10-K
2013-06-30
false
Silverton Adventures, Inc.
0001419122
--06-30
1061664939
1061664939
Smaller Reporting Company
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<!--egx--><pre style='text-align:justify'><b>NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</b></pre><pre style='text-align:justify'><u>Business and Organization</u></pre><pre style='text-align:justify'>Silverton Adventures, Inc. (the "Company"), was originally incorporated in the State of Nevada on May 31, 2006 as Mor Travel, Inc. On December 26, 2007, the Company changed its name to Silverton Adventures, Inc. The Company currently operates under the DBA Silverton Print and Mail in Clark County, Nevada.  The Company’s principal business objectives are the licensing and distribution of educational and family media content to distributors and end consumers, and providing printing and mailing services to companies nationwide. </pre><pre style='text-align:justify'>On December 30, 2010, the Company acquired Worldwide Media Organization, Inc. (“Worldwide”).  Worldwide is the owner or licensee of media content and also has important relationships with media distributers that the Company felt would allow significant growth in the media content and royalty business.  Worldwide operates as a wholly owned subsidiary of the Company.</pre><pre style='text-align:justify'>On June 30, 2011 the Company formed Silverton Printing, Inc., a Nevada corporation, as a wholly-owned subsidiary.  The Company plans to operate its printing and mailing services through this subsidiary.</pre><pre style='text-align:justify'><u>Accounting Basis</u></pre><pre style='text-align:justify'>The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States.  The Company has elected a June 30 fiscal year end.  </pre><pre style='text-align:justify'><u>Principles of Consolidation</u></pre><pre style='text-align:justify'>The accompanying consolidated financial statements for the years ended June 30, 2013 and 2012 include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany balances and transactions have been eliminated in consolidation.</pre><pre style='text-align:justify'><u>Use of Estimates</u></pre><pre style='text-align:justify'>The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates. </pre><pre style='text-align:justify'><u>Cash and Cash Equivalents</u></pre><pre style='text-align:justify'>The company considers all highly liquid investments with original maturities of three months or less to be cash or cash equivalents</pre> <p style='text-align:justify;line-height:normal;text-autospace:none'><u>Concentrations of Risk</u></p> <p style='text-align:justify;line-height:normal'>The Company’s bank accounts are held by insured institutions. The funds are insured up to $250,000. At June 30, 2013, the Company’s bank deposits did not exceed the insured amounts.</p> <p style='text-align:justify;line-height:normal'>Two of the Company’s customers make up 31 percent of total sales and five vendors account for 28 percent of total purchases.</p> <pre style='text-align:justify'><u>Accounts Receivable</u></pre><pre style='text-align:justify'>The Company’s accounts receivable are presented net of the allowance for estimated doubtful accounts. Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in the existing accounts receivable balance. The Company determines the allowance for doubtful accounts based upon historical write-off experience and current economic conditions. The Company reviews the adequacy of its allowance for doubtful accounts on a regular basis. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.</pre><pre style='text-align:justify'>The Company’s accounts receivable, net of the allowance for doubtful accounts, was $9,534 and $15,187 at June 30, 2013 and 2012, respectively.</pre><pre style='text-align:justify'><u>Property and Equipment</u></pre><pre style='text-align:justify'>Property and equipment is recorded at cost.  Major additions and improvements are capitalized and depreciated over their estimated useful lives.  Depreciation of property and equipment is determined using the straight-line method over their useful lives, which ranges from three to five years.  Gains or losses on the sale or disposal of property and equipment are included in the statements of operations. Maintenance and repairs that do not extend the useful life of the assets are expensed as incurred.  </pre> <p style='text-align:justify;line-height:normal'><u>Valuation of Long-Lived Assets</u></p> <p style='text-align:justify;line-height:normal'>The Company follows ASC 360 regarding the valuations and carrying values of its long-lived assets. Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values.  For the years ended June 30, 2013 and 2012, no impairment of fixed assets was recognized.</p> <p style='line-height:normal'><u>Fair Value of Financial Instruments</u></p> <p style='line-height:normal'>In accordance with ASC 820, the carrying value of cash and cash equivalents, accounts receivable and accounts payable approximates fair value due to the short-term maturity of these instruments. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:</p> <p style='line-height:normal'> </p> <p style='line-height:normal'>Level 1-Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.</p> <p style='line-height:normal'> </p> <p style='line-height:normal'>Level 2-Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other then quoted prices that are observable, and inputs derived from or corroborated by observable market data.</p> <p style='line-height:normal'> </p> <p style='line-height:normal'>Level 3-Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Revenue Recognition</u></p> <p style='text-align:justify;line-height:normal'><font style='background:white'>The Company's revenues are generated from the printing and mailing services and from royalties on rights to media owned or licensed by the Company, primarily film rights.  </font>The Company follows guidance found in <font style='background:white'>ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements and </font>ASC 926 which provides guidance on the recognition of revenue from the sales or licensing of films by producers or distributors of films. </p> <p style='text-align:justify;line-height:normal'><font style='background:white'>ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue related to goods and services provided when the following conditions are met:</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>a) <font style='background:white'>Persuasive evidence of an arrangement exists, </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>b) <font style='background:white'>Delivery has occurred or services have been rendered, </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>c) <font style='background:white'>The fee is fixed or determinable, </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>d) <font style='background:white'>Collectability is reasonably assured.  </font></p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><font style='background:white'>Revenues from printing and reproduction, such as photo copies, catalogue printing or reproduction, DVD duplication or other similar services are recognized under ASC 605 and are recognized when the product is shipped. </font></p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><font style='background:white'>The Company's royalty revenues are generated by licensing rights to media owned or licensed by the Company and is recognized under ASC 926 which states that a sale occurs when the Company transfers control of the master copy of a film or other media content and all the associated rights that accompany it. The following conditions are required before the Company recognizes revenue from a sale or licensing arrangement of a film or other media content:</font></p> <p style='text-align:justify;line-height:normal'> </p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>a) <font style='background:white'>Persuasive evidence of a sale or licensing arrangement with a customer exists,</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>b) <font style='background:white'>The film or other media content is complete and, in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery,</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>c) <font style='background:white'>The license period of the arrangement has begun and the customer can begin its exploitation, exhibition, sale or license of the film or media content,</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>d) <font style='background:white'>The arrangement fee is fixed or determinable,</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:10.0pt;margin-left:.5in;line-height:115%;margin-bottom:0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;line-height:normal'>e) <font style='background:white'>Collection of the arrangement fee is reasonably assured.  </font></p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Advertising Costs</u></p> <p style='text-align:justify;line-height:normal'>The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred $18,114 and $18,067 in advertising expense for the years ended June 30, 2013 and 2012, respectively.</p> <p style='margin:0in;margin-bottom:.0001pt'><u>Reclassification</u></p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt'>Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation.</p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='text-align:justify;line-height:normal;text-autospace:none'><u>Stock-based Compensation</u></p> <p style='text-align:justify;line-height:normal'>The Company follows the provisions of ASC 718 which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. The Company uses the Black-Scholes pricing model for determining the fair value of stock-based compensation.  </p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>Equity instruments issued to non-employees for goods or services are accounted at fair value when the service is complete or a performance commitment date is reached, whichever is earlier.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Income Taxes</u></p> <p style='text-align:justify;line-height:normal'>The Company accounts for income taxes in accordance with accounting guidance now codified as ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. </p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>The Company applies the provisions of ASC 740, “Accounting for Uncertainty in Income Taxes”. The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements.  The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed.  The Company did not recognize any interest or penalties for unrecognized tax benefits during the years ended June 30, 2013 and 2012, nor were any interest or penalties accrued as of June 30, 2013.</p> <p style='text-align:justify;line-height:normal'> </p> <pre style='text-align:justify'><u>Basic Loss per Share</u></pre> <p style='text-align:justify;line-height:normal'>Basic loss per share is calculated by dividing the Company’s net loss applicable to common stockholders by the weighted average number of common shares during the period. Diluted loss per share is calculated by dividing the Company’s net loss available to common stockholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity.  As of June 30, 2013 the Company has an outstanding balance of convertible debt that is potentially dilutive.  There are no such common stock equivalents outstanding as of June 30, 2013 or 2012.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Recent Accounting Pronouncements</u></p> <p style='text-align:justify;line-height:normal'>Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s consolidated financial statements.</p> <p style='text-align:justify;line-height:normal'> </p>
<!--egx--><p style='margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>NOTE 2 - GOING CONCERN</b></p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.  During the year ended June 30, 2013, the Company realized a net loss of $2,737,319 and has incurred an accumulated deficit of $3,189,063.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>In order to continue as a going concern, the Company will need, among other things, additional capital resources.  Management's plans to obtain such resources for the Company include (1) obtaining capital</p> <p style='text-align:justify;line-height:normal'>from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company.  However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.  The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue<b> </b>as a going concern.</p>
<!--egx--><pre><b>NOTE 3 – PROPERTY AND EQUIPMENT </b></pre> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>As of June 30, 2013 and 2012, property and equipment consisted of the following:</p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="571" style='line-height:115%;width:5.95in;margin-left:.7in;border-collapse:collapse'> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'> </p> </td> <td width="259" colspan="5" valign="bottom" style='width:2.7in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='text-align:center;line-height:normal'>June 30,</p> </td> </tr> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'> </p> </td> <td width="126" colspan="2" valign="bottom" style='width:94.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='text-indent:30.4pt;line-height:normal'>2013</p> </td> <td width="16" valign="top" style='width:12.25pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='text-align:center;text-indent:30.4pt;line-height:normal'> </p> </td> <td width="117" colspan="2" valign="bottom" style='width:87.65pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='text-align:center;line-height:normal'>2012</p> </td> </tr> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'> </p> </td> <td width="18" valign="top" style='width:13.5pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="top" style='width:11.8pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="101" valign="bottom" style='width:75.85pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> </tr> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'>Printing and imaging equipment</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>$</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>16,270</p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="bottom" style='width:11.8pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>$</p> </td> <td width="101" valign="bottom" style='width:75.85pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>28,053</p> </td> </tr> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'>Computer equipment</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>2,506</p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="bottom" style='width:11.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="101" valign="bottom" style='width:75.85pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>2,506</p> </td> </tr> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'>Total property and equipment</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>18,776</p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="bottom" style='width:11.8pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="101" valign="bottom" style='width:75.85pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>30,559</p> </td> </tr> <tr style='height:1.0pt'> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'>Accumulated depreciation</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>(17,218)</p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="bottom" style='width:11.8pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="101" valign="bottom" style='width:75.85pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>(14,388)</p> </td> </tr> <tr style='height:1.0pt'> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'> </p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="bottom" style='width:11.8pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="101" valign="bottom" style='width:75.85pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> </tr> <tr align="left"> <td width="312" valign="bottom" style='width:3.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='line-height:normal'>Total property and equipment, net</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>$</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>1,557)</p> </td> <td width="16" valign="top" style='width:12.25pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'> </p> </td> <td width="16" valign="bottom" style='width:11.8pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>$</p> </td> <td width="101" valign="bottom" style='width:75.85pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin-left:-5.6pt;text-align:right;line-height:normal'>16,171)</p> </td> </tr> </table> </div> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>Depreciation expense for the years ended June 30, 2013 and 2012 was $5,068 and $14,050, respectively.  </p> <p style='text-align:justify;line-height:normal'> </p>
