Notes Payable

6 Months Ended

Mar. 31, 2013

Notes Payable Disclosure [Text Block]

Note 5.  Notes Payable

Notes payable and accrued interest consisted of the following at March 31, 2013 and September 30, 2012:

	March 31, 2013	September 30, 2012
Convertible debentures, interest rates from 6% - 8% and maturing in 2013	$ 149,081	$ 111,000
Notes Payable	15,000	39,289
Accrued interest	4,908	3,401
Debt discount	(58,948)	(13,258)
Total	$ 110,041	$ 140,432

Settlement of Notes Payable

In December 2012, one of our note holders assigned their note to a third party who converted the note into 3,367,003 shares of common stock and we recorded a loss on settlement of liabilities of $14,916 in our condensed consolidated statement of operations. We recorded a reduction to our Notes Payable in the amount of $10,000 for this transaction.

During the three months ended March 31, 2013, six of our note holders assigned their notes to a third party who then converted the notes into 7,159,628 shares of common stock. We recorded a loss on settlement of liabilities of $31,790 in our condensed consolidated statement of operations and a reduction to Notes Payable in the amount of $29,289 for this transaction.

Issuance of Convertible Promissory Note

In April 2012, we issued a convertible promissory note in the amount of $53,000 to an investor for net proceeds of $50,000. The note bore interest at an annual rate of 8% and had a maturity date of January 13, 2013.  In October and November of 2012, the debenture was converted in full into 9,654,476 shares of common stock under the conversion terms of the note.

During the six months ended March 31, 2013, we issued three convertible promissory notes in the aggregate amount of $128,000 to an investor for net proceeds of $120,000. The notes are interest bearing at an annual rate of 8% and have maturity dates of July 5, 2013, September 4, 2013, and October 28, 2013. After six months from the date of issue, the promissory notes may be converted into shares of common stock at a rate of 58% of the average of the three lowest closing bid prices during the ten trading days prior to notice to convert. During the six months ended March 31, 2013, we recorded debt discount for beneficial conversion feature on these notes in the amount of $109,881.

During the six months ended March 31, 2013, one of our convertible promissory note holders converted $36,319 of their note into 6,662,191 shares of our common stock on which we recorded $25,845 as loss on settlement of liabilities in our condensed consolidated statement of operations.

Issuance of Promissory Note

During the three months ended March 31, 2013, we issued a non-interest bearing promissory note in the amount of $15,000 in full satisfaction of an outstanding liability. The note is payable in three installments of $5,000 with the first payment due within 30 days of the agreement and the  following two payments on the 15^th of each month thereafter.