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): April 27,
      2006

     

    friendlyway
      Corporation 

    (Exact
      name of Registrant as Specified in its Charter) 

     

    
      	
               
                Nevada

            	
               

            	
              0-20317

            	
               

            	
              88-0270266

            
	
               
                (State or Other Jurisdiction of 

              Incorporation
                or Organization) 

            	
               

            	
              (Commission
                file number)

            	
               

            	
              (I.R.S.
                Employer Identification Number)

            

    

     

    1255
      Battery Street, Suite 200

    San
      Francisco, California 94111

    (Address
      of Principal Executive Offices including Zip Code) 

     

    (415)
      288-3333 

    (Registrant's
      Telephone Number, Including Area Code) 

     

    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:

     

    
      	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
              2.01	
              Completion
                of Acquisition or Disposition of
                Assets

            

    

    

    On
      May 2,
      2006, friendlyway Corporation (the “Company”) completed the acquisition of
      Pantel Systems, Inc., a Nevada corporation, pursuant to a Share Exchange
      Agreement (the “Agreement”) dated April 27, 2006 with Pantel Systems, Inc. and
      Kenneth J. Upcraft, its sole stockholder. The Business provides e-Banking kiosks
      systems and services to its customers. Under the terms of the Agreement, Mr.
      Upcraft has exchanged all of his shares of capital stock of Pantel Systems,
      Inc.
      for 20,000,000 shares of common stock of the Company, of which 5,000,000 shares
      are being held in escrow pursuant to the terms of an Escrow Agreement among
      the
      parties. The Company has assumed the liabilities of Pantel Systems, Inc.
      pursuant to the Agreement. 

    

    Farrand
      Investment Bankers acted as the financial advisor to the Company in connection
      with the foregoing Share Exchange Agreement and received compensation in the
      form of common stock of the Company in an amount equal to 5,753,635
      shares.

    

    The
      purchase price was determined in arms-length negotiations between the parties.
      The assets acquired in this acquisition include without limitation office
      equipment, computer hardware and software, supplies, customer accounts,
      contracts, permits and licenses, trade secrets and other proprietary
      information. The assets will continue to be used in the Company’s business.

    

    The
      terms
      and conditions of the foregoing are more fully set forth in the Share Exchange
      Agreement and Escrow Agreement, copies of which are attached hereto as Exhibits
      2.1 and 10.1, respectively. 

    

    The
      full
      text of a press release issued by the Company on May 2,
      2006
      regarding the foregoing is attached as Exhibit 99.1.

    

    
      	Item
              3.02	
              Unregistered
                Sales of Equity Securities

            

    

    

    On
      April
      29, 2006, the Company entered into a Common Stock Purchase Agreement and Warrant
      Agreement for the sale of $350,000 of its common stock and warrants to certain
      purchasers. The registrant sold 2,740,000 restricted shares of its common stock
      at purchase prices ranging from $0.10 to $0.25 per share. Four of the five
      purchasers also received five-year warrants to purchase an aggregate of
      2,620,000 shares of common stock at exercise prices ranging from $0.10 to $0.25
      per share. The warrants are subject to the terms and conditions of the form
      of
      Warrant attached hereto as Exhibit 10.4. The terms of the foregoing financing
      transaction are more fully set forth in the Common Stock Purchase Agreement
      attached hereto as Exhibit 10.3.

    

    Farrand
      Investment Bankers acted as the financial advisor to the Company in connection
      with the foregoing Share Exchange Agreement and received compensation in the
      form of common stock of the Company in an amount equal to 5,753,635
      shares.

    

    The
      issuance of the shares of common stock and warrants was exempt from the
      registration requirements under the Securities Act of 1933, as amended (the
      “Securities Act”), pursuant to Section 4(2) thereof. Each of the purchasers and
      Farrand Investment Bankers represented to the Company its status as an
“accredited investor”, as that term is defined in Rule 501 promulgated under the
      Securities Act. Each of the purchasers and Farrand Investment Bankers
      represented his or its intention to acquire such shares for investment only
      and
      not with a view to sell such shares in connection with any distribution thereof,
      and an appropriate restrictive legend was affixed to the stock
      certificates.