<!--egx--><pre><b>NOTE 4 - RELATED PARTY TRANSACTIONS</b></pre><pre style='text-align:justify'><u>Related Party Payables</u></pre> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Various general and administrative expenses of the Company as well as loans for operating purposes have been paid for or made by related parties of the Company. During the year ended June 30, 2013 the Company received cash of $1,100 on these payables, and made payments totaling $5,131 on these related-party payables. Related party payables totaled $1,100 and $5,131 at June 30, 2013 and 2012, respectively. These amounts payable bear no interest, are uncollateralized and due on demand. </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b><font style='background:white'>NOTE 5 – ROYALTIES</font></b></p> <p style='margin:0in;margin-bottom:.0001pt'><font style='background:white'> </font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company entered into several royalty agreements wherein the Company acquired rights to licensed content. The Company intends to either reproduce and distribute the media or sublicense the rights to another party. The agreements require the Company to pay an upfront royalty fee and then ongoing royalty fees of 15 to 30 percent of gross sales receipts over the life of the licensing agreement. The agreements vary in length from three to five years. Royalty expenses totaled $17,735 and $17,467 for the years ended June 30, 2013 and 2012, respectively. As of June 30, 2013 and 2012, royalty payables under these agreements totaled $39,806 and $23,368, respectively.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Under some of these arrangements, the Company pays an upfront royalty fee that is applied to future royalties as the Company achieves sales and incurs corresponding royalty expense. The upfront fees that are to be applied against future royalty expenses are capitalized and amortized as royalty expenses are applied. As of June 30, 2013 and 2012, the Company has recorded $8,999 and $9,753 as prepaid royalties, respectively. </p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company has also entered into similar royalty agreements wherein the Company licenses content rights to third parties in exchange for a royalty fee. During the years ended June 30, 2013 and 2012, the Company recognized royalty revenue of $36,941 and $115,169, respectively.</p>
<!--egx--><pre><b>NOTE </b><b>6</b><b> - STOCKHOLDERS’ DEFICIT</b></pre><pre style='text-align:justify'>The Company is authorized to issue four classes of stock.  The total number of shares authorized to be issued by the Company is 10,000,000 shares of series A preferred stock at a par value of $0.001 per share, 6 shares of series B preferred stock at a par value of $0.0001 per share, 10,000,000 shares of series C preferred stock at a par value of $0.0001 per share, and 979,999,994 shares of common stock at a par value of $0.00001.  As of June 30, 2013, the Company has 82,400 series A preferred shares issued and outstanding, 2 series B preferred shares issued and outstanding, 238,649 series C preferred shares issued and outstanding, and 678,300,845 common shares issued and outstanding. </pre><pre style='text-align:justify'>During the year ended June 30, 2013 the Company amended its articles of incorporation and changed the par value of the Company’s common stock from $0.0001 to $0.00001.</pre><pre style='text-align:justify'><u>Preferred Stock – Series A</u></pre><pre style='text-align:justify'>On December 2, 2011 the Company issued 100,000 shares of Series “A” preferred stock to two unrelated entities for cash at $0.10 per share in exchange for cash of $3,500 and services valued at $6,500.  According to the terms of the preferred stock, each share of Series A preferred stock is convertible into shares of the Company’s common stock at a conversion ratio of one hundred (100) shares of common stock for every one (1) share of preferred stock.  The Company’s Series A preferred stock is not entitled to receive any dividends, has no liquidation rights, and is not entitled to any voting rights.</pre> <p style='text-align:justify;line-height:normal;background:white'><u>Preferred Stock - Series B</u><u> </u></p> <p style='text-align:justify;line-height:normal;background:white'>On April 9, 2013, the Board of Directors authorized 6 shares of Class B Convertible Preferred Stock and 10,000,000 shares of Class C Convertible Preferred Stock. Class B and C Convertible Preferred Stock have the following attributes:</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'>Each share of Series B Preferred Stock is convertible into the number of shares of Common Stock which equals 4 times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of conversion, plus ii) the total number of shares of Series C Preferred Stocks which are issued and outstanding at the time of conversion, divided by: the number of shares of Series B Preferred Stock issued and outstanding at the time of conversion.</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'>The Series B Preferred Stock voting rights are equal to the number of shares of Common Stock which equals 4 times the sum of: i) the total number of shares of Common Stock which are issued and outstanding, plus ii) the total number of shares of Series C Preferred Stocks which are issued and outstanding at time of voting, divided by: the number of shares of Series B Preferred Stock issued and outstanding at the time of voting.</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'><u>Preferred Stock  - Series C</u> </p> <p style='text-align:justify;line-height:normal;background:white'>Each share of Series C Preferred Stock is convertible at common stock par value $0.00001 per share (the “Series C Preferred”), at any time, and/or from time to time, into the number of shares of the Corporation's common stock, par value $0.00001 per share (the "Common Stock") equal to the price of the Series C Preferred Stock ($2.50), divided by the par value of the Series C Preferred (par value of $0.0001per share), subject to adjustment as may be determined by the Board of Directors from time to time (the "Conversion Rate").</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'>Based on the $2.50 price per share of Series C Preferred Stock, and a par value of $0.0001 per share for Series C Preferred each share of Series B Preferred Stock is convertible into 250,000 shares of Common Stock.</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'>Each share of Series C Preferred Stock has 10 votes for any election or other vote placed before the shareholders of the Common stock</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'>The Preferred B stock has a stated value of $.0001 and no stated dividend rate and is non-participatory. The Series B and Series C has liquidation preference over common stock. The Voting Rights for each share of Series B is equal to 1 vote per share (equal to 4 times the number of common and Preferred C shares outstanding) and Series C Preferred Stock have 10 votes per shares.</p> <p style='text-align:justify;line-height:normal;background:white'> </p> <p style='text-align:justify;line-height:normal;background:white'>The Holder has the right to convert the Preferred B and C to common shares of the Company with the Series B convertible to 4 times the number of common and Preferred C shares outstanding and Series C convertible to 250,000 common shares per Preferred C share. The Preferred Series B and Series C represents voting control based on management’s interpretation of the Company bylaws and Certificate of Designation.