NOTE 11 SUBSEQUENT EVENTS (unaudited)
Generation Zero Group, Inc. was not able to meet the terms of the Forbearance Agreement identified in Note 3 with the Secured Noteholders. In March 2012, the Secured Noteholders, with over majority approval, authorized the Collateral Agent to forbear in the exercise of its rights and remedies under the Secured Notes, Security Agreements, Operating Agreement, Forbearance Agreement and applicable law during a Forbearance Period commencing on June 30, 2010 and ending on the earlier to occur of January 2, 2014 or the date that any Forbearance Default occurs. The Secured Notes have been renegotiated to represent a face value of $2,920,250 and interest shall not accrue or be assessed during the Forbearance Period. As a forbearance fee, Generation Zero Group, Inc. issued 1,460,125 shares of restricted common stock pro-rata with the outstanding principal amount of the Secured Notes held by each holder. The authorized amendment to the Forbearance Agreement also provides for the restructuring of Generation Zero Group, Inc. and the replacement of current management.
In April 2012 several of the Secured Noteholders participated in a non-interest bearing bridge loan for $40,000, with a maturity date of January 2, 2014. The Company issued 400,000 shares of restricted common stock in consideration of this funding. In addition, on August 15, 2012, the Company issued a Convertible Promissory Note of $200,000 to a Third Party qualified investor. The Note carries a 10% interest rate with maximum conversion to 2,500,000 shares of common stock and has a maturity date of August 15, 2014. The funds raised will be used for working capital.
The principal balance of the Convertible Note identified in Note 7 above was $4,312.00 as of October 23, 2012. The Company has not received any notice of an assignment of the Convertible Note which is required prior to any assignment. On October 23, 2012, the Company exercised its right to pay-off the note in full and has remitted payment to Cascata Equity Management of $5,860.93 in order to cancel the Convertible Note. This amount is comprised of $4132.00 in unpaid principal plus interest in the amount of $1,728.92 computed at 6%, as no demand for payment was ever made to cause the 15% default interest rate to apply. The payment terms have provided Cascata 30 days in order to dispute any error in the tendered payment amount, but no notice of any objection was timely received and Cascata accepted the payment.