NOTE 13.

EQUITY TRANSACTIONS

Common Stock Transaction

On September 13, 2011, we entered into a Common Stock Purchase Agreement (the "Common Stock Agreement") with Ironridge Global BioPharma, a division of Ironridge Global IV, Ltd. ("Ironridge"), under which we delivered four notices to Ironridge exercising our right to require Ironridge to purchase up to $969,000 of our common stock at a price per share equal to $0.50.

We presented the notices to Ironridge for the purchase of common stock, with Ironridge purchasing each tranche of shares of common stock with a promissory note, as follows:

§		646,364 shares of common stock, par value $0.001 per share, for $323,182 on September 16, 2011;
§		300,000 shares of common stock, par value $0.001 per share, for $150,000 on November 7, 2011;
§		500,000 shares of common stock, par value $0.001 per share, for $250,000 on December 22, 2011; and
§		491,636 shares of common stock, par value $0.001 per share, for $245,818 on January 12, 2012.

The promissory notes bear interest at 1.5% per year calculated on a simple interest basis. The entire principal balance and interest thereon is due and payable seven and one-half years from the date of each promissory note, but no payments are due so long as we are in default under the Common Stock Agreement or the Series A Agreement (as defined below) or if there are any shares of Series A Stock (as defined below) issued or outstanding. Each promissory note is secured by the borrower's right, title and interest in all shares legally or beneficially owned by Ironridge or an affiliate, as more fully described in the note.

On August 22, 2011, we entered into a Finder's Fee and Indemnity Agreement with Maxim Group LLC ("Maxim") to assist us, on a non-exclusive basis, with finding and introducing investors as a potential source for financing. We will pay Maxim a finder's fee equal to 5% of the total cash consideration paid to us as a result of the cash proceeds received from Ironridge.

We completed the offering and sale of shares of common stock to Ironridge pursuant to a shelf registration statement on Form S-3 (Registration No. 333-160568) declared effective by the Securities and Exchange Commission on July 23, 2009, and a base prospectus dated as of the same date, as supplemented by a prospectus supplement filed with the Securities and Exchange Commission on September 15, 2011.

Preferred Stock Transaction

On September 13, 2011, we entered into a Preferred Stock Purchase Agreement (the "Series A Agreement") with Ironridge Global III, LLC, a Delaware limited liability company ("Ironridge Global"), under which Ironridge Global committed to purchase for cash up to $650,000 of the Company's redeemable, convertible Series A Preferred Stock (the "Series A Stock") at $10,000 per share of Series A Stock. The Series A Stock is convertible at the option of the Company at a fixed conversion price of $0.70. The conversion price for the holder is fixed with no adjustment mechanisms, resets, or anti-dilution covenants, other than the customary adjustments for stock splits. The conversion price, if we elect to convert the Series A Stock, is subject to adjustment based on the market price of our common stock and any applicable early redemption price at the time we convert.

Under the terms of the Series A Agreement, on September 20, 2011, we presented Ironridge Global with our initial notice to purchase Series A Stock and Ironridge Global funded the purchase of 15 shares of Series A Stock for cash of $150,000. On November 8, 2011, we and Ironridge Global entered into a First Amendment to Preferred Stock Purchase Agreement (the "First Amendment") for the purpose of revising certain terms and conditions contained in the Series A Agreement, to include an updated schedule for the timing and number of shares for certain purchase obligations, the option by us to set the per share price of the Series A Stock below $10,000 subject to certain calculations, and to define certain terms contained therein. Pursuant to the First Amendment, we presented Ironridge Global with notice and Ironridge Global funded the purchase of additional Series A Stock in installments as follows:

§		10 Series A Stock shares for $100,000 on November 9, 2011;
§		25 Series A Stock shares for $148,750 on January 13, 2012; and
§		15 Series A Stock shares for $141,525 on January 23, 2012.

On September 13, 2011, we filed a Certificate of Designations of Preferences, Rights and Limitations of Series A Stock (the "Series A Certificate of Designations") with the Secretary of State of the State of Nevada. A summary of the Series A Certificate of Designations is set forth below:

Ranking and Voting. The Series A Stock will, with respect to dividend rights and rights upon liquidation, winding-up or dissolution, rank: (a) senior with respect to dividends and pari passu in right of liquidation with the Company's common stock; (b) pari passu with respect to dividends and junior in right of liquidation with respect to any other class or series of Preferred Stock; and (c) junior to all existing and future indebtedness of the Company. Holders of Series A Stock have no voting rights, except as required by law, and no preemptive rights. There are no sinking-fund provisions applicable to the Series A Stock.

Dividends and Other Distributions. Commencing on the date of issuance of any such shares of Series A Stock, holders of Series A Stock are entitled to receive dividends on each outstanding share of Series A Stock, which accrue in shares of Series A Stock, at a rate equal to 7.50% per annum from the date of issuance. Accrued dividends are payable upon redemption of the Series A Stock. So long as any shares of Series A Stock are outstanding, no dividends or other distributions will be paid, delivered or set apart with respect to the shares of common stock.

Liquidation. Upon any liquidation, dissolution or winding up, after payment or provision for payment of the Company's debts and other liabilities, pari passu with any distribution or payment made to the holders of the Company's common stock, the holders of Series A Stock shall be entitled to be paid out of the Company's assets available for distribution to our stockholders an amount with respect to the Series A Liquidation Value, as defined below, after which any of the Company's remaining assets will be distributed among the holders of the Company's other classes or series of stock as applicable.

Redemption. The Company may redeem any or all of the Series A Stock at any time after the seventh anniversary of the issuance date at the redemption price of $10,000 per share of Series A Stock, plus any accrued but unpaid dividends with respect to such shares of Series A Stock (the "Series A Liquidation Value"). Prior to the seventh anniversary of the issuance of the Series A Stock, the Company may redeem the shares at any time after six-months from the issuance date at a price per share (the "Early Redemption Price") equal to 100% of the Series A Liquidation Value divided by (b) the British Pound Sterling Exchange Rate, multiplied by (c) one plus the LIBOR Rate, multiplied by (d) the Rate Factor, for the first calendar month after the issuance date, and decreasing each calendar month thereafter by an amount equal to 0.595% of the Early Redemption Price for the first month. Any capitalized defined terms that are undefined have been defined in the Series A Certificate of Designations.

In addition, if the Company liquidates, dissolves or winds-up its business, or engages in any deemed liquidation event, it must redeem the Series A Stock at the applicable early redemption price set forth above.

Conversion. The Series A Stock is convertible into shares of the Company's common stock at our option at any time after six-months from the date of issuance of the Series A Stock. The conversion price for the holder is fixed at $0.70 per share with no adjustment mechanisms, resets, ratchets, or anti-dilution covenants other than the customary adjustments for stock splits.

If we elect to convert the Series A Stock into common stock, we will issue a number of conversion shares (the "Series A Reconciling Conversion Shares"), so that the total number of conversion shares under the conversion notice equals the early redemption price set forth above multiplied by the number of shares subject to conversion, divided by the lower of (i) the Series A Conversion Price and (ii) 85% of the average of the daily volume-weighted average prices of the Company's common stock for the 20 trading days following Ironridge Global's receipt of the conversion notice, provided, however, in no event shall the lower of (i) and (ii) be less than $0.001.

The Series A Stock automatically converts into common stock if the closing price of the Company's common stock exceeds 150% of the Series A Conversion Price for any 20 consecutive trading days. We will issue that number of shares of its common stock equal to the early redemption price set forth above multiplied by the number of shares subject to conversion, divided by the Series A Conversion Price.