</p> <p style='line-height:normal;background:white'> </p> <p style='line-height:normal;background:white'><u>Issuances of Preferred Stock</u></p> <p style='line-height:normal;background:white'> </p> <p style='line-height:normal;background:white'>On April 15, 2013, the Company issued 2 shares of Series B Convertible Preferred Stock, with a fair market value of $214,556, for services to the President of the Company and one director who has since resigned.</p> <p style='line-height:normal;background:white'> </p> <p style='line-height:normal;background:white'>On April 15, 2013 the Company issued 36,649 shares of Series C Convertible Preferred Stock for conversion of debt in the amount of $91,623.</p> <p style='line-height:normal;background:white'> </p> <p style='line-height:normal;background:white'>On April 5, 2013 the company issued 2,000 shares of Series C Convertible Preferred Stock for cash of $5,000.</p> <pre style='text-align:justify'>During the year ended June 30, 2013 pursuant to the conversion terms of the Series A preferred shares the Company issued 1,760,000 shares of common stock upon the conversion of 17,600 shares of Series A preferred stock.</pre><pre style='text-align:justify'>On April 26, 2013 the Company issued 200,000 shares of Series C Convertible Preferred Stock, with a fair market value of $500,000, for services. </pre><pre style='text-align:justify'><u>Common Stock</u></pre><pre style='text-align:justify'>On April 15 the Company amended its articles of incorporation and increased the authorized shares of common stock from 750,000,000 to 979,999,994 and changed the par value of common stock from 0.0001 to 0.00001.</pre><pre style='text-align:justify'>On April 15, 2013 the Company issued 510,000,000 shares of common stock, with a fair market value of $1,116,642, to its President for services.</pre><pre style='text-align:justify'>During the year ended June 30, 2013 the Company issued 148,740,845 shares of common stock for conversion of debt in the amount of $16,486. During the year ended June 30, 2013 the Company recorded a loss on settlement of debt in the amount of $295,714.</pre> <p style='margin:0in;margin-bottom:.0001pt'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 7 – CONVERTIBLE NOTES PAYABLE</b></p> <p style='text-align:justify'> </p> <p style='text-align:justify'>On July 20, 2011, the Company entered into a convertible note payable in the amount of $10,000. The note bears interest at 8.50 percent per annum and has a maturity date of July 20, 2014. The creditor has the option at any time to convert the principal and any accrued interest into common stock of the Company according to the following stock prices: year one, $0.75 per share; year two, $1.00 per share; and year three, $1.25 per share. The entire note with a principal balance of $10,000 along with $1,306.44 was assigned to a third party. In addition the Company assigned another note payable in the amount of $30,000 and accrued interest of $2,544 to the third party. The total aggregate amount assigned to the third party was $43,851. The terms of the assigned notes were amended. The amended terms are:</p> <p style='margin-left:.5in;text-align:justify;text-indent:-.25in'><font style='font-family:Symbol'>· </font>The assigned notes bear interest at 10%</p> <p style='margin-left:.5in;text-align:justify;text-indent:-.25in'><font style='font-family:Symbol'>· </font>The assigned notes are due on demand</p> <p style='margin-left:.5in;text-align:justify;text-indent:-.25in'><font style='font-family:Symbol'>· </font>The principal balance of the note along with accrued interest is convertible at any time, at the option of the note holder, into the Company's common stock at a price of 45 percent of the current market price. The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date. </p> <p style='text-align:justify'>As a result of this note assignment the Company determined that a beneficial conversion feature existed and because the assigned note is due on demand the full amount of the beneficial conversion feature of $43,851 was recorded to interest expense.</p> <p style='text-align:justify'>As of June 30, 2013, $15,000 of the note was converted into 140,845 shares of common stock by the note holder (see note 6).</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On November 6, 2012, the Company borrowed $42,500 from an unrelated third party entity in the form of a convertible note, $33,000 of which was received in cash and $9,500 of which was for professional fees. The note bears interest at 8 percent per annum with principal and interest due in full on August 8, 2013. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The principal balance of the note along with accrued interest is convertible at any time, at the option of the note holder, into the Company's common stock at a price of 55 percent of the current market price. The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date. </font></p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $42,500 on the note date. As of June 30, 2013 the Company had amortized $36,473 of the debt discount to interest expense, leaving $6,027 in unamortized debt discount at June 30, 2013.</font></p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The fair value of the conversion option of the convertible note of $67,374 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements. Included in the model are the following assumptions: stock price at valuation date of $.025, exercise price of $0.0138, dividend yield of zero, years to maturity of 0.11, risk free rate of 0.03 percent, and annualized volatility of 312.97 percent.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At June 30, 2013 the derivative liability was revalued at $44,237, which led to the Company recording a gain on derivative liability in the amount of $23,137</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On December 26, 2012 the Company entered into a convertible note agreement. Pursuant to the agreement, the agreement was consummated on January 2, 2013 upon the Company’s receipt of $32,500 cash proceeds from the note. The note bears interest at 8 percent per annum with principal and interest due in full on September 30, 2013. <font style='background:white'>The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 55 percent of the current market price. The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $32,500 on the note date. As of June 30, 2013 the Company had amortized $21,467 of the debt discount to interest expense, leaving $11,033 in unamortized debt discount at June 30, 2013.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The fair value of the conversion option of the convertible note of $41,012 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements. Included in the model are the following assumptions: stock price at valuation date of $0.49 to $0.9, exercise price of $0.3025 to $0.0138, dividend yield of zero, years to maturity of 0.74to 0.25, risk free rate of 0.14 to 0.04 percent, and annualized volatility of 247 to 350 percent.</font></p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At June 30, 2013 the derivative liability was revalued at $39,943, which led to the Company recording a gain on derivative liability in the amount of $1,069.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On February 5, 2013 the Company borrowed $37,500 from an unrelated third party entity in the form of a convertible note. The note bears interest at 8 percent per annum with principal and interest due in full on November 7, 2013. <font style='background:white'>The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 55 percent of the current market price. The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.</font></p> <p style='margin:0in;margin-bottom:.0001pt'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $37,500 on the note date. As of June 30, 2013 the Company had amortized $19,773 of the debt discount to interest expense, leaving $17,727 in unamortized debt discount at June 30, 2013.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The fair value of the conversion option of the convertible note of $116,141 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements. Included in the model are the following assumptions: stock price at valuation date of $0.68 to $0.025, exercise price of $0.1925 to $0.0138, dividend yield of zero, years to maturity of 0.75 to 0.36, risk free rate of 0.13 to 0.03 percent, and annualized volatility of 263 to 400 percent.