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4. NOTES PAYABLE

9 Months Ended

Mar. 31, 2014

Convertible Notes Payable

Convertible notes payable consisted of the following as of March 31, 2014 and June 30, 2013, respectively:

Convertible Notes Payable – Related Parties
	March 31,		June 30,
	2014		2013

$250,000 face value, issued in February 2010, interest rate of 12%, matures in February 2013, net of unamortized discount of $0 and $0 at March 31, 2014 and June 30,2013, respectively.	$	250,000	$	250,000
$250,000 face value, issued in May 2010, interest rate of 12%, matures in May 2013, net of unamortized discount of $0 and $0 at March 31, 2014 and June 30,2013, respectively.		250,000		250,000
$250,000 face value, issued in August 2010, interest rate of 12%, matures in August 2013, net of unamortized discount of $0 and $24,559 at March 31, 2014 and June 30,2013, respectively.		250,000		225,441
$250,000 face value, issued in December 2010, interest rate of 12%, matures in December 2013, net of unamortized discount of $0 and $40,148 at March 31, 2014 and June 30,2013, respectively.		250,000		209,852
$250,000 face value, issued in November 2011, interest rate of 15%, matures in November 2012, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013, respectively.		250,000		250,000
$250,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013, respectively.		250,000		250,000
$100,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013, respectively.		100,000		100,000
$300,000 face value, issued in December 2011, interest rate of 15%, matures in June 2013, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013, respectively.		300,000		300,000

$100,000 face value, issued in February 2012, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $1,168 as of March 31, 2014 and June 30,2013, respectively.		100,000		98,832
$100,000 face value, issued in February 2012, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $1,514 as of March 31, 2014 and June 30,2013, respectively.		100,000		98,486
$150,000 face value, issued in March 2012, interest rate of 15%, matures in September 2013, net of unamortized discount of $0 and $1,111 as of March 31, 2014 and June 30,2013, respectively.		150,000		148,889
$200,000 face value, issued in March 2012, interest rate of 15%, matures in September 2013, net of unamortized discount of $0 and $1,814 as of March 31, 2014 and June 30,2013, respectively.		200,000		198,186
$200,000 face value, issued in April 2012, interest rate of 10%, matures in October 2013, net of unamortized discount of $0 and $2,450 as of March 31, 2014 and June 30,2013, respectively.		200,000		197,550
$150,000 face value, issued in May 2012, interest rate of 10%, matures in November 2013, net of unamortized discount of $0 and $1,682 as of March 31, 2014 and June 30,2013, respectively.		150,000		148,318
$125,000 face value, issued in June 2012, interest rate of 10%, matures in December 2013, net of unamortized discount of $0 and $1,897 as of March 31, 2014 and June 30,2013, respectively.		125,000		123,103
$125,000 face value, issued in June 2012, interest rate of 10%, matures in December 2013, net of unamortized discount of $0 and $2,208 as of March 31, 2014 and June 30,2013, respectively.		125,000		122,792
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2014, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30, 2013.		50,000		50,000
$50,000 face value, issued in September 2012, interest rate of 10%, matures in March 2014, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30, 2013.		50,000		50,000
$100,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $95 and $2,662 as of March 31, 2014 and June 30, 2013.		99,905		97,338
$100,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $163 and $2,786 as of March 31, 2014 and June 30, 2013.		99,837		97,214
$50,000 face value, issued in October 2012, interest rate of 10%, matures in April 2014, net of unamortized discount of $99 and $1,192 as of March 31, 2014 and June 30, 2013.		49,901		48,808
$75,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $244 and $1,804 as of March 31, 2014 and June 30, 2013.		74,756		73,196
$25,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $188 and $1,159 as of March 31, 2014 and June 30, 2013.		24,812		23,841
$50,000 face value, issued in November 2012, interest rate of 10%, matures in May 2014, net of unamortized discount of $413 and $2,358 as of March 31, 2014 and June 30, 2013.		49,587		47,642
$50,000 face value, issued in December 2012, interest rate of 10%, matures in June 2014, net of unamortized discount of $555 and $2,502 as of March 31, 2014 and June 2013.		49,445		47,498
$75,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $526 and $2,111 as ofMarch 31, 2014 and June 30, 2013.		74,474		72,889
$25,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $160 and $637 as of March 31, 2014 and June 30, 2013.		24,840		24,363
$35,000 face value, issued in January 2013, interest rate of 10%, matures in July 2014, net of unamortized discount of $274 and $1,099 as of March 31, 2014 and June 30, 2013.		34,726		33,901
$5,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $39 and $156 as of March 31, 2014 and June 30, 2013.		4,961		4,844
$10,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $94 and $374 as of March 31, 2014 and June 30, 2013.		9,906		9,626
$50,000 face value, issued in February 2013, interest rate of 10%, matures in August 2014, net of unamortized discount of $572 and $2,296 as of March 31, 2014 and June 30, 2013.		49,428		47,704
$50,000 face value, issued in March 2013, interest rate of 10%, matures in September 2014, net of unamortized discount of $445 and $1,746 as of March 31, 2014 and June 30, 2013.		49,555		48,254
$75,000 face value, issued in April 2013, interest rate of 10%, matures in October 2014, net of unamortized discount of $1,086 and $2,712 as of March 31, 2014 and June 30, 2013.		73,914		72,288
Total convertible notes payable – related parties		3,920,047		3,820,855
Less current portion		3,920,047		2,096,416
Convertible notes payable – related parties, long-term	$	-	$	1,724,439

