ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

On August 29, 2008, pursuant to a Securities Purchase Agreement ("Agreement") of that date, we sold, an aggregate of $2,170,000 principal amount 10% Convertible Notes and common stock purchase warrants to purchase an aggregate of 4,340,000 shares of our common stock to four accredited investors in a private transaction exempt from registration under the Securities Act of 1933 in reliance on the exemptions provided by Section 4(2) and Rule 506 of Regulation D of that act. We used $1,000,000 of the gross proceeds to satisfy the principal amount owed on a Secured Convertible Debenture that matured on August 29, 2008. We intend to use the balance of the proceeds for general working capital.

The notes, which bear interest at 10% per annum, are due two years from the issuance date. The notes are convertible at any time at the option of the holder into shares of our common stock based upon a conversion rate of $0.50 per share, subject to adjustment as provided in the transaction documents. Interest is convertible as provided in the notes. We are not permitted to prepay the notes without the prior written consent of the holders. The Warrants, which have a cashless exercise provision, are exercisable until approximately four years after the closing at an exercise price of $0.60 per share. The number of shares covered by the Warrants and the Warrant exercise price are subject to adjustment as provided in the transaction documents.

As part of the transaction Cornelis Wit, Chief Executive Officer and Director and Guus van Kesteren, Director, purchased $1,770,000 and $150,000, respectively, principal amount of notes, which are convertible into 3,540,000 shares and 300,000 shares, respectively, and received 3,540,000 and 300,000 warrants, respectively. As a result, Mr. Wit and Mr. van Kesteren are considered to be beneficial owners of approximately 15% and 5%, respectively, of our issued and outstanding shares of common stock.

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