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    <div>&#160;</div>
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    <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: 14pt; 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;February 17, 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 align="center">
      <table cellpadding="0" cellspacing="0" width="50%">

          <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>
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    <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>
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          <tr>
            <td valign="bottom" width="27%" style="border-bottom: black thin solid;">
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            </td>
            <td width="3%">&#160;</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 width="3%">&#160;</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>
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              <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>
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            <td width="3%">&#160;</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 width="3%">&#160;</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 width="3%">&#160;</td>
            <td align="left" valign="middle" width="27%">&#160;</td>
            <td width="3%">&#160;</td>
            <td align="left" valign="middle" width="27%">&#160;</td>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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          <tr>
            <td valign="top" width="45%" 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">207
                Queens Quay W # 455, Toronto, Ontario, Canada </font></div>
            </td>
            <td width="5%">&#160;</td>
            <td valign="top" width="45%" 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">M5J
                1A7</font></div>
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          <tr>
            <td valign="top" width="45%">
              <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 width="5%">&#160;</td>
            <td valign="top" width="45%">
              <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>
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          <tr>
            <td valign="top" width="45%">
              <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 width="5%">&#160;</td>
            <td valign="top" width="45%">
              <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="45%">
              <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 width="5%">&#160;</td>
            <td valign="top" width="45%" 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="45%">
              <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 width="5%">&#160;</td>
            <td valign="top" width="45%">
              <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="45%">&#160;</td>
            <td width="5%">&#160;</td>
            <td align="left" valign="middle" width="45%">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" width="50%">

          <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>
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          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 27pt;"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></td>
            <td align="left" valign="bottom">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Written
                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425) </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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </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: 27pt;"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></td>
            <td align="left" valign="bottom">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Soliciting
                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12) </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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </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: 27pt;"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></td>
            <td align="left" valign="bottom">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b)) </font></div>
            </td>
          </tr>

      </table>
    </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>
      <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: 27pt;"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font></td>
            <td align="left" valign="bottom">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c)) </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div>
      <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="1">
      <hr style="MARGIN-TOP: -13px; COLOR: #000000" noshade size="4">
    </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">In
      consideration of past services rendered for the benefit of Element 21 Golf
      Company, a Delaware corporation (the &#8220;Company&#8221;), by certain stockholders, and
      money loaned in an aggregate to the Company by certain stockholders, the Company
      has entered into individual Series A Convertible Preferred Stock Exchange
      Agreements and Acknowledgements (collectively, the &#8220;Exchange Agreements&#8221;) with
      four (4) individual stockholders (&#8220;Series A Stockholders&#8221;) under which the
      Series A Stockholders are granted an aggregate amount of 2,113,556 shares of
      Series A Convertible Preferred Stock, par value $0.001 per share (&#8220;Series A
      Preferred Stock&#8221;) in full payment and satisfaction of the money loaned by and/or
      in consideration of the past services rendered by such Series A
      Stockholder.</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
      Exchange Agreements under which the Series A Preferred Stock was granted are
      dated as of February 22, 2006. Under the Exchange Agreements, each Series A
      Stockholder acknowledges the grant of the Series A Preferred Stock and in
      consideration of the grant, accepts the Series A Preferred Stock as payment
      in
      full of any debt and/or any salary or other consideration owing for money loaned
      or service rendered that was loaned or performed by the Series A Stockholder
      as
      of the date of the Exchange Agreement. The Company warrants that the Series
      A
      Preferred Stock will be, when delivered, duly authorized, validly issued, fully
      paid and non-assessable, and will be free and clear of all liens, obligations
      and encumbrances. Because the shares of Series A Preferred Stock were issued
      in
      exchange for outstanding debt and services previously rendered to the Company,
      the Company did not receive any proceeds in connection with the issuance of
      the
      Series A Preferred Stock. </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">A
      form of
      the Series A Convertible Preferred Stock Exchange Agreement and Acknowledgement
      is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
      The
      foregoing description of the Exchange Agreement does not purport to be complete
      and is qualified in its entirety by reference to such exhibit. For a more
      fulsome description of the terms and conditions of the Series A Preferred Stock,
      please see Items 3.03 and 5.03 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">Under
      one
      such Exchange Agreement by and among the Company and ASA Commerce, in addition
      to the Series A Preferred Stock granted thereunder, the Company issued a warrant
      exercisable for three years to purchase shares of the Company&#8217;s Common Stock
      (&#8220;ASA Warrant&#8221;). The ASA Warrant entitles ASA Commerce to purchase up to
      1,000,000 shares of the Company&#8217;s Common Stock at an exercise price of $.01 per
      share (&#8220;ASA Exercise Price&#8221;). The ASA Exercise Price is subject to adjustment
      from and after the date upon which the Equity Financing (as defined above)
      occurs, if at all, if the Company: (1) pays a dividend or makes a distribution
      on its shares of Common Stock in shares of Common Stock or (2) subdivides or
      reclassifies its outstanding Common Stock into a greater number of shares.