On August 9, 2012, the Company issued a convertible note to a related party for $50,000 that matures in February 9, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The convertible note is in default and has been reclassified as current.

In conjunction with the note, the Company issued detachable warrants to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.25 per share and a contractual life of 5 years from the issuance date. The value of the beneficial conversion feature (BCF) recorded was $2,356 and the debt discount related to the attached warrants was $2,356, for a total debt discount of $4,712.

On September 10, 2012, the Company issued a convertible note to a related party for $50,000 that matures in March 10, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The convertible note is in default and has been reclassified as current.

In conjunction with the note, the Company issued detachable warrants to purchase 50,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.25 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $17,060 and the debt discount related to the attached warrants was $3,505, for a total debt discount of $20,120.

On October 10, 2012, the Company issued a convertible note to a related party for $100,000 that matures in April 10, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 25,000 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $5,126, for a total debt discount of $5,126.

On October 17, 2012, the Company issued a convertible note to a related party for $100,000 that matures in April 17, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

On October 25, 2012, the Company issued a convertible note to a related party for $50,000 that matures in April 25, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 12,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $2,181, for a total debt discount of $2,181.

On November 13, 2012, the Company issued a convertible note to a related party for $75,000 that matures in May 13, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 18,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $3,107, for a total debt discount of $3,107.

On November 23, 2012, the Company issued a convertible note to a related party for $25,000 that matures in May 23, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 6,250 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $1,936, for a total debt discount of $1,936.

On November 28, 2012, the Company issued a convertible note to a related party for $50,000 that matures in May 28, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

On December 17, 2012, the Company issued a convertible note to a related party for $50,000 that matures in June 17, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

On January 14, 2013, the Company issued a convertible note to a related party for $75,000 that matures in July 14, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

On January 23, 2013, the Company issued a convertible note to a related party for $25,000 that matures in July 14, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

On January 31, 2013, the Company issued a convertible note to a related party for $35,000 that matures in July 31, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 8,750 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $1,644, for a total debt discount of $1,644.

On February 5, 2013, the Company issued a convertible note to a related party for $5,000 that matures in August 5, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 1,250 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $-0- and the debt discount related to the attached warrants was $234, for a total debt discount of $234.

On February 14, 2013, the Company issued a convertible note to a related party for $10,000 that matures in August 14, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

In conjunction with the note, the Company issued detachable warrants to purchase 2,500 shares of the Company’s Common Stock. The warrant has an exercise price of $0.40 per share and a contractual life of 5 years from the issuance date. The value of the BCF recorded was $0 and the debt discount related to the attached warrants was $559, for a total debt discount of $559.

On February 22, 2013, the Company issued a convertible note to a related party for $50,000 that matures in August 22, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

On March 6, 2013, the Company issued a convertible note to a related party for $50,000 that matures in September 6, 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share. The convertible note is in default and has been reclassified as current.

On April 8, 2013, the Company issued a convertible note to a related party for $75,000 that matures in October 8, 2014. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, after 180 days into shares of the Company’s Common Stock at $0.50 per share.

