Notes Payable

On October 6, 2011, the Company initiated a private placement (the “Placement”) of up to $4,500 of 12 month Senior Secured Notes (“Notes”) bearing interest at 13%APR due on various dates through November 30, 2012. Net proceeds have been used to repay and replace an existing Senior Secured Bank Note totaling approximately $3,000 and will also be used for additional working capital. The Placement will expire on the sooner of March 1, 2012, or when the Maximum was attained. The notes are secured by all business assets of the Company, as defined. As of December 31, 2011, the Company has issued $3,892 of notes. The Company incurred financing fees of $632 which have been recognized as deferred financing fees as part of Prepaid Expenses and Other Current Assets and are being amortized ratably over the life of the debt.

Line of Credit – Related Party

On August 17, 2010, the Company entered into a long term line of credit facility, with an initial term of up to 18 months, with one of its directors for $4,000. The facility had an annual interest rate of 7.73% on any outstanding balance Additionally, 15,000 warrants, with a five year term at $1.00 per share, per month will be paid for each month the facility is outstanding. On August 12, 2011, the Company modified this agreement, extending the term another 24 months, and reducing the credit facility to $2,000, with an annual interest rate of 7.75% on any outstanding balance.  On October 26, 2011, the Company terminated the line of credit facility.