Note D – Long-Term Debt

The Company has a credit facility with an entity controlled by its principal stockholder under which, at June 30, 2014, it has borrowed a total of $1,345,640 evidenced by senior secured notes of $1,224,060 and borrowings under a secured line of credit of $121,580. On March 7, 2014, the maturity date of the credit facility was extended from March 31, 2015 to April 15, 2018; accordingly, the indebtedness has been reflected as non-current in the accompanying condensed balance sheets.

The Company’s secured line of credit was expanded from $200,000 to $500,000 on March 7, 2014.

The senior secured notes and line of credit incur interest at 10% per annum and are secured by all of the Company’s assets and an aggregate of 3,848,485 shares of common stock to be issued and delivered to the senior secured lender in the event of default. At June 30, 2014, these obligations are not in default and such shares are not included in the calculation of outstanding shares.