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VistaGen Therapeutics, Inc., a Nevada corporation (VistaGen or the Company), is a biotechnology company applying human pluripotent stem cell technology for drug rescue and novel pharmaceutical assays for predictive heart and liver toxicology and drug metabolism screening. VistaGen's drug rescue activities are focused on combining its human pluripotent stem cell technology platform, Human Clinical Trials in a Test Tube, with modern medicinal chemistry to generate new chemical variants (Drug Rescue Variants) of once-promising small-molecule drug candidates. These are drug candidates discontinued due to heart or liver toxicity or drug metabolism issues after substantial investment and development by large pharmaceutical companies, the U.S. National Institutes of Health (NIH) or university laboratories. VistaGen uses its pluripotent stem cell technology to generate early indications, or predictions, of how humans will ultimately respond to new drug candidates before they are ever tested in humans, bringing human biology to the front end of the drug development process.   Additionally, VistaGen's orally-available, small molecule drug candidate, AV-101, is completing Phase 1 development for treatment of neuropathic pain. Neuropathic pain, a serious and chronic condition causing pain after an injury or disease of the peripheral or central nervous system, affects millions of people worldwide.  To date, VistaGen has been awarded approximately $8.8 million from the NIH for development of AV-101.   The Company is in the development stage and, since inception, has devoted substantially all of its time and efforts to stem cell research and stem-cell based bioassay development, small molecule drug development, creating, protecting and patenting intellectual property, recruiting personnel and raising working capital.   The Merger   VistaGen Therapeutics, Inc., a California corporation and now a wholly-owned subsidiary of the Company (VistaGen California), was incorporated in California on May 26, 1998.  Excaliber Enterprises, Ltd. (Excaliber) was organized as a Nevada corporation on October 6, 2005.  On May 11, 2011, Excaliber acquired all outstanding shares of VistaGen California for 6,836,452 shares of Excalibers common stock (the Merger), and assumed VistaGen Californias pre-Merger obligations to contingently issue common shares in accordance with stock option agreements, warrant agreements, and a convertible promissory note.  As part of the Merger, Excaliber repurchased 5,064,207 shares of its common stock from two stockholders for a nominal amount, leaving 784,500 shares of Excaliber common stock outstanding at the date of the Merger.  The 6,836,452 shares issued to VistaGen Californias stockholders in connection with the Merger represented approximately 90% of the outstanding shares of Excalibers common stock after the Merger.  As a result of the Merger, the business of VistaGen California became the business of Excaliber. Shortly after the Merger:   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Each of the prior directors of VistaGen California was appointed as a director of Excaliber;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">The prior directors and officers of Excaliber resigned as officers and directors of Excaliber;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">VistaGen Californias prior officers were appointed as officers of like tenor of Excaliber;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·  </td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Excalibers directors approved a two-for-one (2:1) forward stock split of Excalibers common stock;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Excalibers directors approved an increase in the number of shares of common stock Excaliber was authorized to issue from 200 million to 400 million shares;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Excaliber changed its name to VistaGen Therapeutics, Inc.;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">VistaGens common stock began trading on the OTC Bulletin Board under the symbol VSTA effective on June 21, 2011; and</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 7%; font: 10pt Times New Roman, Times, Serif; text-align: justify">·</td> <td style="width: 93%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Excaliber adopted VistaGen California's fiscal year-end of March 31, with VistaGen California as the accounting acquirer.</td></tr> </table>    VistaGen California, as the accounting acquirer in the Merger, recorded the Merger as the issuance of stock for the net monetary assets of Excaliber, accompanied by a recapitalization.  This accounting for the transaction was identical to that resulting from a reverse acquisition, except that no goodwill or other intangible assets were recorded.  A total of 1,569,000 shares of common stock, representing the shares held by stockholders of Excaliber immediately prior to the Merger and effected for the post-Merger two-for-one (2:1) forward stock split noted above, have been retroactively reflected as outstanding for all periods presented in the accompanying Condensed Consolidated Financial Statements of the Company.    In October 2011, the Companys stockholders amended the Companys Articles of Incorporation to (1) reduce the number of shares of common stock the Company is authorized to issue from 400 million shares to 200 million shares; (2) authorize the Company to issue up to 10 million shares of preferred stock; and (3) authorize the Companys Board of Directors to prescribe the classes, series and the number of each class or series of preferred stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of each class or series of preferred stock.  In December 2011, the Companys Board of Directors authorized the creation of a series of up to 500,000 shares of Series A Preferred Stock, par value $0.001 (Series A Preferred).  Each share of Series A Preferred is convertible at the option of the holder into ten shares of the Company's common stock.   The Condensed Consolidated Financial Statements in this Quarterly Report represent the activity of VistaGen California from May 26, 1998, and the consolidated activity of VistaGen California and Excaliber (now VistaGen Therapeutics, Inc., a Nevada corporation) from May 11, 2011 (the date of the Merger). The consolidated financial statements also include the accounts of VistaGens other wholly-owned subsidiaries, Artemis Neuroscience, Inc. (Artemis), a Maryland corporation, and VistaStem Canada, Inc., an Ontario corporation.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not contain all of the information and footnotes required for complete consolidated financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Companys interim financial information. The accompanying Condensed Consolidated Balance Sheet at March 31, 2012 has been derived from the Company's audited consolidated financial statements at that date but do not include all disclosures required by U.S. GAAP.  Additionally, certain reclassifications have been made to the Condensed Consolidated Balance Sheet at March 31, 2012 to conform to current year presentation. The operating results for the six months ended September 30, 2012 are not necessarily indicative of the operating results to be expected for the Company's fiscal year ending March 31, 2013 or for any other interim period or any other future year.   The accompanying unaudited Condensed Consolidated Financial Statements and notes to Condensed Consolidated Financial Statements should be read in conjunction with the Companys audited Consolidated Financial Statements for the fiscal year ended March 31, 2012 contained in its Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission.   The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. As a development stage company without sustainable revenues, the Company has experienced recurring losses and negative cash flows from operations. From inception through September 30, 2012, the Company has a deficit accumulated during its development stage of $58.6 million.  The Company expects these conditions to continue for the foreseeable future as it expands its Human Clinical Trials in a Test Tube platform and executes its drug rescue and cell therapy business programs.   At September 30, 2012, the Company had $13,400 in cash and cash equivalents.  The Companys principal source of financing during the quarter ended September 30, 2012 has been proceeds from certain financing transactions between the Company and Platinum Long Term Growth VII, LLC (Platinum), the Companys largest institutional investor.  On July 2, 2012 and on August 31, 2012, the Company issued to Platinum 10% senior secured convertible promissory notes in the principal amount of $500,000 (the July 2012 Platinum Note) and $750,000 (the August 2012 Platinum Note), respectively.  (See Note 7, Convertible Promissory Notes and Notes Payable).  Subsequent to September 30, 2012, on October 11, 2012, the Company and Platinum entered into a Note Exchange and Purchase Agreement, wherein Platinum agreed to purchase 10% senior secured convertible promissory notes in the aggregate principal amount of $2.0 million, issuable over four $500,000 tranches between October 2012 and December 2012.  The first and second $500,000 tranches, in the aggregate principal amount of $1.0 million, were purchased by Platinum on October 11, 2012 and October 19, 2012, respectively.  The final two $500,000 tranches, in the aggregate principal amount of $1.0 million, are issuable on November 15, 2012 and December 15, 2012 provided that the Company consummates a debt or equity financing, or a combination of financings, resulting in gross proceeds of at least $1.0 million. (See Note 11, Subsequent Events).   The Company anticipates that its cash expenditures during the next twelve months will be approximately $4.0 million to $6.0 million and it plans to meet its cash needs and fund its working capital requirements through a combination of additional private placements of its securities, which may include both debt and equity securities issued to Platinum and other investors, stem cell technology-based research and development collaborations, stem cell technology and drug candidate license fees and government grant awards. If the Company is unable to obtain sufficient financing, it may be required to reduce, defer, or discontinue certain of its research and development activities or it may not be able to continue as a going concern.

Use of Estimates   The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates include those relating to revenue recognition, share-based compensation, and assumptions that have been used to value warrant modifications and previous put option, note term extension and warrant liabilities.   Revenue Recognition   The Company generates revenue principally from collaborative research and development arrangements, technology access fees and government grants.  Revenue arrangements with multiple components are divided into separate units of accounting if certain criteria are met, including whether the delivered component has stand-alone value to the customer. Consideration received is allocated among the separate units of accounting based on their respective selling prices.  The selling price for each unit is based on vendor-specific objective evidence, or VSOE, if available, third party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third party evidence is available.  The applicable revenue recognition criteria are then applied to each of the units.   The Company recognizes revenue when the four basic criteria of revenue recognition are met: (1) a contractual agreement exists; (2) the transfer of technology has been completed or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.  For each source of revenue, the Company complies with the above revenue recognition criteria in the following manner:   <table align="center" cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="width: 3%; font: 10pt Times New Roman, Times, Serif; text-align: justify"></td> <td style="width: 94%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Collaborative arrangements typically consist of non-refundable and/or exclusive technology access fees, cost reimbursements for specific research and development spending, and various milestone and future product royalty payments.  If the delivered technology does not have stand-alone value, the amount of revenue allocable to the delivered technology is deferred.  Non-refundable upfront fees with stand-alone value that are not dependent on future performance under these agreements are recognized as revenue when received, and are deferred if the Company has continuing performance obligations and has no objective and reliable evidence of the fair value of those obligations.  The Company recognizes non-refundable upfront technology access fees under agreements in which it has a continuing performance obligation ratably, on a straight-line basis, over the period in which the Company is obligated to provide services.  Cost reimbursements for research and development spending are recognized when the related costs are incurred and when collectability is reasonably assured.  Payments received related to substantive, performance-based at-risk milestones are recognized as revenue upon achievement of the milestone event specified in the underlying contracts, which represent the culmination of the earnings process.  Amounts received in advance are recorded as deferred revenue until the technology is transferred, costs are incurred, or a milestone is reached.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; text-align: justify"> </td> <td style="width: 3%; text-align: justify"></td> <td style="width: 94%; text-align: justify">Technology license agreements typically consist of non-refundable upfront license fees, annual minimum access fees and/or royalty payments. Non-refundable upfront license fees and annual minimum payments received with separable stand-alone values are recognized when the technology is transferred or accessed, provided that the technology transferred or accessed is not dependent on the outcome of the continuing research and development efforts. Otherwise, revenue is recognized over the period of the Companys continuing involvement.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; text-align: justify"> </td> <td style="width: 3%; text-align: justify"></td> <td style="width: 94%; text-align: justify">Government grants, which support the Companys research efforts on specific projects, generally provide for reimbursement of approved costs as defined in the terms of grant awards. Grant revenue is recognized when associated project costs are incurred.</td></tr> </table>   Research and Development Expenses   Research and development expenses include internal and external costs.  Internal costs include salaries and employment related expenses of scientific personnel and direct project costs.  External research and development expenses consist of sponsored stem cell research and development costs, costs associated with clinical and non-clinical development of AV-101, the Companys small molecule prodrug candidate, and costs related to the application and prosecution of patents related to the Companys stem cell technology, Human Clinical Trials in a Test Tube, and AV-101.  All such costs are charged to expense as incurred.   Stock-Based Compensation   The Company recognizes compensation cost for all share-based awards to employees based on the grant date fair value of the award.  Share-based compensation expense is recognized over the period during which the employee is required to perform services in exchange for the award, which generally represents the scheduled vesting period.  The Company has no awards with market or performance conditions.  For equity awards to non-employees, the Company re-measures the fair value of the awards as they vest and the resulting value is recognized as an expense during the period over which the services are performed.   The Company recorded share-based compensation costs of $77,300 and $148,300 for the three and six month periods ended September 30, 2012, respectively and $539,600 and $979,400 for the three and six month periods ended September 30, 2011, respectively. During the six months ended September 30, 2012, the Company granted options to purchase an aggregate of 155,000 shares of its common stock at an exercise price of $0.51 per share (the quoted market price on the grant date) to its employees (excluding senior management) and certain scientific consultants.  During the six months ended September 30, 2011, the Company granted options to purchase an aggregate of 230,000 shares of its common stock at exercise prices ranging from $1.80 per share to $2.58 per share to certain of its employees and consultants.  At September 30, 2012, there were options outstanding to purchase 4,920,771 shares of the Companys common stock at a weighted average exercise price of $1.51 per share.   Comprehensive Loss   The Company has no components of other comprehensive loss other than net loss, and accordingly the Companys comprehensive loss is equivalent to net loss for the periods presented.   Loss per Common Share   Basic loss per share of common stock excludes the effect of dilution and is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period.  Diluted loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock.  For all periods presented, potentially dilutive securities are excluded from the computation in loss periods, as their effect would be antidilutive.   Potentially dilutive securities excluded from diluted net loss per common share are as follows:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">September 30,</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td> <td nowrap="nowrap" style="font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%">All series of preferred stock issued and outstanding</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right">5,000,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right">-</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Outstanding options under the 2008 and 1999 Stock Incentive Plan and 1998 Scientific Advisory Board Plan</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">4,920,771</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">4,719,153</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Outstanding warrants to purchase common stock</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5,127,434</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">6,523,064</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="font-size: 12pt">February 2012 12% convertible promissory notes and accrued interest (1)</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">357,900</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">15,406,105</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">11,242,217</td> <td nowrap="nowrap"> </td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 76%">____________</td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"> </td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right"> </td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td colspan="8">(1) assumes mandatory conversion in connection with a qualified financing at $2.00 per share, plus fee warrants to placement agent</td> <td nowrap="nowrap"> </td></tr> </table>   Recent Accounting Pronouncements   There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended September 30, 2012, as compared to the recent accounting pronouncements described in the Companys Form 10-K for the fiscal year ended March 31, 2012, that are of significance or potential significance to the Company.

