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3. NOTE RECEIVABLE – RELATED PARTY
 12 Months Ended
Jun. 30, 2016
Receivables [Abstract]  
NOTE RECEIVABLE – RELATED PARTY

Note receivable at June 30, 2016 and 2015 represents a note due from American Citizenship Center, LLC (“ACC”), a related party. Note receivable activity for fiscal years ended June 30, 2016 and 2015 consists of the following:

 

    2016   2015
Note receivable - beginning of year $           322,800  $          409,000
Advances                      -                       -   
Payments             (27,400)         (115,200)
Accounting and loan fees added to note                      -                29,000
    Accounting and loan fees reversed against deferred income             (29,000)                    -   
    Less reserve           (266,400)                    -   
  Total                      -              322,800
    Less long-term                      -            (262,800)
Notes receivable - current $                    -     $            60,000

 

The gross balance of $295,400 at June 30, 2016 represents the outstanding amount drawn by ACC on a $295,400 credit line provided by the Company at June 30, 2016. The note is secured by all assets of ACC and at June 30, 2016 bears interest at the rate of 9.5% per annum. At June 30, 2016, ACC owed the company approximately $2,800 consisting of interest of $2,300 plus $500 of legal fees associated with a note modification which was paid subsequent to year end. The note was modified twice during the fiscal year 2016 including a modification in January 2016 which deferred minimum principal payments of $10,000 to August 31, 2016.

 

ACC’s business plan is based on the Executive Action, known as DAPA, issued by President Obama in November 2014. The action is designed to expand the original deferred action program to eligible parents and spouses of U.S. citizens and agricultural workers with a demonstrated history. In February 2015, twenty-six states filed a lawsuit to stop the program and the court granted an injunction meaning that the U.S. Government cannot proceed with rolling out the program. The U.S. government appealed the lawsuit which went to the 5th Circuit Court of Appeals. The appeal was unsuccessful and in January 2016, the Supreme Court granted an oral hearing which was held in April 2016. In June 2016, the Supreme Court announced that the justice votes were even for and against the DAPA case, effectively a no decision. As a result, it is presumed that the case will go back to trial at the District Court in Texas. As of June 30, 2016, the Company has fully reserved for the amount of the note. The required interest payments are current.

 

In August 2016, ACC and the Company again modified the loan agreement by requiring minimum monthly payments of $10,000 per month starting 60 days following implementation of an immigration reform program which allows DAPA or a similar program to be implemented in the United States. In addition, the maturity date was extended to August 31, 2018. All other terms of the note remained the same.