    

    
      	Item
              5.02	
              Departure
                of Directors or Principal Officers; Election of Directors; Appointment
                of
                Principal Officers.

            

    

    

    On
      April
      27, 2006, Mr. Upcraft was appointed the Company’s President and Chief Executive
      Officer and a director and has entered into an Employment Agreement with the
      Company for his services, including a confidentiality agreement and covenant
      not
      to compete with the Company. The Employment Agreement has a term of two years
      and provides for annual base salary compensation in the amount of $200,000,
      bonus compensation and a performance award payable on an earn-out basis for
      a
      period of three years. The amount of future consideration, if any, to be paid
      by
      the Company to Mr. Upcraft under the performance award will be based on the
      gross profits of Pantel Systems, Inc. Mr. Upcraft is eligible to participate
      in
      the Company’s insurance, benefit and compensation plans available to employees
      generally, including the Company’s stock option plan. The terms of Mr. Upcraft’s
      employment are more fully set forth in the Employment Agreement with the Company
      attached hereto as Exhibit 10.2.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    Since
      its
      inception in February 2005, Mr. Upcraft has served as president and chief
      executive of Pantel Systems, Inc. Mr. Upcraft served as president of USURF
      America, Inc. from April 2002 until August 2004. Mr. Upcraft served as vice
      president of Netbeam from February 2001 until March 2002. From June 1993 until
      March 2001, Mr. Upcraft operated a consultancy focused on providing professional
      services to telecommunications and Internet service providers, including
      wireless Internet access providers.

     

    Concurrently
      with the appointment of Mr. Upcraft, Alexander von Welczeck has resigned as
      the
      Company’s Chief Executive Officer.

     

    
      	Item
              9.01.	
              Financial
                Statements and Exhibits.

            

    

     

    
      	
            	(c)	
              Exhibits.
                

            

    

     

    The
      following are filed as exhibits to this report on Form 8-K: 

     

    
      	
               

            	
               2.1

            	
              Share
                Exchange Agreement dated as of April 27, 2006 among friendlyway
                Corporation, Pantel Systems, Inc. and Kenneth J. Upcraft
                

            
	
               

            	
               

            	
               

            
	
               

            	
              10.1

            	
              Escrow
                Agreement among friendlyway Corporation, Kenneth J. Upcraft and Law
                Offices of Michael H. Hoffman, P.A., as escrow agent 

            
	
               

            	
               

            	
               

            
	
               

            	
              10.2

            	
              Employment
                Agreement between friendlyway Corporation and Kenneth J.
                Upcraft

            
	
               

            	
               

            	
               

            
	
               

            	
              10.3

            	
              Form
                of Common Stock Purchase Agreement dated as of April 29, 2006
                

            
	
               

            	
               

            	
               

            
	
               

            	
              10.4

            	
              Form
                of Warrant Agreement dated as of April 29, 2006

            
	
               

            	
               

            	
               

            
	
               

            	
              99.1

            	
              Press
                release dated May 2, 2006

            
	
               

            	
               

            	
               

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    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. 

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              FRIENDLYWAY
                CORPORATION

              (Registrant)

            
	
               

               

            	
               

               

            	
               

               

            
	
              Dated:
                May 3, 2006

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
              By:  

            	
              /s/ Kenneth
                J. Upcraft

            
	
               

            	
              Kenneth
                J. Upcraft

            
	
               

            	
              President
                and Chief Executive Officer

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    INDEX
      TO EXHIBITS

     

    Exhibits
      

     

    
      	
               

            	
               2.1

            	
              Share
                Exchange Agreement dated as of April 27, 2006 among friendlyway
                Corporation, Pantel Systems, Inc. and Kenneth J. Upcraft
                

            
	
               

            	
               

            	
               

            
	
               

            	
              10.1

            	
              Escrow
                Agreement among friendlyway Corporation, Kenneth J. Upcraft and Law
                Offices of Michael H. Hoffman, P.A., as escrow agent 

            
	
               

            	
               

