<html>
  <head>
    <title>
      Unassociated Document
</title><!-- Licensed to: vf-->
<!-- Document Created using EDGARizer HTML 3.0.4.0 -->
<!-- Copyright 2006 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body bgcolor="#ffffff"><br>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="4">
      <hr style="MARGIN-TOP: -10px; COLOR: #000000" noshade size="1">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest event reported):&#160;&#160;July 31, 2006 </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="bottom" width="49%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Element
                21 Golf Company</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="49%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="bottom" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Delaware</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
            <td valign="bottom" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>000-15260</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
            <td valign="bottom" width="27%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>88-0218411</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
                or other jurisdiction </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
                incorporation) </font></div>
            </td>
            <td valign="bottom" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number) </font></div>
            </td>
            <td valign="bottom" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(IRS
                Employer Identification No.) </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="27%">&#160;</td>
            <td align="left" valign="middle" width="27%">&#160;</td>
            <td align="left" valign="middle" width="27%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="50%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">200
                Queens Quay East, Unit #1</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Toronto,
                Ontario, Canada, </font></div>
            </td>
            <td valign="top" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">M5A
                4K9</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
                of principal executive offices) </font></div>
            </td>
            <td valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Zip
                Code) </font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant's
                telephone number, including area&#160;code </font></div>
            </td>
            <td valign="top" width="30%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">800-710-2021</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="50%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
            <td valign="top" width="30%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
                </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="50%">&#160;</td>
            <td align="left" valign="middle" width="30%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="bottom" width="49%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Not
                Applicable </font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="49%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
                name or former address, if changed since last report) </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="49%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below): </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;&#160;Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;&#160;Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b)) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c)) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="1">
      <hr style="MARGIN-TOP: -13px; COLOR: #000000" noshade size="4">
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">&#160;</div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01 Entry into a Material Definitive Agreement </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      July
      31, 2006 (the &#8220;Initial Closing Date&#8221;), Element 21 Golf Company (the &#8220;Company&#8221;)
      consummated a $4 million equity financing by entering into two Series B
      Convertible Preferred Stock Subscription Agreements (each a &#8220;Subscription
      Agreement&#8221; and collectively the &#8220;Subscription Agreements&#8221;) with each of
      Clearline Capital, LLC and Vladimir Goryunov (each a &#8220;Purchaser&#8221; and
      collectively, the &#8220;Purchasers&#8221;). Each Subscription Agreement provides for the
      sale by the Company to the applicable Purchaser of 117,648 shares of the
      Company&#8217;s Series B Convertible Preferred Stock, par value $0.10 per share (the
&#8220;Series B Preferred Stock&#8221;), and warrants to purchase an aggregate of 17,647,059
      shares of the Company&#8217;s Common Stock, $.01 par value per share (the &#8220;Common
      Stock&#8221;), in exchange for and in consideration of an aggregate investment by each
      Purchaser of $2 million in cash (each Purchaser&#8217;s &#8220;Investment Amount&#8221;), which
      amount is to be invested by each Purchaser in two equal $1 million installments,
      the first of which occurred on the Initial Closing Date and the second of which
      will occur at a subsequent closing to occur on or before November 30, 2006
      (the
&#8220;Subsequent Closing&#8221;, and the date of such Subsequent Closing, the &#8220;Subsequent
      Closing Date&#8221;); provided that the Company satisfies the necessary condition
      precedent to the Subsequent Closing as described below. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Initial Closing Date, each Purchaser invested $1 million in the Company in
      return for 58,824 shares of Series B Preferred Stock and two warrants (the
      terms
      of which are more fully described below) to purchase an aggregate of 8,823,530
      shares of Common Stock. The Subscription Agreements obligate each Purchaser
      to
      invest the remaining $1 million of its Investment Amount (each Purchaser&#8217;s
&#8220;Additional Investment Amount&#8221;) in the Company no later than November 30, 2006,
      subject only to the Company converting at least 80% of the aggregate outstanding
      principal amount evidenced by those certain convertible promissory notes issued
      by the Company between February 2006 and July 31, 2006 (collectively, the
&#8220;Promissory Notes&#8221;) into shares of Common Stock prior to the Subsequent Closing
      Date. In exchange for each Purchaser&#8217;s Additional Investment Amount, the Company
      will issue to each Purchaser an additional 58,824 shares of Series B Preferred
      Stock and two additional warrants (the terms of which are more fully described
      below) to purchase an aggregate of an additional 8,823,529 shares of Common
      Stock. On August 3, 2006, the Company issued a press release to announce the
      consummation of the equity financing. A copy of the press release issued by
      the
      Company is attached hereto as Exhibit 99.1.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      share of Series B Preferred Stock will initially be:<font size="3">&#160;</font></font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;">&#160;</td>
            <td align="left">
            </td>
          </tr>

      </table>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">convertible
                into 100 shares of Common Stock (subject to adjustment in the event
                of
                dilutive issuances, stock splits, combinations, certain dividends
                and
                distributions, and mergers, reorganizations or other similar
                recapitalization events); </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;entitled
                to vote on all matters submitted to a vote of the holders of the
                Common
                Stock on an as-if converted to common stock
                basis;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entitled
                to accruing dividends at a rate per annum of 4% of the base amount
                per
                share (defined as the original issue price of $17.00 per share plus
                the
                amount of accrued but unpaid dividends as calculated on each anniversary
                of the date of issuance of such Series B Preferred Stock
                shares);</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">upon
                the occurrence of certain events (each a &#8220;Liquidating Event&#8221;), entitled to
                a liquidation preference equal to the greater of: (i) the amount
                that
                would have been payable on each share of Series B Preferred Stock
                had each
                share been converted into Common Stock immediately prior to such
                Liquidating Event, or (ii) $17.00 per share (adjusted to reflect
                any stock
                dividend, stock split, combination, recapitalization or reorganization)
                plus all accruing dividends and all other declared but unpaid dividends.