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At June 30, 2013 the derivative liability was revalued at 56,663, which led to the Company recording a gain on derivative liability in the amount of $59,478.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On March 27, 2013 the Company borrowed $25,000 from an unrelated third party entity in the form of a convertible note. Pursuant to the note agreement the Company was charged a 10% original issue discount of $2,500. The note bears no interest for the first three months. If the Company does not repay the note on or before 90 days from the effective date, a one-time interest charge of 12% shall be applied to the Principle sum of the note. Principal and interest on the note are due in full on March 27, 2014. <font style='background:white'>The principal balance of the note along with accrued interest is convertible at any time at the option of the note holder, into the Company's common stock at a price of the lessor of, $0.09, or 60 percent of the lowest trading price for the Common Stock during the twenty five day period on the latest complete trading day prior to the conversion date.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $25,000 on the note date. As of June 30, 2013 the Company had amortized $6,507 of the debt discount to interest expense, leaving $18,493 in unamortized debt discount at June 30, 2013.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The fair value of the conversion option of the convertible note of $36,222 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements. Included in the model are the following assumptions: stock price at valuation date of $0.9 to $0.025, exercise price of $0.054 to .012, dividend yield of zero, years to maturity of 1 to 0.74, risk free rate of 0.14 to 0.13 percent, and annualized volatility of 274 to 323 percent.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At June 30, 2013 the derivative liability was revalued at $46308, which led to the Company recording a loss on derivative liability in the amount of $10,086.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On May 1, 2013 the Company entered into a convertible note agreement. Pursuant to the agreement, the agreement was consummated on May 2, 2013 upon the Company’s receipt of $-0- cash proceeds and $9,500 of which was for professional fees. The note bears interest at 8 percent per annum with principal and interest due in full on February 3, 2014. <font style='background:white'>The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 55 percent of the current market price. The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $9,500 on the note date. As of June 30, 2013 the Company had amortized $135 of the debt discount to interest expense, leaving $498 in unamortized debt discount at June 30, 2013.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The fair value of the conversion option of the convertible note of $633 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements. Included in the model are the following assumptions: stock price at valuation date of $0.035 to $0.025, exercise price of $0.3025 to $0.0138, dividend yield of zero, years to maturity of 0.76to 0.6, risk free rate of 0.1 percent, and annualized volatility of 311 to 355 percent.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At June 30, 2013 the derivative liability was revalued at $15,134, which led to the Company recording a gain on derivative liability in the amount of $14,501.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On May 24, 2013 the Company entered into a convertible note agreement. Pursuant to the agreement, the agreement was consummated on June 3, 2013 upon the Company’s receipt of $32,830 cash proceeds and $14,670 of which was for professional fees. The note bears interest at 8 percent per annum with principal and interest due in full on February 28, 2014. <font style='background:white'>The principal balance of the note along with accrued interest is convertible after 180 days, at the option of the note holder, into the Company's common stock at a price of 55 percent of the current market price. The current market price is defined as the average of the lowest three trading prices for the Common Stock during the ten day period on the latest complete trading day prior to the conversion date.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>Pursuant to this conversion feature, the Company recognized a discount on convertible debt in the amount of $47,500 on the note date. As of June 30, 2013 the Company had amortized $4,750 of the debt discount to interest expense, leaving $42,750 in unamortized debt discount at June 30, 2013.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The fair value of the conversion option of the convertible note of $120,160 has been recognized as a derivative liability on the date of issuance with all future changes in the fair value of these conversion options being recognized in earnings in the Company’s statement of operations under the caption “Other income (expense) – Gain (loss) on derivative liability” until such time as the note is converted or the conversion feature expires.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>The Company uses the Black-Scholes option pricing model to value the derivative liability and subsequent remeasurements. Included in the model are the following assumptions: stock price at valuation date of $0.0299 to $0.025, exercise price of $0.011 to $0.0138, dividend yield of zero, years to maturity of 0.74to 0.67, risk free rate of 0.11 to 0.13 percent, and annualized volatility of 363 to 338 percent.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'><font style='background:white'>ASC 815 requires the Company to assess the fair market value of certain derivatives at each reporting period and recognize any change in the fair market value of the derivatives as gain (loss) on the income statements. At June 30, 2013 the derivative liability was revalued at $75,837, which led to the Company recording a gain on derivative liability in the amount of $44,323.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p>
<!--egx--><p style='margin:0in;margin-bottom:.0001pt'><b>NOTE 8</b><b> </b><b>–</b><b> </b><b>NOTES PAYABLE</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On May 18, 2012 the Company entered into a note payable with an unrelated third party in the amount of $30,000. The note is unsecured, bears interest at a rate of 12.0 percent per annum, and is due on May 18, 2014. During the year ended June 30, 2013 the note was paid off in full.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On January 5, 2012 the Company entered into a note payable with an unrelated third-party in the amount of $8,000. The Company received $6,000 in cash, but agreed to repay a total of $8,000. The $2,000 difference is accounted for as interest expense. As of June 30, 2013, the note was in default and the creditor had made demands for payment. As of June 30, 2013 the outstanding balance on this note was $5,100. </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>During the year ended June 30, 2012 the Company entered into a note payable with an unrelated third-party in the amount of $3,500. The Company received $3,000 but promised to repay a total of $3,500 as of June 28, 2012. The $500 difference is accounted for as interest expense. As of June 30, 2013 the note was in default and the creditor has demanded payment. The note term dictates that upon default, the Company is responsible for $100 per week in accrued interest. In August 2012, this weekly penalty interest was reduced to $50 per week. The note is unsecured and as of June 30, 2013 the outstanding balance on this note, including accrued interest, totaled $2,800.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On April 2, 2012 the Company entered into a note payable agreement with an unrelated third-party in which the related party would pay $6,500 of expenses on behalf of the Company. The note is due on demand and bears no interest. As of June 30, 2013 the outstanding balance on this note was $6,500.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>On March 18, 2013 the Company entered into a note payable agreement with an unrelated third-party in the amount of $3,000. The note bears interest at 40 percent per annum and is due on April 18, 2013. The note is in default. As of June 30, 2013 the outstanding balance on this note was $$1,000.During the year ended June 30, 2013 the Company issued 36,694 shares of Series C Preferred stock to an unrelated third party for $91,623 of debt.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>During the year ended June 30, 2013 the Company issued 1,486 shares of common stock for debt in the amount of $1,486 (see note 6) for which the Company recognized a loss of $285,714.</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'> </p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>As of June 30, 2013 and 2012 the total outstanding notes payable balance was $40,564 and 115,125, respectively.  </p>
