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6. Debt

9 Months Ended

Jun. 30, 2014

During the nine months ended June 30, 2014, the Company issued $129,500 of convertible notes. The convertible notes have an exercise price of $0.35 per share of common stock and mature in September 2014. During the nine months ended June 30, 2014, convertible notes of $134,750 were converted to common stock.

During the nine months ended June 30, 2014, the Company raised $506,000 in an 8% Note Offering with principal and interest to be repaid one year from the date of issuance or from the proceeds of a future offering of Company securities (the “Bridge Notes”). Additionally, the Company granted each note holder an option to purchase one share of the Company’s common stock for each dollar of the principal amount of the note at $0.05 per share. The options expire one year from the date on which the note is repaid.

The following table describes the Company’s debt outstanding as of June 30, 2014:

Debt		Carrying Value				Maturity		Rate

Capital lease		$	16,147			March 31, 2015			10.00	%

Convertible notes		$	185,550			September 30, 2014			8.00	%

Notes Payable (Bridge Notes)		$	506,000			Various – One year from inception			8.00	%

Due to shareholder		$	136,948			Demand			0.00	%

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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