                A
                merger or consolidation of the Company into another corporation or
                entity
                or the sale of all or substantially all of the Company&#8217;s assets will be
                deemed to be a Liquidating Event unless otherwise decided by the
                majority
                vote of the then outstanding shares of the Series B Preferred
                Stock.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
      at any time when at least 25,000 shares of Series B Preferred Stock are
      outstanding (subject to appropriate adjustment in the event of any stock
      dividend, stock split, combination or other similar recapitalization event
      affecting such shares), the Company may not do any of the following without
      the
      written consent or affirmative vote of the holders of at least a majority of
      the
      then outstanding shares of Series B Preferred Stock: (i) effect any merger
      or
      consolidation of the Company; (ii) amend or repeal any provision of, or add
      any
      provision to, the Company&#8217;s Certificate of Incorporation or By-laws if such
      action would alter or change the preferences, rights, privileges or powers
      of,
      or the restrictions provided for the benefit of, such Series B Preferred Stock;
      (iii) create, or authorize the creation of, or issue or obligate itself to
      issue
      shares of, or increase the authorized number of shares of, any additional class
      or series of capital stock unless the same ranks junior to the Series B
      Preferred Stock; (iv) acquire another entity by means of a purchase of all
      or a
      portion of the capital stock or assets of such entity for consideration in
      excess of $2,000,000; (v) liquidate, wind up, or dissolve the Company or adopt
      any plan for the same; (vi) effect any sale, lease, transfer, pledge or other
      disposition of assets of the Company or its subsidiaries, not in the ordinary
      course of business, unless the value of such assets; singly or in connection
      with any related series of transactions does not in the aggregate exceed
      $5,000,000; (vii) enter into any transaction with any officer, director or
      beneficial owner of five percent (5%) or more of the Common Stock; (viii)
      authorize or effect the issuance by the Company of any shares of capital stock
      or rights to acquire shares of capital stock pursuant to stock option, stock
      bonus or other employee stock plans for the benefit of the employees of the
      Corporation other than the issuance of options to purchase up to 20,000,000
      shares of Common Stock pursuant to the Company&#8217;s existing stock option plan;
      (ix) incur any indebtedness for borrowed money in excess of $1,000,000
      outstanding at any time; (x) acquire any material assets of another person
      for
      consideration in excess of $2,000,000 other than in the ordinary course of
      business, or (xi) permit any subsidiary to do any of the foregoing. The
      protective provisions described above in subsections (iv)-(xi) will cease to
      be
      of further force and effect if the Purchasers fail to invest the Additional
      Investment Amount on or prior to November 30, 2006 for any reason other than
      the
      failure of the Company to convert at least 80% of the aggregate outstanding
      principal amount evidenced by the Promissory Notes into shares of Common Stock
      prior to November 30, 2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      the
      Initial Closing Date the Company granted each Purchaser (i) one warrant to
      purchase 3,750,000 shares of Common Stock at an exercise price of $0.22 per
      share in the event the warrant is exercised on or prior to July 31, 2007, and
      $0.28 per share in the event the warrant is exercised on or after August 1,
      2007, and (ii) one warrant to purchase 5,073,530 shares of Common Stock at
      an
      exercise price of $0.28 per share (each an &#8220;Initial Warrant&#8221;, and collectively,
      the &#8220;Initial Warrants&#8221;). Assuming that the conditions precedent to the
      Subsequent Closing are satisfied, on the Subsequent Closing Date, the Company
      will grant each Purchaser (i) one additional warrant to purchase 3,750,000
      shares of Common Stock at an exercise price of $0.22 per share in the event
      the
      warrant is exercised on or prior to July 31, 2007, which increases to $0.28
      per
      share in the event the warrant is exercised on or after August 1, 2007, and
      (ii)
      one additional warrant to purchase 5,073,530 shares of Common Stock at an
      exercise price of $0.28 per share (each a &#8220;Subsequent Warrant&#8221;, collectively,
      the &#8220;Subsequent Warrants&#8221; and collectively with the Initial Warrants, the
&#8220;Warrants&#8221;). The Warrants expire on January 31, 2009. The exercise prices of the
      Warrants are </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">subject
      to adjustment in the event of certain dilutive issuances, stock dividends,
      stock
      splits, share combinations or other similar recapitalization events. The
      Warrants may only be exercised by the payment of the applicable exercise price
      to the Company in cash, no cashless exercise is permitte</font><a name="id_0_7"/><a name="id_0_8"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">d.
      The
      terms of the Initial Warrants and the Subsequent Warrants are identical. Forms
      of each of the two Initial Warrants are attached hereto as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits
      4.1 and 4.2 respectively. </font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Certificate (as defined in Section 3.03 below) relating to the Series B
      Preferred Convertible Stock is attached hereto as Exhibit 3(i) and is
      incorporated herein by reference. A form of the two identical Subscription
      Agreements is attached hereto as Exhibit 10.1 and is incorporated herein by
      reference. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forms
      of
      each of the two Initial Warrants are attached hereto as </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits
      4.1 and 4.2 respectively and each is incorporated herein by reference.
