Notes Payable

6 Months Ended

Mar. 31, 2014

Notes to Financial Statements

4. Notes Payable

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

	03/31/2014		09/30/2013
4.9% Note payable due August 2010	$	13,246	$	13,246
Auto Loan		11,189		11,189
Prime Plus 4.5%, 1,000,000 bank credit facility (a)		180,141		180,141
Loan on equipment		67,318		67,318
	$	271,894	$	271,894

(a) On May 14, 2008, the Company entered into an agreement with a financial institution to provide up to $1,000,000 in secured credit, subject to certain limitations. This facility replaced a previous facility with another bank that had a limit of $300,000. Under this new facility, the Company is permitted to draw on an advance of up to 80% of certain eligible accounts receivable arising from our manufactured products segment.

The interest rate is prime plus 4.5%. The line is secured by the accounts receivable, inventory, and the unencumbered fixed assets of that segment. As part of the transaction, the lender was granted 150,000 shares of common stock having a fair market value of $15,000.

The above notes were entered into with various financial institutions when the Company was were an operating company. However, due to the lack of documentation of payments or settlement agreements for reason described in Note 1, the Company was not able to definitively determine that these notes were settled even though it appeared that the financial institutions repossessed the underlying collaterals. Therefore, these notes will remain on our books until the statute of limitation expires which we estimate to be between 2015 and 2017.