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Notes Payable
6 Months Ended
Sep. 30, 2011
Notes Payable [Abstract] 
Notes Payable

Note 2: Notes Payable

 

G-Max Trust Note

 

On December 29, 2009, the Company issued a Convertible Promissory Note (the “G-Max Note”) to The G-Max Trust (the “Investor”) in connection with a private placement to the Investor for gross proceeds of $500,000, and 500,000 shares of common stock of the Company at par value for gross proceeds of $500 as an inducement to enter into the agreement. The market value of the common stock on the date issued was $0.25 per share, for a total value of $125,000. A discount on the note payable of $124,500 was recorded as a result, and was being amortized over the term of the G-Max Note. The stock was restricted for six months from the date issued. The discount was fully amortized and the net carrying value was $500,000 (Note 3).

 

Interest on the outstanding principal balance of the G-Max Note accrued at a rate of 10% per annum compounded monthly and was payable monthly commencing February 1, 2010. On June 30, 2011, the maturity date of the note, the holder of the G-Max note converted the entire $500,000 principal amount of the note into 2,500,000 shares of common stock at the conversion price stated in the note.

 

Gemini Master Fund, Ltd. Notes

 

In January 2010, the Company completed the closing of a private placement financing transaction with a small number of institutional investors led by Gemini Master Fund, Ltd., pursuant to a Securities Purchase Agreement. The Company issued 10% Senior Secured Convertible Notes (the “Notes”) in the aggregate principal amount of approximately $1.5 million and 1,500,000 shares of common stock (sold at par value) of the Company, and received gross proceeds of $1.5 million, excluding transaction costs and expenses. The fair market value of the Company’s common stock on the date of the transaction was $ 0.41 per share. A discount of approximately $600,000 was calculated as a result, and was amortized over the life of the Notes. The stock was restricted for six months from the date issued. The discount was fully amortized.

 

During April through June 2011, certain of the Gemini note holders exercised their conversion feature to convert their notes into shares of the Company’s common stock. A total of approximately 1,593,102 shares were issued in the conversion of notes with a total converted amount of $318,620, including interest (Note 3).

 

On June 30, 2011, the three remaining Gemini note holders accepted payment of the principal amounts owed. The amount of the notes paid and retired was $345,000.

 

Notes Payable to Related Party

 

The Company had notes payable to a related party amounting to $101,232 at September 30, 2011, which bear interest at 10%. Accrued interest related to the notes was $58,602 at September 30, 2011.