Item 1.01 Entry into a Material Definitive Agreement

Coupon Express, Inc. (the “Company”) has entered into conversion agreements (the “Conversion Agreements”) with thirteen (13) holders of its 14% Convertible Subordinated Notes due June 23, 2011 in the aggregate principal amount of $646,000 (the “Subordinated Notes”).  As provided in the Conversion Agreements, the Subordinated Notes were converted on August 7, 2012 into 7,177,777 shares of the Company’s Common Stock.  In accordance with the terms of each Conversion Agreement, the outstanding principal amount of each Subordinated Note was converted into shares of Common Stock as determined by dividing the outstanding principal amount by a conversion price of $0.09, which was a reduction in the original conversion price of $0.10.  Interest on each Subordinated Note was paid through the date of the conversion agreement and was paid in shares of Common Stock as determined by dividing the amount of interest due and owing to each noteholder by $0.10.   In addition, the Conversion Agreements provided for the reduction in the exercise prices of the warrants to purchase the Company’s Common Stock from $0.15 to $0.10 and the extension of the expiration dates of such warrants for a period of one (1) year.  Finally, pursuant to the Conversion Agreements, the holders of the Subordinated Notes waived their rights to anti-dilution adjustments under the Subordinated Notes and the warrants.

As a result of this conversion, all of the Company’s outstanding Cumulative Convertible Senior Notes (the “Senior Notes”), in the aggregate principal amount of $2,760,500, converted automatically into shares of the Company’s Series A Preferred Stock (the “Preferred Stock”).  The Senior Notes converted at a rate of one share of Preferred Stock for each $25,000 of Senior Notes.  Following the conversion of the Senior Notes, the Company has 110.42 shares of Preferred Stock issued and outstanding.

The shares of Preferred Stock bear a cumulative dividend of 7% per annum.  Upon liquidation, and upon an acquisition of the Company, the holders of Preferred Stock are entitled to a liquidation preference equal to the greater of (i) the amount invested plus all accrued and unpaid dividends, and (ii) the amount the holders of Preferred Stock, would receive had they converted the Preferred Stock to Common Stock immediately prior to such event.  Each share of Preferred Stock is convertible into 1,250,000 shares of the Company’s Common Stock, subject to certain adjustments.  The holders of a majority of the Preferred Stock are entitled to elect one director to the Board of Directors.  Further, such holders also have the right, under the Investor Rights Agreement, to consent to a second independent board member, and the Company has agreed that the board otherwise shall be comprised of five members.

Without the consent of the holders of a majority of the Preferred Stock, voting as a separate class, the Company shall not:

1.

amend the Articles of Incorporation, by-laws, the Certificate of Designation or any other certificate of designation or file any new certificate of designation;

2.

issue any Common Stock, Preferred Stock, Common Stock Equivalents or other securities or amend the terms thereof;

3.

redeem any outstanding Common Stock, Preferred Stock, Common Stock Equivalents or other securities;

4.

incur or repay indebtedness for borrowed money;

5.

acquire or dispose of material assets;

6.

enter into any Acquisition (as defined in the Articles), merger, consolidation, reorganization or similar transaction;

7.

create subsidiaries or other affiliates;

8.

dissolve, liquidate or wind up or file any petition under insolvency or bankruptcy laws;

9.

enter into any contract or arrangement with any present or former director, executive officer, shareholder, partner, member, employee or affiliate of the Company or any of its subsidiaries, or any of such Person’s affiliates or immediate family members;

10.

change senior management of the Company;

11.

declare or pay dividends or declare or make other distributions other than the Base Dividends;

12.

adopt or materially deviate from the business plan or budget adopted by the Board of Directors and the holders of a majority of the Preferred Stock, voting as a separate class; or

13.

change or revoke the Operations Committee Charter adopted by the Board of Directors, or in any other way disband, dissolve or impair the authority of the Operations Committee.

This summary is not a complete description of the rights of holders of the Company’s Preferred Stock and is qualified in its entirety by reference to the Certificate of Amendment to Articles of Incorporation—Series A Preferred Stock Rights, Designations and Privileges filed as Exhibit 3.1 which is attached to the Current Report on Form 8-K dated June 6, 2012, and which is incorporated by reference into this Item 3.03.

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