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the Series B Preferred Stock does not purport to be
      complete and is qualified in its entirety by reference to Section 5.03 and
      to
      Exhibit 3(i). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02 Unregistered Sales of Equity Securities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described above, on the Initial Closing Date, the Company sold an aggregate
      of
      117,648 shares of Series B Preferred Stock and issued warrants to purchase
      an
      aggregate of 17,647,060 shares of Common Stock for an aggregate purchase price
      of $2,000,000. The Company did not pay any underwriting discounts or commissions
      in connection with its issuance of shares of Series B Preferred Stock and the
      accompanying warrants. The shares of Series B Preferred Stock are convertible
      into shares of Common Stock at the election of the Purchasers. Each share of
      Series B Preferred Stock is initially convertible into 100 shares of Common
      Stock, with such conversion ratio subject to adjustment in the</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      event of
      dilutive issuances, stock splits, combinations, certain dividends and
      distributions, and mergers, reorganizations or other similar recapitalization
      events. The warrants may be exercised in whole or in part for shares of Common
      Stock by payment by the Purchasers of the applicable exercise price in cash
      prior to the expiration of the warrants on January 31, 2009. Neither the shares
      of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Series
      B
      Preferred Stock, the warrants, or the shares of Common Stock issuable upon
      conversion of the shares of Series B Preferred Stock or upon the exercise of
      the
      warrants were registered under the Securities Act of 1933, as amended
      (&#8220;Securities Act&#8221;). The offer and sale of the shares Series B Preferred Stock
      and warrants to the Purchasers was (and we anticipate that the issuance of
      shares of Common Stock upon conversion of the Series B Preferred Stock and
      upon
      exercise of the warrants, will be) exempt from the registration requirements
      of
      Section 5 of the Securities Act pursuant to Section 4(2) of the Securities
      Act
      and Rule 506 of Regulation D thereunder</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company relied on the following facts in determining that the offer and sale
      of
      the shares of Series B Preferred Stock and accompanying warrants qualified
      for
      the exemption provided by Rule 506:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <table cellpadding="0" cellspacing="0" id="list" width="100%">

        <tr valign="top" style="line-height: 1.25;">
          <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
          <td>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
              offer and sale satisfied the terms and conditions of Rule 501 and 502
              under the Securities Act; and</font></div>
          </td>
        </tr>

    </table>
    <table cellpadding="0" cellspacing="0" id="list" width="100%">

        <tr valign="top" style="line-height: 1.25;">
          <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
          <td>
            <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
              to Rule 506 under the Securities Act, no more than 35 purchasers purchased
              the Series B Preferred Stock and warrants, as determined in accordance
              with Rule 501(e) under the Securities
              Act.</font></div>
          </td>
        </tr>

    </table>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.03 Material Modifications to Rights of Security Holders</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      discussed below in Item 5.03, the Company has designated 350,000 shares of
      its
      authorized preferred stock as Series B Convertible Preferred Stock pursuant
      to a
      Certificate of the Powers, Designations, Preferences and Rights of the Series
      B
      Convertible Preferred Stock, $0.10 par value per share (the &#8220;Certificate&#8221;). As
      described in Item 1.01 above, as of the Initial Closing Date, the Company sold
      an aggregate of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">117,648
      shares of Series B Preferred Stock to the Purchasers. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      more
      specifically described in Item 1.01, the designation and issuance of the shares
      of Series B Preferred Stock materially affects the rights and powers of the
      holders of the Company's Common Stock in the following ways:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
                share of Series B Preferred Stock is convertible into 100 shares
                of Common
                Stock (subject to adjustment in the event of dilutive issuances,
                stock
                splits, combinations, certain dividends and distributions, and mergers,
                reorganizations or other similar recapitalization
                events).</font></div>
            </td>
          </tr>

      </table>
      <div>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">4</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
      </div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
                  share of Series B Preferred Stock is entitled to vote on all matters
                  submitted to a vote of the holders of the Common Stock on an as-if
                  converted to common stock
                  basis.&#160;</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
                  holder of Series B Preferred Stock is entitled to receive accruing
                  dividends with respect to each shares of Series B Preferred Stock
                  held by
                  such holder at a rate per annum of 4% of the base amount (defined
                  as the
                  original issue price of $17.00 per share plus the amount of accrued
                  but
                  unpaid dividends as calculated on each anniversary of the date
                  of issuance
                  of such Series B Preferred Stock shares). The Company may not pay
                  a
                  dividend to holders of Common Stock unless the accruing dividends
                  payable
                  with respect to the shares of Series B Preferred Stock have been
                  paid in
                  full and a similar dividend is paid with respect to each share
                  of Series B
                  Preferred Stock on an as-converted-to-Common Stock
                  basis.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

            <tr valign="top" style="line-height: 1.25;">
              <td align="left" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font face="Symbol">&#183;</font></font></td>
              <td align="left">
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
                  the occurrence of a Liquidating Event, each holder of Series B
                  Preferred
                  Stock is entitled to a per-share liquidation preference equal to
                  the
                  greater of: (i) the amount that would have been payable on each
                  share of
                  Series B Preferred Stock had each share been converted into Common
