Note 7 – Short-Term Loans

9 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Note 7 – Short-Term Loans

Note 7 - Short-Term Loans

On October 26, 2010, the Company entered into a loan agreement with Desmet Ballestra North America, Inc. under which the Company borrowed $75,000. This agreement was restructured on January 21, 2011 extending the due date on the initial payment to March 31, 2011. The due date on the loan was subsequently extended with no definitive maturity date. The loan bears no interest but accrued interest on late payments amounted to $4,125 at March 31, 2012. Principal payments are being made to Desmet when possible. The outstanding balance on March 31, 2012 was $55,000.

On December 28, 2011, the CEO, Todd Zelek, extended to the company a $100,000 short-term loan due on demand at an annual interest rate of 12%. Accrued interest amounted to $3,000 at March 31, 2012.

In addition, throughout the third quarter of fiscal 2012, we received $57,000 from our Director of Operations which is included in short-term loans, related parties which are funds that are earmarked for eventual conversion into a convertible promissory note, should the Company be able to raise $400,000.