      The
      ASA Warrant is attached hereto as Exhibit 4.6 and 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
      2.03 Creation of a Direct Financial Obligation or an Obligation under an
      Off-Balance Sheet Arrangement of a Registrant</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: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      or
      after February 17, 2006, the Company issued 10% Convertible Promissory Notes
      (each a &#8220;Note&#8221; and collectively, the &#8220;Notes&#8221;) in the aggregate principal face
      amount of $450,000 to thirteen individual investors (each a &#8220;Purchaser&#8221; and
      collectively, the &#8220;Purchasers&#8221;). Each Purchaser also received three separate
      warrants (a warrant exercisable for one year, a warrant exercisable for two
      years, and a warrant exercisable for three years) to purchase shares of the
      Company&#8217;s Common Stock (each a &#8220;Warrant&#8221; and collectively, the &#8220;Warrants&#8221;). Each
      Warrant entitles a Purchaser to invest an amount equal to the Purchaser&#8217;s
      investment in the Notes in additional shares of the Company&#8217;s Common Stock. The
      exercise price of each Warrant (other than the warrant issued to Oleg Muzyrya
      which is attached hereto as Exhibit 4.5) is equal to either (i) the twenty
      day
      trading average of shares of the Company&#8217;s Common Stock on the OTC Bulletin
      Board prior to the date of exercise, or (ii) from and after the date upon which
      the Equity Financing (as defined below) occurs, if at all, the price per share
      paid by participants in the Equity Financing. Each of the Warrants issued to
      Oleg Muzyrya represents the right to purchase 1,081,081 shares of the Company&#8217;s
      Common Stock at an exercise price of $0.17 per share, subject to adjustment
      in
      the case of certain recapitalizations transactions or dilutive issuances.
      Additionally, the Warrants issued to Oleg Muzyrya may only be exercised after
      the consummation of the Equity Financing as defined 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 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="2">
        </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
      Notes
      mature one year after issuance and accrue interest at an annual interest rate
      equal to 10% per annum, payable at maturity. From and after the date upon which
      the Company consummates an equity financing of at least $5,000,000 (the &#8220;Equity
      Financing&#8221;), each Note (other than the Note issued to Oleg Muzyrya which is
      attached hereto as Exhibit 4.3) may be converted, at the option of the Purchaser
      holding such Note, into shares of the same class and series as those issued
      pursuant to the Equity Financing and pursuant to the same terms and conditions
      as those in the Equity Financing including the price per share paid by
      participants in the Equity Financing. The Note issued to Oleg Muzyrya may be
      converted, at the option of Mr. Muzyrya, into shares of the same class and
      series as those issued pursuant to the Equity Financing and pursuant to the
      same
      terms and conditions as those in the Equity Financing except that the per share
      price to be paid by Mr. Muzyrya upon such conversion will be $0.17 per share.
