Item 3.02. Unregistered Sales of Equity Securities.

On May 2, 2012, two former consultants exercised options to purchase a total of 8,332 shares of the Company's common stock. The options were issued under the Company's 2009 Incentive Compensation Plan. The exercise price was $2.80 per share for 4,166 shares, and $3.60 per share for 4,166 shares. The issuance of the common stock upon exercise of the options was made without registration in reliance on the exemption from registration afforded by Section 4(2) under the Securities Act of 1933 and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.

On June 28, 2012, three holders of warrants issued to them in connection with prior equity or debt financing transactions, elected to exercise all of their warrants on a "cashless" basis under the terms of the warrants. Warrants to purchase a total of 2,353,744 were exercised. HWH Lending, LLC received a total of 716,484 net shares of common stock from the cashless exercise. Milfam I, L.P. received a total of 716,484 net shares of common stock from the cashless exercise. A third accredited investor received a total of 32, 610 net shares of common stock from the cashless exercise. The warrants had exercise prices of $1.60 per share (471,628 net shares), $3.00 per share (701,388 net shares) and $2.90 per share (292,562 net shares). The issuance of the common stock upon exercise of the warrants was made without registration in reliance on the exemptions from registration afforded by Rule 506 of Regulation D and by Section 4(2) under the Securities Act of 1933 and corresponding provisions of state securities laws, which exempt transactions by an issuer not involving any public offering.