The Company follows the principles of fair value accounting as they relate to its financial assets and financial liabilities. Fair value is defined as the estimated exit price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, rather than an entry price that represents the purchase price of an asset or liability.  Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters.  Where observable prices or inputs are not available, valuation models are applied.  These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on several factors, including the instruments complexity.  The required fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels is described as follows:   <table align="center" cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; font: 10pt Times New Roman, Times, Serif; text-align: justify"> </td> <td style="width: 3%; font: 10pt Times New Roman, Times, Serif; text-align: justify"></td> <td style="width: 94%; font: 10pt Times New Roman, Times, Serif; text-align: justify">Level 1  Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; text-align: justify"> </td> <td style="width: 3%; text-align: justify"></td> <td style="width: 94%; text-align: justify">Level 2  Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; text-align: justify"> </td> <td style="width: 3%; text-align: justify"></td> <td style="width: 94%; text-align: justify">Level 3  Unobservable inputs (i.e., inputs that reflect the reporting entitys own assumptions about the assumptions that market participants would use in estimating the fair value of an asset or liability) are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.</td></tr> </table>   A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  Where quoted prices are available in an active market, securities are classified as Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific financial instrument, then the Company estimates fair value by using pricing models, quoted prices of financial instruments with similar characteristics or discounted cash flows. In certain cases where there is limited activity or less transparency around inputs to valuation, financial assets or liabilities are classified as Level 3 within the valuation hierarchy.   The Company does not use derivative instruments for hedging of market risks or for trading or speculative purposes.  No assets or liabilities were carried at fair value at September 30, 2012 or March 31, 2012.   During 2007 and 2008, the Company issued three convertible promissory notes with an aggregate principal balance of $4.0 million (the Original Platinum Notes) to Platinum Long Term Growth VII, LLC (Platinum).  On May 5, 2011, the Original Platinum Notes were amended, restated and consolidated into a single note (the Platinum Note) with a principal balance of $4.0 million (May 2011 Amendment).  In conjunction with the issuance of the Original Platinum Notes, the Company determined that i) the cash payment option or put option, which provided the lender with the right to require the Company to repay part of the debt at a 25% premium, and ii) the note term extension option, which provided the lender with the right to extend the maturity date by one year, were embedded derivatives that should be bifurcated and accounted for separately as liabilities.  In conjunction with the issuance of the Original Platinum Notes, the Company also issued warrants to purchase 560,000 shares of its common stock. These warrants included certain exercise price adjustment features and, as a result, the Company determined that the warrants were liabilities, which were recorded at their estimated fair value. The Company determined the fair value of the i) put option and note term extension option using an internal valuation model with Level 3 inputs and ii) the warrant liability using a lattice model with Level 3 inputs. Inputs used to determine fair value include estimated value of the underlying common stock at the valuation measurement date, the remaining contractual term of the notes, risk-free interest rates, expected volatility of the price of the underlying common stock, and the probability of a qualified financing. Changes in the fair value of these liabilities prior to the May 2011 Amendment were recognized as a non-cash charge or income in other income (expense) in the consolidated statements of operations.   As a result of the May 2011 Amendment, the Original Platinum Notes were amended and restated on May 5, 2011, eliminating the cash payment option.  Further, concurrent with the Merger transaction described in Note 1 above, the warrants were determined not to be liabilities, since the exercise price adjustment feature ended upon the Company becoming a public company as a result of the Merger.  The increase in fair value of the warrant liability of $7,000 and the increase in the put option and note term extension option liabilities of $71,000 were recognized in other expense, net in the statement of operations for the quarter ended June 30, 2011.  The remaining put option and note term extension option liabilities, in the amount of $161,700, were reclassified to note discount in connection with the May 2011 Amendment.  The aggregated fair value of the warrants at May 11, 2011, $424,100, was reclassified from a liability to additional paid-in capital, a component of stockholders deficit.   In December 2011, the Company and Platinum entered into a Note and Warrant Exchange Agreement pursuant to which the Platinum Note and warrants issued to Platinum were cancelled in exchange for shares of the Companys Series A Preferred.

Prepaid expenses consist of the following:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="font-weight: bold; text-align: center">September 30,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="font-weight: bold; text-align: center">March 31,</td> <td nowrap="nowrap" style="font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> Investor relations and awareness services paid</td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%">   by issuance of common stock or warrants</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">203,400</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">19,700</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> Insurance</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">71,900</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">19,000</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> Legal fees</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">23,600</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">6,100</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> All other</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">16,100</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">6,100</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">315,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">50,900</td> <td nowrap="nowrap"> </td></tr> </table> Accrued expenses consist of the following:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="font-weight: bold; text-align: center">September 30,</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="font-weight: bold; text-align: center">March 31,</td> <td nowrap="nowrap" style="font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%"> Accrued professional services</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">58,800</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">107,400</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> Accrued research and development expenses</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">237,500</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> Accrued vacation pay and other compensation</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">226,700</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">229,900</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> Accrued placement agent fees</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">50,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">50,000</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> Accrued registration rights payments</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">20,700</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> All other</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">38,200</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">32,500</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">394,400</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">657,300</td> <td nowrap="nowrap"> </td></tr> </table>