      The principal amount of the Note and any interest accrued thereon may be prepaid
      at any time by the Company.</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">Upon
      the
      occurrence of an &#8220;Event of Default&#8221; (as defined in each Note), the principal
      amount of the Notes and accrued and unpaid interest thereon may become
      immediately due and payable by the Company. Such Events of Default include:
      (i)
      the Company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      fails to
      pay any monetary obligation due under the Note after having received three
      (3)
      business days prior written notice that such obligation has become due; (ii)
      the
      Company fails, for three (3) days after written notice, to comply with any
      other
      material term, condition, covenant, or agreement in the Note; (iii) the Company
      becomes insolvent, makes an assignment for the benefit of creditors, calls
      a
      meeting of its creditors to obtain any general financial accommodation or
      suspends business; or (iv) a case under the Bankruptcy Code is commenced by
      or
      against the Company or a liquidator, trustee, custodian or similar officer
      is
      appointed for all or a material portion of the Company's assets, and such case
      is not dismissed or such appointment is not rescinded within thirty (30) days
      thereafter.</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"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      form of
      the 10% Convertible Promissory Note is attached hereto as Exhibit 4.2 and a
      form
      of the Warrants is attached hereto as Exhibit 4.4 the 10% Convertible Promissory
      Note purchased by Oleg Muzyrya is attached hereto as Exhibit 4.3 and a form
      of
      the Warrants issued to Oleg Muzyrya is attached hereto as Exhibit 4.5; each
      of
      the foregoing is incorporated herein by reference. The foregoing descriptions
      of
      the Notes and Warrants do not purport to be complete and each such description
      is qualified in its entirety by reference to Exhibits 4.2 through 4.5.
</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"><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="justify"><font id="TAB1" style="MARGIN-LEFT: 54pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described above, the Company granted an aggregate of [1,813,556] shares of
      Series A Preferred Stock to certain Series A Stockholders. The date of grant,
      title, description, amount granted, nature of the grant, nature and aggregate
      amount of consideration received by the Company and terms of conversion of
      the
      Series A Preferred Stock are described under Item 1.01 above and Items 3.03
      and
      5.03 below. The Series A Preferred Stock was not registered under the Securities
      Act of 1933, as amended (&#8220;Securities Act&#8221;). Each share of the Series A Preferred
      Stock carries a liquidation preference equal to $1.00 (subject to adjustment
      in
      certain instances) and may be converted into such number of shares of the
      Company&#8217;s Common Stock as shall initially be determined by dividing $1.00 by
      $0.255 (subject to adjustment in certain instances). The issuance of shares
      of
      Common Stock issued upon conversion of shares of Series A Preferred Stock will
      be made without registration under the Securities Act. The offer and sale of
      the
      Series A Preferred Stock to the Series A Stockholders was (and we anticipate
      that the issuance of Common Stock upon conversion of the Series A Preferred
      Stock, if any, will be) exempt from 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. We relied on the following facts in determining
      that
      the grant of the Series A Preferred Stock 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="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="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </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
              grant satisfied the terms and conditions of Rule 501 and 502 under
              the
              Securities Act; and</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>
    <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 were
              granted Series A Preferred Stock under the Exchange Agreements, 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: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Notes, Warrants and ASA Warrant were not registered under the Securities Act.
