5. RELATED PARTY TRANSACTIONS

6 Months Ended

Dec. 31, 2013

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

Due from Related Party

Notes receivable from related party is comprised of two notes of $5,000 each and the related accrued interest receivable. The principal of these notes were due and payable on or before May 1, 2012. The notes are unsecured and non-interest bearing until maturity, after which time interest is calculated at 10% per annum. Total interest was $1,589 as of December 31, 2013 and $1,084 as of December 31, 2012.

Notes Payable - Related Parties

Current related party notes payable consist of the following:

	December 31, 2013		June 30, 2013
Notes payable to director/shareholder, noninterest-bearing, unsecured and payable on demand		8,500		8,500
Notes payable to shareholder, interest rate of 10%, unsecured and payable on July 31, 2004		5,000		5,000
Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on December 31, 2012		3,500		3,500
Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on December 31, 2012		5,000		5,000
Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on December 31, 2012		5,000		5,000
Notes payable to director/shareholder, interest rate of 8%, unsecured and payable on December 31, 2012		1,000		1,000
Notes payable to director/shareholder, interest rate of 6%, unsecured and payable on January 25, 2014		10,000		-
	$	38,000	$	28,000

On September 8, 2010 we entered into a loan agreement containing certain conversion features whereby the note holder could convert the principal amount of the loan, $100,000, together with accrued interest at the rate of 6% per annum, into shares of our Series B Convertible, Voting, Preferred stock at the conversion rate of $0.20 per share. The Series B Convertible, Voting, Preferred stock could then be further converted to common stock at a ratio of 1:20 after being held for a minimum period of 270 days from the date of issuance. The result of the conversion to common stock would be the issuance of 10,000,000 shares with a fair market value set at the date of the debenture at $0.025 creating a beneficial conversion feature to the debenture equal to $100,000. The cost of the beneficial conversion feature was amortized over the 2-year life of the debenture and is listed on the Statement of Operations as “Beneficial conversion feature expense”. A total of $9,439 was amortized for the six-month period ended December 31, 2012 with no balance remaining thereafter.

On January 1, 2013 we consolidated all outstanding notes payable due a related party into one loan agreement containing certain conversion features whereby the note holder could convert the principal amount of the loan, $204,700 comprised of the sum total of the principal amounts of the individual notes, $122,000, plus $82,700 in accrued interest applicable to those notes, together with accrued interest at the rate of 4.944% per annum, into shares of our common stock at the conversion rate of $0.02 per share. The note is unsecured and becomes due and payable on January 1, 2015. The accrued interest on this $204,700 convertible debenture as of December 31, 2013 was $10,120. There was no beneficial conversion feature involved in the new note.

Interest expense for all related party notes payable, including convertible debentures, for the six-month periods ended December 31, 2013 and 2012 amounted to $6,090 and $7,089.