The following table summarizes the components of the companys secured and unsecured promissory notes and other notes payable at September 30, 2012 and March 31, 2012 (amounts in 100s).   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="11" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">September 30, 2012</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="11" style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">March 31, 2012</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">Principal</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">Accrued</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">Principal</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> Accrued </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="text-align: center; background-color: White; vertical-align: middle"> <td style="font-weight: bold; padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Balance</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Interest</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Total</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Balance</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"> Interest </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">Total</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; font-style: italic; text-align: left; padding-left: 15px">Senior Secured 10% Convertible Promissory Notes:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 41%; text-align: left; padding-left: 30px">Issued to Platinum on July 2, 2012</td><td style="width: 7%"> </td> <td style="width: 2%; text-align: left">$</td><td style="width: 2%; text-align: right">500,000</td><td style="width: 2%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">12,400</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 4%; text-align: right">512,400</td><td style="width: 2%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 3%; text-align: left">$</td><td style="width: 4%; text-align: right">  </td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 7%; text-align: right">  </td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td> <td style="width: 2%; text-align: left">$</td><td style="width: 5%; text-align: right">  </td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 30px">Issued to Platinum on August 30, 2012</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">750,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">756,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 30px">   Total Senior notes (non-current)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,250,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">18,700</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,268,700</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; font-style: italic; text-align: left; padding-left: 15px">Convertible Promissory Notes:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="font-weight: bold"> </td> <td style="font-weight: bold; text-align: left"> </td><td style="font-weight: bold; text-align: right"> </td><td style="font-weight: bold; text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 30px"> February 2012 12% convertible promissory notes</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">500,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">35,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">535,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">500,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">5,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">505,300</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 30px">  Note discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(481,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(481,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(499,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(499,300</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 30px">   Total 12% convertible notes, net (non-current)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">18,700</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">35,400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">54,100</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">700</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">5,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,000</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; font-style: italic; text-align: left; padding-left: 15px">Notes Payable to unrelated parties:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 30px"> 7.0% Notes payable (April 2011)</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">38,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">38,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">63,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">64,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 30px"> 7.0% Notes payable (August 2012)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">60,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">60,400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 30px"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">98,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">600</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">99,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">63,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">64,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 60px"> less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(43,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(600</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(43,600</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(63,800</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(64,200</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 30px"> 7.0% Notes payable - non-current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">55,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">55,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 30px"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 30px"> 7.5% Notes payable to vendors for accounts payable converted to notes payable:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 45px">    Burr, Pilger, Mayer</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">91,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">93,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">93,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">94,500</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 45px">    Desjardins</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">214,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">225,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">224,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">227,100</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 45px">    McCarthy Tetrault</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">441,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">22,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">463,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">459,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">5,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">465,100</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 45px">    May 2011 Morrison Foerster</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,420,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">37,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,458,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 45px">    August 2012 Morrison & Foerster Note A</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">991,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">991,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 45px">    August 2012 Morrison & Foerster Note B</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,379,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">8,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,387,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">       Note discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,600,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,600,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(228,900</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(228,900</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 45px"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,518,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">42,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,560,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,968,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">47,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">3,015,800</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 60px"> less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(531,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(33,900</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(564,900</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(367,700</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(367,700</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">   non-current portion and discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">987,200</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">8,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">995,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,600,600</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">47,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,648,100</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 45px"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 30px">  5.8%  and 8% Notes payable to insurance</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">premium financing company (current)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">40,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">40,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">4,600</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">4,600</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 45px"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 30px"> 10% Notes payable to vendors for accounts</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 45px">payable converted to notes payable</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">158,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">20,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">179,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">165,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">16,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">182,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 60px"> less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(145,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(20,800</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(166,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(146,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(146,000</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">   non-current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">13,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">13,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">19,400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">16,800</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">36,200</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-left: 45px"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 45px">   Total notes payable to unrelated paties</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,815,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">63,600</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,879,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">3,202,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">64,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">3,266,800</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 60px"> less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(759,700</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(55,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(815,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(582,100</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(582,500</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">   non-current portion and discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,056,200</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">8,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">1,064,500</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,620,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">64,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">2,684,300</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-size: 11pt"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-family: Arial, Helvetica, Sans-Serif"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; font-style: italic; text-align: left; padding-left: 15px">Notes payable to related parties:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif"> </td> <td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: right"> </td><td style="font-family: Arial, Helvetica, Sans-Serif; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-left: 30px"> 7 % Note payable to Cato Holding Co.</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">293,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">17,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">310,600</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">293,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">6,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">300,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 15px">           Note discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(18,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(18,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(24,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(24,300</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">    Total notes payable to related parties</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">275,400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">17,200</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">292,600</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">269,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,900</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">275,900</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 60px"> less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(237,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(17,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(254,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(168,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(168,200</td><td style="padding-bottom: 1pt; text-align: left">)</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 45px">   non-current portion and discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">38,200</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">38,200</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">100,800</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,900</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">107,700</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> </table>     Senior Secured Convertible Promissory Notes   On July 2, 2012 and on August 31, 2012, the Company issued to Platinum senior secured convertible promissory notes in the principal amount of $500,000 (the July 2012 Platinum Note) and $750,000 (the "August 2012 Platinum Note"), respectively.  The July 2012 Platinum Note and the August 2012 Platinum Note each accrue interest at the rate of 10% per annum and are due and payable on July 2, 2015.  The July 2012 Platinum Note and the August 2012 Platinum Note are each mandatorily convertible into securities that may be issued by the Company in an equity, equity-based, or debt financing, or series of financings, subsequent to the issuance of the note resulting in gross proceeds to the Company of at least $3,000,000, excluding any additional investment by Platinum.  However, as further discussed in Note 11, Subsequent Events, all amounts due under the terms of the July 2012 Platinum Note and the August 2012 Platinum Note, as well as the related accrued interest, were consolidated into a senior secured convertible note and warrant financing with Platinum that is expected to result in gross proceeds to the Company of approximately $3.25 million, including proceeds of $1.25 million from the issuance of the July 2012 Platinum Note and the August 2012 Platinum Note. The Company and Platinum also executed and subsequently amended a security agreement to secure repayment of all obligations due and payable under the terms of the July 2012 Platinum Note and the August 2012 Platinum Note.  The Company did not issue warrants in connection with either the July 2012 Platinum Note or the August 2012 Platinum Note.    February 2012 12% Convertible Notes   On February 28, 2012, the Company completed a private placement of convertible promissory notes to certain accredited investors in the aggregate principal amount of $500,000 (the "Notes").  Each Note accrues interest at the rate of 12% per annum and matures on the earlier of (i) twenty-four months from the date of issuance, or (ii) the consummation of an equity, equity-based, or series of equity-based financings resulting in gross proceeds to the Company of at least $4.0 million (the Qualified Financing Threshold).  The holder of each Note may voluntarily convert the outstanding principal amount of the Notes and all accrued and unpaid interest (the Outstanding Balance) at any time prior to maturity into that number of shares of the Companys common stock equal to the Outstanding Balance, divided by $3.00 (the "Conversion Shares").  In addition, in the event the Company consummates a financing equal to or exceeding the Qualified Financing Threshold, and the price per unit of the securities sold, or price per share of common stock issuable in connection with such financing, is at least $2.00 (a Qualified Financing), the Outstanding Balance will automatically convert into such securities, including warrants, that are issued in the Qualified Financing, the amount of which shall be determined according to the following formula: (Outstanding Balance at the closing date of the Qualified Financing) x (1.25) / (the per security price of the securities sold in the Qualified Financing).  The purchaser of each Note was issued a five-year warrant to purchase, for $2.75 per share, the number of shares of the Companys common stock equal to 150% of the total principal amount of the Notes purchased by such purchaser, divided by $2.75, resulting in the potential issuance of an aggregate of 272,724 shares of the Companys common stock upon exercise of the warrants (the Warrant Shares).   The Company entered into a Registration Rights Agreement with the purchasers of the February 2012 Notes pursuant to which the Company agreed to register for resale the Conversion Shares and the Warrant Shares.  The Company agreed to file a registration statement no later than ninety days from the February 28, 2012 closing date, or by May 28, 2012 (the Filing Deadline).  If the Company does not file the registration statement by the Filing Deadline or if the registration statement is not declared effective by the agreed upon effectiveness deadline, the Company is required to make aggregate payments to the purchasers in an amount equal to 1% of the $500,000 aggregate face amount of the February 2012 Notes for each 30-day period following the Filing Deadline, or pro-rata portion thereof, with an aggregate limitation of $50,000.  At September 30, 2012, for strategic purposes, the Company had not filed the registration statement and had recorded $20,700 as a liability under the Registration Rights Agreement.  Such amount is included in Accrued expenses in the Condensed Consolidated Balance Sheet at September 30, 2012.  (See Note 6, Accrued Expenses.)   August 2010 Short-Term Note Converted to 7% Note Payable   In August 2010, the Company issued short-term, non-interest bearing, unsecured promissory notes (the August 2010 Short-Term Notes) having an aggregate principal amount, as adjusted, of $1,120,000.  In May 2011, a total of $840,000 of the aggregate principal amount of the August 2010 Short-Term Notes were converted into Units consisting of shares of the Companys common stock and three-year warrants to purchase shares of the Companys common stock at an exercise price of $2.50 per share.  Of the remaining balance of the August 2010 Short Term Notes; $105,000 of such amount was converted into a long-term note issued to Cato Holding Company, doing business as Cato BioVentures; and $175,000 of such amount was amended into a note bearing interest at 7% per annum, as described below.   In April 2011, the Company and the holder of the $175,000 August 2010 Short-Term Note amended the note, whereby the Company paid $50,000 of the note balance in May 2011 and was to make four monthly payments of $5,000 between May 2011 and August 2011, an additional nine monthly payments of $11,125 per month for the period from September 1, 2011 through May 1, 2012, plus a final payment on May 2, 2012 equal to any remaining balance.  In September 2011, the Company and the holder agreed to modify the payment schedule to require payments of $5,000 per month through November 1, 2011, six monthly payments of $11,125 for the period from December 1, 2011 through May 1, 2012, an additional payment of $11,125 on May 2, 2012, plus a final payment on June 30, 2012 equal to any remaining balance.  For strategic purposes, the Company did not make the February 2012 and March 2012 payments as scheduled. In March 2012, the Company and the note holder again agreed to modify the payment schedule to require seven monthly payments of $9,171 beginning June 1, 2012 with the final payment due on December 1, 2012 to include interest accrued after March 2012.  The Company made three payments totaling $27,500 during the period from June 1, 2012 to September 30, 2012.   Issuance of Long-Term Promissory Note to Cato Holding Company   In April 2011, all amounts owed by the Company to Cato Holding Company ("CHC") and its affiliates, which included the $105,000 balance of the August 2010 Short-Term Note issued to Cato BioVentures discussed above, were consolidated into a single note, in the principal amount of $352,273 (the 2011 CHC Note).  Concurrently, CHC released certain security interests in the Companys personal property.  The 2011 CHC note bears interest at 7% per annum, compounded monthly.  Under the terms of the note, the Company was to make six monthly payments of $10,000 each beginning June 1, 2011, and thereafter to make payments of $12,500 monthly until the note is repaid in full. The Company has the option to prepay the outstanding balance under this note in full or in part at any time during its term without penalty.   At September 30, 2012, the Company had not made the monthly payments due subsequent to December 2011.  As disclosed in Note 11, Subsequent Events, in October 2012, the Company issued a new unsecured promissory note in the principal amount of $310,400 and a warrant to CHC, exercisable for 250,000 shares of the Companys common stock, in exchange for the cancellation of the 2011 CHC Note.   Issuance of Long-Term Notes and Cancellation of Amounts Payable   On February 25, 2011, the Company issued to Burr, Pilger, and Mayer, LLC (BPM) an unsecured promissory note in the principal amount of $98,674 for amounts payable in connection with valuation services provided to the Company by BPM.  The BPM note bears interest at the rate of 7.5% per annum and has payment terms of $1,000 per month, beginning March 1, 2011 and continuing until all principal and interest are paid in full.  In addition, a payment of $25,000 shall be due upon the sale of the Company or upon the Company completing a financing transaction of at least $5.0 million during any three-month period, with the payment increasing to $50,000 (or the amount then owed under the note, if less) upon the Company completing a financing of over $10.0 million.   On April 29, 2011, the Company issued to Desjardins Securities, Inc. (Desjardins) an unsecured promissory note in the principal amount of CDN $236,000 for amounts payable for legal fees incurred by Desjardins in connection with investment banking services provided to the Company by Desjardins.  The Desjardins note bears interest at 7.5% and will be due, along with all accrued but unpaid interest on the earliest of (i) June 30, 2014, (ii) the consummation of a Change of Control, as defined in the Desjardins note, and (iii) any failure to pay principal or interest when due.  The Company is to make payments of CDN $4,000 per month beginning May 31, 2011, increasing to CDN $6,000 per month on January 31, 2012. In addition, if, prior to June 30, 2012, the Company closes an equity financing or series of equity financings with aggregate proceeds of $5.0 million or more, then the Company shall make a payment of $39,600 to Desjardins within 10 business days of the closing of such transaction(s). Beginning on January 1, 2012, the Company shall also make payments equal to one-half percent (0.5%) of the net proceeds of all private or public equity financings closed during the term of the note. At September 30, 2012, the Company had not made the monthly payments required for February through September 2012. However, the Company resumed such monthly payments in October 2012.   On May 5, 2011, the Company issued to McCarthy Tetrault LLP (McCarthy) an unsecured promissory note in the principal amount of CDN $502,797 for the amounts payable in connection with legal services provided to the Company.  The McCarthy note bears interest at 7.5% and will be due, along with all accrued but unpaid interest on the earliest of (i) June 30, 2014, (ii) the consummation of a Change of Control, as defined in the McCarthy note, and (iii) any failure to pay principal or interest when due.  The Company is to make payments of CDN $10,000 per month beginning May 31, 2011, increasing to CDN $15,000 per month on January 31, 2012. In addition, if, prior to June 30, 2012, the Company had closed an equity financing or series of equity financings with aggregate proceeds of $5.0 million or more, then the Company would have been required to make a payment of $100,000 to McCarthy within 10 business days of the closing of such transaction(s). Beginning on January 1, 2012, the Company is also required to make payments equal to one percent (1%) of the net proceeds of all private or public equity financings closed during the term of the note.  At September 30, 2012, the Company had not made the monthly payments required for February through September 2012. However, the Company resumed such monthly payments in October 2012.   On August 30, 2012, the Company issued a promissory note in the principal amount of $60,000 and 15,000 shares of its common stock valued at a market price of $0.94 per share to Progressive Medical Research in settlement of past due obligations for clinical research services in the amount of $79,900. Under the terms of the settlement, the company also agreed to make monthly cash payments of $5,000 in August 2012 through December 2012. The promissory note bears interest at 7% per annum and requires payments of $1,000 per month beginning January 15, 2013 until all principal and interest is paid in full.  The note requires payment in full upon the sale of all or substantially all of the Companys assets or upon the Company completing a financing transaction, or series of transactions, resulting in gross proceeds to the Company of at least $4.0 million in any three-month period, excluding proceeds from stock option or warrant exercises. The Company charged the loss on the settlement to interest expense.   On May 5, 2011, the Company and Morrison & Foerster LLP (Morrison & Foerster), the Companys legal and intellectual property counsel, amended a previously outstanding note (the Original Note) issued by the Company in payment of legal services (the Amended Note).  Under the Amended Note, the principal balance of the Original Note was increased to $2,200,000, interest accrued at the rate of 7.5% per annum, and the Company was required to make an additional payment of $100,000 within three business days of the date of the Amended Note, which amount was paid.   On August 31, 2012, the Company restructured the Amended Note (the Restructuring Agreement).  Pursuant to the Restructuring Agreement, the Company issued to Morrison & Foerster two new unsecured promissory notes to replace the Amended Note, one in the principal amount of $1,000,000 ("Replacement Note A") and the other in the principal amount of $1,379,400 ("Replacement Note B") (together, the "Replacement Notes"); amended an outstanding warrant to purchase shares of the Companys common stock (the Amended M&F Warrant); and issued a new warrant to purchase shares of the Companys common stock (the New M&F Warrant).  Under the terms of the Restructuring Agreement, the Amended Note was cancelled and all of the Company's past due payment obligations under the Amended Note were satisfied.  The Company made a payment of $155,000 to Morrison & Foerster on August 31, 2012 pursuant to the terms of the Amended Note, and issued the Replacement Notes, each dated as of August 31, 2012.  Both Replacement Notes accrue interest at the rate of 7.5% per annum and are due and payable on March 31, 2016.  Replacement Note A requires monthly payments of $15,000 per month through March 31, 2013, and $25,000 per month thereafter until maturity.  Payment of the principal and interest on Replacement Note B will be made solely in shares of the Companys common stock pursuant to Morrison & Foersters surrender from time to time of all or a portion of the principal and interest balance due on Replacement Note B in connection with its exercise of the New M&F Warrant, at an exercise price of $1.00 per share, and concurrent cancellation of indebtedness and surrender of Replacement Note B; provided, however, that Morrison & Foerster shall have the option to require payment of Replacement Note B in cash upon the occurrence of a change in control of the Company or an event of default, and only in such circumstances.    The Company treated the aggregate of the incremental value of the Amended M&F Warrant and the fair value of the New M&F Warrant as a discount to the Replacement Notes.  Under the terms of the Amended M&F Warrant, the Company amended the warrant to purchase 425,000 shares of its common stock originally issued to Morrison & Foerster on March 15, 2010 to extend the expiration date of the warrant from December 31, 2014 to September 15, 2017 and to provide for exercise by paying cash or by the cancellation in whole or in part of the Companys indebtedness under either of the Replacement Notes.  The Company determined that the incremental value of the Amended M&F Warrant was $121,650 at the modification date using the Black-Scholes Option Pricing Model and the following assumptions:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: left; font-weight: bold">Assumption:</td> <td style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Pre-modification</td> <td nowrap="nowrap" style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td> <td style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Post-modification</td> <td nowrap="nowrap" style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 54%; text-align: left">Market price per share</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 20%; text-align: right">0.94</td> <td nowrap="nowrap" style="width: 1%; text-align: left"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 20%; text-align: right">0.94</td> <td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">Exercise price per share</td> <td style="text-align: left"> </td> <td style="text-align: left">$</td> <td style="text-align: right">2.00</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left">$</td> <td style="text-align: right">2.00</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">Risk-free interest rate</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.25</td> <td nowrap="nowrap" style="text-align: left">%</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.60</td> <td nowrap="nowrap" style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">Expected term (years)</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">2.33</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">5.04</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">Volatility</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">77.9</td> <td nowrap="nowrap" style="text-align: left">%</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">88.8</td> <td nowrap="nowrap" style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">Dividend rate</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.0</td> <td nowrap="nowrap" style="text-align: left">%</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.0</td> <td nowrap="nowrap" style="text-align: left">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; font-weight: bold">Fair Value per share</td> <td style="padding-bottom: 2.65pt; text-align: left; font-weight: bold"> </td> <td style="text-align: left; font-weight: bold">$</td> <td style="text-align: right; font-weight: bold">0.24</td> <td nowrap="nowrap" style="padding-bottom: 2.65pt; text-align: left; font-weight: bold"> </td> <td style="padding-bottom: 2.65pt; text-align: left; font-weight: bold"> </td> <td style="text-align: left; font-weight: bold">$</td> <td style="text-align: right; font-weight: bold">0.52</td> <td nowrap="nowrap" style="padding-bottom: 2.65pt; text-align: left; font-weight: bold"> </td></tr> </table>   The New M&F Warrant is exercisable for the number of shares of the Companys common stock equal to the principal and accrued interest due under the terms of Replacement Note B divided by the warrant exercise price of $1.00 per share.  At the August 31, 2012 date of grant, the New M&F Warrant was exercisable to purchase 1,379,376 shares of the Companys common stock.  The New M&F Warrant effectively requires exercise only by the cancellation in whole or in part of the Companys indebtedness under either of the Replacement Notes. The New M&F Warrant expires on September 15, 2017.  The Company determined the fair value of the New M&F Warrant to be $0.94 per share, or $1,296,600, at the date of grant using the Black Scholes Option Pricing Model and the following assumptions:  market price per share: $0.94; exercise price per share: $0.00; risk-free interest rate: 0.61%; contractual term: 5.04 years; volatility: 88.8%; expected dividend rate: 0%.  The note discounts totaling $1,617,700, including the $199,500 remaining unamortized discount recorded prior to the modification, will be amortized to interest expense using the effective interest method over the term of the Replacement Notes. The aggregate amount of the incremental fair value of the Amended M&F Warrant, and the fair value of the New M&F Warrant, $1,418,300, was recognized as equity and was credited to additional paid-in capital in the accompanying Condensed Consolidated Balance Sheets.  The effective interest rate on the Replacement Notes at the date of issuance was 50.37%, based on the stated interest rate, the amount of discount, and the term of the Replacement Notes.