<!--egx--><pre><b>NOTE </b><b>9</b><b> – INCOME TAXES</b></pre><pre style='text-align:justify'>The Company’s provision for income taxes was $-0- for the years ended June 30, 2013 and 2012, respectively, since the Company has accumulated taxable losses from operations.  ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a full valuation allowance equal to the deferred tax asset has been recorded.</pre><pre style='text-align:justify'>The total deferred tax asset is calculated by multiplying a 34 percent marginal tax rate by the cumulative Net Operating Loss (“NOL”).  At June 30, 2013, the Company has available $153,593 of NOL’s which expire in various years beginning in 2026 and carrying forward through 2032.  The tax effects of significant items comprising the Company's net deferred taxes as of June 30, 2013 and 2012 were as follows:</pre> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="589" style='line-height:115%;width:441.7pt;margin-left:4.65pt;border-collapse:collapse'> <tr style='height:16.65pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:16.65pt'> <p style='line-height:normal'> </p> </td> <td width="258" colspan="5" valign="bottom" style='width:193.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:16.65pt'> <p align="center" style='text-align:center;line-height:normal'>June 30,</p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="122" colspan="2" valign="bottom" style='width:91.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="center" style='text-align:center;line-height:normal'>2013</p> </td> <td width="15" valign="bottom" style='width:11.1pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="122" colspan="2" valign="bottom" style='width:91.3pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.0pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="center" style='text-align:center;line-height:normal'>2012</p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'> </p> </td> <td width="22" valign="bottom" style='width:16.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="100" valign="bottom" style='width:75.0pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'>Cumulative NOL</p> </td> <td width="22" valign="bottom" style='width:16.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="100" valign="bottom" style='width:75.0pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>3,189,063</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="100" valign="bottom" style='width:75.0pt;border:none;border-bottom:double windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>451,744</p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'>Deferred Tax Assets:</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='text-indent:11.0pt;line-height:normal'>Net operating loss carry forwards</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>(1,084,281)</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>(153,593)</p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='text-indent:11.0pt;line-height:normal'>Common and preferred stock issued for services</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;text-indent:11.0pt;line-height:normal'> </p> </td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>455,973</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>3,366</p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='text-indent:11.0pt;line-height:normal'>Valuation allowance</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>458,308</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="100" valign="bottom" style='width:75.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>150,227</p> </td> </tr> <tr style='height:1.0pt'> <td width="331" valign="bottom" style='width:248.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="100" valign="bottom" style='width:75.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>-</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="100" valign="bottom" style='width:75.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>-</p> </td> </tr> </table> </div> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 34 percent to net loss before provision for income taxes for the following reasons:</p> <p style='text-align:justify;line-height:normal'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" width="601" style='line-height:115%;width:450.95pt;margin-left:-10.25pt;border-collapse:collapse'> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="251" colspan="5" valign="bottom" style='width:188.05pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="center" style='text-align:center;line-height:normal'>June 30,</p> </td> </tr> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="127" colspan="2" valign="bottom" style='width:94.95pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="center" style='text-align:center;line-height:normal'>2013</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="109" colspan="2" valign="bottom" style='width:82.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="center" style='text-align:center;line-height:normal'>2012</p> </td> </tr> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'> </p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="105" valign="bottom" style='width:78.65pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="88" valign="bottom" style='width:65.7pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> </tr> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'>Income tax benefit at U. S. federal statutory rates:</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="105" valign="bottom" style='width:78.65pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>930,688</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="88" valign="bottom" style='width:65.7pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>105,180</p> </td> </tr> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'>Stock/options issued for services</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="105" valign="bottom" style='width:78.65pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>(622,607)</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="88" valign="bottom" style='width:65.7pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> </tr> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p style='line-height:normal'>Change in valuation allowance</p> </td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="105" valign="bottom" style='width:78.65pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>(308,081)</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="88" valign="bottom" style='width:65.7pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>(105,180)</p> </td> </tr> <tr style='height:1.0pt'> <td width="351" valign="bottom" style='width:262.9pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="105" valign="bottom" style='width:78.65pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>-</p> </td> <td width="15" valign="bottom" style='width:11.1pt;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'></td> <td width="22" valign="bottom" style='width:16.3pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="88" valign="bottom" style='width:65.7pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:double windowtext 2.25pt;border-right:none;padding:0in 5.4pt 0in 5.4pt;height:1.0pt'> <p align="right" style='text-align:right;line-height:normal'>-</p> </td> </tr> </table> </div> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal;text-autospace:none'>The Company files federal and Nevada income tax returns subject to statutes of limitations. The years ended June 30, 2013, 2012, and 2011 are subject to examination by federal and state tax authorities.</p> <p style='line-height:normal;text-autospace:none'> </p>