Convertible Notes Payable - Non-Related Parties

Convertible notes payable due to non-related parties consisted of the following as of March 31, 2013 and June 30, 2013, respectively:

Convertible Notes Payable - Non-Related Parties
	March 31,		June 30,
	2014		2013

$100,000 face value, issued in September 2011, interest rate of 15%, originally matured in December 2011, extended to August 2014, net of unamortized discount of $-0- and $4,064 as of March 31, 2014 and June 30,2013.	$	100,000	$	95,936
$10,000 face value, of which $8,000 has been paid back, issued in October 2011, interest rate of 15%, matures in August 2013, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013.		2,000		10,000
$15,000 face value, issued in October 2011, interest rate of 10%, matures in June 2012, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013.		15,000		15,000
$75,000 face value, issued in January 2012, interest rate of 12%, originally matured in June 2013, extended to August 2014, net of unamortized discount of $-0- and $3,017 as of March 31, 2014 and June 30,2013.		75,000		71,984
$50,000 face value, issued in August 2012, interest rate of 10%, matures in February 2013, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30, 2013.		50,000		50,000
$10,000 face value, issued in Sepember 2012, interest rate of 10%, matures in March 2013, net of unamortized discount of $0 and $0 as of March 31, 2014 and June 30,2013.		10,000		10,000
$50,000 face value of which $9,600 was converted leaving a $40,400 face value, issued in November 2012, interest rate of 10%, matures in November 2013, net of unamortized discount of $0 and $13,789 as of March 31, 2014 and June 30, 2013.		40,400		26,611

$30,000 face value, issued in February 2013, interest rate of 10%, matures in November 2013, net of unamortized discount of $0 and $10,487 as of March 31, 2014 and June 30, 2013.		30,000		19,513
$20,000 face value, issued in April 2013, interest rate of -0-%, matures in October 2013, net of unamortized discount of $0 and $12,678 as of March 31, 2014 and June 30, 2013.		20,000		7,322
$60,000 face value, of which $60,000 has been paid back, issued in July 2013, interest rate of 6%, matures in October 2013, net of unamortized discount of $0 as of March 31, 2014.		-		-
$100,000 face value, issued in September 2013, interest rate of 6%, matures in February 2014, net of unamortized discount of $0 as of March 31, 2014.		100,000		-
$50,000 face value, issued in October 2013, interest rate of 0%, originally matured in November 2013, with an extended maturity date of May 2014, net of unamortized discount of $22,084 as of March 31, 2014.		27,916		-
$50,000 face value, issued in November 2013, interest rate of 0%, matures in May 2014, net of unamortized discount of $15,746 as of March 31, 2014.		34,254		-
$25,000 face value, issued in November 2013, interest rate of 0%, matures in February 27, 2014, net of unamortized discount of $0 as of March 31, 2014.		25,000		-
$20,000 face value, issued in March 2014, interest rate of 10%, matures in June 2014, net of unamortized discount of $20,000 as of March 31, 2014.		-		-
$10,000 face value of which $10,000 was converted leaving a $0 face value, issued in February 2014, interest rate of 10%, matures in March 2014, net of unamortized discount of $0 as of March 31, 2014.		-		-
$50,000 face value, issued in February 2014, interest rate of 10%, matures in April 2014, net of unamortized discount of $7,576 as of March 31, 2014.		42,424		-
$50,000 face value, issued in February 2014, interest rate of 6%, matures in August 2014, net of unamortized discount of $39,503 as of March 31, 2014.		10,497		-
$30,000 face value, issued in March 2014, interest rate of 0%, matures in September 2014, net of unamortized discount of $25,924 as of March 31, 2014.		4,076		-

Total convertible notes payable – non-related parties		586,568		306,366
Less current portion		586,568		306,366
Convertible notes payable – non-related parties, long-term	$	-	$	-

On September 4, 2012, the Company issued a convertible note to an unrelated individual for $10,000 that matures on March 4, 2013. The note bears an interest rate of 10% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.25 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The convertible note is in default and has been reclassified as current.

As additional compensation, the Company issued to the holder 10,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $2,481.

On November 28, 2012, the Company issued a convertible note to an unrelated individual for $50,000 that matures one year after issuance. The note bears an interest rate of 0% for the first 90 days and 10% after 90 days per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at the lesser of $0.18 per share or 60% of the lowest trade price in the 25 trading days previous to conversion. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $33,333. The convertible note is in default and has been reclassified as current. The note holder elected to convert $9,600 of the note and accrued interest on June 3, 2013.