                  Stock
                  immediately prior to such Liquidating Event, or (ii) $17.00 per
                  share
                  (adjusted to reflect any stock dividend, stock split, combination,
                  recapitalization or reorganization) plus all accruing dividends
                  and all
                  other declared but unpaid dividends. A merger or consolidation
                  of the
                  Company into another corporation or entity or the sale of all or
                  substantially all of the Company&#8217;s assets will be deemed to be a
                  Liquidating Event unless otherwise decided by the majority vote
                  of the
                  then outstanding shares of the Series B Preferred
                  Stock.</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Additionally,
      at any time when at least 25,000 shares of Series B Preferred Stock (subject
      to
      appropriate adjustment in the event of any stock dividend, stock split,
      combination or other similar recapitalization affecting such shares) are
      outstanding, the Company may not do any of the following without the written
      consent or affirmative vote of the holders of at least a majority of the then
      outstanding shares of Series B Preferred Stock: (i) effect any merger or
      consolidation of the Company; (ii) amend or repeal any provision of, or add
      any
      provision to, the Company&#8217;s Certificate of Incorporation or By-laws if such
      action would alter or change the preferences, rights, privileges or powers
      of,
      or the restrictions provided for the benefit of, such Series B Preferred Stock;
      (iii) create, or authorize the creation of, or issue or obligate itself to
      issue
      shares of, or increase the authorized number of shares of, any additional class
      or series of capital stock unless the same ranks junior to the Series B
      Preferred Stock; (iv) acquire another entity by means of a purchase of all
      or a
      portion of the capital stock or assets of such entity for consideration in
      excess of $2,000,000; (v) liquidate, wind up, or dissolve the Company or adopt
      any plan for the same; (vi) effect any sale, lease, transfer, pledge or other
      disposition of assets of the Company or its subsidiaries, not in the ordinary
      course of business, unless the value of such assets; singly or in connection
      with any related series of transactions does not in the aggregate exceed
      $5,000,000; (vii) enter into any transaction with any officer, director or
      beneficial owner of five percent (5%) or more of the Common Stock; (viii)
      authorize or effect the issuance by the Company of any shares of capital stock
      or rights to acquire shares of capital stock pursuant to stock option, stock
      bonus or other employee stock plans for the benefit of the employees of the
      Corporation other than the issuance of options to purchase up to 20,000,000
      shares of Common Stock pursuant to the Company&#8217;s existing stock option plan;
      (ix) incur any indebtedness for borrowed money in excess of $1,000,000
      outstanding at any time; (x) acquire any material assets of another person
      for
      consideration in excess of $2,000,000 other than in the ordinary course of
      business, or (xi) permit any subsidiary to do any of the foregoing. The
      protective provisions described above in subsections (iv)-(xi) will cease to
      be
      of further force and effect if the Purchasers fail to invest the Additional
      Investment Amount on or prior to November 30, 2006 for any reason other than
      the
      failure of the Company to convert at least 80% of the aggregate outstanding
      principal amount evidenced by the Promissory Notes into shares of Common Stock
      prior to November 30, 2006. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Certificate is attached hereto as Exhibit 3(i) and is incorporated herein by
      reference. The foregoing description of the rights of the holders of Series
      B
      Preferred Stock does not purport to be complete and is qualified in its entirety
      by reference to such exhibit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
      Year</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company designated 350,000 shares of its authorized preferred stock as Series
      B
      Convertible Preferred Stock pursuant to the authority granted to the Board
      of
      Directors by the Company&#8217;s Certificate of Incorporation, as amended. In
      connection with such designation, the Company filed the Certificate with the
      Secretary of State of the State of Delaware on July 31, 2006. A copy of the
      Certificate is attached hereto as Exhibit 3(i). Upon filing, the Certificate
      became a part of the Company's Certificate of Incorporation, as amended. The
      Certificate sets forth the voting powers, designation, preferences, limitations,
      restrictions and relative rights of the Series B Preferred Stock. The rights
      of
      the holders of the Series B Preferred Stock are described under Items 1.01
      and
      3.03 above. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the Certificate does not purport to be complete and
      is
      qualified in its entirety by reference to Exhibit 3(i) which is incorporated
      herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01 Financial Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibits</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="23%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                Number</strong></font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="23%">&#160;</td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="23%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(i)</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                of the Powers, Designations, Preferences and Rights of the Series
                B
                Convertible Preferred Stock, Par Value $0.10 Per Share</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="23%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Warrant for Purchase of 3,750,000 Shares of Common Stock dated
                July 31,
                2006</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="23%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Warrant for Purchase of 5,073,530 Shares of Common Stock dated
                July 31,
                2006</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="23%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Subscription Agreement for Shares of Series B Convertible Preferred
                Stock dated as of July 31, 2006</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="top" width="23%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                Release issued by the Company on August 3,
                2006</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Signatures</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Date:
              August 3, 2006<font size="3"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36.8pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 36.8pt">&#160;</font></font></font></td>
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">ELEMENT
              21 GOLF