      The date, title and amount of securities sold, as well as the total offering
      price and the terms of conversion of the Notes, and the terms relating to the
      exercise of the ASA Warrant and the Warrants, are described under Items 1.01
      and
      2.03 above. The offer and sale of the Notes and Warrants to the Purchasers
      and
      the grant of the ASA Warrant to ASA Commerce were exempt from the registration
      requirements of Section 5 of the Securities Act, as amended, pursuant to Section
      4(2) of the Securities Act and Rule 506 of Regulation D thereunder. We relied
      on
      the following facts in determining that the offer and sale of the Notes, the
      ASA
      Warrant and the 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="justify"><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>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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">Pursuant
              to Rule 506 under the Securities Act, no more than 35 purchasers purchased
              securities from us under both the offer and the sale, 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: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      discussed below in Item 5.03, the Company has designated 2,200,000 shares of
      preferred stock authorized as Series A Preferred Stock under a Certificate
      of
      Designations. The Company has granted an aggregate of 2,113,556 shares of such
      Series A Preferred Stock to certain Series A Stockholders, as described in
      Item
      1.01 above. The designation and issuance of the Series A Preferred Stock
      materially affects the rights and powers of the holders of the Company&#8217;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"><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">Each
              share of Series A Preferred Stock is convertible at the holder's option,
              in whole or in part, at any time after such share is issued, into a
              number
              of shares of Common Stock which is obtained by dividing the $1.00 original
              issue price by the conversion price applicable to such share. The current
              conversion price of the Series A preferred stock is $0.255 per share.
              The
              conversion price is subject to adjustment to reflect any stock split,
              stock dividend, combination, recapitalization or
              reorganization.</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>
    <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">Each
              share of Series A Preferred Stock issued and outstanding shall have
              the
              right to fifty (50) votes on all matters.
</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>
    <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 the Certificate of Designations, the Series A Preferred Stock will
              receive dividends in preference and priority to any payment of any
              dividend on any share of Common Stock or any other stock ranking junior
              to
              the Series A Preferred Stock in dividends or liquidation rights.
              </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 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="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">&#160;</div>
      </div>
    </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">In
              the event of any liquidation, dissolution or winding up of the affairs
              of
              the Company, voluntarily or involuntarily, holders of shares of Series
              A
              Preferred Stock will be entitled to receive pro rata a preferential
              amount
              equal to $1.00 per share (adjusted to reflect any stock split, stock
              dividend, combination, recapitalization or reorganization) of Series
              A
              Preferred Stock held by them plus all declared but unpaid dividends
              (&#8220;Series A Preferred Stock Liquidation Preference&#8221;). If, upon such
              liquidation, dissolution, winding up, merger or consolidation of the
              Company with or into another corporation or entity or the sale of all
              or
              substantially all the assets of the Company, the assets of the Corporation
              are insufficient to provide for the payment of the Series A Preferred
              Stock Liquidation Preference for each share of Series A Preferred Stock
              outstanding, any assets that are available will be paid out pro rata
              among
              the Series A Preferred Stock and no payment will be made to the holders
              of
              Junior Shares. </font></div>
          </td>
        </tr>

    </table>
    <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 id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Certificate of the Powers, Designations, Preferences and Rights of the Series
      A
      Preferred Stock is attached hereto as Exhibit 4.1 and is incorporated herein
      by
      reference. The foregoing description of the Certificate of Designations 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">&#160;</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: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has designated 2,200,000 shares of preferred stock authorized as Series
      A Preferred Stock pursuant to the authority granted to the Board of Directors
      by
      the Certificate of Incorporation, as amended. In connection with the issuance
      of
      the Series A Preferred Stock, the Company filed a Certificate of the Powers,
      Designations, Preferences and Rights of the Series A Preferred Stock (the
&#8220;Certificate&#8221;) with the Secretary of State of the State of Delaware on February
      22, 2006 attached hereto as Exhibit 4.1. Upon filing, the Certificate became
      a
      part of the Company&#8217;s Certificate of Incorporation, as amended. The Certificate
      sets forth the voting powers, designation, preferences, limitations,
      restrictions and relative rights of the Series A Preferred Stock. The rights
      of
      the holders of the Series A Preferred Stock are described under Item 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 4.1.</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">Exhibits</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: #ffffff 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><u>Exhibit
                Number</u></strong></font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%" style="border-bottom: #ffffff 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><u>Description</u></strong></font></div>
            </td>
          </tr>
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            <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%">
