The information reported in Item 3.02 of this report is incorporated into this Item 1.01 by reference.

On September 24, 2008, in a transaction deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act, we entered into an agreement for the sale of $1.25 million in convertible notes with two accredited investors, MicroCapital Fund, LP and MicroCapital Fund, Ltd. We issued three year notes in the aggregate principal amount of $1.25 million, bearing interest at 10% payable quarterly and convertible into shares of our common stock at $1.65 per share. We also issued five year warrants to purchase 387,787 shares of our common stock at $1.65 per share. We also issued three year warrants allowing the note holders to purchase, on substantially the same terms and conditions as the issued notes and warrants, (i) additional convertible notes in the aggregate principal amount of up to $1.25 million and (ii) additional five year warrants to purchase up to 387,787 shares of our common stock at $1.65 per share. After a specified time period, the three year warrants may be callable, subject to the warrant holders' right to exercise, if certain criteria are met, including that the closing sale price per share of our common stock equals or exceeds a certain price per share for at least 24 trading days within a 30 trading day period. We agreed to register the resale of the shares of common stock underlying the securities. We intend to use the proceeds to fund capital expenditure and working capital requirements associated with our China based manufacturing operations.

(d) Exhibits

Exhibit No.   Description
10.1*         Purchase Agreement
10.2*         Form of Convertible Note
10.3*         Form of Series A Warrants
10.4*         Form of Series B Warrants
10.5*         Form of Series C Warrants
10.6*         Registration Rights Agreement
99.1          Press Release, dated September 24, 2008 (Incorporated by reference
              to Exhibit 99.1 of Form 8-K filed on September 25, 2008)