              COMPANY</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;<br>&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td>&#160;</td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">By:&#160;&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">/s/&#160;Nataliya
              Hearn</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="FONT-FAMILY: " size="1">&#160;</font></td>
            <td align="left">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Name:
              Nataliya Hearn</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">&#160;</font></td>
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">Title:
              President</font></td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="3">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
      Index</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="top" width="23%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                  Number</strong></font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="23%">&#160;</td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="23%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3(i)</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certificate
                  of the Powers, Designations, Preferences and Rights of the Series
                  B
                  Convertible Preferred Stock, Par Value $0.10 Per Share</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="23%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.1</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                  of Warrant for Purchase of 3,750,000 Shares of Common Stock dated
                  July 31,
                  2006</font></div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="23%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.2</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                  of Warrant for Purchase of 5,073,530 Shares of Common Stock dated
                  July 31,
                  2006</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="23%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.1</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                  of Subscription Agreement for Shares of Series B Convertible Preferred
                  Stock dated as of July 31, 2006</font></div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="23%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
              </td>
              <td width="5%">&#160;</td>
              <td align="left" valign="top" width="56%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Press
                  Release issued by the Company on August 3,
                  2006</font></div>
              </td>
            </tr>

        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left">&#160;</div>
        </div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: ">8</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="3">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
        </div>
      </div>
    </div>
  </body>
</html>
{"company-data": {"conformed-name": "ELEMENT 21 GOLF CO", "cik": "0000797662", "assigned-sic": "3949", "irs-number": "880218411", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-15260", "film-number": "061001844"}, "business-address": {"street1": "340 GRANITE STREET", "street2": "SUITE 200", "city": "MANCHESTER", "state": "NH", "zip": "03102-4004", "phone": "416-362-2121"}, "mail-address": {"street1": "200 QUEENS QUAY EAST", "street2": "UNIT 1", "city": "TORONTO,", "state": "A6", "zip": "M5A 4K9"}, "former-company": [{"former-conformed-name": "BRL HOLDINGS INC", "date-changed": "20011212"}, {"former-conformed-name": "BIORELEASE CORP", "date-changed": "19930809"}, {"former-conformed-name": "OIA INC", "date-changed": "19920703"}]}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
      of
      Report (Date of earliest event reported):  July 31, 2006
Element
                21 Golf Company
(Exact
      name of registrant as specified in its charter)
Delaware
000-15260
88-0218411
(State
                or other jurisdiction
of
                incorporation)
(Commission
                File Number)
(IRS
                Employer Identification No.)
200
                Queens Quay East, Unit #1
Toronto,
                Ontario, Canada,
M5A
                4K9
(Address
                of principal executive offices)
(Zip
                Code)
Registrant's
                telephone number, including area code
800-710-2021
Not
                Applicable
(Former
                name or former address, if changed since last report)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Item
      1.01 Entry into a Material Definitive Agreement
On
      July
      31, 2006 (the "Initial Closing Date"), Element 21 Golf Company (the "Company")
      consummated a $4 million equity financing by entering into two Series B
      Convertible Preferred Stock Subscription Agreements (each a "Subscription
      Agreement" and collectively the "Subscription Agreements") with each of
      Clearline Capital, LLC and Vladimir Goryunov (each a "Purchaser" and
      collectively, the "Purchasers"). Each Subscription Agreement provides for the
      sale by the Company to the applicable Purchaser of 117,648 shares of the
      Company's Series B Convertible Preferred Stock, par value $0.10 per share (the
"Series B Preferred Stock"), and warrants to purchase an aggregate of 17,647,059
      shares of the Company's Common Stock, $.01 par value per share (the "Common
      Stock"), in exchange for and in consideration of an aggregate investment by each
      Purchaser of $2 million in cash (each Purchaser's "Investment Amount"), which
      amount is to be invested by each Purchaser in two equal $1 million installments,
      the first of which occurred on the Initial Closing Date and the second of which
      will occur at a subsequent closing to occur on or before November 30, 2006
      (the
"Subsequent Closing", and the date of such Subsequent Closing, the "Subsequent
      Closing Date"); provided that the Company satisfies the necessary condition
      precedent to the Subsequent Closing as described below.
On
      the
      Initial Closing Date, each Purchaser invested $1 million in the Company in
      return for 58,824 shares of Series B Preferred Stock and two warrants (the
      terms
      of which are more fully described below) to purchase an aggregate of 8,823,530
      shares of Common Stock. The Subscription Agreements obligate each Purchaser
      to
      invest the remaining $1 million of its Investment Amount (each Purchaser's
"Additional Investment Amount") in the Company no later than November 30, 2006,
      subject only to the Company converting at least 80% of the aggregate outstanding
      principal amount evidenced by those certain convertible promissory notes issued
      by the Company between February 2006 and July 31, 2006 (collectively, the
"Promissory Notes") into shares of Common Stock prior to the Subsequent Closing
      Date. In exchange for each Purchaser's Additional Investment Amount, the Company
      will issue to each Purchaser an additional 58,824 shares of Series B Preferred
      Stock and two additional warrants (the terms of which are more fully described
      below) to purchase an aggregate of an additional 8,823,529 shares of Common
      Stock. On August 3, 2006, the Company issued a press release to announce the
      consummation of the equity financing. A copy of the press release issued by
      the
      Company is attached hereto as Exhibit 99.1.