University Health Network   On September 17, 2007, the Company and University Health Network ("UHN") entered into a Sponsored Research Collaboration Agreement (SRCA) to develop certain stem cell technologies for drug discovery and drug rescue technologies. The SRCA was amended on April 19, 2010 to extend the term to five years and give the Company various options to extend the term for an additional three years. On December 15, 2010, the Company and UHN entered into a second amendment to expand the scope of work to include induced pluripotent stem cell technology and to further expand the scope of research and term extension options. On April 25, 2011, the Company and UHN amended the SRCA a third time to expand the scope to include therapeutic and stem cell therapy applications of induced pluripotent cells and to extend the date during which the Company may elect to fund additional projects to April 30, 2012.  On October 24, 2011, the Company and UHN amended the SRCA a fourth time to identify five key programs that will further support the Companys core drug rescue initiatives and potential cell therapy applications.  Under the terms of the fourth amendment, the Company committed to making monthly payments of $50,000 per month from October 2011 through September 2012 to fund these programs.  As disclosed in Note 11, Subsequent Events, on October 10, 2012, the Company issued a promissory note in the principal amount of $549,500 and a warrant to UHN as payment in full for services rendered under the fourth amendment and also entered into a fifth amendment to the SRCA.   Concurrent with the execution of the fourth amendment to the SRCA, the Company and UHN entered into a License Agreement under the terms of which UHN granted the Company exclusive rights to the use of a novel molecule that can be employed in the identification and isolation of mature and immature human cardiomyocytes from pluripotent stem cells, as well as methods for the production of cardiomyocytes from pluripotent stem cells that express this marker.  In consideration for the grant of the license, the Company has agreed to make payments to UHN totaling $3.9 million, if, and when, it achieves certain milestones set forth in the License Agreement, and to pay UHN royalties based on the receipt of revenue by the Company attributable to the licensed patents.   U.S. National Institutes of Health   During fiscal years 2006 through 2008, the U.S. National Institutes of Health ("NIH") awarded the Company a $4.2 million grant to support preclinical development of AV-101, the Companys lead drug candidate for treatment of neuropathic pain and other neurodegenerative diseases such as Huntingtons and Parkinsons diseases.  In June 2009, the NIH awarded the Company a $4.2 million grant to support the Phase I clinical development of AV-101, which amount was subsequently increased to a total of $4.6 million in July 2010.  The Company recognized NIH grant revenue related to AV-101 in the amounts of $187,000 and $731,000 in the six-month periods ended September 30, 2012 and 2011, respectively.  The grant expired in the ordinary course on June 30, 2012 and has not been extended or renewed.   Cato Research Ltd.   The Company has built a long-term strategic development relationship with Cato Research Ltd. ("CRL"), a global contract research and development organization, or CRO.  CRL has provided the Company with access to essential CRO services and regulatory expertise supporting its AV-101 preclinical and clinical development programs and other projects.  The Company recorded research and development expenses for CRO services provided by CRL in the amounts of $291,800 and $514,400 in the three month and six month periods ended September 30, 2012, respectively, and $221,000 and $659,000 in the three month and six month periods ended September 30, 2011, respectively. At September 30, 2012, the Company owed $895,300 to CRL for research, development and regulatory compliance services rendered by CRL. As disclosed in Note 11, Subsequent Events, the Company issued an unsecured promissory note in the principal amount of $1,009,000, and a warrant exercisable for 1,009,000 shares of the Companys common stock, as payment in full of all amounts owed to CRL as of September 30, 2012 and for CRO services to be rendered to the Company through December 31, 2012. Fall 2012 Private Placement of Units   In September 2012, the Company sold 300,000 Units in a private placement to an accredited investor and received cash proceeds of $150,000. The Units were sold for $0.50 per Unit and each Unit consisted of one share of the Companys common stock and a five year warrant to purchase one half (1/2) of one share of the Companys common stock at an exercise price of $1.50 per share. The proceeds of this private placement have reduced the remaining amount of financing the Company is required to secure from $1.0 million to $850,000 to be entitled to sell additional senior secured convertible promissory notes to Platinum in November and December 2012 under the terms of the Note Exchange and Purchase Agreement described in Note 11, Subsequent Events.   Warrants and Stock Grants   In April 2012, the Company entered into a contract for investor relations consulting services pursuant to which it granted three-year warrants to purchase 50,000 shares of the Companys common stock at an exercise price of $2.80 per share.  The Company valued the warrant at $69,200 using the Black Scholes Option Pricing Model and the following assumptions:  market price per share: $2.74; exercise price per share: $2.80; risk-free interest rate: 0.50%; contractual term: 3 years; volatility: 79.09%; expected dividend rate: 0%.  The fair value of the warrant was recorded as a prepaid expense and is being expensed over one year in accordance with the terms of the contract.   In June 2012, the Company entered into a contract for investor relations and public company support services through December 31, 2012 pursuant to which it granted 280,000 restricted shares of its common stock valued at $238,000 based on the grant date quoted market price of $0.85 per share and warrants to purchase 100,000 shares of its common stock at an exercise price of $3.00 per share through December 31, 2015.  The Company valued the warrant at $25,800 using the Black Scholes Option Pricing Model and the following assumptions:  market price per share: $0.85; exercise price per share: $3.00; risk-free interest rate: 0.46%; contractual term: 3.53 years; volatility: 84.279%; expected dividend rate: 0%.  The fair value of the stock and the warrant was recorded as a prepaid expense and is being expensed over the approximately six-month term of the contract.   In June 2012, the Company entered into a contract for investor relations consulting services pursuant to which it granted 120,000 shares of its common stock valued at $102,000 based on the grant date quoted market price of $0.85 per share.  The fair value of the stock was recorded as a prepaid expense and is being expensed over the approximately six-month term of the contract.   In August 2012, the Company modified an existing warrant and issued a new warrant to Morrison & Foerster as additional consideration for the Restructuring Agreement, as disclosed in Note 7, Convertible Promissory Notes and Other Notes Payable.  As described in Note 7, the Company has treated the aggregate of the incremental value of the Amended M&F Warrant and the fair value of the New M&F Warrant as a discount to the Replacement Notes, which discount is being amortized to interest expense using the effective interest rate method over the term of the Replacement Notes.   During August 2012, the Company issued 88,235 shares of its common stock valued at a market price of $1.01 per share in settlement of a past-due obligation for business development consulting services in the amount of $25,000.  The Company charged the loss on the settlement to interest expense. As disclosed in Note 7, Convertible Promissory Notes and Other Notes Payable, in August 2012, the Company issued a promissory note in the principal amount of $60,000 and 15,000 shares of its common stock valued at $0.94 per share in settlement of its past due obligation for AV-101 clinical development services.   Warrant Modifications   Between May and June 30, 2012, the Company offered certain warrant holders the opportunity to exercise their warrants to purchase shares of the Companys common stock at reduced exercise prices.  The Company subsequently extended the offer through August 2012. Warrant holders exercised warrants to purchase an aggregate of 524,056 shares of the Companys common stock and the Company received cash proceeds of $262,000.  In addition, certain warrant holders exercised warrants to purchase 25,000 shares of the Companys common stock in lieu of payment by the Company in satisfaction of amounts due for services in the aggregate amount of $12,500.  For every three discounted warrant shares exercised by the warrant holders, the Company granted a three-year warrant to purchase one share of its common stock at an exercise price of $3.00 per share.   The Company calculated the fair value of the warrants exercised immediately before and after the May 18, 2012 Board of Directors approval of the modification offer, and on the exercise date for the exercises occurring after June 30, 2012, and determined that the increase in the fair value of the warrants exercised was $440,700, which is reflected in general and administrative expense in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.  The warrants subject to the exercise price modifications were valued using the Black-Scholes Option Pricing Model and the following assumptions:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; text-align: left; font-weight: bold">Assumption:</td> <td style="padding-bottom: 1.35pt; text-align: left"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Pre-modification</td> <td style="padding-bottom: 1.35pt; text-align: left"> </td> <td style="padding-bottom: 1.35pt; text-align: left"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Post-modification</td> <td style="padding-bottom: 1.35pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 54%; text-align: left">Market price per share (weighted average)</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 20%; text-align: right">1.95</td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 1%; text-align: left">$</td> <td style="width: 20%; text-align: right">1.95</td> <td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">Exercise price per share (weighted average)</td> <td style="text-align: left"> </td> <td style="text-align: left">$</td> <td style="text-align: right">2.75</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left">$</td> <td style="text-align: right">0.50</td> <td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">Risk-free interest rate (weighted average)</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.29%</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.06%</td> <td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">Expected term in years (weighted average)</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">1.93</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.12</td> <td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">Volatility (weighted average)</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">78.0%</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">85.7%</td> <td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">Dividend rate</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.0%</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right">0.0%</td> <td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left; font-weight: bold">Weighted Average Fair Value per share</td> <td style="text-align: left"> </td> <td style="text-align: left; font-weight: bold">$</td> <td style="text-align: right; font-weight: bold">0.64</td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left; font-weight: bold">$</td> <td style="text-align: right; font-weight: bold">1.45</td> <td style="text-align: left"> </td></tr> </table>   The market price per share is based on the quoted market price of the Companys common stock on the Over-the-Counter Bulletin Board on the date of the modification.  Because of its short history as a public company, the Company has estimated volatility based on the historical volatilities of a peer group of public companies over the expected term of the option.  The risk-free rate of interest is based on the quoted constant maturity rate for U.S Treasury Bills on the date of the modification for the term corresponding with the expected term of the warrant.  The expected dividend rate is zero as the Company has not paid and does not expect to pay dividends in the near future.   In connection with the foregoing exercises, the Company issued three-year warrants to purchase 183,025 shares of the Companys common stock at an exercise price of $3.00 per share.  The Company valued these warrants at $35,900 using the Black Scholes Option Pricing Model and the following assumptions:  weighted average market price per share: $0.89; exercise price per share: $3.00; risk-free interest rate: 0.42%; contractual term: 3.0 years; volatility: 78.04%; expected dividend rate: 0%.  The fair value of the warrants was charged to interest expense.   Following the warrant exercises and grants described above, at September 30, 2012, the Company had outstanding warrants to purchase shares of its common stock at a weighted average exercise price of $1.88 per share as follows:   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td colspan="2" style="text-align: center; font-weight: bold">Exercise</td> <td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td> <td style="text-align: center; font-weight: bold">Expiration</td> <td style="text-align: left; font-weight: bold"> </td> <td colspan="2" style="text-align: center; font-weight: bold">September 30,</td> <td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Price</td> <td nowrap="nowrap" style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td> <td style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">Date</td> <td style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center; font-weight: bold">2012</td> <td nowrap="nowrap" style="padding-bottom: 1.35pt; text-align: left; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%; text-align: left">$</td> <td style="width: 20%; text-align: right">0.88</td> <td nowrap="nowrap" style="width: 1%; text-align: left"> </td> <td style="width: 55%; text-align: center">5/11/2014</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%; text-align: left"> </td> <td style="width: 20%; text-align: right">15,428</td> <td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">$</td> <td style="text-align: right">1.00</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">9/15/2017</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">1,379,376</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">$</td> <td style="text-align: right">1.125</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">12/28/2012</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">97,679</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">$</td> <td style="text-align: right">1.25</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">5/11/2014 to 12/31/2014</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">120,280</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">$</td> <td style="text-align: right">1.50</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">12/31/2012 to 9/4/2017</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">475,000</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">$</td> <td style="text-align: right">1.75</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">12/31/2013</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">577,784</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">$</td> <td style="text-align: right">2.00</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">8/3/2013 to 9/15/2017</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">604,000</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">$</td> <td style="text-align: right">2.50</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">5/11/2014</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">492,004</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">$</td> <td style="text-align: right">2.625</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">12/31/2013</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">480,134</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">$</td> <td style="text-align: right">2.75</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">2/28/2017</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">272,724</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left">$</td> <td style="text-align: right">2.80</td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: center">4/2/2015</td> <td style="text-align: right"> </td> <td style="text-align: left"> </td> <td style="text-align: right">50,000</td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left">$</td> <td style="padding-bottom: 1.35pt; text-align: right">3.00</td> <td nowrap="nowrap" style="padding-bottom: 1.35pt; text-align: left"> </td> <td style="padding-bottom: 1.35pt; text-align: center">5/11/2015 to 2/13/2016</td> <td style="padding-bottom: 1.35pt; text-align: right"> </td> <td style="border-bottom: black 1.5pt solid; text-align: left"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">563,025</td> <td nowrap="nowrap" style="padding-bottom: 1.35pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td nowrap="nowrap" style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: left"> </td> <td style="text-align: right"> </td> <td nowrap="nowrap" style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: left"> </td> <td style="padding-bottom: 2.65pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 2.65pt; text-align: left"> </td> <td style="padding-bottom: 2.65pt; text-align: left"> </td> <td style="padding-bottom: 2.65pt; text-align: right"> </td> <td style="border-bottom: black 2.25pt double; text-align: left"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">5,127,434</td> <td nowrap="nowrap" style="padding-bottom: 2.65pt; text-align: left"> </td></tr> </table>   2012 Exchange Agreement with Platinum   On June 29, 2012, the Company and Platinum entered into an Exchange Agreement (the 2012 Exchange Agreement) pursuant to which the Company agreed to issue Platinum 62,945 shares of its Series A Preferred in exchange for 629,450 shares of common stock owned by Platinum, in consideration for Platinums agreement to purchase from the Company the July 2012 Platinum Note, as described in Note 7, Convertible Promissory Notes and Other Notes Payable. Under the terms of the 2012 Exchange Agreement, Platinum, at its option, may exchange all or a portion of its Series A Preferred for the securities issued in connection with a qualified financing, an equity or equity-based financing, or series of financing transactions resulting in gross proceeds to the Company of at least $3.0 million, based on the stated value of $15.00 per share of Series A Preferred.  The Company estimated the fair value of the shares of Series A Preferred tendered to Platinum under the terms of the 2012 Exchange Agreement at $736,500 ($1.17 per share on a common share equivalent basis). Following the issuance of the Series A Preferred pursuant to the 2012 Exchange Agreement, Platinum owns all 500,000 authorized and outstanding shares of the Companys Series A Preferred, each share of which is convertible into ten shares of the Companys common stock.  The common shares that were exchanged for shares of Series A Preferred are treated as Treasury Stock in the accompanying Condensed Consolidated Balance Sheet at September 30, 2012.  See Note 11, Subsequent Events, regarding the Series A Preferred Exchange component of the October 2012 agreement between the Company and Platinum.

