Convertible Debentures

3 Months Ended

Jan. 31, 2013

Convertible Notes Payable [Abstract]

Convertible Debentures

8. Convertible Debentures

On November 10, 2010, the Company entered into a convertible note for $64,868 with a stockholder. The Note matured on May 31, 2012 and bears interest at the rate of ten percent (10%) per annum. The Note is convertible into shares of common stock at a forty two percent (42%) discount to the average of the lowest three (3) closing bid prices of the common stock during the ten (10) trading days prior to the conversion date. The note holder may convert any or all of the unpaid principal note prior to the maturity date. The Company calculated the intrinsic value of the conversion feature to be $46,973 as of the date of issuance of the debentures using the same criteria as noted above, which amount has been fully amortized as of January 31, 2013. The Company has expensed $14,449 in accrued interest on the note as of January 31, 2013. If the note had been converted as of January 31, 2013, the Company would have issued a total of 117,728 shares of common stock the value of which would exceed, by $117,610 the principal balance due on the note. The Company is currently negotiating with the lender to settle or renegotiate the Note.

On November 27, 2009, the Company borrowed $25,000 from an unaffiliated lender. In September 2011, the lender converted $12,500 of the principal and $2,876 in accrued interest into 17,084 shares of common stock. The Company issued an Amended and Restated Convertible Note for the $12,500 principal balance of the loan. The amended note matured on December 31, 2012 and bears interest at 6% and is convertible into common shares at a 55% discount to the average of the lowest three (3) closing bid prices of the common stock during the ten (10) trading days prior to the conversion date. The Company calculated the intrinsic value of the conversion feature on the remaining balance to be $10,507 as of the date of issuance of the amended note which has been fully amortized as of January 31, 2013. As of January 31, 2013, the Company had expensed a total of $1,021 in accrued interest on the remaining principal balance of $12,500. If the $12,500 balance of the note had been converted as of January 31, 2013, the Company would have issued a total of 29,240 shares of common stock.

At January 31, 2013 and October 31, 2012, without taking into effect any unamortized discounts, convertible debentures consisted of the following:

			October 31, 2012
	January 31, 2013		(Audited)
Convertible note payable to stockholder; principal and interest at 10% due on May 31, 2012.	$	64,868		64,868
Convertible notes payable to various stockholders; principal and interest at 6% maturing on December 31, 2012.	$	12,500		12,500
		77,368		77,368
Less current maturities	$	77,368		77,368
Long term portion of Convertible and Series 1 notes payable	$	—	$	—