Each
      share of Series B Preferred Stock will initially be:
·
convertible
                into 100 shares of Common Stock (subject to adjustment in the event
                of
                dilutive issuances, stock splits, combinations, certain dividends
                and
                distributions, and mergers, reorganizations or other similar
                recapitalization events);
·
entitled
                to vote on all matters submitted to a vote of the holders of the
                Common
                Stock on an as-if converted to common stock
                basis;
·
entitled
                to accruing dividends at a rate per annum of 4% of the base amount
                per
                share (defined as the original issue price of $17.00 per share plus
                the
                amount of accrued but unpaid dividends as calculated on each anniversary
                of the date of issuance of such Series B Preferred Stock
                shares);
·
upon
                the occurrence of certain events (each a "Liquidating Event"), entitled to
                a liquidation preference equal to the greater of: (i) the amount
                that
                would have been payable on each share of Series B Preferred Stock
                had each
                share been converted into Common Stock immediately prior to such
                Liquidating Event, or (ii) $17.00 per share (adjusted to reflect
                any stock
                dividend, stock split, combination, recapitalization or reorganization)
                plus all accruing dividends and all other declared but unpaid dividends.
                A
                merger or consolidation of the Company into another corporation or
                entity
                or the sale of all or substantially all of the Company's assets will be
                deemed to be a Liquidating Event unless otherwise decided by the
                majority
                vote of the then outstanding shares of the Series B Preferred
                Stock.
2
Additionally,
      at any time when at least 25,000 shares of Series B Preferred Stock are
      outstanding (subject to appropriate adjustment in the event of any stock
      dividend, stock split, combination or other similar recapitalization event
      affecting such shares), the Company may not do any of the following without
      the
      written consent or affirmative vote of the holders of at least a majority of
      the
      then outstanding shares of Series B Preferred Stock: (i) effect any merger
      or
      consolidation of the Company; (ii) amend or repeal any provision of, or add
      any
      provision to, the Company's Certificate of Incorporation or By-laws if such
      action would alter or change the preferences, rights, privileges or powers
      of,
      or the restrictions provided for the benefit of, such Series B Preferred Stock;
      (iii) create, or authorize the creation of, or issue or obligate itself to
      issue
      shares of, or increase the authorized number of shares of, any additional class
      or series of capital stock unless the same ranks junior to the Series B
      Preferred Stock; (iv) acquire another entity by means of a purchase of all
      or a
      portion of the capital stock or assets of such entity for consideration in
      excess of $2,000,000; (v) liquidate, wind up, or dissolve the Company or adopt
      any plan for the same; (vi) effect any sale, lease, transfer, pledge or other
      disposition of assets of the Company or its subsidiaries, not in the ordinary
      course of business, unless the value of such assets; singly or in connection
      with any related series of transactions does not in the aggregate exceed
      $5,000,000; (vii) enter into any transaction with any officer, director or
      beneficial owner of five percent (5%) or more of the Common Stock; (viii)
      authorize or effect the issuance by the Company of any shares of capital stock
      or rights to acquire shares of capital stock pursuant to stock option, stock
      bonus or other employee stock plans for the benefit of the employees of the
      Corporation other than the issuance of options to purchase up to 20,000,000
      shares of Common Stock pursuant to the Company's existing stock option plan;
      (ix) incur any indebtedness for borrowed money in excess of $1,000,000
      outstanding at any time; (x) acquire any material assets of another person
      for
      consideration in excess of $2,000,000 other than in the ordinary course of
      business, or (xi) permit any subsidiary to do any of the foregoing. The
      protective provisions described above in subsections (iv)-(xi) will cease to
      be
      of further force and effect if the Purchasers fail to invest the Additional
      Investment Amount on or prior to November 30, 2006 for any reason other than
      the
      failure of the Company to convert at least 80% of the aggregate outstanding
      principal amount evidenced by the Promissory Notes into shares of Common Stock
      prior to November 30, 2006.
On
      the
      Initial Closing Date the Company granted each Purchaser (i) one warrant to
      purchase 3,750,000 shares of Common Stock at an exercise price of $0.22 per
      share in the event the warrant is exercised on or prior to July 31, 2007, and
      $0.28 per share in the event the warrant is exercised on or after August 1,
      2007, and (ii) one warrant to purchase 5,073,530 shares of Common Stock at
      an
      exercise price of $0.28 per share (each an "Initial Warrant", and collectively,
      the "Initial Warrants"). Assuming that the conditions precedent to the
      Subsequent Closing are satisfied, on the Subsequent Closing Date, the Company
      will grant each Purchaser (i) one additional warrant to purchase 3,750,000
      shares of Common Stock at an exercise price of $0.22 per share in the event
      the
      warrant is exercised on or prior to July 31, 2007, which increases to $0.28
      per
      share in the event the warrant is exercised on or after August 1, 2007, and
      (ii)
      one additional warrant to purchase 5,073,530 shares of Common Stock at an
      exercise price of $0.28 per share (each a "Subsequent Warrant", collectively,
      the "Subsequent Warrants" and collectively with the Initial Warrants, the
"Warrants"). The Warrants expire on January 31, 2009. The exercise prices of the
      Warrants are
subject
      to adjustment in the event of certain dilutive issuances, stock dividends,
      stock
      splits, share combinations or other similar recapitalization events. The
      Warrants may only be exercised by the payment of the applicable exercise price
      to the Company in cash, no cashless exercise is permitte
d.
      The
      terms of the Initial Warrants and the Subsequent Warrants are identical. Forms
      of each of the two Initial Warrants are attached hereto as
Exhibits
      4.1 and 4.2 respectively.
