Quarterly report pursuant to Section 13 or 15(d)

PREFERRED STOCK

PREFERRED STOCK

3 Months Ended

Jul. 31, 2013

The Company has one Series of preferred stock designated as "Series E Preferred Stock." The Series E Preferred Stock has the following features:


•	Series E Preferred Stock will not bear any dividends.

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Each share of Series E Preferred Stock is entitled to receive its share of assets distributable upon the liquidation, dissolution or winding up of the affairs of the Company. The holders of the Series E Preferred Shares shall be entitled to receive cash out of the assets of the Company before any amount shall be paid to the holders of any capital stock of the Company of any class junior in rank to the Series E Preferred Shares.


•	Each share of Series E Preferred Stock is convertible, at the holder’s option, into shares of Common Stock, at the average closing bid price of the Common Stock for five (5) trading days prior to the conversion date.

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At every meeting of stockholders, every holder of Series E Preferred Stock is entitled to 50,000 votes for each share of Series E Preferred Stock in his name, with the same and identical voting rights as a holder of a share of Common Stock; therefore, the holder of the preferred stock can effectively increase the Company issued Common Stock shares without a vote of the Common Stock shareholders thus enabling any potential shortfall of authorized common shares outstanding from being covered should the Preferred Stockholders wish to convert.

On March 1, 2011, the Company issued 3,500 shares of Series E Preferred Stock to a shareholder for an $80,000 loan that was made to the Company. Based on prior year issuance of Series E Preferred Stock , the original valuation was $50.00/share and since the valuation of the Series E Preferred Stock for this loan was set to $80,000 per 3,500 shares or $22.86/share, the Company has recorded a loss on conversion of debt of $95,000 for year ending April 30, 2011.

During the period ended July 31, 2013, the shareholder converted 3,500 shares of the Series E Preferred Stock into 4,000,000 shares of Common Stock. The Series E Preferred Stock was valued using the closing price on the day of issuance for a total of $720,000 resulting in a loss on conversion of $640,000.

Holders of Series E Preferred Stock have specific rights to be paid in cash out of the assets of the Company prior to any junior class of Common Stock. As a result of the obligations for Series E Preferred Stock, the Company has determined these redemption features have the potential to be outside the control of the Company, and accordingly, the Company has classified the Series E Preferred Stock outside of shareholder’s equity in accordance with ASC 480 regarding instruments with debt and equity features. Thus, the full value for the convertible Series E Preferred Stock was recorded outside of stockholders’ equity in the accompanying consolidated balance sheet.