NOTE 16 - SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2011

NOTE 16 - SUBSEQUENT EVENTS

Amendment and Restatement of the Convertible Notes and Registration Rights Agreements

On March 10, 2012, the Company amended and restated each of the Subordinated convertible notes payable (the “Convertible Notes”) which:

·	Permit each holder of Convertible Notes to convert the outstanding principal balance due there under into shares of Common Stock of the Company at the conversion price originally set forth in the Convertible Notes ($5.00 per share of Common Stock) on or before March 15, 2012.

Provide to the holders of the Convertible Notes, as consideration for agreeing to the terms of the amendment, a one time cash payment, in such amount as follows: (i) with respect to holders of Convertible Notes who do not elect to convert their Convertible Note prior to March 16, 2012, an amount equal to 3% of the outstanding principal amount of their Convertible Note and (B) with respect to holders of Convertible Notes who elect to convert their Convertible Note prior to March 16, 2012 (the “Converted Holders”), an amount equal to 80% of the interest that such Holder would have received if such Holder had held the Convertible Note to maturity.

·	Remove the dilution protection provision which would have reset the conversion price below $5.00 per share in the event that the Company made certain issuances of Common Stock at a price below $5.00 per share of Common Stock.

The Company also amended and restated the Registration Rights Agreement to among other things:

·	Obligate the Company to file a registration statement with the Securities and Exchange Commission with respect to the shares of Common Stock held by the converted holders, no later than July 31, 2012 and have such registration statement effective no later than August 31, 2012.

Obligate the Company to pay monthly cash penalties to the Converted Holders equal to 5% of the principal amount of such converted holders’ Convertible Notes (as existing prior to the conversion) commencing on August 31, 2012 if the Company fails to register the underlying shares of Common Stock as agreed. Such penalties are capped at a maximum of 30% of the principal amount of such Converted Holders’ Convertible Notes.

The changes made to the Convertible Notes and the Registration Rights Agreement, resulted in a change of accounting treatment of the derivatives on the Convertible Notes. Effective on March 10, 2012, the derivatives will no longer be required to be accounted for on a separate basis. Therefore, the Company will no longer be required to re-measure the fairvalue of the derivatives after the amendment date and will write-off the fair value of the derivative after the amendment. The Company will record the impact of this change in the first quarter of 2012.

The Company has received conversion elections and/or indication of intent to convert from holders representing $1,150 of the total $1,500 of principal amount of Convertible Notes.

3-for-2 Stock Split

On March 27, 2012, the Board of Directors declared a 3-for-2 stock split, payable April 30, 2012 to the holders of record of the Company’s common stock as of the close of business on April 23, 2012. The Company will make cash payments based upon the closing price of the Company’s shares on the record date in lieu of the issuance of fractional shares. Share and per share information in these financial statements does not reflect the impact of this proposed 3 for 2 stock split.