Item 1.01.   Entry into Material Definitive Agreement

On July 25, 2016, the Company entered into $2,000,000 equity line financing agreement (“Purchase Agreement”) with River North Equity, LLC, Chicago, Illinois (“River North” or the “Investor”). The financing is over a period closing December 31, 2017.  Under the Purchase Agreement and the registration rights agreement for this financing, we are required to file a registration statement (“Registration Statement”) under the Securities Act of 1933, as amended, and to make any required filings under applicable state securities laws to register the shares of our common stock to be purchased by the Investor pursuant to the Investment Agreement.  Under a Modification Agreement we entered into with River North, we are required to use our best efforts to file the Registration Statement by October 31, 2016, following the filing of the Company’s 2016 Annual Report on Form 10-K, and to have the Registration Statement be declared effective within 90 days from the filing date.

We have issued to the River North and Old Main, LLC in connection with the execution of the Purchase Agreement two Commitment Notes in the principal amount of $40,000 each, due March 29, 2017, and convertible into our common stock at a conversion price of a 35% discount from market.

THE FOREGOING DESCRIPTIONS OF THE EQUITY PURCHASE AGREEMENT, REGISTRATION RIGHTS AGREEMENT, MODIFICATION AGREEMENT AND COMMITMENT NOTES DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FORMS OF EQUITY PURCHASE AGREEMENT, REGISTRATION RIGHTS AGREEMENT, MODIFICATION AGREEMENT AND CONVERTIBLE NOTES, WHICH ARE FILED AS EXHIBITS 10.12 THROUGH 10.15 TO THIS CURRENT REPORT ON FORM 8-K AND ARE INCORPORATED HEREIN BY REFERENCE.  DEFINED TERMS USED IN THE DESCRIPTIVE SECTIONS ABOVE IN THIS CURRENT REPORT SHALL HAVE THE MEANINGS PROVIDED IN THE EQUITY PURCHASE AGREEMENT AND THE OTHER AGREEMENTS FILED HEREWITH, UNLESS SPECIFICALLY DEFINED OTHERWISE ABOVE IN THIS REPORT.  

Unregistered Sale of Equity Securities.

The following table sets forth the sales of unregistered securities since the Company’s last report filed under this item.  

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Item 2.03   Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference herein.

Item 3.02   Unregistered Sales of Equity Securities

As described in Item 1.01 of this Current Report, which is incorporated herein by reference, on July 25, 2016, the Company issued two Commitment Note to the Investor in a transaction exempt from registration as provided by Section 4(a)(2) and Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The holders of the Commitment Notes are “accredited investors” as such term is defined in Rule 501(a) of Regulation D of the Securities Act. The sale of the Commitment Notes did not involve a public offering and was made without general solicitation or general advertising. The Investors acquired the Commitment Notes for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

Item 9.01 Financial Statements and Exhibits.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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