6. NOTES PAYABLE

3 Months Ended

Jul. 31, 2013

Debt Disclosure [Abstract]

6. NOTES PAYABLE

The following table summarizes our outstanding notes payable as of July 31, 2013 and April 30, 2012:

	July 31, 2013			April 30, 2013
Current portion of notes payable, net	$	23,167		$	57,539
Current portion of convertible notes payable		4,900,001			-
Less: Unamortized discount		(1,497,226	)
Current portion of notes payable, net	$	3,425,942		$	57,539
Long-term portion of convertible notes payable	$	-		$	4,900,001
Less: Unamortized discount		-			(1,905,559	)
Long-term portion of notes payable, net	$	-		$	2,994,442

Convertible Note

On June 29, 2011, the Company issued a note (the “June Note”) with a principal amount of approximately $300,000 and Warrants to purchase 6,652 shares of Common Stock. On July 1, 2011, the Company issued a separate note (together with the June Note, the “Notes”) with a principal amount of $4,600,000 and warrants to purchase 101,996 shares of Common Stock. The aggregate gross proceeds to the Company from the offering were approximately $4.9 million, excluding any proceeds from the exercise of any warrants. The aggregate placement agent fees were $297,000 and legal fees associated with the offering were $88,839. These costs have been capitalized as debt issue costs and will be amortized as interest expense over the life of the Notes. The Company recorded amortization of debt issue costs of $32,154 for each of the three months ended July 31, 2013 and 2012.

Interest on the Notes accrues at a rate of 15% annually and will be paid in quarterly installments commencing on the third month anniversary of issuance. The Notes will mature 36 months from the date of issuance. The Notes may be converted into shares of Common Stock at a conversion price of $45.10 per share (subject to adjustment for stock splits, dividends and combinations, recapitalizations and the like) (the "Conversion Price") at any time, in whole or in part, at any time at the option of the holders of the Notes. The Notes also will automatically convert into shares of Common Stock at the Conversion Price at the election of a majority-in-interest of the holders of notes issued under the purchase agreement or upon the acquisition or sale of all or substantially all of the assets of the Company. The Company may make each applicable interest payment or payment of principal in cash, shares of Common Stock at the Conversion Price, or any combination thereof. The Company may elect to prepay all or any portion of the Notes without prepayment penalties only with the approval of a majority-in-interest of the note holders under the purchase agreement at the time of the election.   The Notes contain various events of default such as failing to timely make any payment under the Note when due, which may result in all outstanding obligations under the Note becoming immediately due and payable. The Company recorded interest expense of $628,321 for the three months ended July 31, 2013 and 2012, respectively.

The total value allocated to the warrants was approximately $1,960,497 and was recorded as a debt discount against the proceeds of the notes.  In addition, the beneficial conversion features related to the notes were determined to be approximately $2,939,504.  As a result, the aggregate discount on the notes totaled $4,900,000, and is being amortized over term of the notes.  The Company recorded interest expense for the amortization of debt discount of approximately $408,000 for each of the three months ended July 31, 2013 and 2012.