Annual report pursuant to Section 13 and 15(d)

Convertible Notes, Convertible Notes - Related Party and Debenture Payable

v3.7.0.1
Convertible Notes, Convertible Notes - Related Party and Debenture Payable
12 Months Ended
Apr. 30, 2017
Debt Disclosure [Abstract]  
Convertible Notes, Convertible Notes - Related Party and Debenture Payable

Note 9. Convertible Notes, Convertible Notes – Related Party and Debenture Payable


On February 29, 2012, a loan payable of $50,000 was converted into a two-year convertible promissory note, bearing interest of 0.19% per annum. Beginning March 31, 2012, the note was convertible into common shares of the Company at the rate of $12.00 per share. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. This loan (now a convertible promissory note) was originally due in February 2014.  The amount due under this note has been reserved for payment upon the note being tendered to the Company by the note holder.


On March 13, 2012, the Company’s CEO loaned the Company $300,000 and received a convertible promissory note due March 31, 2013, bearing interest at 0.19% per annum. The note is convertible into common shares of the Company at the rate of $12.00 per share upon five days written notice to the Company. The Company evaluated the convertible note and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the common shares on the note issue date. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these modifications. On April 22, 2016, the CEO converted the loan and accrued interest into common stock. The loan was converted at $2.28 per share and the Company issued 132,588 shares of common stock.  The note modification was treated as a debt extinguishment under ASC 470-50. There was no gain or loss on this debt extinguishment. The Company evaluated the convertible note and determined that, for the embedded conversion option there was no beneficial conversion value to record as the conversion price exceeded the fair market value of the common shares on the note issue date.


On August 14, 2012, the Company’s CEO loaned the Company $300,000 and received a convertible promissory note, payable on demand, bearing interest at 5% per annum. The note was convertible into shares of common stock of the Company at a rate of $4.20 per share (based on proceeds received on September 28, 2012 under a private placement at $4.20 per unit). The Company evaluated the convertible notes and determined that, for the embedded conversion option, there was no beneficial conversion value to record as the conversion price is considered to be the fair market value of the shares of common stock on the note issue date. Through various note extensions, the debt was extended to May 5, 2018. There was no accounting effect for these modifications.  This note was paid in full with accrued interest on April 7, 2017, as part of the $7,500,000 equity raise (See Note 11.)


Convertible notes payable and loan payable consisted of the following at April 30, 2017 and 2016:


 

 

April 30,

 

 

 

2017

 

 

2016

 

Convertible note payable - related party originating August 14, 2012; no monthly payments required; bearing interest at 5%

 

$

 

 

$

300,000

 

 

 

 

 

 

 

 

 

 

Convertible note payable - originating February 29, 2012; no monthly payments required; bearing interest at 0.19%; maturing at February 29, 2014

 

 

50,000

 

 

 

50,000

 

 

 

 

 

 

 

 

 

 

Loan Payable - related party originating February 25, 2012; no monthly payments required; bearing interest at 10%

 

 

 

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

Total

 

 

50,000

 

 

 

1,350,000

 

Less: Current maturities (notes payable)

 

 

(50,000

)

 

 

(50,000

)

Subtotal

 

 

 

 

 

1,300,000

 

Less: amount due after one year for notes payable

 

 

 

 

 

(1,000,000

)

Amount due after one year for convertible notes payable

 

$

 

 

$

300,000

 


Future maturities of notes payable as of April 30, 2017 are as follows:


Year ending April 30,

 

 

 

2018

 

$

50,000

 

2019

 

 

 

 

 

$

50,000