Cato Holding Company, doing business as Cato BioVentures ("CBV"), the parent of CRL, is the Companys second largest institutional stockholder.  Pursuant to a loan agreement dated as of February 3, 2004 between CBV and VistaGen, as amended, CBV extended to VistaGen a $400,000 revolving line of credit. As of April 29, 2011, the outstanding balance under the line of credit agreement was $242,273.  On April 29, 2011, the line of credit agreement was terminated and VistaGen issued to CBV an unsecured promissory note in the principal amount of $352,273 (the 2011 Cato Note), which principal amount included the $242,273 outstanding balance on the line of credit as of April 29, 2011, and $105,000 of indebtedness owed to CBV under an August 2010 Short-Term Note.  The 2011 Cato Note bears interest at the rate of 7.0% per annum, is payable in installments as follows: $10,000 each month, beginning June 1, 2011 and ending on November 1, 2011; $12,500 each month, beginning December 1, 2011, and each month thereafter until the balance is paid in full, with the final monthly payment to be made in the amount equal to the then current outstanding balance of principal and interest due under the 2011 Cato Note.  Total interest expense on notes payable to CBV was $8,300 and $16,600 in the three month and six month periods ended September 30, 2012, respectively, and $6,000 and $73,000 in the three month and six month periods ended September 30, 2011, respectively.   During fiscal year 2007, the Company entered into a contract research organization arrangement with CRL related to the development of its lead drug candidate, AV-101, and subsequent other projects under which the Company incurred expenses of $291,800 and $514,400 in the three month and six month periods ended September 30, 2012, respectively, and $221,000 and $659,000 in the three month and six month periods ended September 30, 2011, respectively.

