Related Party Transactions

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Related Party Transactions

14. Related Party Transactions

In March 2002 the Company executed a binding agreement with its CEO, who is also a principal stockholder, to fund up to $6.1 million. Under the terms of the agreements, the Company can draw amounts as needed to fund operations. Amounts drawn bear interest at the BBA LIBOR Daily Floating Rate plus 1.4 percentage points (1.696% per annum at December 31, 2011), payable monthly and were to become due and payable on December 31, 2005 or upon a change in control of the Company or consummation of any other financing over $7.0 million. Beginning in March 2006, annually, through February 2012, the maturity date for the agreement was extended from December 31, 2007 to December 31, 2013. Refer to Note 8.

The Company has loans outstanding from one board member, who is also a significant stockholder, totaling $100,000 and $-0- at December 31, 2011 and 2010. During 2011 and 2010 this board member loaned the Company $125,000 and $25,000, respectively, and forgave $50,000 in 2010 and $25,000 in 2011. The forgiven amounts were reclassified to additional paid in capital. The outstanding debt obligation at December 31, 2011 matures on January 1, 2013 and is included in Current Liabilities. This board member is also the President of a separate entity that provided consulting services to the Company in 2010 and 2011. Refer to Notes 8 and 10.