Notes Payable

On March 28, 2012 the Company issued a 90 day promissory note in the amount of $300 bearing interest at 12% per annum. Upon maturity, on June 29, 2012 the Company began negotiating an extension with the Noteholder to roll the balance into another note, with an additional $300 of funds, received on July 2, 2012, for a total note of $600 bearing interest at 12% and payable over a 24 month term, with interest only for the first twelve months and principal and interest payments beginning month thirteen through the end of the term.

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 and secured by all business assets of the Company. Net proceeds were used to repay and replace an existing Senior Secured Bank Note totaling approximately $3,000 and for additional working capital. The Placement expired on March 1, 2012. As of June 30, 2012, the Company has a balance of $3,550 of Senior Secured Notes Payable. The Company incurred financing fees of $679 which have been recognized 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.