On February 13, 2013, the Company issued a convertible note to an unrelated individual for $30,000 that matures on November 28, 2013. The note bears an interest rate of 0% for the first 90 days and 10% after 90 days per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at the lesser of $0.18 per share or 60% of the lowest trade price in the 25 trading days previous to conversion. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $30,000. The convertible note is in default and has been reclassified as current.

On April 24, 2013, the Company issued a convertible note to an unrelated individual for $20,000 that matures on October 24, 2013. The note bears an interest rate of 0% for the first 90 days and 10% after 90 days per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at the lesser of $0.18 per share or 60% of the lowest trade price in the 25 trading days previous to conversion. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was$20,000. The convertible note is in default and has been reclassified as current.

On July 30, 2013, the Company issued a convertible note to an unrelated individual for $60,000 that matures on September 30, 2013. The note bears an interest rate of 6% per annum and is convertible, along with all accrued interest, into shares of the Company’s Common Stock at $0.15 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $26,000. Subsequent to period end on October 1, 2013, the Company paid the note and interest in full.

On September 30, 2013, the Company issued a convertible note to an unrelated individual for $100,000 that matures on February 28, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $100,000. The convertible note is in default and has been reclassified as current.

On October 17, 2013, the Company issued a convertible note to an unrelated individual for $50,000 with an original maturity date of November 17, 2013, the note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the original BCF recorded was $50,000. The note was amended on November 17, 2013 to extend the maturity date to May 17, 2014 and issued 25,000 common stock and 25,000 warrants as incentive to extending the maturity date. Under ASC 470-60-55-12, the debt was deemed to be extinguished and the company recognized a loss on extinguishment of debt $27,713 and recoded a BCF on the new terms of $50,000.

On November 5, 2013, the Company issued a convertible note to an unrelated individual for $50,000 that matures on May 5, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $50,000.

On November 27, 2013, the Company issued a convertible note to an unrelated individual for $25,000 that matures on February 27, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $25,000. The convertible note is in default and has been reclassified as current.

On February 3, 2014, the Company issued a convertible note to an unrelated individual for $10,000 that matures on March 31, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $10,000. On March 31, 2014 the note holder elected to convert the entire note and accrued interest of $10,000 and $153 respectively.

As additional compensation, the Company issued to the holder 10,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $2,400.

On February 3, 2014, the Company issued a convertible note to an unrelated individual for $50,000 that matures on April 10, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $50,000.

As additional compensation, the Company issued to the holder 25,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $6,250.

On February 21, 2014, the Company issued a convertible note to an unrelated individual for $50,000 that matures on August 21, 2014. The note bears an interest rate of 6% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $50,000.

As additional compensation, the Company issued to the holder 25,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $5,250.

On March 6, 2014, the Company issued a convertible note to an unrelated individual for $30,000 that matures on September 6, 2014. The note bears an interest rate of 0% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $30,000.

As additional compensation, the Company issued to the holder 15,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $3,500.

On March 31, 2014, the Company issued a convertible note to an unrelated individual for $20,000 that matures on June 28, 2014. The note bears an interest rate of 10% per annum and is convertible into shares of the Company’s Common Stock at $0.10 per share. The maturity date of the note can be extended, at the option of the holder, for a single 30 day period. The value of the BCF recorded was $20,000.

As additional compensation, the Company issued to the holder 10,000 shares of restricted common stock. The value of the debt discount relate to the attached Common Stock was $2,300.

Non-convertible Notes Payable – Related Parties

Non-convertible notes payable due to related parties consisted of the following as of March 31, 2014 and June 30, 2013:

Non-Convertible Notes Payable – Related Parties

	March 31,			June 30,
	2014			2013

Face value of $200,000, issued in April 2011, original maturity date of August 2011 extended to June 2013, 30,000 warrants per month were granted in lieu of interest through June 2011, warrants increased to 50,000 shares per month through August 2011, from September until maturity, the note bears interest at 12%.		$	200,000	$	200,000
Face value of $250,000, issued in September 2011, matures in September 2012, 25,000 warrants per month issued for first 90 days, note bears interest at 15% from December 2011 through maturity.			250,000		250,000
Face value of $125,000, issued in October 2011, matures in October 2012, 30,000 warrants issued in lieu of interest through December 2011, note bears interest at 15% from December 2011 through maturity.			125,000		125,000
Face value of $35,000, issued in January 2014, matures in February 2014, note bears interest at 10%, interest is accrued monthly and paid quarterly by issuing restricted stock until the January 2015 and thereafter interest to be paid in cash.			35,000		-

