ITEM 1.01.Entry into a Material Definitive Agreement

On September 19, 2012, Fortune Industries, Inc. (the "Company") entered into an Escrow Agreement (the "Escrow Agreement") with Ide Management Group, LLC, a Tennessee limited liability company ("Ide"), whereby the Company and Ide (collectively, the "Parties") have agreed to pursue in good faith the negotiation of a definitive agreement between them relating to a proposed merger transaction in accordance with the material terms set forth in the Escrow Agreement. As a condition of the Company going forward with further negotiations with Ide, Ide deposited the sum of Three Hundred Thousand dollars ($300,000.00) into escrow with a third-party bank for the benefit of the Company. The funds will be used to pay for expenses in connection with the proposed merger transaction. The funds will only be refundable to Ide if the Company does not complete the proposed merger transaction for reasons not related to Ide, and will not be refundable to Ide if Ide does not complete the proposed merger transaction for any reason other than the Company not meeting its obligations to Ide.

The Parties entered into the Escrow Agreement in connection with their reaching an agreement in principal to restructure its current merger agreement by planning to enter into an amended merger agreement with Ide (the "Amended Agreement"). The Amended Agreement is subject to final documentation, completion of due diligence, regulatory compliance and other normal contingencies. Once completed, a revised Proxy Statement and the Amended Agreement will be filed with the SEC for review. Further, the Amended Agreement will result in the Company remaining registered with the Securities and Exchange Commission, and it is anticipated that it will continue to be publicly traded. Current shareholders of the Company will continue to own their Company shares.

In connection with the negotiation of the Amended Agreement, it is currently anticipated the Company will exchange all of its professional employer organization ("PEO") subsidiaries for all of the common and preferred shares owned by the late Carter M. Fortune and by CEP, Inc., a Tennessee corporation which had previously entered into a merger agreement with the Company to acquire all the Company's PEO operations. As a result of the revised transaction structure, assuming it is not revised further, the Company will cease being in the PEO business and through its newly acquired Ide subsidiaries, will operate a chain of 20 skilled nursing facilities located in Indiana, Illinois, Iowa and Wisconsin.

The current draft of the Amended Agreement provides that Ide will merge with a to-be formed subsidiary of the Company, and become a wholly-owned subsidiary of the Company. Mark Ide, the sole member of Ide, will receive sufficient shares of the Company in exchange for all full ownership of Ide. As a result, Mr. Ide will own a substantial majority of the Company shares.

Additional information will be made available as material events occur.