            	
               

            
	
               

            	
              10.2

            	
              Employment
                Agreement between friendlyway Corporation and Kenneth J.
                Upcraft

            
	
               

            	
               

            	
               

            
	
               

            	
              10.3

            	
              Form
                of Common Stock Purchase Agreement dated as of April 29, 2006
                

            
	
               

            	
               

            	
               

            
	
               

            	
              10.4

            	
              Form
                of Warrant Agreement dated as of April 29, 2006

            
	
               

            	
               

            	
               

            
	
               

            	
              99.1

            	
              Press
                release dated May 2, 2006

            
	
               

            	
               

            	
               

            

    

    

    
      
        
        

      

      
        5UNITED
      STATES

     

    SECURITIES
      AND EXCHANGE COMMISSION

    Washington,
      D.C. 20549

     

    
      
        

      

       

    

    FORM
      8-K

     

    
      
        

      

       

    

    CURRENT
      REPORT 

     

    Pursuant
      to Section 13 or 15(d) 

     

    of
      the Securities Exchange Act of 1934 

     

    Date
      of Report (Date of earliest event reported): July 19, 2006

     

    friendlyway
      Corporation

    (Exact
      name of Registrant as Specified in its Charter) 

     

    
      	
               
                Nevada

            	
               

            	
              0-20317

            	
               

            	
              88-0270266

            
	
               
                (State or Other Jurisdiction of Incorporation or
                Organization) 

            	
               

            	
              (Commission
                file number)

            	
               

            	
              (I.R.S.
                Employer Identification Number)

            

    

     

    7222
      Commerce Center Drive, Suite 240

    Colorado
      Springs, CO 80919 

    (Address
      of Principal Executive Offices including Zip Code) 

     

    (719)
      359-5533 

    (Registrant's
      Telephone Number, Including Area Code) 

     

     

    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:

     

    
      	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))

                

        

      

    

     

     

    
      

      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SECTION
      1 - REGISTRANT’S BUSINESS AND OPERATIONS

     

    
      
        	Item
                1.01	
                Entry
                  into a Material Definitive
                  Agreement.

              

      

    

    

    On
      July
      19, 2006, we entered into a Securities Purchase Agreement (the “Purchase
      Agreement”)
      with a
      group of eight (8) accredited investors (“Holders
      or Purchasers”),
      in
      connection with our offering (the “Offering”) of senior subordinated secured
      convertible term notes (the “Notes”) and warrants to purchase shares of our
      common stock (the “Warrants). Pursuant to the Offering, the Holders agreed to
      provide us with funding in the aggregate amount of $830,000 (the “Facility”).
      This
      is the first closing of an anticipated total facility of $1,800,000 to be funded
      in the near future. The term of the Facility is thirty (30) months and shall
      accrue interest on the unpaid principal and interest at a rate per annum equal
      to the “prime rate” published in The
      Wall Street Journal from
      time
      to time, plus four percent (4%) or fourteen percent (14%), whichever is greater.
      We will begin paying monthly payments of accrued interest plus the principle
      payment which is amortized over 28 months beginning October 1, 2006, and each
      consecutive calendar month thereafter until January 1, 2009. The funds will
      be
      used for working capital to deploy our e-banking kiosks. We have an option
      to
      repay each monthly payment in cash or stock. If we pay in stock, we will pay
      the
      Holder an amount equal to 100% of the then monthly amount due with common stock
      valued at 85% of the volume weighted average price (“VWAP”) for the ten days
      prior to the repayment date. Subject to certain provisions, the Holder has
      a
      right at any time to convert any of the outstanding monthly payments due into
      common stock of the Company at the initial rate of fourteen cents ($.14) per
      share. Each Holder received a Warrant to purchase an additional share for each
      three shares under the conversion rights at an initial exercise price of
      nineteen cents ($.19) per share. 