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            </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 Series A
                Convertible Preferred Stock, $.001 Par Value 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">4.2</font></div>
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            <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 10% Convertible Promissory Note issued to Purchasers</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">4.3</font></div>
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            <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">10%
                Convertible Promissory Note issued to Oleg Muzyrya</font></div>
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          </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">4.4</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 issued to Purchasers</font></div>
            </td>
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          <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">4.5</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 issued to Oleg Muzyrya</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">4.6</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">Warrant
                issued to ASA Commerce</font></div>
            </td>
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          <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">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 Series A Convertible Preferred Stock Exchange Agreement and
                Acknowledgment</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: ">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </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:
              February 23, 2006</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 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="2">
        </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><u>Exhibit
      Index</u></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: medium none;">
              <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><u>Exhibit
                Number</u></strong></font></div>
            </td>
            <td width="5%">&#160;</td>
            <td align="left" valign="top" width="56%" style="border-bottom: medium none;">
              <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><u>Description</u></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">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">Certificate
                of the Powers, Designations, Preferences and Rights of Series A
                Convertible Preferred Stock, $.001 Par Value 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">4.2</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 10% Convertible Promissory Note issued to Purchasers</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">4.3</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">10%
                Convertible Promissory Note issued to Oleg Muzyrya</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">4.4</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 issued to Purchasers</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">4.5</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 issued to Oleg Muzyrya</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">4.6</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">Warrant
                issued to ASA Commerce</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">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 Series A Convertible Preferred Stock Exchange Agreement and
                Acknowledgment</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <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">
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{"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": "06640737"}, "business-address": {"street1": "340 GRANITE STREET", "street2": "SUITE 200", "city": "MANCHESTER", "state": "NH", "zip": "03102-4004", "phone": "6036418443"}, "mail-address": {"street1": "340 GRANITE STREET", "street2": "SUITE 200", "city": "MANCHESTER", "state": "NH", "zip": "13102-4004"}, "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):  February 17, 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.)
207
                Queens Quay W # 455, Toronto, Ontario, Canada
M5J
                1A7
(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
In
      consideration of past services rendered for the benefit of Element 21 Golf
      Company, a Delaware corporation (the "Company"), by certain stockholders, and
      money loaned in an aggregate to the Company by certain stockholders, the Company
      has entered into individual Series A Convertible Preferred Stock Exchange
      Agreements and Acknowledgements (collectively, the "Exchange Agreements") with
      four (4) individual stockholders ("Series A Stockholders") under which the
      Series A Stockholders are granted an aggregate amount of 2,113,556 shares of
      Series A Convertible Preferred Stock, par value $0.001 per share ("Series A
      Preferred Stock") in full payment and satisfaction of the money loaned by and/or
      in consideration of the past services rendered by such Series A
      Stockholder.
The
      Exchange Agreements under which the Series A Preferred Stock was granted are
      dated as of February 22, 2006. Under the Exchange Agreements, each Series A
      Stockholder acknowledges the grant of the Series A Preferred Stock and in
      consideration of the grant, accepts the Series A Preferred Stock as payment
      in
      full of any debt and/or any salary or other consideration owing for money loaned
      or service rendered that was loaned or performed by the Series A Stockholder
      as
      of the date of the Exchange Agreement. The Company warrants that the Series
      A
      Preferred Stock will be, when delivered, duly authorized, validly issued, fully
      paid and non-assessable, and will be free and clear of all liens, obligations
      and encumbrances. Because the shares of Series A Preferred Stock were issued
      in
      exchange for outstanding debt and services previously rendered to the Company,
      the Company did not receive any proceeds in connection with the issuance of
      the
      Series A Preferred Stock.
A
      form of
      the Series A Convertible Preferred Stock Exchange Agreement and Acknowledgement
      is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
      The
      foregoing description of the Exchange Agreement does not purport to be complete
      and is qualified in its entirety by reference to such exhibit. For a more
      fulsome description of the terms and conditions of the Series A Preferred Stock,
      please see Items 3.03 and 5.03 below.
