Arkados Group, Inc. (OTCMKTS:AKDS) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement.

(a)Acquisition of SolBright Renewable Energy,
LLC

On May 1, 2017, Arkados Group, Inc., a Delaware corporation (the
Company) completed an acquisition (the Asset Purchase) to an
Asset Purchase Agreement dated May 1, 2017 (the Asset Purchase
Agreement) with SolBright Renewable Energy, LLC (SolBright), to
which the Company has acquired substantially all of the assets,
and certain specified liabilities, of SolBright used in the
operation of SolBrights solar engineering, procurement and
construction business (the SolBright Assets, the transaction
shall collectively be referred to herein as the Acquisition). The
Asset Purchase Agreement and the Acquisition were approved by the
board of directors of the Company and the sole manager and
members of SolBright.

In consideration for the purchase of the SolBright Assets, the
Company delivered to SolBright (i) $3,000,000 in cash (the Cash
Payment), (ii) a Senior Secured Promissory Note in the principal
amount of $2,000,000 (the Secured Promissory Note), described
below, (iii) a Convertible Promissory Note in the principal
amount of $6,000,000 (Preferred Stock Note), described below, and
(iv) the Common Stock Consideration, described below.

The Secured Promissory Note matures on May 1, 2020 barring any
events of default, an equity financing in which the Company
issues equity securities which yield gross cash proceeds to the
Company of at least $10,000,000 (excluding redeemable or
convertible notes) or a change of control of the Company. The
Company shall make prepayments of principal on a quarterly basis
to the terms of the Secured Promissory Note if such funds are
available. The Secured Promissory Note bears interest at 15% per
annum, payable on a quarterly basis with the first payment due on
May 31, 2017. The Secured Promissory Note is secured with a
second priority lien on the accounts receivable of the Company
relating to the solar engineering, procurement and construction
business of SolBright acquired by the Company to the Asset
Purchase Agreement, with such lien being junior only to the first
priority security position granted to the Note Purchase Agreement
and the Security Agreement, both dated May 1, 2017, described in
(b) below.

The Preferred Stock Note matures on July 31, 2018 barring any
demands following an event of default, provided that the Company
shall make prepayments of principal on a quarterly basis to the
terms of the Preferred Stock Note if such funds are available.
The Preferred Stock Note bears interest at 4% per annum, provided
that upon and during an event of default it shall bear interest
at 12% per annum. Interest is payable quarterly in arrears
commencing on May 1, 2017 and on the first business day of each
August, November, February and May thereafter. The Preferred
Stock Note will automatically convert on the date that the
Companys Certificate of Designation is filed with the State of
Delawares Secretary of State and becomes effective into a number
of shares of the Companys Series A 4% Convertible Preferred
Stock, par value $0.0001 per share, equal to the outstanding
principal and interest on the Preferred Stock Note divided by
$1.50 per share, as adjusted for any stock splits, stock
dividends, recapitalizations, combinations and the like that may
occur prior to such conversion. The Company has agreed in the
Asset Purchase Agreement to take the actions required for the
automatic conversion of the Preferred Stock Note promptly
following the closing of the Asset Purchase.

In connection with the Asset Purchase Agreement, and in addition
to the consideration represented by the Cash Payment, the Secured
Promissory Note and the Preferred Stock Note, the Company issued
to SolBright 4,000,000 shares of Companys common stock at one
dollar per share (the Common Stock Consideration). The Common
Stock Consideration is subject to antidilution protection if,
within 120 days of the closing of the Asset Purchase, the Company
sells shares of its common stock at a price per share that is
less than one dollar per share, in which case the Company shall
issue additional shares of common stock to SolBright so that the
total number of shares the Company has issued to SolBright equals
$4,000,000 divided by such lower price per share.

The Asset Purchase Agreement contained customary representations,
warranties and covenants of the Company and SolBright.

A copy of the Asset Purchase Agreement, Secured Promissory Note
and the Preferred Stock Note are attached as Exhibits 2.1, 10.1
and 10.2, respectively, to this Current Report on Form 8-K and
are incorporated herein by reference. The foregoing description
of the Asset Purchase Agreement, Secured Promissory Note and the
Preferred Stock Note is qualified in its entirety by reference to
the full text of the Asset Purchase Agreement, Secured Promissory
Note and the Preferred Stock Note filed with this Current Report
on Form 8-K.

