Note 6 - Notes Payable To Shareholders

3 Months Ended

Sep. 30, 2014

Notes

Note 6 - Notes Payable To Shareholders

NOTE 6 – NOTES PAYABLE TO SHAREHOLDERS

On March 1, 2012 the Company borrowed $151,410 (CDN$150,000) from one of the Company’s shareholders on an uncollateralized, non-interest bearing, demand note that matures on February 28, 2013. On May 17, 2012, we converted $56,156 USD of the above debt’s principal to shares of our restricted common stock at $0.04 per share. On December 14, 2012, we converted $75,137 USD, or 751,368 shares of our restricted common stock, of the above debt’s principal into shares of our restricted common stock at $0.10 per share. As of September 30, 2014 and June 30, 2014, the remaining balance of $20,117 is outstanding, respectively.

On October 23, 2012 the Company borrowed $20,130 (CDN$20,000) from a company owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and matures on January 14, 2013. We accrued $412 in interest expense for the three months ended September 30, 2014 and 2013, in connection with this note, and the principal and interest are outstanding as of September 30, 2014 and June 30, 2014.

On December 14, 2012 the Company received $50,000 USD from the same company as above owned by one of the Company’s shareholders. Initially this transaction was recorded as a subscription agreement. Subsequent to June 30, 2013 the parties renegotiated the agreement and the funds were reclassified as an uncollateralized, demand note, bearing a 8% interest rate per annum and is payable upon demand of the note holder. The related interest was accrued in the current year. As of the three months ended September 30, 2013 and 2014, we accrued $1,022 in interest expense in connection with this note, and the principal and interest are outstanding as of September 30, 2014 and June 30, 2014.

On February 15, 2013 the Company borrowed $50,000 USD from a company owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum. Repayment of this note shall be from sales of the Company’s products through WalMart Canada.  For each check received from WalMart Canada, the Company shall pay five percent (5%) of the proceeds which shall be applied to the repayment of this Note, including principal and accrued interest.  Upon satisfaction of this Note, the note holder shall be entitled to a 2.5% royalty on future sales of the Company’s products through WalMart Canada in perpetuity. During the years ended June 30, 2014 and 2013, we accrued $289 and $1,500, respectively, in interest expense in connection with this note, and on June 21, 2013, we converted $50,000 USD, or 500,000 shares of our restricted common stock, of the above debt’s principal into shares of our restricted common stock at $0.10 per share. As of June 30, 2014, we had no remaining balance outstanding.

On April 26, 2013 the Company borrowed $30,000 USD from the same company as above owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and is payable upon demand of the note holder. As of September 30, 2014 and 2013, we accrued $613 and $613, respectively, in interest expense in connection with this note. As of September 30, 2014 and June 30, 2014, the entire principal amount is outstanding.

On June 26, 2013 the Company borrowed $23,300 USD (CDN $24,500) from the same company as above owned by one of the Company’s shareholders on an uncollateralized, demand note, bearing a 8% interest rate per annum and is payable upon demand of the note holder. As of June 30, 2014 and 2013, we accrued $321 and $21, respectively, in interest expense in connection with this note. On August 2013, we repaid the entire balance due. As of September 30, 2014 and June 30, 2014, only the interest accrued is outstanding.

The notes payable to shareholders balance comprised of the below, net of accrued interest of $13,765.

Description	September 30, 2014			June 30, 2014
Uncollateralized note to a related entity bearing no interest per annum which matured on February 28, 2013.	$	20,117	$		20,117
Uncollateralized note to a related entity bearing 8% interest per annum.		--			--
Uncollateralized note to a related entity bearing 8% interest per annum.		50,000			50,000
Uncollateralized note to a related entity bearing 8% interest per annum.		30,000			30,000
Uncollateralized note to a related entity bearing 8% interest per annum which matured on January 14, 2013.		20,130			20,130
Total liabilities		120,247			120,247

All notes are payable on demand and appropriately classified as current liabilities.