NOTE 12 – SUBSEQUENT EVENTS

Effective October 5, 2012, the Company entered into an amendment to its employment agreement (the “Selzer Amendment”) with Benjamin Selzer, which amended the employment agreement entered into with Mr. Selzer on April 2, 2012 (the “Selzer Agreement”) to serve as Chief Operating Officer.  Pursuant to the Selzer Amendment, the base salary under the Selzer Agreement remains $175,000 per annum through March 31, 2013, at which time it shall increase to $250,000 per annum, and shall increase to $320,000 per annum upon the Company consummating an underwritten public offering of equity securities in excess of $10 million net to the Company (the “Selzer Threshold”).

Pursuant to the Selzer Agreement, the base salary was to increase to $250,000 effective October 7, 2012. In addition, pursuant to the Selzer Amendment, a retroactive adjustment of the base salary to the $320,000 per annum rate, not to exceed an aggregate adjustment of $170,000, that Mr. Selzer would have been entitled to upon the Selzer Threshold occurring after October 7, 2012 was eliminated.

On October 26, 2012, the Company elected to voluntarily terminate Benjamin Selzer as Chief Operating Officer, Secretary and Treasurer, effective immediately. In conjunction with the termination, 500,000 unvested options previously issued to Mr. Selzer were cancelled.

Between October and November 2012, the Company issued promissory notes in the amount of $320,000 (the “Notes”) in exchange for $320,000 borrowed from six affiliated investors. The Notes bear no interest and were payable on demand.

On November 14, 2012, the Company sold to accredited investors for aggregate cash proceeds of $390,000, convertible debentures (the “Debentures”) in the principal face amount of $390,000 and the exchange of the Notes for Debentures in the principal face amount of $320,000.

The Debentures mature on the earlier of (i) November 14, 2013 or (ii) the date of closing of a private placement of equity, equity equivalent, convertible debt or debt financing in which we receive gross proceeds, in one or more transactions, of at least $100,000 (a “Subsequent Financing”). The Debentures bear interest at 8% per annum and are convertible at the holder’s option into either (i) a Subsequent Financing at a price equal to a 25% discount to the price of securities sold in the Subsequent Financing or (ii) shares of the Company’s common stock at a conversion price per share equal to $1.00.