<!--egx--><p style='margin-bottom:0in;margin-bottom:.0001pt;line-height:normal;text-autospace:none'><b>NOTE 10 – COMMITMENTS AND CONTINGENCIES</b></p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Lease Agreements</u></p> <p style='text-align:justify;line-height:normal'>During the year ended June 30, 2013 the Company terminated its lease agreement. Rent expense totaled $64,081 and $34,566 for the years ended June 30, 2013 and 2012, respectively.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Royalty Agreements</u></p> <p style='text-align:justify;line-height:normal'>The Company entered into several royalty agreements wherein the Company acquired rights to licensed content. The Company intends to either reproduce and distribute the media or sublet the rights to another party. The agreements require the Company to pay royalties of 15 to 30 percent of gross sales receipts over the life of the licensing agreement. The agreements vary in length from three to five years. Royalty expenses totaled $17,735 and $17,467 for the years ended June 30, 2013 and 2012, respectively.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'><u>Legal Proceedings</u></p> <p style='text-align:justify;line-height:normal'>The Company may be party to various legal actions arising in the ordinary course of business. Matters that are probable of unfavorable outcomes to the Company and which can be reasonably estimated are accrued. Such accruals are based the Company’s estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters.  There is no litigation or contingencies that require accrual or disclosure as of June 30, 2013.</p> <p style='text-align:justify;line-height:normal'> </p>
<!--egx--><p style='margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS</b></p> <p style='line-height:normal'> </p> <p style='text-align:justify;line-height:normal;text-autospace:none'>The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2013 and 2012. As required by ASC 820, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels for the years ended June 30, 2013 and 2012.</p> <p style='line-height:normal;text-autospace:none'> </p> <p style='text-align:justify;line-height:normal'>The carrying amounts reported in the balance sheets for cash, accounts receivable, loans payable, and accounts payable and accrued expenses, approximate their fair market value based on the short-term maturity of these instruments. The following table presents assets and liabilities that are measured and recognized at fair value as of June 30, 2013 and 2012, on a recurring basis:</p> <p style='text-align:justify;line-height:normal'> </p> <div align="center"> <table border="0" cellspacing="0" cellpadding="0" style='line-height:115%'> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'> </p> <p style='line-height:normal'>Liabilities measured </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;padding:0'> <p style='line-height:normal'> </p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'>at fair value on a recurring </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'>basis at June 30, 2013:</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="center" style='text-align:center;line-height:normal'>Level 1</p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="center" style='text-align:center;line-height:normal'>Level 2</p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="center" style='text-align:center;line-height:normal'>Level 3</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="center" style='text-align:center;line-height:normal'>Total</p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='margin-bottom:2.75pt;line-height:normal'><b>Liabilities</b></p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'></td> <td width="4" valign="bottom" style='width:3.15pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'></td> <td width="3" valign="bottom" style='width:2.5pt;padding:0'></td> <td width="84" valign="bottom" style='width:62.85pt;padding:0'></td> <td width="4" valign="bottom" style='width:3.1pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'></td> <td width="15" valign="bottom" style='width:11.4pt;padding:0'></td> <td width="62" valign="bottom" style='width:46.85pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="10" valign="bottom" style='width:7.3pt;padding:0'></td> <td width="64" valign="bottom" style='width:48.0pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='margin-bottom:2.75pt;line-height:normal'>Derivative liability</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="75" valign="bottom" style='width:56.4pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$                 - </p> </td> <td width="4" valign="bottom" style='width:3.15pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'></td> <td width="3" valign="bottom" style='width:2.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="84" valign="bottom" style='width:62.85pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$      278,122</p> </td> <td width="4" valign="bottom" style='width:3.1pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'></td> <td width="15" valign="bottom" style='width:11.4pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="62" valign="bottom" style='width:46.85pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'><font style='background:white'>-</font></p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="10" valign="bottom" style='width:7.3pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="64" valign="bottom" style='width:48.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>278,122</p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='margin-bottom:2.75pt;line-height:normal'>Total</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="75" valign="bottom" style='width:56.4pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$                 - </p> </td> <td width="4" valign="bottom" style='width:3.15pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'></td> <td width="3" valign="bottom" style='width:2.5pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'></td> <td width="84" valign="bottom" style='width:62.85pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$      278,122</p> </td> <td width="4" valign="bottom" style='width:3.1pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'></td> <td width="15" valign="bottom" style='width:11.4pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="62" valign="bottom" style='width:46.85pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>-</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="10" valign="bottom" style='width:7.3pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="64" valign="bottom" style='width:48.0pt;border:none;border-bottom:double windowtext 1.