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STOCKHOLDER NOTES PAYABLE AND LINE OF CREDIT
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12 Months Ended | |
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Jun. 30, 2013
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| Debt Disclosure [Abstract] | ||
| STOCKHOLDER NOTES PAYABLE AND LINE OF CREDIT | NOTE 5 - STOCKHOLDER NOTES PAYABLE AND LINE OF CREDIT
In October 2011, we entered into a revolving promissory note agreement with Esenjay Investments LLC (“Esenjay”), a stockholder for $1,000,000. The revolving promissory note bears interest at 8%, is due on September 30, 2013, as amended, and is secured by substantially all of the assets of the Company. As of June 30, 2013 the balance outstanding payable on the note was $1,000,000. There are no further funds available under this note agreement. As of September 30, 2013, we have not paid the amount due under the Revolving Note on the maturity date and are not in compliance with the terms of the Revolving Note. As a result, the unpaid balance is subject to a default interest rate of 18% or the highest rate allowed by law (whichever is less) and Esenjay has a right to exercise its rights as a secured party.
On March 7, 2012, we entered into an additional note payable agreement with the same stockholder for $250,000. The note is due on March 7, 2014 and bears interest at 8% per annum. As of June 30, 2013, the balance outstanding payable on the note was $250,000 there are no further funds available under this note agreement. On September 24, 2012, the Company entered into a Line of Credit with the same stockholder for $1,500,000. The revolving promissory note bears interest at 8% per annum and principal and accrued interest are due and payable on September 24, 2014. During the twelve months ended June 30, 2013, the Company made draws of approximately $1,218,000 under this agreement, and as of June 30, 2013, the balance outstanding was $1,218,000. Subsequent to June 30, 2013, during the first quarter of fiscal 2014 the Company made additional draws of $403,000 under this agreement. The Company is in the process of renegotiating an amendment to its stockholder notes payable and line of credit with Esenjay, to extend both the notes and the line of credit maturity dates through December 31, 2015. In addition, further draws on the line of credit will be at a reduced interest rate. The proposed amendment stipulates that Esenjay has an option to convert up to $400,000 of debt and interest to common stock at $0.06 per share by December 31, 2013. Other proposed conversion options for Esenjay includes converting debt and interest in any fraction to common stock at $0.30 per share until debt maturity. As of October 15, 2013, final approval to the amendment to the notes payable and the line of credit is pending approval of formal board resolution and formal sign-off of the amendment. |