NOTES PAYABLE

3 Months Ended

Jul. 31, 2016

Notes to Financial Statements

NOTE 7 - NOTES PAYABLE

Notes payable, currently in default, consist of the following at:

	July 31, 2016		April 30, 2016
Note payable to an unrelated party, maturing July 15, 2010, with interest at 10%	$	300,000	$	300,000
Note payable to an unrelated party, maturing December 31, 2010, with interest at 10%		25,000		25,000
Note payable to an unrelated party, maturing January 27, 2012, with interest at 25%		50,000		50,000
	$	375,000	$	375,000

Accrued interest payable on notes payable, currently in default, totaled $286,790 and $276,477 at July 31, 2016 and April 30, 2016, respectively.

Convertible notes payable, currently in default, consist of the following at:

	July 31, 2016		April 30, 2016
Note payable to an accredited investor, maturing March 1, 2013, with interest at 1.87% per month, secured with 900,000 common shares of the Company owned by the president and CEO of the Company	$	120,000	$	120,000
Note payable to an unrelated party, maturing March 18, 2014, with interest at 10%		75,001		75,001
Total		195,001		195,001
Less discount		-		-
Net	$	195,001	$	195,001

Accrued interest payable on convertible notes payable, currently in default, totaled $120,665 and $112,058 at July 31, 2016 and April 30, 2016, respectively.

On January 2, 2013, the Company closed a note purchase agreement with an accredited investor pursuant to which the Company sold a $120,000 note in a private placement transaction. The note was due and payable on March 1, 2013, is currently in default and carries a monthly interest rate of 1.87%. The note purchase agreement included the issuance of 300,000 shares of the Company’s common stock. The note is secured with 900,000 shares of the Company’s common stock owned by Jack W. Hanks, the Company’s President and CEO. The 300,000 shares were valued at $0.10 per share, the closing price of the Company’s common stock on January 2, 2013, and recorded as a $30,000 increase to debt discount and an increase to common stock payable.

The Company allocated the proceeds from the issuance of the notes to the warrants when applicable and to the notes based on their estimated fair market values at the date of issuance using the Black-Scholes option pricing model. The debt discount resulting from interest and the value of warrants computed at the inception of the notes payable was amortized as additional interest expense over the term of the notes.