3
The
      Certificate (as defined in Section 3.03 below) relating to the Series B
      Preferred Convertible Stock is attached hereto as Exhibit 3(i) and is
      incorporated herein by reference. A form of the two identical Subscription
      Agreements is attached hereto as Exhibit 10.1 and is incorporated herein by
      reference.
Forms
      of
      each of the two Initial Warrants are attached hereto as
Exhibits
      4.1 and 4.2 respectively and each is incorporated herein by reference.
The
      foregoing description of the Series B Preferred Stock does not purport to be
      complete and is qualified in its entirety by reference to Section 5.03 and
      to
      Exhibit 3(i).
Item
      3.02 Unregistered Sales of Equity Securities
As
      described above, on the Initial Closing Date, the Company sold an aggregate
      of
      117,648 shares of Series B Preferred Stock and issued warrants to purchase
      an
      aggregate of 17,647,060 shares of Common Stock for an aggregate purchase price
      of $2,000,000. The Company did not pay any underwriting discounts or commissions
      in connection with its issuance of shares of Series B Preferred Stock and the
      accompanying warrants. The shares of Series B Preferred Stock are convertible
      into shares of Common Stock at the election of the Purchasers. Each share of
      Series B Preferred Stock is initially convertible into 100 shares of Common
      Stock, with such conversion ratio subject to adjustment in the
event of
      dilutive issuances, stock splits, combinations, certain dividends and
      distributions, and mergers, reorganizations or other similar recapitalization
      events. The warrants may be exercised in whole or in part for shares of Common
      Stock by payment by the Purchasers of the applicable exercise price in cash
      prior to the expiration of the warrants on January 31, 2009. Neither the shares
      of
Series
      B
      Preferred Stock, the warrants, or the shares of Common Stock issuable upon
      conversion of the shares of Series B Preferred Stock or upon the exercise of
      the
      warrants were registered under the Securities Act of 1933, as amended
      ("Securities Act"). The offer and sale of the shares Series B Preferred Stock
      and warrants to the Purchasers was (and we anticipate that the issuance of
      shares of Common Stock upon conversion of the Series B Preferred Stock and
      upon
      exercise of the warrants, will be) exempt from the registration requirements
      of
      Section 5 of the Securities Act pursuant to Section 4(2) of the Securities
      Act
      and Rule 506 of Regulation D thereunder
.
The
      Company relied on the following facts in determining that the offer and sale
      of
      the shares of Series B Preferred Stock and accompanying warrants qualified
      for
      the exemption provided by Rule 506:
·
The
              offer and sale satisfied the terms and conditions of Rule 501 and 502
              under the Securities Act; and
·
Pursuant
              to Rule 506 under the Securities Act, no more than 35 purchasers purchased
              the Series B Preferred Stock and warrants, as determined in accordance
              with Rule 501(e) under the Securities
              Act.
Item
      3.03 Material Modifications to Rights of Security Holders
As
      discussed below in Item 5.03, the Company has designated 350,000 shares of
      its
      authorized preferred stock as Series B Convertible Preferred Stock pursuant
      to a
      Certificate of the Powers, Designations, Preferences and Rights of the Series
      B
      Convertible Preferred Stock, $0.10 par value per share (the "Certificate"). As
      described in Item 1.01 above, as of the Initial Closing Date, the Company sold
      an aggregate of
117,648
      shares of Series B Preferred Stock to the Purchasers.
As
      more
      specifically described in Item 1.01, the designation and issuance of the shares
      of Series B Preferred Stock materially affects the rights and powers of the
      holders of the Company's Common Stock in the following ways:
·
Each
                share of Series B Preferred Stock is convertible into 100 shares
                of Common
                Stock (subject to adjustment in the event of dilutive issuances,
                stock
                splits, combinations, certain dividends and distributions, and mergers,
                reorganizations or other similar recapitalization
                events).
4
·
Each
                  share of Series B Preferred Stock is entitled to vote on all matters
                  submitted to a vote of the holders of the Common Stock on an as-if
                  converted to common stock
                  basis.
·
Each
                  holder of Series B Preferred Stock is entitled to receive accruing
                  dividends with respect to each shares of Series B Preferred Stock
                  held by
                  such holder at a rate per annum of 4% of the base amount (defined
                  as the
                  original issue price of $17.00 per share plus the amount of accrued
                  but
                  unpaid dividends as calculated on each anniversary of the date
                  of issuance
                  of such Series B Preferred Stock shares). The Company may not pay
                  a
                  dividend to holders of Common Stock unless the accruing dividends
                  payable
                  with respect to the shares of Series B Preferred Stock have been
                  paid in
                  full and a similar dividend is paid with respect to each share
                  of Series B
                  Preferred Stock on an as-converted-to-Common Stock
                  basis.
·
Upon
                  the occurrence of a Liquidating Event, each holder of Series B
                  Preferred
                  Stock is entitled to a per-share liquidation preference equal to
                  the
                  greater of: (i) the amount that would have been payable on each
                  share of
                  Series B Preferred Stock had each share been converted into Common
                  Stock
                  immediately prior to such Liquidating Event, or (ii) $17.00 per
                  share
                  (adjusted to reflect any stock dividend, stock split, combination,
                  recapitalization or reorganization) plus all accruing dividends
                  and all
                  other declared but unpaid dividends. A merger or consolidation
                  of the
                  Company into another corporation or entity or the sale of all or
                  substantially all of the Company's assets will be deemed to be a
                  Liquidating Event unless otherwise decided by the majority vote
                  of the
                  then outstanding shares of the Series B Preferred
                  Stock.
