$DIRV Form 8-K

The Note shall mature on April 8, 2016 (the “Maturity Date”) and shall accrue interest at an annual rate equal to 10%. The Principal Amount and interest shall be paid on the Maturity Date (or sooner as provided in the Note), in cash or, in shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”). In accordance with the terms of the Note, the Investor shall be entitled to convert a portion or all of the Principal Amount and interest due and outstanding under the Note into shares of Common Stock equal to 55% of the lowest traded price in the prior twenty five (25) trading days.

The Investor shall not have the right to convert any portion of the Note to the extent that after giving effect to such conversion, the Investor (together with any affiliate of the Investor) would beneficially own more than 4.99% of the then issued and outstanding shares of Common Stock of the Company (the “Beneficial Ownership Amount”). Upon 61 days’ prior notice to the Company, the Investor may increase or decrease the Beneficial Ownership Amount not to exceed 9.99% of the issued and outstanding shares of Common Stock of the Company.

The securities issued pursuant to the SPA were not registered under the Securities Act of 1933, as amended (the “Securities Act”), but qualified for exemption under Section 4(a)(2) of the Securities Act. The securities were exempt from registration under Section 4(a)(2) of the Securities Act because the issuance of such securities by the Company did not involve a “public offering,” as defined in Section 4(a)(2) of the Securities Act, due to the insubstantial number of persons involved in the transaction, size of the offering, and manner of the offering and number of securities offered. The Company did not undertake an offering in which it sold a high number of securities to a high number of investors. In addition, the Investor had the necessary investment intent as required by Section 4(a)(2) of the Securities Act since they agreed to, and received, the securities bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, the Company has met the requirements to qualify for exemption under
Section 4(a)(2) of the Securities Act.

(b) Not applicable.

(c) Not applicable.

(d) Exhibit No. Description:

EXHIBIT        DESCRIPTION

Exhibit 10.1   Form of Securities Purchase Agreement

Exhibit 10.2   Form of 5% Original Issue Discount Senior Secured Convertible
               Promissory Note

Exhibit 10.3   Form of Guaranty and Pledge Agreement

Exhibit 10.4   Form of Security Agreement

Exhbit 10.5    Form of Subsidiary Guarantee