The Asset Purchase Agreement has been included to provide
investors with information regarding the terms of the
transactions contemplated thereby. The Asset Purchase Agreement
is not intended to provide any other factual information about
the Company, SolBright or their respective subsidiaries or
affiliates. The Asset Purchase Agreement contains representations
and warranties of the Company and SolBright. The assertions
embodied in those representations and warranties were made for
purposes of the Asset Purchase Agreement and are qualified by
information in confidential disclosure schedules that the parties
have exchanged in connection with the execution of the Asset
Purchase Agreement. The disclosure schedules contain information
that modifies, qualifies and creates exceptions to the
representations and warranties set forth in the Asset Purchase
Agreement. In addition, certain representations and warranties
were made as of a specific date may be subject to a contractual
standard of materiality different from what an investor might
view as material, or may have been used for purposes of
allocating risk between the respective parties rather than
establishing matters as facts. Accordingly, you should read the
representations and warranties in the Asset Purchase Agreement
not in isolation but only in conjunction with the other
information about the Company, SolBright and their respective
subsidiaries that are included in reports, statements and other
filings made by the Company with the Securities and Exchange
Commission (the SEC).

(b)AIP Financing

On May 1, 2017, the Company completed a financing transaction
with AIP Asset Management Inc. (the Security Agent), AIP Global
Macro Fund, LP (AGMF), AIP Global Macro Class (AGMC) and AIP
Canadian Enhance Income Class (ACEIC and together with AGMF and
AGMC, collectively, AIP), to which the Company raised additional
capital by issuing 10% Secured Convertible Promissory Notes (the
10% Notes) in the aggregate principal amount of $2,500,000 to AIP
and AIP Private Capital Inc. (collectively, the Holders) in
accordance with the terms of the Note Purchase Agreement dated
May 1, 2017 (the Purchase Agreement) with AIP (the AIP
Financing). In connection with the issuance of the 10% Notes, the
Company and its subsidiaries entered into a Security Agreement
dated May 10, 2017 (the Security Agreement) with the Security
Agent, to which the Company granted the Security Agent a security
interest in substantially all assets of the Company and its
subsidiaries. In addition, to the Note Purchase Agreement, the
Company issued warrants (the AIP Warrants) to the Holders to
purchase 2,500,000 shares of the Companys common stock, subject
to adjustment for certain events, such as stock splits and stock
dividends, at an exercise price of $1.00 per share, and which
have three year terms.

The principal amount of the 10% Notes exceeds the cash
consideration paid by the Holders for such notes, with such
excess representing a 15% original issue discount. The 10% Notes
mature on May 1, 2018 unless earlier converted to the terms of
the Purchase Agreement. The 10% Notes bear interest at 10% per
annum, provided that during an Event of Default (as defined in
the Purchase Agreement) it shall bear interest at 20% per annum,
payable on a monthly basis. The 10% Notes are secured with a
first priority lien as set forth in the Security Agreement. The
outstanding principal and interest under the 10% Notes is
convertible at the option of the Holder of each Note into shares
of the Companys common stock at $0.80 per share, or $0.60 if the
Company has not raised $500,000 in the 90 days following the
closing, or, upon an uncured Event of Default (as defined in the
Purchase Agreement), the lesser of the closing bid of the
Companys common stock on the day notice of conversion is given or
75 percent of the price of Shares in any registered offering.

In connection with the AIP Financing, the Company and the Holders
entered into a Registration Rights Agreement under which the
Company is required, in no event later than 75 calendar days
after the closing of the AIP Financing, to file a registration
statement with the SEC covering the resale of the shares of the
Companys common stock issuable to the 10% Notes and the Warrants
and to use reasonable best efforts to have the registration
declared effective as soon as practicable, but in no event later
than 120 days after the closing of the AIP Financing. The Company
will be subject to certain monetary penalties, as set forth in
the Registration Rights Agreement, if the registration statement
is not filed, does not become effective on a timely basis, or
does not remain available for the resale (subject to certain
allowable grace periods) of the Registrable Securities, as such
term is defined in the Registration Rights Agreement.

The foregoing does not purport to be a complete description of
the Purchase Agreement, the 10% Notes, the Security Agreement,
the Registration Rights Agreement or the AIP Warrants and is
qualified in its entirety by reference to the full text of such
documents, which are filed as Exhibits 10.3, 10.4, 10.5, 10.6,
and 10.7, respectively, hereto.

