COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

NOTE 9 - COMMITMENTS AND CONTINGENCIES

Leases

We have been residing in our current building at 228 W. Main Street, Tustin, California since 2006. Since that time, we have paid our rent on a month-to-month basis. As such, we are free to leave our current premises at any time with 30 days courtesy notice but we do not have a lease agreement with the property owner. This is our preference since it is our desire to be able to quickly expand to alternative office space should our growth require additional square footage than our current offices. The Company or Company employees or contractors own all of the computer and office equipment that is used in the course of business. We do not have any lease agreements for any office equipment.

Technology Payable

On June 22, 2011, the Company entered into a technology transfer agreement with an unaffiliated third party which included a liability in the amount of $36,000 and 96,000 shares of common stock (Note 11) in exchange for the right, title, and interest in the Marishco Game Engine. The liability is payable in 24 installments of $1,500 per installment and there is no stated interest rate. Therefore the balance of $36,000 was recorded as a liability, net of a discount of $2,834 with the discount to be amortized over the life of the liability using the effective interest method.

As of March 31, 2013 and December 31, 2012, the Company recognized a current liability of $17,940 and $17,787, respectively. During the three months ended March 31, 2013 and 2012, the Company recorded amortization of the debt discount of $153 and $500, respectively.