SHORT-TERM NOTES PAYABLE

6 Months Ended

Jun. 30, 2013

Short-Term Notes Payable

Note 3. Short-Term Notes Payable

One June 21 and June 27, 2013, the Company entered into Note Purchase Agreements (the “NPA”) with investors for the sale and issuance of promissory notes in the principal amount of $150,000 and $50,000, respectively (the “Notes”).

The Notes bear interest at the rate of 10% per annum, and mature six months from the date of issuance.  The Notes contain customary default provisions and provide that 110% of principal amount of the Notes shall be exchanged by the investor into securities offered in a subsequent financing consummated by the Company prior to the maturity date of the Notes.

As of June 30, 2013, the Company has accrued approximately $400 in interest on the Notes and incurred approximately $15,000 in costs related to issuing the Notes.  These costs are included in interest and other expense in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2013.