(8)

Restructuring

On February 7, 2013, the Company eliminated nine positions as part of its efforts to lower operating costs to conserve capital. The Company incurred $175,000 of expenses due to the position eliminations with approximately $85,000 paid in the first quarter of 2013 and the balance paid in the second quarter of 2013.

On June 28, 2013, we announced the termination of 30 of our then remaining 41 employees.

The Company incurred $304,000 of expenses in the second quarter due to the position eliminations, which will result in cash expenditures of that amount in the third quarter.

Additionally we have evaluated our long-lived assets and determined that approximately $229,000 of these assets have been impaired.

Costs associated with the elimination of positions have been recorded as a general and administrative personnel cost. Costs associated with the impairment of long-lived assets have been recorded as a general and administrative loss on long-lived assets.