Debt Financing by Platinum Long Term Growth VII, LLC   Issuance of Notes   On October 11, 2012, Platinum and the Company entered into a Note Exchange and Purchase Agreement (the October 2012 Agreement), pursuant to which Platinum agreed to purchase from the Company additional senior secured convertible promissory notes in the aggregate principal amount of up to $2.0 million (the Investment Notes).  Investment Notes for $500,000 each were issued to Platinum on October 11, 2012 and on October 19, 2012, and the additional Investment Notes are issuable in two separate $500,000 tranches in November and December 2012, conditioned on the closing by the Company of a debt or equity financing, or a combination of financings, resulting in gross proceeds of at least an additional $850,000 (refer to Note 9, Capital Stock, Fall 2012 Private Placement of Units). In addition, under the terms of the October 2012 Agreement, the secured convertible promissory notes issued by the Company to Platinum in July 2012 and August 2012 (the Existing Notes) in the principal amounts of $500,000 and $750,000, respectively, were exchanged for a note in the principal amount of $1,272,577, which amount represented the sum of the principal amounts outstanding under the Existing Notes, plus all accrued interest (the Exchange Note). Each Investment Note and the Exchange Note accrues interest at a rate of 10% per annum and, subject to certain limitations and exceptions set forth in the Exchange Note and Investment Notes, will be due and payable in shares of the Companys common stock on October 11, 2015, or three years from the date of issuance, as determined by the terms of the Investment Notes.   The Company and Platinum also entered into an amended and restated Security Agreement to secure repayment of all obligations due and payable under the terms of the Investment Notes and Exchange Note.   Issuance of Warrants   As additional consideration for the purchase of the Investment Notes, the Company agreed to issue to Platinum a warrant to purchase an aggregate of 2,000,000 shares of the Companys common stock, issuable in separate tranches of 500,000 shares each, to be issued together with each Investment Note, of which a warrant to purchase 500,000 shares was issued to Platinum on October 11, 2012 and on October 19, 2012.  In addition, the Company issued Platinum a warrant to purchase 1,272,577 shares of the Companys common stock in connection with the issuance of the Exchange Notes. Each warrant has a term of 5 years and an exercise price of $1.50.   Series A Preferred Exchange   The October 2012 Agreement also provides Platinum with the right and option to exchange all shares of the Companys Series A Preferred held by Platinum for (i) a total of 15,000,000 shares of the Companys common stock, and (ii) a five-year warrant to purchase 7,500,000 shares of the Companys common stock at an exercise price of $1.50 per share.   Debt Restructuring   Cato Holding Company   On October 10, 2012, the Company and Cato Holding Company (CHC) restructured certain indebtedness evidenced by an unsecured promissory note issued to CHC on April 29, 2011, in the principal amount of $352,273 (the 2011 CHC Note).  The 2011 CHC Note was cancelled and exchanged for a new unsecured promissory note in the principal amount of $310,443 (the 2012 CHC Note) and a five-year warrant to purchase 250,000 shares of the Companys common stock at a price of $1.50 per share (the CHC Warrant). The 2012 CHC Note accrues interest at a rate of 7.5% per annum and is due and payable in monthly installments of $10,000, beginning November 1, 2012 and continuing until the outstanding balance is paid in full.    Cato Research Ltd.   On October 10, 2012, the Company issued to Cato Research Ltd. ( CRL ) (i) an unsecured promissory note in the initial principal amount of $1,009,000, which promissory note is payable solely in restricted common stock of the Company and accrues interest at the rate of 7.5% per annum (the CRL Note ), as payment in full for all contract research and development services and regulatory advice ( CRO Services ) rendered by CRL to the Company and its affiliates through December 31, 2012 with respect to the preclinical and clinical development of AV-101, and (ii) a five-year warrant to purchase, at a price of $1.00 per share, 1,009,000 restricted shares of the Companys common stock, the amount equal to the sum of the principal amount of the CRL Note, plus all accrued interest thereon, divided by $1.00 per share (the CRL Warrant ). The principal amount of the CRL Note may, at the Companys option, be automatically increased as a result of future CRO Services rendered by CRL to the Company and its affiliates from January 1, 2013 to June 30, 2013.  The CRL Note is due and payable on March 31, 2016 and shall be payable solely by CRL's surrender from time to time of all or a portion of the principal and interest balance due on the CRL Note in connection with its concurrent exercise of the CRL Warrant, provided, however, that CRL shall have the option to require payment of the CRL Note in cash upon the occurrence of a change in control of VistaGen or an event of default, and only in such circumstances.   University Health Network   On October 10, 2012, the Company issued to University Health Network ( UHN ) (i) an unsecured promissory note in the principal amount of $549,500, which promissory note is payable solely in restricted common stock of the Company and accrues interest at the rate of 7.5% per annum, as payment in full for all sponsored stem cell research and development activities by UHN and Gordon Keller, Ph.D. under the Companys long-standing Sponsored Research Collaboration Agreement with UHN and Dr. Keller (the SRCA ) through September 30, 2012 (the UHN Note ), and (ii) a five-year warrant to purchase, at a price of $1.00 per share, 549,500 restricted shares of the Companys common stock, the amount equal to the sum of the principal amount of the UHN Note, plus all accrued interest thereon, divided by $1.00 per share (the UHN Warrant ).   The UHN Note is due and payable on March 31, 2016 and shall be payable solely by UHN's surrender from time to time of all or a portion of the principal and interest balance due on the UHN Note in connection with its concurrent exercise of the UHN Warrant, provided, however, that UHN shall have the option to require payment of the UHN Note in cash upon the occurrence of a change in control of VistaGen or an event of default, and only in such circumstances.   Additionally, the Company and UHN entered into Amendment No. 5 to the SRCA (Amendment No. 5), establishing the sponsored research projects and the sponsored research budgets under the SRCA from October 1, 2012 to September 30, 2013, as well as a schedule of the Companys sponsored research payments for such period totaling $309,000, including an initial payment of $75,000 applicable to services for the period from October 1, 2012 to December 31, 2012.   Modification of Note Receivable   In connection with the May 2011 Private Placement, the Company accepted a short term note receivable from an investor in the face amount of $500,000 that was due on September 6, 2011 in payment for units purchased in the private placement. In October 2011, the Company modified the note to extend the repayment term through September 1, 2012 and to increase the interest rate to 5% per annum. On November 8, 2012 the Company and the investor again amended the note to require payment of the outstanding balance of $256,000, reflecting unpaid principal and accrued interest, in twenty-four monthly payments of $11,000 through November 2014, with a final payment of the remaining unpaid principal and interest due in December 2014.

500

400

-3781600

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-58564100

8800000 6836452 4920771 4719153 5127434 6523064 15406105 11242217 357900

155000

230000

0.51 1.80 2.58

1.51

16100

6100

23600 6100

71900

19000

315000

50900

237500

226700

229900

50000 50000 20700

38200

32500

394400

657300

310400

250000

0.779

0.888

P2Y4M

P5Y14D

2 2 0.24 0.52 5/11/2014 9/15/2017 12/28/2012 5/11/2014 to 12/31/2014 12/31/2012 to 9/4/2017 12/31/2013 8/3/2013 to 9/15/2017 05-11-2014 12/31/2013 2/28/2017 5/11/2015 to 2/13/2016 4/2/2015

895300

1009000 1009000

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not contain all of the information and footnotes required for complete consolidated financial statements. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Companys interim financial information. The accompanying Condensed Consolidated Balance Sheet at March 31, 2012 has been derived from the Company's audited consolidated financial statements at that date but do not include all disclosures required by U.S. GAAP.  Additionally, certain reclassifications have been made to the Condensed Consolidated Balance Sheet at March 31, 2012 to conform to current year presentation. The operating results for the six months ended September 30, 2012 are not necessarily indicative of the operating results to be expected for the Company's fiscal year ending March 31, 2013 or for any other interim period or any other future year.   The accompanying unaudited Condensed Consolidated Financial Statements and notes to Condensed Consolidated Financial Statements should be read in conjunction with the Companys audited Consolidated Financial Statements for the fiscal year ended March 31, 2012 contained in its Annual Report on Form 10-K, as filed with the United States Securities and Exchange Commission.   The accompanying Condensed Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. As a development stage company without sustainable revenues, the Company has experienced recurring losses and negative cash flows from operations. From inception through September 30, 2012, the Company has a deficit accumulated during its development stage of $58.6 million.  The Company expects these conditions to continue for the foreseeable future as it expands its Human Clinical Trials in a Test Tube platform and executes its drug rescue and cell therapy business programs.   At September 30, 2012, the Company had $13,400 in cash and cash equivalents.  The Companys principal source of financing during the quarter ended September 30, 2012 has been proceeds from certain financing transactions between the Company and Platinum Long Term Growth VII, LLC (Platinum), the Companys largest institutional investor.  On July 2, 2012 and on August 31, 2012, the Company issued to Platinum 10% senior secured convertible promissory notes in the principal amount of $500,000 (the July 2012 Platinum Note) and $750,000 (the August 2012 Platinum Note), respectively.  (See Note 7, Convertible Promissory Notes and Notes Payable).  Subsequent to September 30, 2012, on October 11, 2012, the Company and Platinum entered into a Note Exchange and Purchase Agreement, wherein Platinum agreed to purchase 10% senior secured convertible promissory notes in the aggregate principal amount of $2.0 million, issuable over four $500,000 tranches between October 2012 and December 2012.  The first and second $500,000 tranches, in the aggregate principal amount of $1.0 million, were purchased by Platinum on October 11, 2012 and October 19, 2012, respectively.  The final two $500,000 tranches, in the aggregate principal amount of $1.0 million, are issuable on November 15, 2012 and December 15, 2012 provided that the Company completes closing of a debt or equity financing, or a combination of financings, resulting in gross proceeds of at least $1.0 million. (See Note 11, Subsequent Events).   The Company anticipates that its cash expenditures during the next twelve months will be approximately $4 million to $6 million and it plans to meet its cash needs and fund its working capital requirements through a combination of additional private placements of its securities, which may include both debt and equity securities issued to Platinum and other investors, stem cell technology-based research and development collaborations, stem cell technology and drug candidate license fees and government grant awards. If the Company is unable to obtain sufficient financing, it may be required to reduce, defer, or discontinue certain of its research and development activities or it may not be able to continue as a going concern.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Significant estimates include those relating to revenue recognition, share-based compensation, and assumptions that have been used to value warrant modifications and previous put option, note term extension and warrant liabilities.

The Company generates revenue principally from collaborative research and development arrangements, technology access fees and government grants.  Revenue arrangements with multiple components are divided into separate units of accounting if certain criteria are met, including whether the delivered component has stand-alone value to the customer. Consideration received is allocated among the separate units of accounting based on their respective selling prices.  The selling price for each unit is based on vendor-specific objective evidence, or VSOE, if available, third party evidence if VSOE is not available, or estimated selling price if neither VSOE nor third party evidence is available.  The applicable revenue recognition criteria are then applied to each of the units.   The Company recognizes revenue when the four basic criteria of revenue recognition are met: (1) a contractual agreement exists; (2) the transfer of technology has been completed or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured.  For each source of revenue, the Company complies with the above revenue recognition criteria in the following manner:   <table align="center" cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; font: 10pt/115% Times New Roman, Times, Serif; text-align: justify"> </td> <td style="width: 3%; font: 10pt/115% Times New Roman, Times, Serif; text-align: justify"></td> <td style="width: 94%; font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Collaborative arrangements typically consist of non-refundable and/or exclusive technology access fees, cost reimbursements for specific research and development spending, and various milestone and future product royalty payments.  If the delivered technology does not have stand-alone value, the amount of revenue allocable to the delivered technology is deferred.  Non-refundable upfront fees with stand-alone value that are not dependent on future performance under these agreements are recognized as revenue when received, and are deferred if the Company has continuing performance obligations and has no objective and reliable evidence of the fair value of those obligations.  The Company recognizes non-refundable upfront technology access fees under agreements in which it has a continuing performance obligation ratably, on a straight-line basis, over the period in which the Company is obligated to provide services.  Cost reimbursements for research and development spending are recognized when the related costs are incurred and when collectability is reasonably assured.  Payments received related to substantive, performance-based at-risk milestones are recognized as revenue upon achievement of the milestone event specified in the underlying contracts, which represent the culmination of the earnings process.  Amounts received in advance are recorded as deferred revenue until the technology is transferred, costs are incurred, or a milestone is reached.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; line-height: 115%; text-align: justify"> </td> <td style="width: 3%; line-height: 115%; text-align: justify"></td> <td style="width: 94%; line-height: 115%; text-align: justify">Technology license agreements typically consist of non-refundable upfront license fees, annual minimum access fees and/or royalty payments. Non-refundable upfront license fees and annual minimum payments received with separable stand-alone values are recognized when the technology is transferred or accessed, provided that the technology transferred or accessed is not dependent on the outcome of the continuing research and development efforts. Otherwise, revenue is recognized over the period of the Companys continuing involvement.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; line-height: 115%; text-align: justify"> </td> <td style="width: 3%; line-height: 115%; text-align: justify"></td> <td style="width: 94%; line-height: 115%; text-align: justify">Government grants, which support the Companys research efforts on specific projects, generally provide for reimbursement of approved costs as defined in the terms of grant awards. Grant revenue is recognized when associated project costs are incurred.</td></tr> </table>

Research and development expenses include internal and external costs.  Internal costs include salaries and employment related expenses of scientific personnel and direct project costs.  External research and development expenses consist of sponsored stem cell research and development costs, costs associated with clinical and non-clinical development of AV-101, the Companys small molecule prodrug candidate, and costs related to the application and prosecution of patents related to the Companys stem cell technology, Human Clinical Trials in a Test Tube, and AV-101.  All such costs are charged to expense as incurred.

