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9. Subsequent Events
9 Months Ended
Sep. 30, 2013
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

Distribution Agreement

On October 22, 2013, the Company entered into an Exclusive Distribution Agreement (the “Distribution Agreement”) with Rivalfly National Network, LLC (“Rivalfly”), whereby the Company granted exclusive distribution rights to Rivalfly for its game platform for an initial term of five (5) years.

 

Under the terms of the Distribution Agreement, Rivalfly will be issued up to 25,512,500 shares (the “Maximum Issuance”) of the Company’s common stock (the “Shares”), issuable in increments upon the Company achieving certain milestones as more fully set forth in the Distribution Agreement. More specifically, Rivalfly will be issued: (i) 4,000,000 Shares upon securing a sub-distribution agreement with Game Exchange of Colorado, Inc.; (ii) 4,000,000 Shares upon the Company’s completion of a successful test phase for its game platform; and (iii) 1,000,000 Shares for every 1,000 paying customers sourced by Rivalfly. The Share issuances are dependent in large part on the Company’s success in raising capital from investors to develop and commercialize its game platform. The Share issuances are not dependent or conditioned on Rivalfly’s efforts to raise capital on behalf of the Company.

 

Under the terms of the Distribution Agreement, upon the issuance of 4,000,000 Shares to Rivalfly, Rivalfly will be entitled to appoint one representative to the Company’s Board of Directors and maintain that representative until the time Rivalfly no longer owns at least 2,000,000 Shares or upon termination of the Distribution Agreement.

 

Under the terms of the Distribution Agreement, in the event of a change in control transaction resulting in net proceeds to the Company of at least $50,000,000, the Maximum Issuance will be deemed fully-earned and issuable.

 

Convertible Promissory Note

As stated in Note 5 above, subsequent to the end of the period covered by the accompanying interim financial statements, on November 4, 2013, the Company signed a consolidation and extension of all the Company’s existing promissory notes, and the accrued interest thereon as of October 31, 2013. The total amount of the consolidated promissory note is $285,239.76 (consisting of $265,996.50 in principal and $19,243.26 in accrued interest) with an interest rate of 8% and maturity date of May 19, 2014. The conversion price per share is $0.10, unless between the date of the consolidated promissory note and the maturity date of the consolidated promissory note, the Company has sold its capital stock in any financing in which the Company received gross proceeds in excess of $1,000,000 at a price other than $0.10. In the event the Company does not pay the outstanding balance due under the consolidated promissory note by May 19, 2014, the interest rate of the consolidated promissory note will increase to 12% per annum.