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8. Distribution Agreement
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3 Months Ended |
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Mar. 31, 2014
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| Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
| 8. Distribution Agreement |
On October 22, 2013, FreeButton, Inc. (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. The Company expectations are that the agreement will be concluded by end of first quarter of 2014.
Under the terms of the Distribution Agreement, Rivalfly was to be issued up to 25,512,500 shares (the Maximum Issuance) of the Companys 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 was to 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 Companys 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 were dependent in large part on the Companys success in raising capital from investors to develop and commercialize its game platform. The Share issuances were not dependent or conditioned on Rivalflys 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 was going to be entitled to appoint one (1) representative to the Companys Board of Directors and maintain that representative until the time Rivalfly no longer owned 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 would have been deemed fully-earned and issuable.
On February 7, 2014, the Distribution Agreement between Rivalfly and the Company, and the related Stock Purchase Agreement, was terminated pursuant to that certain Cancellation and Termination of Stock Purchase Agreement and Exclusive Distribution Agreement entered into between the Company and Rivalfly. Following the termination of the Distribution Agreement, neither party has any obligations under the Distribution Agreement. |