NOTE 7 – LONG-TERM DEBT

Convertible Notes

PT Soho Industri Pharmasi

Mariposa Australia entered into a Convertible Note Deed (the "Convertible Note") dated September 29, 2010 with PT Soho Industri Pharmaci in the principal amount of AUD $750,000 that bears interest at 6% per annum and had a maturity date of September 28, 2013 that was amended and replaced by an Unsecured Loan Deed dated May 6, 2015. Soho agreed to amend and replace the Convertible Note. The note holder has converted 60% of the debt to equity in Mariposa US at the time of the Purchase and, assuming a minimum listing price, has agreed to convert the balance AUD $368,204 (USD $281,796) to equity in Mariposa US upon Mariposa Australia listing on a recognized exchange. The Unsecured Loan Deed may be converted into 438,789 of common shares of the Company upon the Company’s ability to list on a recognized US stock exchange (an exchange greater than the over-the-counter exchanges). The total accrued interest on the Convertible Note as of December 31, 2015 and June 30, 2015 was $21,340 and $4,728, respectively. These amounts are included in accounts payable and accrued expenses. The Unsecured Loan Deed has interest at 12.5% per annum and a maturity date of May 12, 2018 and is included in long-term liabilities.

The conversion feature of the convertible note is not viewed separately from the debt. Therefore, no value is assigned to the conversion feature.

Lyndcote Holding Pty Ltd

The Company on January 28, 2015 issued a convertible note in the amount of AUD $100,000 (USD $76,570) with interest at 15% per annum and a maturity date of June 30, 2018 and this amount is included in long-term liabilities. The total accrued interest on the Convertible Note as of December 31, 2015 and June 30, 2015 was $10,077 and $4,815, respectively. These amounts are included in accounts payable and accrued expenses.

As of December 31, 2015 and the date of this report the convertible note is outstanding and has not been converted.

This note is convertible into shares of common stock in accordance with the terms of the convertible note. The lender is to receive 70,319 shares of common stock which is .93% of the total shares issued to the Mariposa Australia shareholders in the reverse merger with the Company.

Promissory Note

The Company on June 17, 2015 issued a Promissory Note in the amount of up to $500,000 with interest at 10% per annum and a maturity date of October 15, 2015. The proceeds drawn down were used for general working capital. The note is senior to our other debt obligations. All outstanding principal and interest was due on the maturity date, which was 120 days from the closing date of the term loan. The Company is currently negotiating with the lender to extend the maturity date but there is no assurance that it will be successful in doing so in which case it would be subject to the default remedies of the lender under the terms of the note that if they were unable to satisfy could force the Company to seek protection under the U.S. bankruptcy laws. The total accrued interest on the Promissory Note as of December 31, 2015 and June 30, 2015 was $19,954 and $1,069, respectively. These amounts are included in accounts payable and accrued expenses. As of December 31, 2015 the Company had drawn down $400,000 and repaid $50,000 of the principal owed to the lender. The principal balance of $350,000 is included as a current liability. The Company is accruing interest at the default interest rate of 15% per annum.

The Company issued 320,000, five-year warrants with an exercise price of $0.001 in accordance with the Promissory Note. As a result of the issuance of warrants, the Company recognized a debt discount in the amount of $33,440 to be recognized over the four months of the term of the debt. Amortization of the discount for the six months ended December 31, 2015 was $30,425. The lender was issued 320,000 shares of the Company's common stock on October 20, 2015, as a result of the exercise of the warrants under the terms of the Warrant.

At December 31, 2015, the Company has $350,000 included as current liabilities and $341,564 as long-term liabilities.