN AGREEMENT

    


    THIS
      SECURED DEMAND LOAN AGREEMENT
      (the
“Agreement”) is made and entered into effective as of the 28th day of February,
      2007 between, by and among QI Systems, Inc. of 609 Cheek Sparger Road, Suite
      #300, Colleyville, Texas 76034, a corporation registered in the State of
      Delaware ("Debtor"), and BFL Group, LLC, 3015 Keystone Dr., Cape Girardeau,
      MO
      63701, ("Secured Party"), pursuant to the terms and conditions set forth herein.
      BFL Group, LLC and QI Systems Inc. are collectively referred to herein as the
      “Parties” and individually as a “Party”.

    


    WITNESSETH:

    


    WHEREAS,
      BFL
      Group, LLC, is interested in providing secured funding to QI Systems
      Inc.,

    


    WHEREAS,
      QI
      Systems Inc. is a public corporation interested in securing operating
      capital,

    


    NOW,
      THEREFORE
      for and
      in consideration of the premises and the mutual covenants and conditions
      contained herein, and other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Parties hereto agree as
      follows:

    


    1.
      THE
      LOAN AMOUNT: For
      true value received promise to pay to the order of BFL Group, LLC, the sum
      of
      Thirty Thousand Dollars ($30,000.00 USD). The entire principal shall be fully
      and immediately payable UPON DEMAND of the Secured Party thereof on or after
      60
      days from the date of signing shown below. The Secured Party shall have at
      its
      discretion the right to extend the note in increments of thirty (30) additional
      days upon the request of the Debtor. At such time an extension is granted to
      the
      Debtor by the Secured Party simple interest shall begin accruing at the rate
      of
      two and one half percent (21⁄2%) per month from the date of the extension. Upon
      mutual agreement of the Debtor and the Secured Party indefinite extensions
      may
      be granted. At the due date of the loan should the Secured Party elect to
      exercise the right of calling the note, the Debtor shall have ninety (90) days
      from the date that the Secured Party’s written notice is received by the Debtor
      to pay, settle and totally discharge the note without additional penalty or
      interest. 

    


    2.
      USE OF FUNDS: The Debtor pledges to use the funds provided by the Secured Party
      herein defined for the purposes of growing, enhancing, developing and
      strengthening the corporation according to acceptable and established business
      practices. The Debtor further pledges that funds will not be used as
      compensation for the Board of Directors or to fund activities not authorized
      or
      endorsed by the corporation’s Senior Management.

    


    3.
      FINANCING FEE: As a financing fee for completing the transaction herein stated
      by this document, the Secured Party shall receive Five Hundred Thousand
      (150,000) shares of QI Systems Inc. common stock payable upon receipt of funds
      by the Debtor.

     

    
      
        BFL
          Group, LLC_________ For QI Systems Inc. _________

        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    4.
      SECURITY
      INTEREST:
      Debtor
      grants to Secured Party a security interest in all inventory, equipment,
      appliances, furnishings, and fixtures now or hereafter placed upon the premises
      known as QI Systems Inc., located at 101-3820 Jacombs Road, Richmond, British
      Columbia, Canada V6V 1Y6 and 609 Cheek Sparger Road, Suite #300, Colleyville,
      Texas 76034 (the "Premises") or used in connection therewith and in which Debtor
      now has or hereafter acquires any right and the proceeds therefrom. As
      additional collateral, Debtor assigns to Secured Party, a security interest
      in
      all of its right, title, and interest to any trademarks, trade names, contract
      rights, and leasehold interests in which Debtor now has or hereafter acquires.
      The Security Interest shall secure the payment and performance of Debtor's
      promissory note of even date herewith in the principal amount of Thirty Thousand
      Dollars ($30,000.00 USD) and the payment and performance of all other
      liabilities and obligations of Debtor to Secured Party of every kind and
      description, direct or indirect, absolute or contingent, due or to become due
      now existing or hereafter arising. 

    


    5.
      COVENANTS:
      Debtor
      hereby warrants and covenants: (a) the collateral will be kept at the Premises
      and that the collateral will not be removed from the Premises other than in
      the
      ordinary course of business. (b) The Debtor's place of business is 101-3820
      Jacombs Road, Richmond, BC, Canada V6V 1Y6 and 609 Cheek Sparger Road, Suite
      #300, Colleyville, Texas 76034 and Debtor will immediately notify Secured Party
      in writing of any change in or discontinuance of Debtor's place of business.
      (c)
      The parties intend that the collateral is and will at all times remain personal
      property despite the fact and irrespective of the manner in which it is attached
      to realty. (d) he Debtor will not sell, dispose, or otherwise transfer the
      collateral or any interest therein without the prior written consent of Secured
      Party, and the Debtor shall keep the collateral free from unpaid charges
      (including rent), taxes, and liens. (e) The Debtor shall execute alone or with
      Secured Party any Financing Statement or other document or procure any document,
      and pay the cost of filing the same in all public offices wherever filing is
      deemed by Secured Party to be necessary. (f) Debtor shall maintain insurance
      at
      all times with respect to all collateral against risks of fire, theft, and
      other
      such risks and in such amounts as Secured Party may require. (g) The Debtor
      shall make all repairs, replacements, additions, and improvements necessary
      to
      maintain any equipment in good working order and condition. At its option,
      Secured Party may discharge taxes, liens, or other encumbrances at any time
      levied or placed on the collateral, may pay rent or insurance due on the
      collateral and may pay for the maintenance and preservation of the collateral.
      Debtor agrees to reimburse Secured Party on demand for any payment made, or
      any
      expense incurred by Secured Party pursuant to the foregoing authorization.
      

