2. Convertible Note Payable - default

9 Months Ended

Sep. 30, 2013

Convertible note payable as of September 30, 2013 and December 31, 2012 is summarized as follows:

	(Unaudited) September 30,		December 31,
	2013		2012

Convertible promissory note, bearing no interest, maturity of January 2010		–		114,700

	$	–	$	114,700

As of December 31, 2012, the Company had a past due note to T Squared Investments, LLC (T Squared), non-interest bearing and convertible at 50% of the note balance at $0.10 per share of common stock and 50% of the note balance at $0.50 per share of common stock. As of February 6, 2013, the note was cancelled pursuant to a settlement and release agreement with T Squared (T Squared Agreement). Under the T Squared Agreement, in exchange for the cancellation of the note, the Company paid T Squared $25,000 in cash and agreed to pay T Squared an additional $15,000 on the first anniversary of the date of the T Squared Agreement. The $15,000 due on the first anniversary of the date of the T Squared Agreement is shown within current liabilities as amount due under note settlement agreement as of September 30, 2013 in the accompanying condensed balance sheets. Gain on extinguishment of convertible note payable of $74,700 for the nine months ended September 30, 2013 is included in the accompanying condensed statement of operations.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details

Hedgebrook 10-Q