    

    In
      connection with the Offering, we paid Sloan Securities Corp., as placement
      agent, approximately $112,696, comprised of sales commissions of $83,000 and
      reimbursement of $29,706 in due diligence, legal and documentation expenses.
      Sloan Securities Corp. is entitled to placement agent warrants, with terms
      identical to those contained in the Warrants, to purchase that number of shares
      equal to ten percent (10%) of the aggregate amount of shares of our common
      stock
      initially issuable upon conversion of Notes issued at each Closing, with an
      exercise price of fourteen cents ($.14) per share (the “Placement Agent
      Warrants”).

     

    Note
      Maturity Date and Interest Rate.
      In
      connection with the Facility, we executed in favor of Holders Notes in the
      principal amount of $830,000. Absent earlier redemption by our company, the
      Notes mature on January 1, 2009. Interest will accrue on the unpaid principal
      and interest on the Notes at a rate per annum equal to the “prime rate”
published in The
      Wall Street Journal from
      time
      to time, plus four percent (4%). 

    

    Payment
      of Interest and Principal.
      Interest on borrowings under the Notes is payable monthly on the first day
      of
      each month during the term of the Notes, commencing on October 1, 2006. All
      outstanding principal amounts must be paid on January 1, 2009. 

    

    Security
      Agreement.
      The
      Notes are secured by a blanket lien on substantially all of the assets of our
      company and our subsidiaries pursuant to the terms of a security agreement
      (the
“Security Agreement”) and further guaranteed by our subsidiaries (the
“Subsidiary Guaranty”). In addition, we have pledged our ownership interests a
      portion of the stock owned by our Chief Executive Officer according to a stock
      pledge agreement (the “Stock
      Pledge Agreement”)
      executed by us in favor of Holders to cover our obligations under the Notes.
      If
      an event of default occurs under any of the Security Agreement, the Warrants,
      the Stock Pledge Agreement, the Subsidiary Guaranty, the Registration Rights
      Agreement (as herein defined), or the Notes (collectively, the “Transaction
      Documents”),
      Holders have the right to accelerate payments under the Notes and, in addition
      to any other remedies available to it, to foreclose upon the assets securing
      the
      Notes. If an event of default occurs under any of the Transaction Documents,
      one
      hundred twenty-five percent (125%) of the unpaid principal balance plus accrued
      interest and fees, will become immediately due and payable. Holders shall also
      be entitled to payment of a default interest rate of two percent (2%) per month
      on all amounts due and such other remedies specified in the Transaction
      Documents and under the Uniform Commercial Code. Such events of default include,
      without limitation, the following:

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    
      	
               

            	
              o 

            	
              a
                failure to make payments of principal and interest under the Notes
                within
                three (3) days of when due;

            
	
               

            	
              o 

            	
              a
                breach by us of any material representation, warranty or statement
                contained in any of the Transaction Documents (that is not cured
                within
                the stated cure period);

            
	
               

            	
              o 

            	
              the
                filing of any money judgment or similar final process against us
                for more
                than $50,000, which remains unvacated, unstayed or unbonded for a
                period
                of thirty (30) days;

            

    

    

    
      	
               

            	
              o 

            	
              if
                we make an assignment for the benefit of our creditors, or a receiver
                or
                trustee is appointed for us, or any form of bankruptcy or insolvency
                proceeding is instituted by us, or any involuntary proceeding is
                instituted against us if not vacated within thirty (30)
                days;

            
	
               

            	
              o 

            	
              if
                our Common Stock is suspended for five (5) consecutive days or for
                five
                (5) days during a ten (10) day consecutive period from a principal
                market
                or pursuant to a stop order issued by the Securities and Exchange
                Commission (the “SEC”); and

            

    

    

    
      	
               

            	
              o 

            	
              a
                failure by us to timely deliver shares of our Common Stock to Holders
                when
                due upon exercise of the Warrants. 

