NOTE C - NOTES PAYABLE AND DERIVATIVE LIABILITIES

3 Months Ended

Sep. 30, 2012

Debt Disclosure [Text Block]

NOTE C – NOTES PAYABLE & DERIVATIVE LIABILITIES

Notes Payable

During the three months ended September 30, 2012 and 2011 MI made repayments on related party notes payable of $11,210 and $105,181 respectively.

During the three months ended September 30, 2012 and 2011 MI received $0 and $3,000 related to promissory notes.

Convertible Notes Payable & Derivative Liabilities

At September 30, 2012 the Company has $231,380 outstanding related to convertible promissory notes.   The convertible notes accrue interest at 10% per annum and matured at various dates prior to September 30, 2012.  The notes were not repaid upon maturity and are convertible into shares of MI common stock at a conversion ratio of 15% below the market price of MI common stock at the time of conversion.  Discount amortization charged to interest expense during the three months ended September 30, 2012, totaled $68,347.

The Company analyzed the conversion options for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the embedded conversion features should be classified as liabilities due to their being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The embedded conversion features were measured at fair value at inception with the change in fair value recorded to earnings. Additionally, because there is no explicit limit to the number of shares to be issued upon conversion of the above instruments, the Company cannot determine if it will have sufficient authorized shares to settle all other share-settleable instruments, including the warrants granted above.  As a result, all other share-settable instruments have also been classified as liabilities.

Derivative Liabilities
June 30, 2012	$	142,327
Change in fair value		38,776
September 30, 2012	$	181,103