The Company recognizes compensation cost for all share-based awards to employees based on the grant date fair value of the award.  Share-based compensation expense is recognized over the period during which the employee is required to perform services in exchange for the award, which generally represents the scheduled vesting period.  The Company has no awards with market or performance conditions.  For equity awards to non-employees, the Company re-measures the fair value of the awards as they vest and the resulting value is recognized as an expense during the period over which the services are performed.   The Company recorded share-based compensation costs of $77,300 and $148,300 for the three and six month periods ended September 30, 2012, respectively and $539,600 and $979,400 for the three and six month periods ended September 30, 2011, respectively. During the six months ended September 30, 2012, the Company granted options to purchase an aggregate of 155,000 shares of its common stock at an exercise price of $0.51 per share (the quoted market price on the grant date) to its employees (excluding senior management) and certain scientific consultants.  During the six months ended September 30, 2011, the Company granted options to purchase an aggregate of 230,000 shares of its common stock at exercise prices ranging from $1.80 per share to $2.58 per share to certain of its employees and consultants.  At September 30, 2012, there were options outstanding to purchase 4,920,771 shares of the Companys common stock at a weighted average exercise price of $1.51 per share.

The Company has no components of other comprehensive loss other than net loss, and accordingly the Companys comprehensive loss is equivalent to net loss for the periods presented.

Basic loss per share of common stock excludes the effect of dilution and is computed by dividing the net loss by the weighted-average number of shares of common stock outstanding for the period.  Diluted loss per share of common stock reflects the potential dilution that could occur if securities or other contracts to issue shares of common stock were exercised or converted into shares of common stock.  For all periods presented, potentially dilutive securities are excluded from the computation in loss periods, as their effect would be antidilutive.

There have been no recent accounting pronouncements or changes in accounting pronouncements during the six months ended September 30, 2012, as compared to the recent accounting pronouncements described in the Companys Form 10-K for the fiscal year ended March 31, 2012, that are of significance or potential significance to the Company.

The Company follows the principles of fair value accounting as they relate to its financial assets and financial liabilities. Fair value is defined as the estimated exit price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, rather than an entry price that represents the purchase price of an asset or liability.  Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters.  Where observable prices or inputs are not available, valuation models are applied.  These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on several factors, including the instruments complexity.  The required fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels is described as follows:   <table align="center" cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; font: 10pt/115% Times New Roman, Times, Serif; text-align: justify"> </td> <td style="width: 3%; font: 10pt/115% Times New Roman, Times, Serif; text-align: justify"></td> <td style="width: 94%; font: 10pt/115% Times New Roman, Times, Serif; text-align: justify">Level 1  Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; line-height: 115%; text-align: justify"> </td> <td style="width: 3%; line-height: 115%; text-align: justify"></td> <td style="width: 94%; line-height: 115%; text-align: justify">Level 2  Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</td></tr> </table>   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 3%; line-height: 115%; text-align: justify"> </td> <td style="width: 3%; line-height: 115%; text-align: justify"></td> <td style="width: 94%; line-height: 115%; text-align: justify">Level 3  Unobservable inputs (i.e., inputs that reflect the reporting entitys own assumptions about the assumptions that market participants would use in estimating the fair value of an asset or liability) are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.</td></tr> </table>   A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  Where quoted prices are available in an active market, securities are classified as Level 1 of the valuation hierarchy. If quoted market prices are not available for the specific financial instrument, then the Company estimates fair value by using pricing models, quoted prices of financial instruments with similar characteristics or discounted cash flows. In certain cases where there is limited activity or less transparency around inputs to valuation, financial assets or liabilities are classified as Level 3 within the valuation hierarchy.   The Company does not use derivative instruments for hedging of market risks or for trading or speculative purposes.  No assets or liabilities were carried at fair value at September 30, 2012 or March 31, 2012.   During 2007 and 2008, the Company issued three convertible promissory notes with an aggregate principal balance of $4.0 million (the Original Platinum Notes) to Platinum Long Term Growth VII, LLC (Platinum).  On May 5, 2011, the Original Platinum Notes were amended, restated and consolidated into a single note (the Platinum Note) with a principal balance of $4.0 million (May 2011 Amendment).  In conjunction with the issuance of the Original Platinum Notes, the Company determined that i) the cash payment option or put option, which provided the lender with the right to require the Company to repay part of the debt at a 25% premium, and ii) the note term extension option, which provided the lender with the right to extend the maturity date by one year, were embedded derivatives that should be bifurcated and accounted for separately as liabilities.  In conjunction with the issuance of the Original Platinum Notes, the Company also issued warrants to purchase 560,000 shares of its common stock. These warrants included certain exercise price adjustment features and, as a result, the Company determined that the warrants were liabilities, which were recorded at their estimated fair value. The Company determined the fair value of the i) put option and note term extension option using an internal valuation model with Level 3 inputs and ii) the warrant liability using a lattice model with Level 3 inputs. Inputs used to determine fair value include estimated value of the underlying common stock at the valuation measurement date, the remaining contractual term of the notes, risk-free interest rates, expected volatility of the price of the underlying common stock, and the probability of a qualified financing. Changes in the fair value of these liabilities prior to the May 2011 Amendment were recognized as a non-cash charge or income in other income (expense) in the consolidated statements of operations.   As a result of the May 2011 Amendment, the Original Platinum Notes were amended and restated on May 5, 2011, eliminating the cash payment option.  Further, concurrent with the Merger transaction described in Note 1 above, the warrants were determined not to be liabilities, since the exercise price adjustment feature ended upon the Company becoming a public company as a result of the Merger.  The increase in fair value of the warrant liability of $7,000 and the increase in the put option and note term extension option liabilities of $71,000 were recognized in other expense, net in the statement of operations for the quarter ended June 30, 2011.  The remaining put option and note term extension option liabilities, in the amount of $161,700, were reclassified to note discount in connection with the May 2011 Amendment.  The aggregated fair value of the warrants at May 11, 2011, $424,100, was reclassified from a liability to additional paid-in capital, a component of stockholders deficit.   In December 2011, the Company and Platinum entered into a Note and Warrant Exchange Agreement pursuant to which the Platinum Note and warrants issued to Platinum were cancelled in exchange for shares of the Companys Series A preferred stock.

Potentially dilutive securities excluded from diluted net loss per common share are as follows:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold"> </td> <td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">September 30,</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2012</td> <td nowrap="nowrap" style="font-weight: bold"> </td> <td style="font-weight: bold"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td> <td nowrap="nowrap" style="font-weight: bold"> </td></tr> <tr style="vertical-align: bottom"> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%">All series of preferred stock issued and outstanding</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right">5,000,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right">-</td> <td nowrap="nowrap" style="width: 1%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Outstanding options under the 2008 and 1999 Stock Incentive Plan and 1998 Scientific Advisory Board Plan</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">4,920,771</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">4,719,153</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Outstanding warrants to purchase common stock</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5,127,434</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">6,523,064</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="font-size: 12pt">February 2012 12% convertible promissory notes and accrued interest (1)</td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">357,900</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 1.5pt solid"> </td> <td style="border-bottom: black 1.5pt solid; text-align: right">-</td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Total</td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">15,406,105</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="border-bottom: black 2.25pt double"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">11,242,217</td> <td nowrap="nowrap"> </td></tr> </table>

Prepaid expenses consist of the following:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: justify">September 30,</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: justify">March 31,</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: justify">2012</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: justify">2012</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%; text-align: justify"> Investor relations and awareness services paid</td> <td style="line-height: 115%; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; line-height: 115%; text-align: justify">   by issuance of common stock or warrants</td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify">$</td> <td style="width: 9%; line-height: 115%; text-align: justify">203,400</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify">$</td> <td style="width: 9%; line-height: 115%; text-align: justify">19,700</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> Insurance</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">71,900</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">19,000</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify"> Legal fees</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">23,600</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">6,100</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> All other</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify">16,100</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify">6,100</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">315,000</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">50,900</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> </table>

Accrued expenses consist of the following:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: justify">September 30,</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; font-weight: bold; text-align: justify">March 31,</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: justify">2012</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td style="line-height: 115%; font-weight: bold; text-align: justify"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: justify">2012</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td colspan="2" style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; line-height: 115%; text-align: justify"> Accrued professional services</td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify">$</td> <td style="width: 9%; line-height: 115%; text-align: justify">58,800</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify">$</td> <td style="width: 9%; line-height: 115%; text-align: justify">107,400</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> Accrued research and development expenses</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">-</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">237,500</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify"> Accrued vacation pay and other compensation</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">226,700</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">229,900</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> Accrued placement agent fees</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">50,000</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">50,000</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify"> Accrued registration rights payments</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">20,700</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify">-</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> All other</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify">38,200</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify">32,500</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">394,400</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: justify">657,300</td> <td nowrap="nowrap" style="line-height: 115%; text-align: justify"> </td></tr> </table>

