Convertible Notes

12 Months Ended

Jun. 30, 2015

Convertible Notes

Convertible Notes

5. Convertible Notes

As of June 30, 2015 and 2014 the balance owing on convertible notes was $419,167 and $525,000 respectively.

On various dates during June 2014 and July 2014, the Company and holders of certain convertible notes agreed to 1) cancel $0.50 warrants and retained the $0.01 warrant, as defined in the original Convertible Note Purchase Agreements warrants to purchase common shares in the Company, 2) extend the due dates on the Notes to July 1, 2016, and 3) reduce the interest on the notes to 10% from 14%. As of June 30, 2014, the Company extended, seven of the convertible notes totaling $275,000 for two years until July 1, 2016. The remaining $250,000 convertible notes have reached maturity and the Company was in the process of negotiating a settlement.

The convertible promissory notes must be repaid by our Company within six months from the date of issuance; accrue interest at the rate of 14%; and are subject to conversion at the election of the investors at such time as our Company has raised a minimum of $500,000 in a subsequent equity financing. The conversion price will be the lower of 80% of the per share purchase price paid for by the new investors in the subsequent financing, or $0.50 per share. Unless these promissory notes are converted or repaid earlier, our Company must pay the note-holders the amount of the then accrued interest on the three, six, and nine month anniversaries of the issue date. As of June 30, 2015, one convertible promissory note, in the amount of $100,000, was converted to restricted common shares.

As of June 30, 2015, the Company’s convertible notes consisted of following:

Note Type and Investor
	Due Date		Balance		Discount		Carrying Value
Convertible Note	7/1/2016	$	25,000	$	—	$	25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		40,000		—		40,000
Convertible Note	7/1/2016		50,000		—		50,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	6/18/2014		25,000		—		25,000
Convertible Note	6/18/2014		25,000		—		25,000
Convertible Note	12/28/2014		25,000		—		25,000
Convertible Note	7/1/2016		8,333		—		8,333
Convertible Note	7/1/2016		20,834		—		20,834
Convertible Note	7/31/2014		25,000		—		25,000
Convertible Note	7/1/2016		25,000		—		25,000
Convertible Note	7/1/2016		100,000		—		100,000
Total Convertible Promissory Notes		$	419,167			$	419,167