Under
      one
      such Exchange Agreement by and among the Company and ASA Commerce, in addition
      to the Series A Preferred Stock granted thereunder, the Company issued a warrant
      exercisable for three years to purchase shares of the Company's Common Stock
      ("ASA Warrant"). The ASA Warrant entitles ASA Commerce to purchase up to
      1,000,000 shares of the Company's Common Stock at an exercise price of $.01 per
      share ("ASA Exercise Price"). The ASA Exercise Price is subject to adjustment
      from and after the date upon which the Equity Financing (as defined above)
      occurs, if at all, if the Company: (1) pays a dividend or makes a distribution
      on its shares of Common Stock in shares of Common Stock or (2) subdivides or
      reclassifies its outstanding Common Stock into a greater number of shares.
      The
      ASA Warrant is attached hereto as Exhibit 4.6 and is incorporated herein by
      reference.
Item
      2.03 Creation of a Direct Financial Obligation or an Obligation under an
      Off-Balance Sheet Arrangement of a Registrant
On
      or
      after February 17, 2006, the Company issued 10% Convertible Promissory Notes
      (each a "Note" and collectively, the "Notes") in the aggregate principal face
      amount of $450,000 to thirteen individual investors (each a "Purchaser" and
      collectively, the "Purchasers"). Each Purchaser also received three separate
      warrants (a warrant exercisable for one year, a warrant exercisable for two
      years, and a warrant exercisable for three years) to purchase shares of the
      Company's Common Stock (each a "Warrant" and collectively, the "Warrants"). Each
      Warrant entitles a Purchaser to invest an amount equal to the Purchaser's
      investment in the Notes in additional shares of the Company's Common Stock. The
      exercise price of each Warrant (other than the warrant issued to Oleg Muzyrya
      which is attached hereto as Exhibit 4.5) is equal to either (i) the twenty
      day
      trading average of shares of the Company's Common Stock on the OTC Bulletin
      Board prior to the date of exercise, or (ii) from and after the date upon which
      the Equity Financing (as defined below) occurs, if at all, the price per share
      paid by participants in the Equity Financing. Each of the Warrants issued to
      Oleg Muzyrya represents the right to purchase 1,081,081 shares of the Company's
      Common Stock at an exercise price of $0.17 per share, subject to adjustment
      in
      the case of certain recapitalizations transactions or dilutive issuances.
      Additionally, the Warrants issued to Oleg Muzyrya may only be exercised after
      the consummation of the Equity Financing as defined below.
2
The
      Notes
      mature one year after issuance and accrue interest at an annual interest rate
      equal to 10% per annum, payable at maturity. From and after the date upon which
      the Company consummates an equity financing of at least $5,000,000 (the "Equity
      Financing"), each Note (other than the Note issued to Oleg Muzyrya which is
      attached hereto as Exhibit 4.3) may be converted, at the option of the Purchaser
      holding such Note, into shares of the same class and series as those issued
      pursuant to the Equity Financing and pursuant to the same terms and conditions
      as those in the Equity Financing including the price per share paid by
      participants in the Equity Financing. The Note issued to Oleg Muzyrya may be
      converted, at the option of Mr. Muzyrya, into shares of the same class and
      series as those issued pursuant to the Equity Financing and pursuant to the
      same
      terms and conditions as those in the Equity Financing except that the per share
      price to be paid by Mr. Muzyrya upon such conversion will be $0.17 per share.
      The principal amount of the Note and any interest accrued thereon may be prepaid
      at any time by the Company.