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>278,122</p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'></td> <td width="4" valign="bottom" style='width:3.15pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'></td> <td width="3" valign="bottom" style='width:2.5pt;padding:0'></td> <td width="84" valign="bottom" style='width:62.85pt;padding:0'></td> <td width="4" valign="bottom" style='width:3.1pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'></td> <td width="15" valign="bottom" style='width:11.4pt;padding:0'></td> <td width="62" valign="bottom" style='width:46.85pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="10" valign="bottom" style='width:7.3pt;padding:0'></td> <td width="64" valign="bottom" style='width:48.0pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'> </p> <p style='line-height:normal'>Liabilities measured </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'>at fair value on a recurring </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'>basis at June 30, 2012:</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p style='margin-bottom:.9pt;line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>Level 1</p> </td> <td width="8" colspan="2" valign="bottom" style='width:6.0pt;padding:0'> <p align="right" style='margin-bottom:.9pt;text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.15pt;padding:0'> <p align="right" style='margin-bottom:.9pt;text-align:right;line-height:normal'> </p> </td> <td width="87" colspan="2" valign="bottom" style='width:65.35pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>Level 2</p> </td> <td width="14" colspan="2" valign="bottom" style='width:10.15pt;padding:0'> <p align="right" style='margin-bottom:.9pt;text-align:right;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p align="right" style='margin-bottom:.9pt;text-align:right;line-height:normal'> </p> </td> <td width="78" colspan="2" valign="bottom" style='width:58.25pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>Level 3</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='margin-bottom:.9pt;text-align:right;line-height:normal'> </p> </td> <td width="74" colspan="2" valign="bottom" style='width:55.3pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>Total</p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'><b>Liabilities</b></p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="75" valign="bottom" style='width:56.4pt;padding:0'></td> <td width="4" valign="bottom" style='width:3.15pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'></td> <td width="3" valign="bottom" style='width:2.5pt;padding:0'></td> <td width="84" valign="bottom" style='width:62.85pt;padding:0'></td> <td width="4" valign="bottom" style='width:3.1pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'></td> <td width="15" valign="bottom" style='width:11.4pt;padding:0'></td> <td width="62" valign="bottom" style='width:46.85pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'></td> <td width="10" valign="bottom" style='width:7.3pt;padding:0'></td> <td width="64" valign="bottom" style='width:48.0pt;padding:0'></td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='line-height:normal'>Derivative liability</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$                 - </p> </td> <td width="4" valign="bottom" style='width:3.15pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="3" valign="bottom" style='width:2.5pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="84" valign="bottom" style='width:62.85pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$ -</p> </td> <td width="4" valign="bottom" style='width:3.1pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.4pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="62" valign="bottom" style='width:46.85pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>          -</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'> </p> </td> <td width="10" valign="bottom" style='width:7.3pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="64" valign="bottom" style='width:48.0pt;border:none;border-bottom:solid black 1.0pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>          -</p> </td> </tr> <tr align="left"> <td width="202" valign="bottom" style='width:151.65pt;padding:0'> <p style='margin-bottom:2.75pt;line-height:normal'> Total</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='margin-bottom:2.75pt;text-align:right;line-height:normal'> </p> </td> <td width="75" valign="bottom" style='width:56.4pt;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$                 - </p> </td> <td width="4" valign="bottom" style='width:3.15pt;border:none;border-bottom:double black 2.25pt;padding:0'></td> <td width="19" colspan="2" valign="bottom" style='width:14.0pt;padding:0'> <p align="right" style='margin-bottom:2.75pt;text-align:right;line-height:normal'> </p> </td> <td width="3" valign="bottom" style='width:2.5pt;padding:0'> <p align="right" style='margin-bottom:2.75pt;text-align:right;line-height:normal'> </p> </td> <td width="84" valign="bottom" style='width:62.85pt;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$ -</p> </td> <td width="4" valign="bottom" style='width:3.1pt;border:none;border-bottom:double black 2.25pt;padding:0'></td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='margin-bottom:2.75pt;text-align:right;line-height:normal'> </p> </td> <td width="5" valign="bottom" style='width:3.65pt;padding:0'> <p align="right" style='margin-bottom:2.75pt;text-align:right;line-height:normal'> </p> </td> <td width="15" valign="bottom" style='width:11.4pt;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="62" valign="bottom" style='width:46.85pt;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>          -</p> </td> <td width="9" valign="bottom" style='width:7.05pt;padding:0'> <p align="right" style='margin-bottom:2.75pt;text-align:right;line-height:normal'> </p> </td> <td width="10" valign="bottom" style='width:7.3pt;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>$</p> </td> <td width="64" valign="bottom" style='width:48.0pt;border:none;border-bottom:double black 2.25pt;padding:0'> <p align="right" style='text-align:right;line-height:normal'>          -</p> </td> </tr> <tr align="left"> <td width="202" style='border:none'></td> <td width="9" style='border:none'></td> <td width="75" style='border:none'></td> <td width="4" style='border:none'></td> <td width="4" style='border:none'></td> <td width="15" style='border:none'></td> <td width="4" style='border:none'></td> <td width="85" style='border:none'></td> <td width="4" style='border:none'></td> <td width="9" style='border:none'></td> <td width="5" style='border:none'></td> <td width="15" style='border:none'></td> <td width="62" style='border:none'></td> <td width="9" style='border:none'></td> <td width="10" style='border:none'></td> <td width="64" style='border:none'></td> </tr> </table> </div> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal;text-autospace:none'>The carrying value of short term financial instruments including cash, accounts payable, accrued expenses and short-term borrowings approximate fair value due to the short period of maturity for these instruments.  The long-term debentures payable approximates fair value since the related rates of interest approximate current market rates.</p> <p style='text-align:justify;line-height:normal'> </p>
<!--egx--><p style='margin-bottom:0in;margin-bottom:.0001pt;line-height:normal'><b>NOTE 12 - SUBSEQUENT EVENTS</b></p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>Subsequent to June 30, 2013 the Company amended five of its notes payable to include a conversion clause granting the note holder the conversion option to convert any portion of the principal amount plus the accrued and unpaid interest into fully paid and non-assessable shares of the Company’s common stock based on a conversion price of $0.00001. The notes payable that were amended were the Kopjaggers Consulting January 5, 2012 note in the amount of $6,000, the Brad McAlpin July 18, 2012 note in the amount of $3,500, the Brad McAlpin June 3, 2011 note in the amount of $2,850, the Ted D. Campbell II January 2, 2013 note in the amount of $7,500, and the Ted D. Campbell II January 17, 2013 note in the amount of $7,500. </p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>Subsequent to June 30, 2013 the Company issued 1,061,664,939 shares of common stock for conversion of debt in the amount of $70,840.</p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>On July 26, 2013 the Company entered into a lease agreement with a term of twenty-four months and a monthly rate of $3,450. The lease commences on August 1, 2013 and continues until July 31, 2016.  </p> <p style='text-align:justify;line-height:normal'> </p> <p style='text-align:justify;line-height:normal'>In accordance with ASC 855, Company management reviewed all material events through the date of this filing, and there are no other material subsequent events to report other than those reported.  </p> <p style='margin-top:0in;margin-right:-240.05pt;margin-bottom:0in;margin-left:0in;margin-bottom:.0001pt;line-height:normal'> </p>
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