Notes Payable

3 Months Ended

Jan. 31, 2016

Debt Disclosure [Abstract]

Notes Payable

6. Notes Payable

On November 19, 2012, the Company entered into an agreement (“Line”) with JMJ Financial (“Lender”) whereby the Company may borrow up to $350,000 from the Lender in increments of $50,000. The Line is subject to an original issue discount of $50,000. Advances under the Line (“Notes”) have a maturity date of one year from the date of the advance. If the advance is repaid within three months, the advance is interest free. If not repaid within three months, the advance may not be repaid before maturity and carries interest at 5%. The Lender has the right at any time to convert all or part of the outstanding principal and accrued interest (and any other fees) into shares of fully paid and non-assessable shares of common stock of the Company at a price equal to the lesser of $0.23 and 60% of the lowest trade price in the 25 trading days previous to the conversion. Unless agreed in writing by the parties, at no time will the Lender convert any amount owing under the Line into common stock that would result in the Lender owning more than 4.99% of the common stock outstanding. On June 22, 2015, the Company and the Lender entered into a settlement agreement, whereby in exchange for the remaining indebtedness of $77,235, the Company agreed that on the 15th of each month commencing July 2015 and ending June 2016, the Company would either pay the lender $6,436 or issue to the lender common shares in the equivalent dollar amount at a price equal to the average closing price of the common stock in the five trading days prior to the scheduled payment date. During the three months ended January 31, 2016, the Company issued a total of 447,694 common shares for three installments.

On May 23, 2014, the Company issued promissory notes (the “LG Notes”) to LG Capital Funding, LLC and Adar Bays, LLC (collectively the “Holders”) in the amount of $52,500 each bearing interest at 8% annually due May 23, 2015. The LG Notes and accrued interest may be converted into shares of the Common Stock of the Company at a 42% discount to the lowest closing bid with a 12 day look back.

On December 15, 2014, the Company received $52,500 from LG Capital in exchange for a note payable bearing interest at 8% due in one year, convertible into shares of the Company’s common stock at a 42% discount from the lowest closing price of the common shares over the prior 15 days. As of January 31, 2016, all but $16,500 of the notes have been converted to common shares.

On July 31, 2015, the Company received $55,250 from Auctus, LLC in exchange for a note payable bearing interest at 8% due in nine months, convertible into shares of the Company’s common stock at a 45% discount from the lowest closing price of the common shares over the prior 15 days.

On August 14, 2015, the Company received $27,500 from Iliad Research & Trading, L.P. in exchange for a note payable bearing interest at 10% due in one year, convertible into shares of the Company’s common stock at a 40% discount from the lowest closing price of the common shares over the prior 15 days.

On October 13, 2015, the Company received $27,500 from Chicago Ventures in exchange for a note payable bearing interest at 10% due in one year, convertible into shares of the Company’s common stock at a 40% discount from the lowest closing price of the common shares over the prior 15 days.

On November 20, 2015, the Company received $50,000 from Bay Private Equity Inc. in exchange for a note payable bearing interest at 8% due in one year, convertible into shares of the Company’s common stock at a 45% discount from the lowest closing price of the common shares over the prior 15 days.

On November 25, 2015, the Company received $160,500 from FirstFire Opportunities Fund LLP in exchange for a note payable bearing interest at 4% due in six months, convertible into shares of the Company’s common stock at a 60% discount from the lowest closing price of the common shares over the prior 15 days.

A summary of the Notes Payable at January 31, 2016 and October 31, 2015 follows:

	January 31, 2016			October 31, 2015
Convertible Note Payable, due December 15, 2015	$	16,500		$	16,500
Convertible Notes Payable, due May 23, 2016		160,500			-
Convertible Note Payable, due June 23, 2016		35,616			54,925
Convertible Note Payable, due July 31, 2016		55,250			55,250
Convertible Note Payable, due August 14, 2016		27,500			27,500
Convertible Note Payable, due October 9, 2016		27,500			27,500
Convertible Note Payable, due November 20, 2016		50,000			-
Debt Discount - value attributable to conversion feature attached to notes, net of accumulated amortization of $164,302 and $72,614		(208,564	)		(109,061	)
Total		164,302			72,614
Less: Current portion		164,302			72,614
Total Long-term portion	$	-		$	-

As described in further detail in Note 7, “Derivative Liabilities”, the Company determines the fair value of the embedded derivatives and records them as a discount to the Notes and as a derivative liability. Upon conversion of the Notes to Common Stock, any remaining unamortized discount is charged to financing expense.