| 5. Convertible Notes Payable | 5. Convertible Notes Payable Convertible notes payable consisted of the following at: October 31, 2015 April 30, 2015 Note payable, no interest, convertible into common stock of the Company at $0.02 per share $ 11,000 $ 11,000 Note payable, no interest, convertible into common stock of the Company at $0.02 per share 90 days from demand 141,150 141,150 Note payable, no interest, convertible into common stock of the Company at $0.02 per share on a quarterly basis 14,500 14,500 Note payable to institutional investor repaid in August 2015 - 38,000 Note payable to institutional investor repaid in September 2015 - 16,000 Other, with interest at 6% per annum 9,000 9,000 Less discount - (29,902) $ 175,650 $ 199,748 The $11,000 and $141,150 convertible notes payable outstanding at October 31, 2015 were convertible 30 days from the first day the Companys common shares are qualified for trading on the OTC Bulletin Board, which occurred in November 2012. As of October 31, 2015, these two convertible notes had not been converted and therefore are in default. On December 3, 2014, the Company entered into a convertible promissory note with an institutional investor (Investor) for $38,000, which bore interest at an annual rate of 8% and matured on September 5, 2015. The Investor had the right, after the first 180 days of the note, to convert the note and accrued interest in whole or in part into shares of the common stock of the Company at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest three trading prices for the Companys common stock during the ten trading day period ending one trading day prior to the date of the conversion notice. At any time for the period beginning on the date of the note and ending on the date which is 30 days following the date of the note, the Company could prepay the note upon payment of an amount equal to the outstanding principal multiplied by 120%, together with accrued and unpaid interest. The amount of the prepayment increased every subsequent 30 days to 125%, 130%, 135%, 140% and 145% of the outstanding principal together with accrued and unpaid interest. After the expiration of 180 days following the date of the note, the Company had no right of prepayment. At the inception of the convertible note to institutional investor, the Company recorded debt issuance costs of $3,000 in prepaid expenses, and a debt discount and derivative liability of $37,325 related to the conversion feature. Interest expense for the amortization of the debt discount was calculated on a straight-line basis over the life of the convertible note. In June 2015, the Company paid the institutional investor $25,000, $14,286 principal of the $38,000 convertible note payable and $10,714 in early payment penalties. On July 1, 2015, the institutional investor converted $10,014 principal of the convertible loan into 181,748 shares of the Companys common stock. In August 2015, the Company paid the institutional investor $20,000, $5,714 principal and $14,286 in accrued interest and early payment penalties. In October 2015, the Company paid the institutional investor $42,500, the remaining principal of $7,986 and $34,514 in loan extension fees and early payment penalties. On March 2, 2015, the Company entered into a convertible promissory note with an institutional investor for $16,000, which bore interest at an annual rate of 8% and matured on December 4, 2015. The investor had the right, after the first 180 days of the note, to convert the note and accrued interest in whole or in part into shares of the common stock of the Company at a price per share equal to 58% (representing a discount rate of 42%) of the average of the lowest three trading prices for the Companys common stock during the ten trading day period ending one trading day prior to the date of the conversion notice. At any time for the period beginning on the date of the note and ending on the date which is 30 days following the date of the note, the Company could prepay the note upon payment of an amount equal to the outstanding principal multiplied by 120%, together with accrued and unpaid interest. The amount of the prepayment increased every subsequent 30 days to 125%, 130%, 135%, 140% and 145% of the outstanding principal together with accrued and unpaid interest. After the expiration of 180 days following the date of the note, the Company had no right of prepayment. At the inception of the convertible note to institutional investor, the Company recorded debt issuance costs of $500 in prepaid expenses, and a debt discount and derivative liability of $16,000 related to the conversion feature. Interest expense for the amortization of the debt discount was calculated on a straight-line basis over the life of the convertible note. The convertible note was paid in full in September 2015. During the six months ended October 31, 2015, we had the following activity in the accounts related to the convertible note to institutional investor: Derivative Liability Debt Discount Loss on Derivative Liability Balance at April 30, 2015 $ 47,808 $ 29,902 Loss on derivative liability 144,941 - $ (144,941) Conversion of debt to shares of common stock and repayment of debt (192,749) (13,317) - Amortization of debt discount to interest expense - (16,585) - Balance at October 31, 2015 $ - $ - $ (144,941) Accrued interest payable was $1,214 and $2,383 at October 31, 2015 and April 30, 2015, respectively. |