            

    

    

    In
      addition, the Purchase Agreement contains certain negative covenants that
      require us to obtain the prior written consent or other actions of Holders
      in
      order for us to take certain actions at any time when borrowings remain
      outstanding under the Facility. These negative covenants include, without
      limitation, restrictions on our ability to:

    

    
      	
               

            	
              o 

            	
              incur
                or assume indebtedness (exclusive of trade debt);

            
	
               

            	
              o 

            	
              guarantee
                or assume any liability in connection with any obligations of another
                person or entity (except on behalf of its subsidiaries in the ordinary
                course of business);

            

    

    

    
      	
               

            	
              o 

            	
              pay
                or make any dividend or distribution on any class of our capital
                stock or
                the capital stock of any subsidiaries or issue any preferred stock;
                and

            
	
               

            	
              o 

            	
              enter
                into any merger, consolidation or reorganization, with limited
                exceptions.

            

    

    

    Warrants.
      We
      issued Warrants entitling Holders to purchase an aggregate of up to 1,976,191
      shares of our common stock, par value $.001 per share (the “Common
      Stock”)
      at an
      initial exercise price of nineteen cents ($.19) per share (subject to applicable
      adjustments) (the “Exercise
      Price”).
      The
      Warrants expire on July 20, 2011.

    

    Registration
      Rights Agreement.
      Pursuant to the terms of a Registration Rights Agreement between Holders and
      our
      company (the “Registration
      Rights Agreement”),
      we
      are obligated to file a registration statement on Form SB-2 or S-3 to register
      the resale of the shares of Common Stock issuable under (i) upon conversion
      of
      the Notes, (ii) upon exercise of the Warrants, (iii) upon exercise of the
      Placement Agent Warrants, and (iv) as a result of adjustments made to the
      conversion price of the Notes or the Exercise Price of the Warrants. With
      respect to the registration statement required to be filed in connection with
      the conversion of the Notes and exercise of the Warrants (the “Original
      Registration Statement”),
      we
      are required to file the Original Registration Statement on or prior to sixty
      (60) days after the last closing of the Offering and to use our best efforts
      to
      have the Original Registration Statement declared effective by the SEC as
      promptly as possible after filing, but in no event later than 180 days after
      filing of the Original Registration Statement with the SEC. In the event of
      clause (iv) set forth above, we are required to file such registration statement
      (the “Additional
      Registration Statement”)
      within
      thirty (30) days of (i) such event resulting in the adjustment of the Exercise
      Price or (ii) the actual date of the adjustment of the Exercise Price. Each
      such
      Additional Registration Statement shall be declared effective within thirty
      (30)
      days following the applicable filing date of such Additional Registration
      Statement. We are obligated to use our reasonable commercial efforts to maintain
      the effectiveness of the Original Registration Statement and any Additional
      Registration Statement until the earliest of the date on which (i) all shares
      registered thereunder have been sold or (ii) all shares registered thereunder
      may be sold immediately without registration under the Act and without volume
      restrictions pursuant to Rule 144(k) of the Securities and Exchange Act of
      1934
      (the “Act”)
      (as
      determined by a our counsel pursuant to a written opinion letter). 

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    The
      above
      discussion describes certain of the material terms of the financing transaction
      with Holders, and is not a complete description of the material terms of the
      transaction and is qualified in its entirety by reference to the agreements
      entered into in connection with the transaction, copies of which are included
      as
      exhibits to this Current Report on Form 8-K and the text of which is
      incorporated herein by reference.

     

    SECTION
      2 - FINANCIAL INFORMATION

     

    
      
        	Item
                2.03	
                Creation
                  of a Direct Financial Obligation or an Obligation under an Off-Balance
                  Sheet Arrangement of a
                  Registrant.

              

      

    

     

    The
      disclosures contained in Item 1.01 are incorporated herein by
      reference.

     

    SECTION
      3 - SECURITIES AND TRADING MARKETS

     

    
      
        	Item
                3.02	
                Unregistered
                  Sales of Equity
                  Securities.

              

      

    

    

    In
      connection with the transactions described in Item 1.01, we issued the Note
      and
      Warrant described therein. The Note and Warrant were issued in reliance on
      the
      exemption from registration provided by Section 4(2) of the Act, on the basis
      that their issuance did not involve a public offering and certain
      representations made to us by Holders in the Purchase Agreement.

    

    SECTION
      9 - FINANCIAL STATEMENT AND EXHIBITS

     

    
      
        	Item
                9.01	
                Financial
                  Statements and
                  Exhibits.

