Notes Payable

9 Months Ended

Jun. 30, 2013

Debt Disclosure [Abstract]

Notes Payable

NOTE 5. Notes Payable

During the nine months ended June 30, 2013, the Company issued a principal amount of $884,750 of 8% Convertible Notes due September 30, 2014 and received proceeds of $884,750. The notes are convertible into restricted shares of the Company’s common stock at any time until maturity by the holder at $0.35 per share. The Company may also prepay the notes at any time upon at least 30 days written notice to the holder(s) either in whole or in part. Upon any prepayment by the Company of the convertible notes the Company shall issue to the holder a warrant to purchase 250 shares of common stock for each $1,000 of principal prepaid. Each warrant issued upon prepayment shall have an exercise price of $0.35 per share of common stock and shall be exercisable for a period of two years from the date of the prepayment. Certain purchasers of the convertible notes elected to convert a principal amount of $767,350 resulting in the issuance of 2,192,143 restricted shares of the Company’s common stock.

An unsecured note payable to a shareholder was acquired by the Company in the asset purchase in April 2011 previously discussed. The note was for $65,000 and carried an interest rate of 6%. The holder of the note was issued the company’s 8% Convertible Notes on December 31, 2012, in satisfaction of the outstanding note.