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LIQUIDITY AND CAPITAL RESOURCES

6 Months Ended

Jun. 30, 2012

2. LIQUIDITY AND CAPITAL RESOURCES

The Company has incurred net losses of approximately $5.7 million and $4.1 million for the six months ended June 30, 2012 and 2011, respectively. In addition, the Company had a stockholders' deficit balance of approximately $5.1 million at June 30, 2012 and $0.7 million at December 31, 2011. Furthermore, the Company's current forecast for fiscal 2012 projects a significant net loss, and projects a need for additional capital to fund its operations beyond 2012. The Company continues to explore strategic alternatives to finance its business plan, including but not limited to, private equity or debt financings or other sources, such as strategic partnerships. The Company is also focusing on increasing sales of its products to generate cash flows to fund its operations.

There can be no assurance that the Company will be successful in its plans described above or in attracting additional debt or equity financing. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.