Convertible Notes Payable

9 Months Ended

Jul. 31, 2019

NOTE 5 – CONVERTIBLE NOTES PAYABLE

During prior years and through the nine months ended July 31, 2019, the Company issued multiple convertible notes payable to several entities. The notes bear interest at rates between 8% and 15% and are convertible at rates between 40-60% of the lowest trading price of company's common stock over a period ranging from 5-20 days prior to the date of conversion. All of the outstanding notes are either currently due or become due on or before July 31, 2020. The notes are summarized as follows:

Total convertible notes payable at July 31, 2019	$	1,526,291
Less: Current portion of notes payable		(1,526,291	)
Long term portion of notes payable		—

The following table summarized the convertible note activity in the nine months ended July 31, 2019 and the year ended October 31, 2018:

	Principal Balance			Loan Discount			Accrued interest
October 31, 2017	$	897,524		$	(383,122	)	$	61,520
Issued in the year		787,515			(754,153	)		—
Converted into stock or repaid		(580,448	)		—			(73,625	)
Amortization of debt discount		—			963,740			—
Interest accrued		—			—			172,497
October 31, 2018	$	1,104,591		$	(173,535	)	$	160,392
Issued in the period		883,257			(871,561	)		—
Converted into stock or repaid		(461,557	)		—			(82,953	)
Amortization of debt discount		—			641,365			—
Accrued interest		—			—			122,087
July 31, 2019	$	1,526,291		$	(403,731	)	$	199,526

The Company evaluated the terms of the conversion features of its convertible debentures in accordance with ASC Topic No. 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined they are indexed to the Company's common stock and the conversion features meet the definition of a liability, and therefore bifurcated the conversion features and accounted for them as a separate derivative liability.

Changes in Derivative Liabilities were as follows:

October 31, 2017	$	1,463,047
Issuance of derivative		1,568,926
Conversion into stock or assignment		(948,922	)
Change in fair value		795,880
October 31, 2018		2,878,931
Issuance of derivative		1,643,911
Conversion into stock or assignment		(1,870,297	)
Change in fair value		398,056
July 31, 2019	$	3,050,601

Interest expense for the nine months ended July 31, 2019 and 2018 was $239,415 and $134,809, respectively. Interest expense for the three months ended July 31, 2019 and 2018 was $130,455 and $75,615, respectively. Accrued interest payable on convertible debt was $199,526 and $160,392 as of July 31, 2019 and October 31, 2018, respectively.

The Company incurred a loss on the conversion of principal and interest during the nine months ended July 31, 2019 and 2018 of $363,970 and $107,098, respectively. During the nine months ended July 31, 2019, the Company recorded $1,184,975 in derivative expense.

Viva Entertainment Group Inc. 10-Q