Item 1.01. Entry into a Material Definitive Agreement

On August 19, 2008, the Registrant entered into a Placement Agency Agreement with Merriman Curhan Ford & Co.(the "Placement Agent"), pursuant to which the Placement Agent agreed to use its best efforts to arrange for the issuance and sale of up to 9,000,000 shares of common stock, par value $0.001 per share, and warrants to purchase 13,500,000 shares of common stock, to certain investors in a registered direct offering (the "Offering"). The common shares and warrants under the Offering will be sold together as units, each unit consisting of one share of common stock and one warrant to purchase 1.5 shares of common stock.

On August 19, 2008, the Registrant and an investor entered into a Subscription Agreement, pursuant to which the Registrant agreed to sell and investor agreed to purchase 9,000,000 units, with each unit consisting of one share of common stock and one warrant to purchase an additional 1.5 shares of common stock, at a purchase price of $2.10 per unit. The warrants have an exercise price of $4.00 per share, subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock and the exercise price and number of warrants held by a purchaser (or such purchaser's direct or indirect transferee) are subject to appropriate adjustment in the event of cash dividends or other distributions to holders of shares of our common stock. The exercise price is also subject to standard weighted average anti-dilution protections if the Registrant issues (or is deemed to issue) securities in the future at a price less than $4.00 per share. The warrants are immediately exercisable and expire on August 25, 2015.

The net proceeds to the Company from the Offering, after deducting placement agent fees and its estimated offering expenses, and excluding the proceeds, if any, from the exercise of the warrants issued in the Offering, are expected to be approximately $17.9 million. The Offering is expected to close on August 25, 2008.

The common stock and warrants to purchase common stock will be issued pursuant to a prospectus supplement dated August 19, 2008, in connection with a takedown from the Company's shelf registration statement on Form S-3 (File No. 333-152133), which became effective on July 14, 2008.

The foregoing summaries of the terms of the Placement Agency Agreement, the Subscription Agreement and the warrants are subject to, and qualified in their entirety by, such documents attached hereto as Exhibits 10.1, 10.2, and 4.1, respectively, and are incorporated herein by reference. A copy of the press release announcing the Offering is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits

Exhibits: 10.1 Placement Agency Agreement, dated August 19, 2008. 10.2 Subscription Agreement, dated August 19, 2008. 4.1 Form of Warrant, dated August 19, 2008. 99.1 Press Release, dated August 20, 2008.

---