Upon
      the
      occurrence of an "Event of Default" (as defined in each Note), the principal
      amount of the Notes and accrued and unpaid interest thereon may become
      immediately due and payable by the Company. Such Events of Default include:
      (i)
      the Company
fails to
      pay any monetary obligation due under the Note after having received three
      (3)
      business days prior written notice that such obligation has become due; (ii)
      the
      Company fails, for three (3) days after written notice, to comply with any
      other
      material term, condition, covenant, or agreement in the Note; (iii) the Company
      becomes insolvent, makes an assignment for the benefit of creditors, calls
      a
      meeting of its creditors to obtain any general financial accommodation or
      suspends business; or (iv) a case under the Bankruptcy Code is commenced by
      or
      against the Company or a liquidator, trustee, custodian or similar officer
      is
      appointed for all or a material portion of the Company's assets, and such case
      is not dismissed or such appointment is not rescinded within thirty (30) days
      thereafter.
A
      form of
      the 10% Convertible Promissory Note is attached hereto as Exhibit 4.2 and a
      form
      of the Warrants is attached hereto as Exhibit 4.4 the 10% Convertible Promissory
      Note purchased by Oleg Muzyrya is attached hereto as Exhibit 4.3 and a form
      of
      the Warrants issued to Oleg Muzyrya is attached hereto as Exhibit 4.5; each
      of
      the foregoing is incorporated herein by reference. The foregoing descriptions
      of
      the Notes and Warrants do not purport to be complete and each such description
      is qualified in its entirety by reference to Exhibits 4.2 through 4.5.
Item
      3.02 Unregistered Sales of Equity Securities
As
      described above, the Company granted an aggregate of [1,813,556] shares of
      Series A Preferred Stock to certain Series A Stockholders. The date of grant,
      title, description, amount granted, nature of the grant, nature and aggregate
      amount of consideration received by the Company and terms of conversion of
      the
      Series A Preferred Stock are described under Item 1.01 above and Items 3.03
      and
      5.03 below. The Series A Preferred Stock was not registered under the Securities
      Act of 1933, as amended ("Securities Act"). Each share of the Series A Preferred
      Stock carries a liquidation preference equal to $1.00 (subject to adjustment
      in
      certain instances) and may be converted into such number of shares of the
      Company's Common Stock as shall initially be determined by dividing $1.00 by
      $0.255 (subject to adjustment in certain instances). The issuance of shares
      of
      Common Stock issued upon conversion of shares of Series A Preferred Stock will
      be made without registration under the Securities Act. The offer and sale of
      the
      Series A Preferred Stock to the Series A Stockholders was (and we anticipate
      that the issuance of Common Stock upon conversion of the Series A Preferred
      Stock, if any, will be) exempt from 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. We relied on the following facts in determining
      that
      the grant of the Series A Preferred Stock qualified for the exemption provided
      by Rule 506:
3
·
The
              grant 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 were
              granted Series A Preferred Stock under the Exchange Agreements, as
              determined in accordance with Rule 501(e) under the Securities
              Act.
The
      Notes, Warrants and ASA Warrant were not registered under the Securities Act.
      The date, title and amount of securities sold, as well as the total offering
      price and the terms of conversion of the Notes, and the terms relating to the
      exercise of the ASA Warrant and the Warrants, are described under Items 1.01
      and
      2.03 above. The offer and sale of the Notes and Warrants to the Purchasers
      and
      the grant of the ASA Warrant to ASA Commerce were exempt from the registration
      requirements of Section 5 of the Securities Act, as amended, pursuant to Section
      4(2) of the Securities Act and Rule 506 of Regulation D thereunder. We relied
      on
      the following facts in determining that the offer and sale of the Notes, the
      ASA
      Warrant and the 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
              securities from us under both the offer and the sale, 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 2,200,000 shares of
      preferred stock authorized as Series A Preferred Stock under a Certificate
      of
      Designations. The Company has granted an aggregate of 2,113,556 shares of such
      Series A Preferred Stock to certain Series A Stockholders, as described in
      Item
      1.01 above. The designation and issuance of the Series A 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 A Preferred Stock is convertible at the holder's option,
              in whole or in part, at any time after such share is issued, into a
              number
              of shares of Common Stock which is obtained by dividing the $1.00 original
              issue price by the conversion price applicable to such share. The current
              conversion price of the Series A preferred stock is $0.255 per share.