Additionally,
      at any time when at least 25,000 shares of Series B Preferred Stock (subject
      to
      appropriate adjustment in the event of any stock dividend, stock split,
      combination or other similar recapitalization affecting such shares) are
      outstanding, the Company may not do any of the following without the written
      consent or affirmative vote of the holders of at least a majority of the then
      outstanding shares of Series B Preferred Stock: (i) effect any merger or
      consolidation of the Company; (ii) amend or repeal any provision of, or add
      any
      provision to, the Company's Certificate of Incorporation or By-laws if such
      action would alter or change the preferences, rights, privileges or powers
      of,
      or the restrictions provided for the benefit of, such Series B Preferred Stock;
      (iii) create, or authorize the creation of, or issue or obligate itself to
      issue
      shares of, or increase the authorized number of shares of, any additional class
      or series of capital stock unless the same ranks junior to the Series B
      Preferred Stock; (iv) acquire another entity by means of a purchase of all
      or a
      portion of the capital stock or assets of such entity for consideration in
      excess of $2,000,000; (v) liquidate, wind up, or dissolve the Company or adopt
      any plan for the same; (vi) effect any sale, lease, transfer, pledge or other
      disposition of assets of the Company or its subsidiaries, not in the ordinary
      course of business, unless the value of such assets; singly or in connection
      with any related series of transactions does not in the aggregate exceed
      $5,000,000; (vii) enter into any transaction with any officer, director or
      beneficial owner of five percent (5%) or more of the Common Stock; (viii)
      authorize or effect the issuance by the Company of any shares of capital stock
      or rights to acquire shares of capital stock pursuant to stock option, stock
      bonus or other employee stock plans for the benefit of the employees of the
      Corporation other than the issuance of options to purchase up to 20,000,000
      shares of Common Stock pursuant to the Company's existing stock option plan;
      (ix) incur any indebtedness for borrowed money in excess of $1,000,000
      outstanding at any time; (x) acquire any material assets of another person
      for
      consideration in excess of $2,000,000 other than in the ordinary course of
      business, or (xi) permit any subsidiary to do any of the foregoing. The
      protective provisions described above in subsections (iv)-(xi) will cease to
      be
      of further force and effect if the Purchasers fail to invest the Additional
      Investment Amount on or prior to November 30, 2006 for any reason other than
      the
      failure of the Company to convert at least 80% of the aggregate outstanding
      principal amount evidenced by the Promissory Notes into shares of Common Stock
      prior to November 30, 2006.
5
The
      Certificate is attached hereto as Exhibit 3(i) and is incorporated herein by
      reference. The foregoing description of the rights of the holders of Series
      B
      Preferred Stock does not purport to be complete and is qualified in its entirety
      by reference to such exhibit.
Item
      5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
      Year
The
      Company designated 350,000 shares of its authorized preferred stock as Series
      B
      Convertible Preferred Stock pursuant to the authority granted to the Board
      of
      Directors by the Company's Certificate of Incorporation, as amended. In
      connection with such designation, the Company filed the Certificate with the
      Secretary of State of the State of Delaware on July 31, 2006. A copy of the
      Certificate is attached hereto as Exhibit 3(i). Upon filing, the Certificate
      became a part of the Company's Certificate of Incorporation, as amended. The
      Certificate sets forth the voting powers, designation, preferences, limitations,
      restrictions and relative rights of the Series B Preferred Stock. The rights
      of
      the holders of the Series B Preferred Stock are described under Items 1.01
      and
      3.03 above.
The
      foregoing description of the Certificate does not purport to be complete and
      is
      qualified in its entirety by reference to Exhibit 3(i) which is incorporated
      herein by reference.
Item
      9.01 Financial Statements and Exhibits.
Exhibits
Exhibit
                Number
Description
3(i)
Certificate
                of the Powers, Designations, Preferences and Rights of the Series
                B
                Convertible Preferred Stock, Par Value $0.10 Per Share
4.1
Form
                of Warrant for Purchase of 3,750,000 Shares of Common Stock dated
                July 31,
                2006
4.2
Form
                of Warrant for Purchase of 5,073,530 Shares of Common Stock dated
                July 31,
                2006
10.1
Form
                of Subscription Agreement for Shares of Series B Convertible Preferred
                Stock dated as of July 31, 2006
99.1
Press
                Release issued by the Company on August 3,
                2006
6
Signatures
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.
Date:
              August 3, 2006
ELEMENT
              21 GOLF
              COMPANY
By:
/s/ Nataliya
              Hearn
Name:
              Nataliya Hearn
Title:
              President
7
Exhibit
      Index
Exhibit
                  Number
Description
3(i)
Certificate
                  of the Powers, Designations, Preferences and Rights of the Series
                  B
                  Convertible Preferred Stock, Par Value $0.10 Per Share
4.1
Form
                  of Warrant for Purchase of 3,750,000 Shares of Common Stock dated
                  July 31,
                  2006
4.2
Form
                  of Warrant for Purchase of 5,073,530 Shares of Common Stock dated
                  July 31,
                  2006
10.1
Form
                  of Subscription Agreement for Shares of Series B Convertible Preferred
                  Stock dated as of July 31, 2006
99.1
Press
                  Release issued by the Company on August 3,
                  2006
8