              

      

    

     

    
      	
              (c) 

            	
              Exhibits. 

            	 
	 	 	 
	 	
              Number 

            	
              Documents 

            
	 	 	 
	
               

            	
              10.1
                

            	
              Security
                Purchase Agreement, dated as of June 14, 2006, by our company and.
                in
                favor of Purchasers.

            

    

    

    
      	
               

            	
              10.2

            	
              Form
                of Senior Subordinated Secured Convertible Term Note, dated as of
                July 19,
                2006, executed by our company in favor of Holders.
                

            

    

    

    
      	
               

            	
              10.3

            	
              Stock
                Pledge Agreement, dated as of July 19, 2006, executed by our company
                and
                Ken Upcraft in favor of Holders.

            

    

    

    
      	
               

            	
              10.4

            	
              Subsidiary
                Guaranty, dated as of July 19, 2006, executed by Friendlyway Technologies,
                Inc, Pantel Financial Centers, Inc, and Pantel Systems, Inc.
                .

            

    

    

    
      	
               

            	
              10.5

            	
              Registration
                Rights Agreement, dated as of July 19, 2006, between our company,
                Sloan
                Securities Corporation and Holders.

            

    

    

    
      	
               

            	
              10.6

            	
              Form
                of Common Stock Purchase Warrant, dated as of July 19, 2006, between
                our
                company and Holders..

            
	 	 	 
	 	
              10.7 

            	Note Security
              Agreement, date July 19, 2006 between our company, its subsidiaries
              and
              Atlantic Professional Association, Inc as Agent for
              Purchasers. 
	 	 	 
	 	
               99.1 

            	Press release
              of
              friendlyway Corporation, dated May 16, 2006. 
	 	 	 
	 	
               99.2 

            	Press release
              of
              friendlyway Corporation, dated July 19,
              2006. 

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

     

    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. 

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              FRIENDLYWAY
                CORPORATION

              (Registrant)

            
	
               

               

            	
               

               

            	
               

               

            
	
              Dated:
                July 23, 2006

            	
              By:  

            	
              /s/ Kenneth
                J. Upcraft

            
	
               

            	
              Kenneth
                J. Upcraft

            
	
               

            	
              President
                and Chief Executive Officer 

            

    

     

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    INDEX
      TO EXHIBITS

     

    Exhibits
      

    

    
      	
               

            	
              10.1
                

            	
              Security
                Purchase Agreement, dated as of June 14, 2006, by our company and
                . in
                favor of Purchasers.

            

    

    

    
      	
               

            	
              10.2

            	
              Form
                of Senior Subordinated Secured Convertible Term Note, dated as of
                July 19,
                2006, executed by our company in favor of Holders.
                

            

    

    

    
      	
               

            	
              10.3

            	
              Stock
                Pledge Agreement, dated as of July 19, 2006, executed by our company
                and
                Ken Upcraft in favor of Holders.

            

    

    

    
      	
               

            	
              10.4

            	
              Subsidiary
                Guaranty, dated as of July 19, 2006, executed by Friendlyway Technologies,
                Inc, Pantel Financial Centers, Inc, and Pantel Systems, Inc.
                .

            

    

    

    
      	
               

            	
              10.5

            	
              Registration
                Rights Agreement, dated as of July 19, 2006, between our company,
                Sloan
                Securities Corporation and Holders.

            

    

    

    
      	
               

            	
              10.6

            	
              Form
                of Common Stock Purchase Warrant, dated as of July 19, 2006, between
                our
                company and Holders..

            

    

     

    
      	 	
              10.7

            	
              Note
                Security Agreement, date July 19, 2006 between our company, its
                subsidiaries and Atlantic Professional Association, Inc as Agent
                for
                Purchasers. 

            

    

     

    
      	
               

            	
               99.1

            	
              Press
                release of friendlyway Corporation, dated May 16,
                2006. 

            

    

     

    
      	
               

            	
               99.2

            	
              Press
                release of friendlyway Corporation, dated July 19,
                2006. 

            

    

    

    
      
         

      

      
        6

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