(c)Note and Warrant Financing

On May 1, 2017, the Company closed a private placement (the
Private Placement) of approximately $899,999 principal amount of
9% Convertible Promissory Notes (the 9% Notes) and Common Stock
Purchase Warrants (the Warrants) issued to L2 Capital LLC (L2)
and SBI Investments LLC 2014-1 (SBI and together with L2, the
Investors). A Note and a Warrant was issued to a Securities
Purchase Agreement, dated May 1, 2017, with each Investor, in
substantially the same form (each, a Securities Purchase
Agreement).

The 9% Notes mature on November 1, 2017 unless earlier converted
to the terms of the Securities Purchase Agreement. The 9% Notes
bear interest at 9% per annum. The outstanding principal and
interest under the 9% Notes, solely upon an Event of Default (as
defined in the 9% Notes), is convertible at the option of the
Holder of each Note into shares of the Companys common stock as
set forth in the 9% Notes.

As a part of the Private Placement, the Company issued Warrants
to the Investors providing them with the right to purchase up to
an aggregate of 1,279,998 shares of the Companys common stock at
an initial exercise price equal to the lesser of (i) $0.60 and
(ii) 75% of the offering price of the Companys common stock in
the Companys next publicly registered offering, subject to
adjustment for certain events, such as stock splits and stock
dividends. Subject to certain limitations, the Warrants are
exercisable on any date after the date of issuance for a term of
five years.

The foregoing does not purport to be a complete description of
the Securities Purchase Agreements, the 9% Notes and the Warrant
and is qualified in its entirety by reference to the full text of
such documents, which are filed as Exhibits 10.8, 10.9 and 10.7,
respectively, hereto.

(d)Common Stock and Warrant Financing

On May 1, 2017, the Company closed a private placement (the
Private Placement) of approximately 1,783,335 shares of the
Companys common stock and Common Stock Purchase Warrants to
purchase 1,783,335 shares of the Companys common stock (the
Warrants) issued to various investors (the Investors), each to a
Securities Purchase Agreement, dated May 1, 2017, with each
Investor, in substantially the same form (each, a Securities
Purchase Agreement).

As a part of the Private Placement, the Company issued Warrants
to the Investors providing them with the right to purchase up to
an aggregate of 1,783,335 shares of the Companys common stock at
an exercise price equal to one dollar, subject to adjustment for
certain events, such as stock splits and stock dividends. Subject
to certain limitations, the Warrants are exercisable on any date
after the date of issuance for a term of three years.

The foregoing does not purport to be a complete description of
the Securities Purchase Agreements and the Warrants and is
qualified in its entirety by reference to the full text of the
form of such documents, which are filed as Exhibits 10.15 and
10.7, respectively, hereto.

Item 2.01 Completion of Acquisition or Disposition of
Assets

Reference is made to the disclosures set forth under Item 1.01(a)
of this Current Report on Form 8-K, which disclosures are
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.

Reference is made to the disclosures set forth under Item 1.01 of
this Current Report on Form 8-K, which disclosure is incorporated
herein by reference

Item 3.02. Unregistered Sales of Equity
Securities.

(a) Reference is made to the
disclosures set forth under Item 1.01(a) of this Current Report
on Form 8-K, which disclosures are incorporated herein by
reference.

The issuance of the shares of the Companys common stock, the
Senior Secured Note and Preferred Stock Notes (and securities
issuable upon conversion thereof) in connection with the Asset
Purchase Agreement as described above is exempt from the
registration requirements of the Securities Act of 1933, as
amended (the Securities Act) to Section 4(2) of the Securities
Act and Regulation D promulgated under the Securities Act
(Regulation D). Prior to the issuance of the Companys common
stock, the Senior Secured Note and Preferred Stock Notes,
SolBright made certain representations to the Company as required
by Regulation D. The Company has not and will not engage in
general solicitation or advertising with regard to the issuance
of the shares of the Companys common stock, the Senior Secured
Note and the Preferred Stock Notes (and securities issuable upon
conversion thereof) to the Asset Purchase Agreement and has not
and will not offer securities to the public in connection with
the issuance of the shares of the Companys common stock, the
Senior Secured Note and the Preferred Stock Notes (and securities
issuable upon conversion thereof).

(b) Reference is made to the
disclosures set forth under Item 1.01(b) of this Current Report
on Form 8-K, which disclosures are incorporated herein by
reference.