The following table summarizes the components of the companys secured and unsecured promissory notes and other notes payable at September 30, 2012 and March 31, 2012 (amounts in 100s).   <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="11" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">30-Sep-12</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="11" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">31-Mar-12</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"> </td><td style="font-weight: bold"> </td> <td colspan="3" style="font-weight: bold; text-align: justify">Principal</td><td style="font-weight: bold"> </td> <td colspan="3" style="font-weight: bold; text-align: justify">Accrued</td><td style="font-weight: bold"> </td> <td colspan="3" style="font-weight: bold; text-align: justify"> </td><td style="font-weight: bold"> </td> <td colspan="3" style="font-weight: bold; text-align: justify">Principal</td><td style="font-weight: bold"> </td> <td colspan="3" style="font-weight: bold; text-align: justify">Accrued</td><td style="font-weight: bold"> </td> <td colspan="3" style="font-weight: bold; text-align: justify"> </td></tr> <tr style="vertical-align: bottom"> <td style="font-weight: bold; text-align: justify"> </td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Balance</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Interest</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Total</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Balance</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Interest</td><td style="font-weight: bold; padding-bottom: 1pt"> </td> <td colspan="3" style="font-weight: bold; text-align: justify; border-bottom: Black 1pt solid">Total</td></tr> <tr style="vertical-align: bottom"> <td colspan="5" style="font-weight: bold; font-style: italic; text-align: justify">Senior Secured 10% Convertible</td><td> </td> <td colspan="3" style="text-align: justify"> </td><td> </td> <td colspan="3" style="text-align: justify"> </td><td> </td> <td colspan="3" style="text-align: justify"> </td><td> </td> <td colspan="3" style="text-align: justify"> </td><td> </td> <td colspan="3" style="text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; font-style: italic; text-align: justify">Promissory Notes:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 40%; text-align: justify">Issued to Platinum on July 2, 2012</td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">500,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">12,400</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">512,400</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">  </td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">  </td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td> <td style="width: 1%; text-align: left">$</td><td style="width: 6%; text-align: right">  </td><td style="width: 1%; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 1pt">Issued to Platinum on August 30, 2012</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">750,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">756,300</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 2.5pt">Total Senior notes (non-current)</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,250,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">18,700</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,268,700</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; font-style: italic; text-align: justify">Convertible Promissory Notes:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">February 2012 12% convertible promissory notes</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">500,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">35,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">535,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">500,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">5,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">505,300</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Note discount</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(481,300</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(481,300</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(499,300</td><td style="text-align: left">)</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">(499,300)</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">Total 12% convertible notes, net (non-current)</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">18,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">35,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">54,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">5,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">6,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="font-weight: bold; font-style: italic; text-align: justify">Notes Payable to unrelated parties:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">7.0% Notes payable (April 2011)</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">38,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">38,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">63,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">64,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 1pt">7.0% Notes payable (August 2012)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">60,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">60,400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">98,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">600</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">99,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">63,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">64,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 1pt">less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(43,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(600</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(43,600</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(63,800</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(64,200)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 2.5pt">7.0% Notes payable - non-current portion</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">55,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">55,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">7.5% Notes payable to vendors for accounts</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">payable converted to notes payable:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">Burr, Pilger, Mayer</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">91,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">93,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">93,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">94,500</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Desjardins</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">214,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">10,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">225,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">224,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">227,100</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">McCarthy Tetrault</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">441,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">22,000</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">463,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">459,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">5,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">465,100</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">May 2011 Morrison Foerster</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,420,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">37,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,458,000</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">August 2012 Morrison & Foerster Note A</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">991,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">991,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">August 2012 Morrison & Foerster Note B</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,379,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">8,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,387,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">  </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt">Note discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,600,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(1,600,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(228,900</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(228,900)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,518,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">42,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">1,560,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">2,968,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">47,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right">3,015,800</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt">less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(531,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(33,900</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(564,900</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(367,700</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(367,700)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 2.5pt">non-current portion and discount</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">987,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">995,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,600,600</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">47,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,648,100</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">5.8% and 8% Notes payable to insurance</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 2.5pt">premium financing company (current)</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">40,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">40,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,600</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">4,600</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify">10% Notes payable to vendors for accounts</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">payable converted to notes payable</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">158,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">20,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">179,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">165,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">16,800</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">182,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt">less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(145,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(20,800</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(166,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(146,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(146,000)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 2.5pt">non-current portion</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">13,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">19,400</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">16,800</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">36,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Total notes payable to unrelated parties</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,815,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">63,600</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">1,879,500</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">3,202,100</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">64,700</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">3,266,800</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt">less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(759,700</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(55,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(815,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(582,100</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(582,500)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 2.5pt">non-current portion and discount</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,056,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">8,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,064,500</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,620,000</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">64,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">2,684,300</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="font-weight: bold; font-style: italic; text-align: justify">Notes payable to related parties:</td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td> <td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">7 % Note payable to Cato Holding Co.</td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">293,400</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">17,200</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">310,600</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">293,300</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">6,900</td><td style="text-align: left"> </td><td> </td> <td style="text-align: left">$</td><td style="text-align: right">300,200</td><td style="text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt">Note discount</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(18,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(18,000</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(24,300</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(24,300)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 1pt">Total notes payable to related parties</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">275,400</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">17,200</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">292,600</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">269,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">6,900</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left">$</td><td style="border-bottom: Black 1pt solid; text-align: right">275,900</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: justify; padding-bottom: 1pt">less: current portion</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(237,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(17,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(254,400</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(168,200</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">  </td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(168,200)</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 2.5pt">non-current portion and discount</td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">38,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">  </td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">38,200</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">100,800</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">6,900</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td> <td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">107,700</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr> </table>   The Company determined that the incremental value of the Amended M&F Warrant was $121,650 at the modification date using the Black-Scholes Option Pricing Model and the following assumptions:   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%; font-weight: bold; text-decoration: underline">Assumption:</td> <td style="line-height: 115%; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Pre- modification</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold; text-align: center"> </td> <td style="line-height: 115%; font-weight: bold; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Post- modification</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 76%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 9%; line-height: 115%; text-align: right"> </td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%"> </td> <td style="width: 9%; line-height: 115%; text-align: right"> </td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Market price per share</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.94</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.94</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Exercise price per share</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">2.00</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">2.00</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Risk-free interest rate</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">0.25</td> <td nowrap="nowrap" style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">0.60</td> <td nowrap="nowrap" style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Expected term (years)</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">2.33</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">5.04</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Volatility</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">77.9</td> <td nowrap="nowrap" style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right">88.8</td> <td nowrap="nowrap" style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Dividend rate</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">0.0</td> <td nowrap="nowrap" style="line-height: 115%">%</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">0.0</td> <td nowrap="nowrap" style="line-height: 115%">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%; text-align: right"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; font-weight: bold">Fair Value per share</td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">0.24</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold"> </td> <td style="line-height: 115%; font-weight: bold"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">0.52</td> <td nowrap="nowrap" style="line-height: 115%; font-weight: bold"> </td></tr> </table>   The warrants subject to the exercise price modifications were valued using the Black-Scholes Option Pricing Model and the following assumptions:   <table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%; font-weight: bold; text-decoration: underline; text-align: justify">Assumption:</td> <td style="line-height: 115%; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Pre- modification</td> <td style="line-height: 115%; text-align: center"> </td> <td style="line-height: 115%; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1.5pt solid"> Post- modification</td> <td style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="width: 76%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 9%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td> <td style="width: 9%; line-height: 115%; text-align: justify"> </td> <td style="width: 1%; line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify">Market price per share (weighted average)</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">1.95</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">1.95</td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify">Exercise price per share (weighted average)</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">2.75</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%">$</td> <td style="line-height: 115%; text-align: right">0.50</td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify">Risk-free interest rate (weighted average)</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: right">0.29%</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: right">0.06%</td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify">Expected term in years (weighted average)</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: right">1.93</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: right">0.12</td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify">Volatility (weighted average)</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: right">78.0%</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: right">85.7%</td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; text-align: justify">Dividend rate</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">0.0%</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">0.0%</td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%; font-weight: bold; text-align: justify">Weighted Average Fair Value per share</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">0.64</td> <td style="line-height: 115%; text-align: justify"> </td> <td style="line-height: 115%; text-align: justify"> </td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold">$</td> <td style="border-bottom: black 2.25pt double; line-height: 115%; font-weight: bold; text-align: right">1.45</td> <td style="line-height: 115%; text-align: justify"> </td></tr> </table>   Following the warrant exercises and grants described above, at September 30, 2012, the Company had outstanding warrants to purchase shares of its common stock at a weighted average exercise price of $1.88 per share as follows:   <table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="text-align: center; vertical-align: bottom"> <td style="width: 30%; font-weight: bold">Exercise</td> <td style="width: 5%; font-weight: bold"> </td> <td style="width: 34%; font-weight: bold">Expiration</td> <td style="width: 5%; font-weight: bold"> </td> <td style="width: 25%; font-weight: bold">September 30,</td> <td style="width: 1%; font-weight: bold"> </td></tr> <tr style="vertical-align: top"> <td style="font-weight: bold; text-align: center; border-bottom: Black 1pt solid">Price</td> <td style="font-weight: bold; text-align: center; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">Date</td> <td style="font-weight: bold; text-align: center; padding-bottom: 1pt"> </td> <td style="border-bottom: Black 1pt solid; font-weight: bold; text-align: center">2012</td> <td style="font-weight: bold; text-align: center; padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: top"> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center">$0.88</td> <td style="text-align: center"> </td> <td style="text-align: center">5/11/2014</td> <td> </td> <td style="text-align: right">15,428</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: center">$1.00</td> <td style="text-align: center"> </td> <td style="text-align: center">9/15/2017</td> <td> </td> <td style="text-align: right">1,379,376</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center">$1.125</td> <td style="text-align: center"> </td> <td style="text-align: center">12/28/2012</td> <td> </td> <td style="text-align: right">97,679</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: center">$1.25</td> <td style="text-align: center"> </td> <td style="text-align: center">5/11/2014 to 12/31/2014</td> <td> </td> <td style="text-align: right">120,280</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center">$1.50</td> <td style="text-align: center"> </td> <td style="text-align: center">12/31/2012 to 9/4/2017</td> <td> </td> <td style="text-align: right">475,000</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: center">$1.75</td> <td style="text-align: center"> </td> <td style="text-align: center">12/31/2013</td> <td> </td> <td style="text-align: right">577,784</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center">$2.00</td> <td style="text-align: center"> </td> <td style="text-align: center">8/3/2013 to 9/15/2017</td> <td> </td> <td style="text-align: right">604,000</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: center">$2.50</td> <td style="text-align: center"> </td> <td style="text-align: center">5/11/2014</td> <td> </td> <td style="text-align: right">492,004</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center">$2.625</td> <td style="text-align: center"> </td> <td style="text-align: center">12/31/2013</td> <td> </td> <td style="text-align: right">480,134</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: center">$2.75</td> <td style="text-align: center"> </td> <td style="text-align: center">2/28/2017</td> <td> </td> <td style="text-align: right">272,724</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: white"> <td style="text-align: center">$2.80</td> <td style="text-align: center"> </td> <td style="text-align: center">4/2/2015</td> <td> </td> <td style="text-align: right">50,000</td> <td style="text-align: right"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center; border-bottom: Black 1pt solid">$3.00</td> <td style="text-align: center; padding-bottom: 1pt"> </td> <td style="text-align: center; border-bottom: Black 1pt solid">5/11/2015 to 2/13/2016</td> <td style="padding-bottom: 1pt"> </td> <td style="text-align: right; border-bottom: Black 1pt solid">563,025</td> <td style="text-align: right; padding-bottom: 1pt"> </td></tr> <tr style="vertical-align: top; background-color: #CCEEFF"> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="border-bottom: black 2.25pt double; text-align: right">5,127,434</td> <td style="border-bottom: black 2.25pt double; text-align: right"> </td></tr> </table>

500000

750000

1250000

-481300

38500

60000

98500

-43000

55500

91800

214500

441700

991200

1379400

-1600400

1518200

-531000

987200

40300

158900

-145400

13500

1815900

-759700

1056200

293400

-18000

275400

-237200

38200

500000

-499300

700

63800

-63800

93400

224300

459400

2420100

-228900

2968300

-367700

2600600

4600

165400

-146000

19400

3202100

-582100

2620000

293300

-24300

269000

-168200

100800

500000

18700

12400 6300 18700 200 400 600 -600 1200 10700 22000 8300 42200 -33900 8300 20800 -20800 63600 -55300 8300 17200 17200 -17200 5300 5300 400 400 -400 1100 2800 5700 37900 47500 47500 16800 16800 64700 -400 64300 6900 6900 6900 35400 35400 512400 756300 1268700 -481300 38700 60400 99100 -43600 55500 93000 225200 463700 991200 1387700 -1600400 1560400 -564900 995500 40300 179700 -166200 13500 1879500 -815000 1064500 310600 -18000 292600 -254400 38200 505300 -499300 6000 64200 64200 -64200 94500 227100 465100 2458000 -228900 3015800 -367700 2648100 4600 182200 -146000 36200 3266800 -582500 2684300 300200 -24300 275900 -168200 107700 535400 54100

1444800

10 0.001 500000 10000000 200000000 .9 784500 5064207 500000 750000 6000000 4000000 4000000 560000 .25 7000 71000 161700

424100

175000 105000 2.50 840000 1120000 500000 750000 .10 3250000 500000 .12 2.75 272724 20700 assumes mandatory conversion in connection with a qualified financing at $2.00 per share, plus fee warrants to placement agent