              The
              conversion price is subject to adjustment to reflect any stock split,
              stock dividend, combination, recapitalization or
              reorganization.
·
Each
              share of Series A Preferred Stock issued and outstanding shall have
              the
              right to fifty (50) votes on all matters.
·
Pursuant
              to the Certificate of Designations, the Series A Preferred Stock will
              receive dividends in preference and priority to any payment of any
              dividend on any share of Common Stock or any other stock ranking junior
              to
              the Series A Preferred Stock in dividends or liquidation rights.
4
·
In
              the event of any liquidation, dissolution or winding up of the affairs
              of
              the Company, voluntarily or involuntarily, holders of shares of Series
              A
              Preferred Stock will be entitled to receive pro rata a preferential
              amount
              equal to $1.00 per share (adjusted to reflect any stock split, stock
              dividend, combination, recapitalization or reorganization) of Series
              A
              Preferred Stock held by them plus all declared but unpaid dividends
              ("Series A Preferred Stock Liquidation Preference"). If, upon such
              liquidation, dissolution, winding up, merger or consolidation of the
              Company with or into another corporation or entity or the sale of all
              or
              substantially all the assets of the Company, the assets of the Corporation
              are insufficient to provide for the payment of the Series A Preferred
              Stock Liquidation Preference for each share of Series A Preferred Stock
              outstanding, any assets that are available will be paid out pro rata
              among
              the Series A Preferred Stock and no payment will be made to the holders
              of
              Junior Shares.
The
      Certificate of the Powers, Designations, Preferences and Rights of the Series
      A
      Preferred Stock is attached hereto as Exhibit 4.1 and is incorporated herein
      by
      reference. The foregoing description of the Certificate of Designations 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 has designated 2,200,000 shares of preferred stock authorized as Series
      A Preferred Stock pursuant to the authority granted to the Board of Directors
      by
      the Certificate of Incorporation, as amended. In connection with the issuance
      of
      the Series A Preferred Stock, the Company filed a Certificate of the Powers,
      Designations, Preferences and Rights of the Series A Preferred Stock (the
"Certificate") with the Secretary of State of the State of Delaware on February
      22, 2006 attached hereto as Exhibit 4.1. 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 A Preferred Stock. The rights
      of
      the holders of the Series A Preferred Stock are described under Item 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 4.1.
Item
      9.01 Financial Statements and Exhibits.
Exhibits
Exhibit
                Number
Description
4.1
Certificate
                of the Powers, Designations, Preferences and Rights of Series A
                Convertible Preferred Stock, $.001 Par Value Per Share
4.2
Form
                of 10% Convertible Promissory Note issued to Purchasers
4.3
10%
                Convertible Promissory Note issued to Oleg Muzyrya
4.4
Form
                of Warrant issued to Purchasers
4.5
Form
                of Warrant issued to Oleg Muzyrya
4.6
Warrant
                issued to ASA Commerce
10.1
Form
                of Series A Convertible Preferred Stock Exchange Agreement and
                Acknowledgment
5
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:
              February 23, 2006
ELEMENT
              21 GOLF
              COMPANY
By:
/s/ Nataliya
              Hearn
Name:
              Nataliya Hearn
Title:
              President
6
Exhibit
      Index
Exhibit
                Number
Description
4.1
Certificate
                of the Powers, Designations, Preferences and Rights of Series A
                Convertible Preferred Stock, $.001 Par Value Per Share
4.2
Form
                of 10% Convertible Promissory Note issued to Purchasers
4.3
10%
                Convertible Promissory Note issued to Oleg Muzyrya
4.4
Form
                of Warrant issued to Purchasers
4.5
Form
                of Warrant issued to Oleg Muzyrya
4.6
Warrant
                issued to ASA Commerce
10.1
Form
                of Series A Convertible Preferred Stock Exchange Agreement and
                Acknowledgment
7