NOTE 9 - SUBSEQUENT EVENTS

11% Convertible Debt - HEP Investments, LLC

As reported in the Company’s Current Report on Form 8-K filed on April 28, 2015, the Company and HEP Investments, LLC, a Michigan limited liability company, entered into the following documents, effective as of April 28, 2015: (i) Fifth Amendment to Loan Agreement under which the Lender has agreed to advance up to a total of $8,500,000 to the Registrant, subject to certain conditions, and (ii) a Sixth Amended and Restated Senior Secured Convertible Promissory Note.  

During the period April 1, 2015 through May 8, 2015, HEP Investments, LLC, a related party, advanced the Company an aggregate of $455,000, bringing the Company’s total indebtedness to HEP Investments to $6,237,200. The receipt of the first $217,800 of these advances completed a Tranche, as defined by the terms of the Loan Agreement and Convertible Promissory Note, as amended.  As a result of the $217,800 being classified as 11% Convertible Debt, the Company recorded an unamortized debt discount in the amount of $94,314, representing the future value of the stock to be issued under the terms of the convertible debt. This value was determined utilizing the Black-Scholes method of valuation using the following assumptions: expected volatilities of 139.68%, annual rate of dividends 0% and a risk free interest rates of 0.51%.

Loans Payable - Related Party

HEP Investments, LLC

The remaining portion of $237,200 of the advances from HEP Investments, LLC referenced above has been classified as a Loan Payable – Related Party until such time as the next tranche is completed by HEP.

Chris Maggiore

From April 1, 2015 to May 6, 2015, Chris Maggiore, a significant shareholder, advanced the Company an additional $15,000.