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CONVERTIBLE NOTE PAYABLE

12 Months Ended

Jun. 30, 2014

On March 7, 2014, the Company issued a convertible promissory note in the amount of $100,000. The note is due on March 10, 2015 and bears interest at 8% per annum. The loan is secured by shares of the Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 58% multiplied by the market price, which is the average of the lowest three (3) trading prices for the common stock during the ten (10) trading day period ending on the latest complete trading day prior to the conversion date. Before the loan became convertible and prior to June 30, 2014, the Company fully paid off this loan in cash and did not convert any portion of this note into shares of common stock. The interest associated with this loan was $2,411, with an additional early payment fee of $24,846.

On April 17, 2014, the Company issued a convertible promissory note in the amount of $71,875. The note is due on April 16, 2015 and bears interest at 15% per annum, which was prepaid by the Company and is being amortized over the life of the loan. The loan is secured by shares of the Company’s common stock. The loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date. During the year ended June 30, 2014, the Company has not converted any portion of this note into shares of common stock. The accrued interest related to this debt is $0 because the entire term’s interest was prepaid, the interest expense related to this loan is $1,541.

On April 18, 2014, the Company issued a convertible promissory note in which the Company will be taking tranche payments on pre-defined dates, the total of these payments cannot exceed $650,000. There is an original discount component of 10% per tranche and an additional expense fee of $5,000. Therefore, the funds available to the Company will be $650,000 and the liability (net of interest) will be $750,000 when all disbursements have been received by the Company. Each tranche is accounted for separately with each principal and OID balance becoming due 18 months after receipt. Each tranche bears interest at 8% per annum. The loan is secured by shares of the Company’s common stock. Each portion of the loan becomes convertible 180 days after date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of 50% multiplied by the market price, which is the lowest quoted price for the common stock during the 20 trading day period ending on the latest complete trading day prior to the conversion date. During the period ended June 30, 2014, the Company has received three tranche disbursements of $100,000 on April 21, 2014; $50,000 on May 6, 2014; and $50,000 on June 11, 2014. The following details the disbursements as of June 30, 2014:

Tranche Date		Principal with OID		Accrued Interest	Converted to Stock
April 21, 2014	$	110,776	$	1,724	None
May 6, 2014		55,384		680	None
June 11, 2014		55,384		243	None
	$	221,544	$	2,647

On April 30, 2014, the Company issued a convertible promissory note with available funds of $250,000, however, the Company only received one tranche payment of $60,000 from this note, carrying a loan balance of $66,000 with principal and OID. There is an original discount component of 10% per tranche. The note is due on April 30, 2016 and bears interest at 0% if repaid within 90 days; and 12% per annum for any remaining balances past 90 days. The loan is secured by shares of the Company’s common stock. The loan becomes convertible immediately upon the date of the note. The loan and any accrued interest can then be converted into shares of the Company’s common stock at a rate of the lower of (1) $0.11per share or (2) 60% multiplied by the market price, which is the lowest quoted price for the common stock during the 25 trading day period ending on the latest complete trading day prior to the conversion date. During the year ended June 30, 2014, the Company fully paid off this loan in cash and did not convert any portion of this note into shares of common stock. The interest associated with this loan was $667.

The Company analyzed the conversion options embedded in the Convertible Promissory Notes for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined that there is not a derivative as the above references convertible notes are not convertible as of June 30, 2014 as they have not reach 180 days from the date of issuance.

- Definition

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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