5. Convertible Notes Payable | NOTE 5 – CONVERTIBLE DEBT PAYABLE Convertible notes payable consisted of the following at: April 30, 2018 April 30, 2017 Note payable, amended April 30, 2016, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 90 days from demand $ 11,000 $ 11,000 Note payable, amended April 30, 2016, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 90 days from demand 9,000 9,000 Note payable, amended April 30, 2016, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 90 days from demand 91,150 91,150 Note payable, amended April 30, 2016, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 90 days from demand 14,500 14,500 Note payable, amended April 30, 2016, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 90 days from demand 20,000 20,000 Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 17,000 17,000 Note payable to institutional investor, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price, in default 233,825 183,825 Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.05 per share 53,650 53,650 Note payable to institutional investor, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price, in default 10,000 10,000 Note payable to institutional investor, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price, in default 15,000 15,000 Note payable to institutional investor, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price, in default 34,337 34,337 Note payable to institutional investor, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price, in default 50,000 50,000 Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.10 per share 23,750 23,750 Note payable to institutional investor, with interest at 12% per annum, convertible into common stock of the Company at a defined conversion price 12,500 12,500 Note payable to institutional investor, with interest at 8% per annum, convertible into common stock of the Company at a defined conversion price 13,664 10,931 Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.035 per share 4,190 4,190 Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.035 per share 17,350 17,350 Note payable to institutional investor, with interest at 8% per annum, convertible after 180 days into common stock of the Company at a defined conversion price 32,610 37,000 Note payable to institutional investor, with interest at 8% per annum, convertible into common stock of the Company at a defined conversion price 22,500 18,000 Note payable to institutional investor, with interest at 2% per annum, convertible into common stock of the Company at a defined conversion price 56,500 -- Note payable, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price 25,000 -- Note payable to institutional investor, with interest at 2% per annum, convertible into common stock of the Company at a defined conversion price 15,000 -- Note payable to institutional investor, with interest at 2% per annum, convertible into common stock of the Company at a defined conversion price 2,500 -- Note payable to institutional investor, with interest at 2% per annum, convertible into common stock of the Company at a defined conversion price 3,000 -- Note payable, with interest at 6% per annum, convertible into common stock of the Company at $0.10 per share 1,000 -- Note payable, with interest at 15% per annum, convertible into common stock of the Company at $0.25per share or 60% of the lowest 10 day trading prices 5,000 -- Note payable to institutional investor, with interest at 15% per annum, convertible into common stock of the Company at a defined conversion price 2,500 -- Note payable, with interest at 6% per annum, convertible into common stock of the PSSI and exchangeable for the Company stock at a defined conversion price 20,000 -- Total 816,526 675,590 Less discount -- (38,411) Total $ 816,526 $ 594,772 On April 30, 2016, the convertible notes payable with principal balances of $11,000, $9,000, $141,150, $14,500 and $20,000 were amended to establish a conversion price of $0.05 per share, interest at 6% retroactive to the original issuance date of the notes, and a conversion date of 90 days from demand of the lender. The amendments were determined to be extinguishments of the prior debt and the issuance of new debt in accordance with ASC 470-50, Debt – Modifications and Extinguishments On March 10, 2016, the Company entered into a convertible promissory note for $17,000, which bears interest at an annual rate of 6% and is convertible into shares of the Company’s common stock at $0.05 per share. The Company recorded a debt discount and a beneficial conversion feature of $17,000 at the inception of the note. The Company subsequently entered into Amendments #1 through #4 to the July 2016 SPA, receiving net proceeds of $10,000 on August 1, 2016, $15,000 on March 15, 2017, $34,337 on March 20, 2017 and $50,000 on April 28, 2017. The amendments are subject to the terms and conditions of the July 2016 SPA and the July 2016 Note. At the inception of the convertible note, the Company, recorded total debt discount of $99,337, a derivative liability of $2,836,791 related to the conversion feature, and a loss on derivative liability of $2,737,454. On July 31, 2016, the Company entered into a convertible promissory note for $53,650, which has no defined maturity date. The note bears interest at an annual rate of 6% and is payable only on conversion into shares of the Company’s common stock at $0.10 per share. On August 1, 2016, the Company entered into a convertible promissory note for $23,750, which has no defined maturity date. The note bears interest at an annual rate of 6% and is payable only on conversion into shares of the Company’s common stock at $0.10 per share. On August 3, 2016, the Company entered into a convertible promissory note with an institutional investor for $25,000, which bears interest at an annual rate of 12% and matures on February 4, 2017. The note holder has the right, after a period of 180 days of the note, to convert the note and accrued interest into shares of the common stock of the Company at a discounted price per share equal to 50% to 65% of the market price of the Company’s common stock, depending upon the stock’s liquidity as determined by the note holder’s broker. At the inception of the convertible note, the Company paid debt issuance costs of $2,500, recorded a debt discount of $22,500, and recorded a derivative liability of $64,942 related to the conversion feature, and a loss on derivative liability of $42,442. