RELATED PARTY DEBT AGREEMENTS |
3 Months Ended | |
|---|---|---|
Sep. 30, 2015 | ||
| Debt Disclosure [Abstract] | ||
| RELATED PARTY DEBT AGREEMENTS |
NOTE 4 RELATED PARTY DEBT AGREEMENTS Between October 2011 and October 2013, the Company entered into and/or amended various debt agreements with Esenjay Investments, LLC (“Esenjay”), with an aggregate borrowing limit of $3,250,000. Esenjay is deemed to be a related party as Mr. Michael Johnson, the sole shareholder and a director of Esenjay is a current member of our board of directors and a major shareholder of the Company (with beneficial ownership of approximately 58% as of September 30, 2015). Between July 1, 2014 and September 30, 2015, the Company borrowed an aggregate of $2,575,000 pursuant to these various debt agreements with Esenjay. On September 3, 2015, the Company entered into a Loan Conversion Agreement (“Conversion Agreement”), as amended on October 6, 2015 and November 13, 2015 (the “Amendments”), with Esenjay pursuant to which Company agreed to issue 51,171,025 shares of our common stock (based on $0.04 per share) (the “Shares”) in exchange for the cancellation of principal amount of $2,000,000 (“Principal Amount”) of the total $2,200,000 outstanding under the Secondary Revolving Promissory Note, the Bridge Loan Promissory Note and the Unrestricted Line of Credit (collectively, the “Loan Agreements”), with Esenjay, plus $46,841 in accrued and unpaid interest on such Principal Amount as of September 3, 2015 (the accrued interest together with the Principal Amount referred to as the “Debt”). The Loan Agreements expire December 31, 2015. In connection with the Conversion Agreement, as amended, on September 9, 2015, Company issued 51,171,025 shares (“Esenjay Shares”) to Esenjay in exchange for cancellation of Principal Amount. The Esenjay Shares have not been registered under the Securities Act. The Esenjay Shares were offered and sold in reliance upon exemptions from registration pursuant to Section 4(a)(2) of the Securities Act. At September 30, 2015, the total unused credit amount under the Loan Agreements was $2,675,000. Additional borrowings under the Loan Agreements are subject to pre-approval by Esenjay and Esenjay has no obligation to loan additional funds under the Loan Agreements. The instruments bare interest rate at 6% per annum and mature on December 31, 2015. At September 30, 2015, the outstanding balance under the Loan Agreements with Esenjay was $575,000. Esenjay has the option to convert the amount outstanding at September 30, 2015 and amounts of any future borrowings under the Loan Agreements into shares of our common stock at a conversion price of $0.30 per share until December 31, 2015. The above mentioned debt conversion have been accounted for as a capital transaction in accordance with FASB ASC Topic No. 470-50, “ Debt, Modifications and Extinguishments ”. Accordingly, no gain or loss has been recognized. The common stock issued in connection with the debt conversion have not been registered under the Securities Act of 1933, as amended (“Securities Act”). This stock was issued in reliance upon exemptions from registration pursuant to Rule 506 promulgated thereunder. |