Quarterly report pursuant to Section 13 or 15(d)

Convertible Debt Related Party Disclosures

v3.10.0.1
Convertible Debt Related Party Disclosures
6 Months Ended
Sep. 30, 2018
Notes  
Convertible Debt Related Party Disclosures

NOTE 6 - CONVERTIBLE DEBT RELATED PARTY

 

Overview

The carrying value of the Notes, as of September 30, 2018 and March 31, 2018 is comprised of the following:

 

 

September 30, 2018

 

March 31, 2018

  Principal value of 5%, convertible, net of conversion

$

120,000

 

$

220,000

  Fair value of embedded derivatives

 

95,000

 

 

156,000

  Accrued interest

 

4,000

 

 

15,204

  Debt discount

 

(58,000)

 

 

(133,590)

Carrying value of Secured Convertible Debenture Note

$

161,148

 

$

257,614

 

As of September 30, 2018, the estimated aggregate fair value of outstanding convertible notes payable is approximately $0.2 million. The fair value estimate is based on the estimated option value of the conversion terms. The estimated fair value represents a Level 3 measurement.

 

Conversions

In September 2018 the holder converted $100,000 of principal and $25,789 $0.1 of interest into approximately 10.7 million shares of common stock. The fair market value of the shares issued of $0.3 million exceeded the net carrying value of the convertible notes by $0.1 million and a loss on extinguishment was recorded.

 

Embedded features

The analysis utilized in calculating the embedded derivative at September 30, 2018 and March 31, 2018 was calculated using the following key inputs:

 

 

September 30, 2018

 

March 31, 2018

Stock price

$0.017

 

$0.06

Contractual term

0.27 years

 

0.1 - 1.0 years

Volatility

400%

 

300%

Risk-free rate

1%

 

1%

 

The fair value estimate of the embedded derivative is a Level 3 measurement. The roll-forward of the Level 3 fair value measurement, for the six months ended September 30, 2018, is as follows:

 

Balance at

March 31, 2018

Conversion

 

Net unrealized

(gain)/loss

Balance at

September 30, 2018

$ 156,000

$ (65,000)

 

$ 4,000

$ 95,000

 

Technical default

The remaining note which was due in July 2018 is in technical default, although the obligation has not been called by the lender.