The issuance of the 10% Notes and the AIP Warrants (and
securities issuable upon conversion thereof) in connection with
the Purchase Agreement as described above is exempt from the
registration requirements of the Securities Act of 1933, as
amended (the Securities Act) to Section 4(2) of the Securities
Act and Regulation D. Prior to the issuance of 10% Notes and the
AIP Warrants (and securities issuable upon conversion thereof),
the Holders made certain representations to the Company as
required by Regulation D. The Company has not and will not engage
in general solicitation or advertising with regard to the
issuance of 10% Notes and the AIP Warrants (and securities
issuable upon conversion thereof) to the Purchase Agreement and
has not and will not offer securities to the public in connection
with the issuance of the 10% Notes and the AIP Warrants (and
securities issuable upon conversion thereof).

(c)Reference is made to the disclosures
set forth under Item 1.01(c) of this Current Report on Form 8-K,
which disclosures are incorporated herein by reference.

The issuance of the 9% Notes and the Warrants (and securities
issuable upon conversion thereof) in connection with the
Securities Purchase Agreements as described above is exempt from
the registration requirements of the Securities Act to Section
4(2) of the Securities Act and Regulation D. Prior to the
issuance of 9% Notes and the Warrants (and securities issuable
upon conversion thereof), the Holders made certain
representations to the Company as required by Regulation D. The
Company has not and will not engage in general solicitation or
advertising with regard to the issuance of the 9% Notes and the
Warrants (and securities issuable upon conversion thereof) to the
Purchase Agreement and has not and will not offer securities to
the public in connection with the issuance of the 9% Notes and
the Warrants (and securities issuable upon conversion thereof).

(d)Reference is made to the disclosures
set forth under Item 1.01(d) of this Current Report on Form 8-K,
which disclosures are incorporated herein by reference.

The issuance of the shares of the Companys common stock and the
Warrants (and securities issuable upon conversion thereof) in
connection with the Securities Purchase Agreements as described
above is exempt from the registration requirements of the
Securities Act to Rule 506 of the Securities Act and Regulation
D. Prior to the issuance of the shares of the Companys common
stock and the Warrants, the Holders made certain representations
to the Company as required by Regulation D. The Company has not
and will not engage in general solicitation or advertising with
regard to the issuance of the shares of the Companys common stock
and the Warrants (and securities issuable upon conversion
thereof) to the Purchase Agreement and has not and will not offer
securities to the public in connection with the issuance of the
shares of the Companys common stock and the Warrants (and
securities issuable upon conversion thereof).

Item 9.01 Financial Statement and Exhibits

As permitted by Item 9.01(a)(4) of Form 8-K, the Company will
file the financial statements required by Item 9.01(a)(1) of Form
8-K to an amendment to this Current Report on Form 8-K not later
than seventy-one (71) calendar days after the date this initial
Current Report on Form 8-K reporting the acquisition of SolBright
was required to be filed.

As permitted by Item 9.01(b)(2) of Form 8-K, the Company will
file the pro forma financial information required by Item
9.01(b)(1) of Form 8-K to an amendment to this Current Report on
Form 8-K not later than seventy-one (71) calendar days after the
date this initial Current Report on Form 8-K reporting the
acquisition of SolBright was required to be filed.

(c)Exhibits.

* Furnished herewith.

About Arkados Group, Inc. (OTCMKTS:AKDS)

Arkados Group, Inc. conducts its business activities through two subsidiaries, Arkados, Inc. (Arkados) and Arkados Energy Solutions, LLC (AES). The Company’s segments include Arkados and AES. Arkados is engaged in offering software and hardware design and developing solutions that enable machine to machine communications for the Internet of Things (IoT). Arkados’ solutions support smart grid and smart building applications primarily in the areas of building automation and energy management and are designed to drive a range of wireless and powerline communication (PLC)-based products, such as sensors, gateways, video cameras, appliances and other devices. AES focuses on the design, installation and maintenance of energy solutions for both residential and commercial customers. AES implements smart grid applications primarily in the areas of light-emitting diode (LED) lighting, building automation and energy management.

Arkados Group, Inc. (OTCMKTS:AKDS) Recent Trading Information

Arkados Group, Inc. (OTCMKTS:AKDS) closed its last trading session 00.00 at 1.40 with 31,157 shares trading hands.