Secured Convertible Promissory Notes

6 Months Ended

Oct. 31, 2017

Debt Disclosure [Abstract]

Secured Convertible Promissory Notes

4. Secured Convertible Promissory Notes

As of October 31, 2017, REGI has outstanding senior secured convertible promissory notes (the “Convertible Notes”) of $924,546 (net of unamortized discount of $36,640) issued to related parties and $861,288 (net of unamortized discount of $642,801) issued to non-related parties. As of April 30, 2017, REGI has outstanding Convertible Notes of $877,449 (net of unamortized discount of $9,888) issued to related parties and $636,539 (net of unamortized discount of $12,944) issued to non-related parties.

During the six months ended October 31, 2017, the Company issued Convertible Notes for cash proceeds of $770,849, settled accounts payable from previous years of $17,436, service debt provided by related parties of $52,000, and service debt provided by non-related parties of $81,721 of which $62,600 was finders’ fee for cash based Convertible Notes recorded as discount to these Convertible Notes. $7,384 of the $62,600 debt discount was amortized and recorded as financing charge during the six months ended October 31, 2017. The Convertible Notes are secured against all assets of the Company, repayable two years after the issuance, bearing simple interest rate of 10% during the term of the notes and simple interest rate of 20% after the due date. During the six months ended October 31, 2017 $14,152 of the Convertible Notes were redeemed with cash payment. During the six months ended October 31, 2017 $60,000 of the Convertible Notes were reclassified from non-related party to related party as a debt holder became a director of the Company.

As of October 31, 2017, $755,185, $17,436, $50,000, $1,462,654, $60,000 and $120,000 of the promissory notes are convertible at any time on or after ninety days from the issuance date into the Company’s common stocks at $0.755, $0.174, $0.12, $0.10, $0.09 and $0.08 per share respectively.

The Company analyzed the conversion option in the notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instrument does not qualify for derivative accounting.

The Company determined that the conversion option was subject to a beneficial conversion feature and during the six months ended October 31, 2017 the Company recorded a total beneficial conversion feature of $691,197, and amortization of the beneficial conversion feature of $89,805 as interest expense.