On October 12, 2011, the Company and the Investors entered into Subscription Agreements for the purchase and sale of the Convertible Notes. The Company received gross proceeds of approximately $1.86 million from the Second Tranche, which will be used for general working capital purposes and repayment of debt.   As additional consideration, the Investors in the Second Tranche received warrants to purchase up to 564,348 shares of the Company's common stock (the "Investor Warrants").   The foregoing description of the Subscription Agreements is qualified by reference to the complete terms of such Subscription Agreements, the form of which was filed as Exhibit 10.1 to the Prior Filing.

The holders of the Convertible Notes have the right at any time and from time to time to convert all or part of the outstanding principal amount into shares of the Company's common stock at a conversion price of $1.98 per share. The foregoing description of the Convertible Notes is qualified by reference to the complete terms of such Convertible Notes, the form of which was filed as Exhibit 10.2.

The exercise price for the Investor Warrants is $2.42 per share. The foregoing description of the Investor Warrants is qualified by reference to the complete terms of such Investor Warrants, the form of which was filed with the Prior Filing as Exhibit 10.3.

The Company and the Investors also entered into a Registration Rights Agreement pursuant to which the Company agreed to file a registration statement within 30 calendar days of the Second Tranche closing (the "Required Filing Date") to register the resale of the shares of common stock issuable upon conversion of the Convertible Notes and exercise of the Investor Warrants. The foregoing description of the Registration Rights Agreement is qualified by reference to the complete terms of such agreement, the form of which was included with the Prior Filing as Exhibit 10.4.

The Company paid its placement agent a cash fee of $229,492 for its services as placement agent in connection with the Second Tranche of the offering.

The aggregate gross proceeds from the First Tranche and Second Tranche resulted in aggregate gross proceeds to the Company of $3.8 million.    The aggregate number of shares potentially issuable upon conversion of the Convertible Notes issued in the First Tranche and Second Tranche is 1,858,434 and the aggregate number of shares of common stock potentially issuable upon exercise of the Investor Warrants issued in the First Tranche and Second Tranche is 1,115,051.