The sale was made to accredited and other qualified investors in the United States and internationally in reliance upon available exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the "Securities Act") including Section 4(a)(2) thereof and Regulation D and Regulation S thereunder, as well as comparable exemptions under applicable state and foreign securities laws. The Company agreed to promptly file a registration statement with the Securities and Exchange Commission to register the resale of the Shares and shares of Common Stock issuable upon exercise of the Warrants. The private placement was made pursuant to definitive subscription agreements between the Company and each Investor. American Stock Transfer & Trust Company, LLC, the Company's registrar and transfer agent, will serve as the agent for the Warrants. The form of subscription agreement is filed herewith as Exhibit 10.1 and is incorporated herein by this reference.

    The Warrants have a term of four years and will not be exercisable for six months following the date of issuance. The number of shares issuable upon exercise of the Warrants is subject to adjustment for any stock dividends, stock splits or distributions by the Company, or upon any merger or consolidation or sale of assets of the Company, tender or exchange offer for the Common Stock, or a reclassification of the Common Stock. The form of Warrant is filed herewith as Exhibit 4.1 and is incorporated herein by this reference.

    iTell AG acted as placement agent for the Company in connection with offers and sales of Units outside the United States. iTell is entitled to cash compensation at closing of 10% of the gross proceeds secured from the sale of Units to non-US investors introduced by the placement agent and accepted by the Company, together with bonus compensation of Warrants to purchase 1,000,000 shares of Common Stock and 1,000,000 shares of Common Stock on the same terms as those sold to investors in the offering (including registration rights) if the gross proceeds received from the non-US investors introduced by the placement agent exceed $5 million. The placement agent is also entitled to reimbursement of legal fees and expenses up to $50,000. The securities were issued to the placement agent in reliance upon available exemptions from the registrations requirements of the Securities Act, including Regulation S thereunder.

    This description is qualified in its entirety by reference to the form of subscription agreement and form of Warrant, which are attached as exhibits to this Current Report on Form 8-K. Readers should review the form of subscription agreement for a complete understanding of the terms and conditions associated with the private placement. A copy of the Company's press release announcing the private placement is filed herewith as Exhibit 99.1.