    


    6.
      DEFAULT:
      The
      Debtor shall be in default under this Agreement upon the happening of any of
      the
      following: (a) any misrepresentation in connection with this Agreement on the
      part of the Debtor. (b) Any noncompliance with or nonperformance of the Debtor's
      obligations under the Note or this Agreement. (c) if Debtor is involved in
      any
      financial difficulty as evidenced by (i) an assignment for the benefit of
      creditors, or (ii) an attachment or receivership of assets not dissolved within
      ninety (90) days, or (iii) the institution of Bankruptcy proceedings, whether
      voluntary or involuntary, which is not dismissed within ninety (90) days from
      the date on which it is filed. Upon default and at any time thereafter, Secured
      Party may declare all obligations secured hereby immediately due and payable
      and
      shall have the remedies of a Secured Party under the Uniform Commercial Code.
      Secured Party may require the Debtor to make it available to Secured Party
      at a
      place which is mutually convenient. No waiver by Secured Party of any default
      shall operate as a waiver of any other default or of the same default on a
      future occasion. This Agreement shall inure to the benefit up and bind the
      heirs, executors, administrators, successors, and assigns of the parties. This
      Agreement shall have the effect of an instrument under seal. 


    
      
        BFL
          Group, LLC_________ For QI Systems Inc. _________

        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    7.
      ASSIGNMENT: This Agreement may not be assigned by any Party without the other
      Party’s prior written approval.

    


    8.
      NOTICE: Any notice or communication required or permitted hereunder shall be
      in
      writing and (i) personally delivered, (ii) sent by United States registered
      or
      certified mail, postage prepaid, return receipt requested, (iii) sent by Federal
      Express or similar nationally recognized overnight courier service, or (iv)
      transmitted by facsimile with a hard copy sent within one (1) business day
      by
      any of the foregoing means. Such notice shall be deemed to have been given
      upon
      the date of actual receipt or delivery (or refusal to accept delivery) as
      evidenced by the notifying Party’s receipt of written or electronic confirmation
      of such delivery or refusal, if received by the Party to be notified between
      the
      hours of 8:00 a.m. and 5:00 p.m. Central Standard Time on any business day,
      with
      delivery made after such hours to be deemed received on the following business
      day. For the purposes of notice, the address of the Parties shall be as
      follows:

    


    
      	 	
              If
                to Secured Party:

            	
              BFL
                Group, LLC

            


    

    
      	 	 	
              c/o
                Mr. Danny T. Berry

            


    

    
      	 	 	
              3015
                Keystone Drive

            


    

    
      	 	 	
              Cape
                Girardeau, MO 63701

            


    

    
      	 	 	
              Phone:
                573-651-8774 

            


    

    
      	 	 	
              Email:
                dbarry5@charter.net

            


    

    


    
      	 	
              If
                to Debtor:

            	
              Attention:
                Mr. Steven R. Garman

            


    

    
      	 	 	
              QI
                Systems Inc.

            


    

    
      	 	 	
              609
                Cheek Sparger Road

            


    

    
      	 	 	
              Suite
                #300

            


    

    
      	 	 	
              Colleyville,
                Texas 76034

            


    

    
      	 	 	
              Phone:
                817-485-8111

            


    

    
      	 	 	
              Fax:
                817-485-8186

            


    

    
      	 	 	
              Email:
                sgarman@qisystemsinc.com

            


    

    


    Any
      address for notice may be changed by written notice so given.

    


    9.
      AMMENDMENTS: This Agreement may not be modified or amended except in writing
      signed by all Parties hereto.


    
      
        BFL
          Group, LLC_________ For QI Systems Inc. _________

        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    


    10.
      ACCEPTANCE: The last party executing this Agreement shall have until 5:00 p.m.,
      Central Standard Time, on the date which is ten (10) days after the date of
      the
      execution of this Agreement by the first Party to execute this Agreement, as
      evidenced by the date shown on the signature page attached hereto, and return
      a
      fully executed original thereof to the first Party; otherwise, the offer set
      forth in this Agreement shall be automatically revoked immediately upon the
      expiration of such ten (10) day period.

    


    11.
      NO
      THIRD-PARTY BENEFICIARY: This Agreement is not intended to give or confer any
      benefits, rights, privileges, claims, actions or remedies to any person or
      entity as a third party beneficiary, decree, or otherwise.

    


    EXECUTED
      to be
      effective as of the date shown herein above, although executed by the parties
      on
      the dates indicated below next to their respective signatures. 

    


    


    
      	By:
              BFL Group, LLC	 	  
	 
	 	 
	 
	 	 	 	 	 	 	 
	 	 	
              Name:

            	 
	 	
              Date

            	 
	 	 	 	 	 	 	 
	 	 	
              Position:

            	 
	 	 	 
	 	 	 	 	 	 	 
	
              By:
                QI Systems Inc.

            	 	 
	 
	 	
              02/28/2007

            	 
	 	 	
              Steven
                R. Garman

            	 	
              Date

            	 
	 	 	
              President
                & CEO

            	 	 	 
	 	 	
              Signing
                for QI Systems Inc.

            	 	 	 


    

     

     

    THE
      REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK

     

     

    BFL
      Group, LLC_________ For QI Systems Inc.
      _________

    4