RELATED PARTY TRANSACTIONS

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

Note 9 - RELATED PARTY TRANSACTIONS

As more fully described in Note 5 to these consolidated financial statements, on November 14, 2008, the Company entered into a series of convertible promissory notes (the “Related Party Convertible Notes”), aggregating $110,000, with certain officers and members of the Company’s Board of Directors. The Related Party Convertible Notes bear interest at 7.0% per annum and were originally due February 14, 2009. The Company continues to seek a waiver from the holders of the Related Party Convertible Notes.

In conjunction with the issuance of the Related Party Convertible Notes, the Company issued an aggregate of 149,996 warrants to the note holders to purchase Common Stock of the Company. The warrants have an exercise price $0.55 per share and may be exercised at any time from November 14, 2008 until November 14, 2013. All warrants were outstanding and exercisable as of March 31, 2012 and December 31, 2011.

During the three months ended March 31, 2012, the Company repaid $45,000 in principal to certain holders of the Related Party Convertible Notes.

In January 2012, the Company entered into a professional services contract with an entity that a member of the Company’s Board of directors has an ownership interest in. The contract value was $50,000 and the Company paid the professional services firm $25,000 during the three months ended March 31, 2012.