Total non-convertible notes payable – related parties			610,000		575,000
Less current portion			610,000		575,000
Non-convertible notes payable - related parties, long term		$	-	$	-

In September 2011, the Company entered into a one-year note payable for $250,000 with a related party. The note provided for 0% interest per annum for the first 90 days. In lieu of interest for the first 90 days, the Company granted the lender a warrant to purchase 25,000 shares of Company’s Common Stock at an exercise price of $0.40 for a contractual period of 5 years for each 30 days or portion thereof the note remains outstanding. If the note remained outstanding beyond the first 90 days, the note provided for an interest rate of 15% per annum. This note includes the following priority repayment provisions: 1) the Company agrees to apply 50% of the first $600,000 of capital raised by the Company in the near term toward all outstanding notes the lender has outstanding with the Company; 2) the Company agrees to apply the first $450,000 of proceeds raised beyond the $600,000 to any outstanding notes the lender has outstanding with the Company; and 3) if the Company is unable to raise additional capital but a large marketing or sales agreement is entered into which provide for revenue in excess of $50,000, all funds received above $50,000 shall be applied to any notes the lender has outstanding with the Company at the time.

The Company was also required to provide to the lender or its representative online access, for viewing purposes only, to the accounting and financial data maintained by the Company. Online access shall be terminated once the loan and other funds advanced by the lender to the Company, including any accrued interest, have been fully paid.

Further, per the terms of the agreement, if the note was not fully repaid by October 31, 2011, which was subsequently extended to November 15, 2011, and the Company had not deployed and made operational certain designated studios, the Company would be obligated to issue to the lender a warrant to purchase 25,000 shares of the Company’s Common Stock at an exercise price of $0.40 per share with a contractual life of 5 years. Such warrant was issued in accordance with the terms of the note.

On October 1, 2012, the note holder agreed to extend the maturity date of the note to June 30, 2013. No consideration was paid to extend the maturity date. The convertible note is in default and has been reclassified as current.

In October 2011, the Company entered into a one-year note payable for $125,000 with a related party. The note provided for 0% interest per annum for the first 45 days. In lieu of interest for the first 45 days, the Company granted the lender a warrant to purchase 30,000 shares of Company’s Common Stock at an exercise price of $0.40 for a contractual period of 5 years. Effective December 1, 2011, the note bears interest of 15% per annum until paid. The convertible note is in default and has been reclassified as current.

This note includes the following priority repayment provisions: 1) the Company agrees to apply 50% of the first $600,000 of capital raised by the Company in the near term toward all outstanding notes the lender has outstanding with the Company; 2) the Company agrees to apply the first $575,000 of proceeds raised beyond the $600,000 to any outstanding notes the lender has outstanding with the Company; and 3) if the Company is unable to raise additional capital but a large marketing or sales agreement is entered into which provide for revenue in excess of $50,000, all funds received above $50,000 shall be applied to any notes the lender has outstanding with the Company at the time.

In January 2014, the Company entered into a one month note payable for $35,000 with a related party. The note provided for 10% interest per annum in restricted common stock calculated at 75% of the preceding 10-day running average closing price for the first year payable each quarter. Thereafter, interest is to be paid in cash. The convertible note is in default and has been reclassified as current.

This note includes the following priority repayment provisions: 1) the Company agrees to apply the first and all subsequent funds raised by the company unless otherwise authorized by the holder; 2) the holder will approve all checks of the company before they are issued, until the note is repaid; and 3) if the terms are not complied with, the note will be due on demand.

Non-Convertible Notes Payable – Non-Related Parties

Non-convertible notes payable due to non-related parties consisted of the following as of March 31, 2014 and June 30, 2013:

Non-Convertible Notes Payable – Non-Related Parties
	March 31,			June 30,
	2014			2013

Various term notes with total face value of $40,488 due upon demand, interest rates range from 12% to 14%.		$	40,488	$	40,488

Total non-convertible note payable – non-related parties			40,488		40,488
Less current portion			40,488		40,488
Non-convertible notes payable – non-related parties, long-term		$	-	$	-

- 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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