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note. On March 20, 2017, the lender converted $12,500 principal into 1,000,000 shares of the Company’s common stock. The note is currently in default. On August 3, 2016, the Company entered into a convertible promissory note with an institutional investor for $37,000, which bears interest at an annual rate of 8% and matures on August 3, 2017. The investor has the right, after the first six months 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 55% (representing a discount rate of 45%) of the lowest bid price of the Company's common stock during the 30 trading days immediately ending on the last trading date prior to the conversion date. At the inception of the convertible note to institutional investor, the Company paid debt issuance costs of $25,500, including 100 shares of its common stock valued at $24,000, and recorded a debt discount of $37,000, including an original issue discount of $5,000, a derivative liability of $173,227 related to the conversion feature, and a loss on derivative liability of $166,727. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note. In a series of conversions during February through April 2017, the lender converted total principal of $26,069 into a total of 58,344 shares of the Company’s common stock. On November 1, 2016, the Company entered into a convertible promissory note for $4,190, which has no defined maturity date. The note bears interest at an annual rate of 6% and is payable only on conversion into shares of the Company’s common stock at $0.10 per share. On December 15, 2016, the Company entered into a convertible promissory note with an institutional investor for $37,000, which bears interest at an annual rate of 8% and matures on September 30, 2017. The investor has the right, commencing on the 180 th On January 31, 2017, the Company entered into a convertible promissory note for $17,350, which has no defined maturity date. The note bears interest at an annual rate of 6% and is payable only on conversion into shares of the Company’s common stock at $0.035 per share. On March 20, 2017, the Company entered into a convertible promissory note with an institutional investor for $18,000, which bears interest at an annual rate of 8% and matures on March 20, 2018. The investor has the right, after the first six months 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 55% (representing a discount rate of 45%) of the lowest bid price of the Company's common stock during the 20 trading days immediately ending on the last trading date prior to the conversion date. At the inception of the convertible note to institutional investor, the Company recorded a debt discount of $18,000, including an original issue discount of $2,000, a derivative liability of $1,285,720 related to the conversion feature, and a loss on derivative liability of $1,269,720. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note. On November 24, 2015, the Company entered into a convertible promissory note with an institutional investor for $55,500, bearing interest at an annual rate of 8% and maturing on November 24, 2016. At the inception of the convertible note, the Company recorded debt issuance costs of $3,000 in prepaid expenses, a debt discount of $55,500, including an original issue discount of $7,000, a derivative liability of $167,776 related to the conversion feature, and a loss on derivative liability of $119,276. Interest expense for the amortization of the debt discount was calculated on a straight-line basis over the life of the convertible note. 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 55% (representing a discount rate of 45%) of the lowest sale price of the Company's common stock during the twenty consecutive trading days immediately preceding the date of the conversion notice. The note was paid in full through conversion of $15,125 into a total of 217 shares of the Company’s common stock in June 2016 and a cash payment of $40,375 in July 2017. On February 4, 2016, the Company entered into a convertible promissory note with an institutional investor for $41,000 maturing on February 4, 2017. A one-time interest charge of 12% was payable in the event the Company did not repay the note during the first 120 days. At the inception of the convertible note, the Company recorded debt issuance costs of $2,500 in prepaid expenses, a debt discount of $41,000, including an original issue discount of $3,500, a derivative liability of $78,034 On September 20, 2016, the Company entered into a convertible promissory note with an institutional investor for $35,000, bearing interest at an annual rate of 9% and maturing on June 20, 2017. At the inception of the convertible note to institutional investor, the Company recorded debt issuance costs comprised of an obligation to issue 73 shares of its common stock valued at $14,311, and recorded a debt discount of $35,000, a derivative liability of $42,432 related to the conversion feature, and a loss on derivative liability of $21,743. Interest expense for the amortization of the debt discount was calculated on a straight-line basis over the life of the convertible note. The investor had the right, commencing on the 180 th On October 27, 2016, the Company entered into a convertible promissory note with an institutional investor for $40,000, bearing interest at an annual rate of 9% and maturing on July 7, 2017. At the inception of the convertible note to institutional investor, the Company recorded a debt discount of $40,000, a derivative liability of $47,939 related to the conversion feature, and a loss on derivative liability of $7,939. Interest expense for the amortization of the debt discount was calculated on a straight-line basis over the life of the convertible note. The investor had the right, commencing on the 180 th On May 25, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $56,500, with net proceeds to the Company of $52,000. The note bears interest at an annual rate of 2%, matures on May 25, 2018 and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 55% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty trading days prior to the conversion date. At the inception of the convertible note, the Company paid debt issuance costs of $4,500, recorded a debt discount of $47,500 and a loss on note issuance of $50,959. