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The accompanying (a) consolidated balance sheet as of December 31, 2011, which has been derived from the audited consolidated financial statements, and (b) unaudited condensed consolidated financial statements have been prepared pursuant to SEC Rule 8-03 of Regulation S-X. 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Certain holders of 10% convertible promissory notes in the aggregate amount of $7,305,000 converted their notes into 730,500 shares of Series A Preferred Stock and were also granted warrants to purchase 255,675 shares of our common stock. In addition, the Company issued an aggregate of 2,200,000 shares of Series A Preferred Stock and warrants to purchase 1,022,175 shares of Common Stock in consideration of aggregate cash proceeds of $22,000,000. Aggregate cash fees of $1,139,855 were paid to the placement agents. In addition, the placement agents were issued five-year warrants, substantially similar to the warrants sold in the offering, to purchase an aggregate of 480,000 shares of common stock for an exercise price of $2.00 per share. 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