13. Subsequent Events

The Company retained Taglich Brothers, Inc. (the “Placement Agent”) as a placement agent for the sale of the Convertible Notes, which sale concludes a private offering of debt in the amount of $500,000 (the “Offering”). Robert C. Schroeder, a director of the Company, is a Vice President with the Placement Agent. In connection with the Offering, the Company paid the Placement Agent in the form of a convertible note with a principal amount of $10,800 (with terms identical to the Convertible Notes set forth above), which represented an 8% commission of the gross proceeds. In addition, the Placement Agent earned warrants to purchase 168,750 shares of Common Stock, which represented 10% of the shares of Common Stock into which the Convertible Notes the Placement Agent sold in the Offering could be converted into at $0.08 per share (the “Placement Agent Warrants”), which have an exercise price of $0.08 per share of Common Stock, will be exercisable for a period of four years, contain customary cashless exercise and anti-dilution protection and are entitled to registration rights

On July 7, 2014, the Company issued a convertible promissory note in the amount of $10,000 (the “Note in an Aggregate Amount of $10,000”) to an accredited investor who is associated with other (the accredited investors collectively referred to as the “$450,000 Investors”). The Convertible Note matures on December 31, 2015 (the “Maturity Date”) and bear interest at an annual rate of interest of 10 percent until maturity, with interest payable quarterly. The Note Investor has a right, in his sole discretion, to convert the Convertible Notes into shares of Common Stock, par value $0.001 per share, of the Company under certain circumstances at a conversion rate of $0.08 per Share. If the Convertible Note have not been fully repaid by the Company by the Maturity Date or converted into shares at the election of the Convertible Note Investor prior to the Maturity Date, then such Convertible Note will accrue interest at the annual rate of 12% from the Maturity Date until the date the Convertible Note is repaid in full. Any interest not paid quarterly will also accrue interest at the annual rate of 12%. Under the terms of the Convertible Note, the Company agreed to seek shareholder approval to increase the number of authorized shares of the Company by at least 25,000,000 shares on or before September 30, 2014. The Company intends to use the proceeds of the Convertible Note for working capital, general corporate purposes, and debt repayment.

On July 10, 2014, the Company exchanged the November 12, 2013 Convertible Promissory Notes in the aggregate amount of $160,000, the December 27, 2013 Convertible Promissory Notes in the aggregate amount of $160,000, and the February 4, 2013 Convertible Promissory Notes in the aggregate amount of $350,000 for Convertible Promissory Notes for Convertible Promissory Notes dated July 10, 2014 in the aggregate amount of $701,067, which included accrued interest of approximately $31,067 as of July 10, 2014.The Convertible Promissory Notes matures on December 31, 2015 (the “Maturity Date”) and bear interest at an annual rate of interest of 10 percent until maturity, with interest payable quarterly. The Investor has a right, in his sole discretion, to convert the Convertible Note into shares of Common Stock, par value $0.001 per share, of the Company under certain circumstances, at a conversion rate of $0.08 per Share. If the Convertible Note have not been fully repaid by the Company by the Maturity Date or converted into shares at the election of the Convertible Note Investor prior to the Maturity Date, then such Convertible Note will accrue interest at the annual rate of 12% from the Maturity Date until the date the Convertible Note is repaid in full. Any interest not paid quarterly will also accrue interest at the annual rate of 12%. Under the terms of the Convertible Note, the Company agreed to seek shareholder approval to increase the number of authorized shares of the Company by at least 25,000,000 shares on or before May 31, 2015.

Effective August 1, 2014, the Company changed its stock symbol to INLX, to align with the name of its sole operating subsidiary, Intellinetics, Inc.

On August 6, 2014, the Company held its annual shareholder's meeting, at which the shareholders voted to approve an amendment to the Articles of Incorporation of the Company to change the Company's name to "Intellinetics, Inc." and complete a reverse stock-split in the ratio of 7-to-1, among other proposals, all of which were disclosed by a current report on 8-K filed August 7, 2014. The Amendment to effectuate the name change and reverse stock split shall be filed and made effective as soon as practicable.