7.	Convertible Notes Payable

In summary, the following convertible notes payable outstanding at April 30, 2013:

Convertible note, original face value of $168,000, dated July 26, 2012, maturing January 26, 2013, 8% interest rate, deferred financing cost of $15,000 ratably charged to interest, unamortized $0, convertible at $.16 per share. If converted as of April 30, 2013, it would represent approximately 627,103 additional shares. Interest accrued to date is $10,236. Partial conversion into common shares were exercised during the 2013 year.	$	90,100

Convertible note, original face value of $25,000, dated August 1, 2012, maturing March 2, 2013, 10% interest rate, deferred financing cost of $2,500 ratably charged to interest, unamortized $0, debt discount of $25,000 amortized to interest, unamortized $0, convertible at 50% discount to market. If converted as of April 30, 2013, it would represent approximately 1,343,151 additional shares. Interest accrued to date is $1,863.		25,000

Convertible note, original face value of $25,000, dated August 28, 2012, maturing March 2, 2013, 10% interest rate, deferred financing cost of $2,500 ratably charged to interest, unamortized $0, debt discount of $25,000 amortized to interest, unamortized $0, convertible at 50% discount to market. If converted as of April 30, 2013, it would represent approximately 1,333,904 additional shares. Interest accrued to date is $1,678.		25,000

Convertible note, original face value of $35,000, dated August 28, 2012, maturing March 2, 2013, 10% interest rate, deferred financing cost of $3,500 ratably charged to interest, unamortized $0, debt discount of $35,000 amortized to interest, unamortized $0, convertible at 50% discount to market. If converted as of April 30, 2013, it would represent approximately 1,617,466 additional shares. Interest accrued to date is $2,349.		30,000

Convertible note, original face value of $75,000, dated September 19, 2012, maturing September 19, 2013, 6% interest rate, deferred financing cost of $4,750 ratably charged to interest, unamortized $1,848, debt discount of $75,000 amortized to interest, unamortized $29,178, convertible at 30% discount to market. If converted as of April 30, 2013, it would represent approximately 1,791,047 additional shares. Interest accrued to date is $2,749. Partial conversion into common shares during quarter ended April 2013		47,400

Convertible note, original face value of $50,000, dated October 5, 2012, maturing May 6, 2013, 10% interest rate, deferred financing cost of $5,000 ratably charged to interest, unamortized $1,848, debt discount of $50,000 amortized to interest, unamortized $29,178 convertible at 50% discount to market. If converted as of April 30, 2013, it would represent approximately 1,682,934 additional shares. Interest accrued to date is $2,836.		57,750

Total Convertible Notes Payable		275,250
Less: Debt Discounts and Deferred Financing Costs		89,153
Convertible Notes Payable, net of discounts and financing cost	$	186,097

Long-term portion	$	-
Current portion of debt	$	186,097

The Company evaluated the terms of these notes in accordance with ASC 815 - 40, Derivatives and Hedging - Contracts in Entity's Own Stock and determined that the underlying common stock is indexed to the Company's common stock. The Company determined that the conversion feature met the definition of a liability and therefore, bifurcated the conversion feature and account for it as a separate derivative liability. The Company has recognized a beneficial conversion resulting from the contract, which was recorded as a debt discount and is being amortized over the life of the loan to interest expense. A charge to the statement of operations was made to provide for the remaining portion of the recognized derivative liability at origination. The Company has re-measured the derivative at the period end, resulting in a derivative liability in the amount of $183,564 as of April 30, 2013. The corresponding change in derivatives, from origination to period end resulted in a change and recognition of expenses (income) in the amount of $64,983, ($16,821), and $7,272 for the three and nine months and from inception through the period ended April 30, 2013, respectively.

The derivative valuation was calculated using the Black-Scholes Model for the conversion feature. Assumptions to the calculation were as follows:

Weighted Average:
Dividend rate	0.00	%
Risk-free interest rate	.08	%
Expected lives (years)	0. 680
Expected price volatility	160.0	%
Forfeiture Rate	0.00	%

Based on the fair market value and the terms of the above agreements, there is a potential conversion of approximately 8,395,600 shares of common stock, if converted.