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note. On July 17, 2017, the Company entered into a Convertible Promissory Note amendment with an institutional investor for $ $25,000. The note bears interest at an annual rate of 15%, as part of the note that is in default. The note is convertible into common shares of the Company at a variable conversion price equal to 60% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty one trading days prior to the conversion date. At the inception of the convertible note, the recorded a debt discount of $22,920. On July 24, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $15,000. The note bears interest at an annual rate of 2%, matures on May 25, 2018 and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 55% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty trading days prior to the conversion date. At the inception of the convertible note, the Company recorded a debt discount of $15,000 On July 24, 2017, the Company entered into a Funding Agreement with RAB Investments AG, a current lender and stockholder located in Zug, Switzerland, which is intended to provide necessary funding towards the initial production of our Offender Alert Passive Scan. The Funding Agreement calls for RAB to fund a minimum of $50,000 to a maximum of $150,000 on a “best efforts basis,” with a first tranche of $25,000 to be completed during August 2017. In exchange for the funds, DTIC will issue convertible notes that may be converted into common stock of the Company at a discount of 25%, based on the 10-day average trading value of Company shares at the time of the initial conversion. The notes may be converted at any time, in whole or partially, but all conversions must be at the same rate as the initial conversion. No funding has been provided as of the date of this filing and there is no assurance that funds will be provided. On September 11, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $5,000. The note bears interest at an annual rate of 15% and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 55% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty trading days prior to the conversion date. At the inception of the convertible note, the Company recorded a debt discount of $5,000, and recorded a derivative liability of $23,828 related to the conversion feature, and a loss on note issuance of $18,828. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note. On September 28, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $2,500. The note bears interest at an annual rate of 12%, matures on May 25, 2018 and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 60% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty one trading days prior to the conversion date. At the inception of the convertible note, the Company recorded a debt discount of $2,500 and a loss on note issuance of $4,875. Interest expense for the amortization of the debt discount is calculated on a straight-line basis over the life of the convertible note. On December 12, 2017, the Company entered into a Convertible Promissory Note with an institutional investor for $3,000. The note bears interest at an annual rate of 2%, matures on May 25, 2018 and is convertible into common shares of the Company after twelve months at a variable conversion price equal to 55% multiplied by the lowest one-day trading price of the Company’s common stock during the twenty one trading days prior to the conversion date. On January 31, 2018, the Company entered into a Convertible Promissory Note with an institutional investor for $5,500. The note bears interest at an annual rate of 6%, matures on August 1, 2018 and is convertible into common shares of the Company at $0.01 per share. During the period ended January 31, 2018 the Company was advanced $2,500 of the note. On February 16, 2018, the Company’s subsidiary entered into a Convertible Promissory Note with an individual for $20,000. The note bears interest at an annual rate of 6%, matures on August 1, 2018 and is convertible into common shares of the subsidiary after six months form the date of the note at a 50% discount to the 10day trading average. The shares of the subsidiary maybe exchanged for the Company shares if the subsidiary’s shares are not trading. The note may only be exchangeable for shares and not repaid in cash. Pursuant to a Securities Purchase Agreement dated July 18, 2016 (the "July 2016 SPA", the Company entered into a Senior Secured Convertible Promissory Note (the "July 2016 Note") with Firstfire Global Opportunities Fund, LLC ("Firstfire) for $189,000. The July 2016 Note was in default with respect to the maturity date, and the Company was in default on certain terms of the July 2016 SPA, including calculation of exercise prices on Firstfire debt conversions and limitations on the Company entering into subsequent "Variable Rate Transactions." On August 9, 2017, the Company and Firstfire entered into a Waiver and Settlement Agreement whereby the Company will issue an additional 8,667 shares of its common stock to Firstfire to cure the deficiency of shares previously issued in the debt conversions. Further, Firstfire agreed to waive any default with respect to the subsequent variable rate transactions. As of January 31, 2018 the shares had not been issued. On April 30, 2018 the Company accrued an additional $50,000 in principal against the note per the default clause of the note. During the year ended April 30, 2018, the Company issued a total of 121,040 shares of its common stock in the conversion of $18,890 in convertible notes principal and in accrued interest payable and fees. During the year ended April 30, 2017, the Company issued a total of 105,472 shares of its common stock in the conversion of $176,349 convertible notes principal and $13,519 accrued interest payable. As of April 30, 2018, and April 30, 2017, the convertible debt outstanding, net of discount, was $816,526 and $594,772, respectively. During the years ended April 30, 2018 and 2017, we had the following activity in our derivative liabilities: Balance at April 30, 2016 $ 2,081,931 Issuance of convertible notes 262,525 Loss on derivative liability 412,372 Conversion of debt to shares of common stock and repayment of debt (1,933,376) Balance at April 30, 2017 823,452 Issuance of convertible notes 200,379 Loss on derivative liability 2,326,136 Conversion of debt to shares of common stock and repayment of debt (140,393) Balance at April 30, 2018 $3,248,160 The estimated fair value of the derivative liabilities at April 30, 2018 was calculated using the Black-Scholes pricing model with the following assumptions: Risk-free interest rate 0.80 – 1.070% Expected life in years 0.25 - 0.89 Dividend yield 0% Expected volatility 514.17% - 687.46% Accrued interest and fees payable were $155,896 and $74,181 at April 30, 2018 and 2017, respectively. |