INFORMATION TO BE INCLUDED IN THE REPORT

Item 1.01. Entry into a Material Definitive Agreement

On March 18, 2005, we entered into a securities purchase agreement with two private investors with respect to the sale of shares of our common stock and warrants. The agreement provides for two types of units, designated as Series A and Series B, and for several closings.

The Series A Units each consist of 100,000 shares of our common stock and a Series A Warrant to purchase 50,000 shares of our common stock at $1.00 per share, subject to adjustment. The Series A Warrants expire five (5) years from the date they are issued. The purchase price for each Series A Unit is $80,000. The securities purchase agreement provides for the sale of up to twenty (20) Series A Units.

The Series B Units each consist of ten (10) shares of a new class of preferred stock that will be convertible into 80,000 shares of our common stock in the aggregate, subject to adjustment, and a Series B Warrant to purchase 40,000 shares of our common stock at $1.50 per share. The Series B Warrants expire five (5) years from the date they are issued. The purchase price for each Series B Unit is $80,000. The securities purchase agreement provides for the sale of up to forty-two (42) Series B Units.

We also entered into a registration rights agreement with the investors pursuant to which we must file a registration statement with the Securities and Exchange Commission within sixty (60) days after March 18, 2005. The registration statement will cover the resale of the shares of common stock issued and issuable under the securities purchase agreement as well as 37,500 shares of common stock issued to the lawyers for the investors in satisfaction of their legal fees, which we agreed to pay. We are obligated to use our best efforts to have the registration statement declared effective by the Commission as soon as possible after filing. This agreement includes liquidated damage provisions, payable in shares of our common stock, if the registration statement is not declared effective within 120 days following March 18, 2005.

Our certificate of incorporation does not currently authorize the issuance of preferred stock. Therefore, we will shortly call a special meeting of our stockholders seeking their approval to amend our certificate of incorporation to provide such authorization. The securities purchase agreement obligates us to file a preliminary proxy statement with the Commission within 15 days following March 18, 2005. Within 15 days after such filing or resolving any comments from the Commission, we are required to file a definitive proxy statement with the Commission and call a meeting of our stockholders. If we fail to make these filings on a timely basis or to obtain stockholder approval within 75 days after March 18, 2005, then the exercise price of the Series A Warrants will be reduced by one cent ($.01) for each day of delay, but not below five cents ($.05) per share.

An initial closing for eight (8) Series A Units was held on March 18, 2005, at which we issued 800,000 shares of common stock and Series A Warrants to purchase 400,000 shares of common stock for an aggregate purchase price of $640,000.

The subsequent closings under the securities purchase agreement are contingent upon our receipt of purchase orders from our customers, at the rate of one Unit for each $100,000 of such orders. The 12 remaining Series A Units will be purchased first, followed by the Series B Units. The obligation of the investors to purchase Units expires on March 17, 2006.