Note 16 - Subsequent Event

8% Convertible Promissory Notes

Subsequent to December 31, 2013, we issued and sold to certain investors, pursuant to a Note Purchase Agreement we entered into during the year ended December 31, 2012, an aggregate principal amount of $1,700,000 of our 8.0% convertible promissory notes (the “8% Notes”) which are initially convertible into shares of our common stock, at a conversion price equal to $0.40 per share of common stock, subject to adjustment as provided on the terms of the 8% Notes, and associated warrants (the “8% Note Warrants”) to purchase, in the aggregate, 4,250,000 shares of common stock, subject to adjustment as provided on the terms of the 8% Note Warrants.

The 8% Notes, including all outstanding principal and accrued and unpaid interest, are due and payable on the earlier of five years from date of issuance or upon the occurrence of an Event of Default (as defined in the 8% Notes). We may prepay the 8% Notes, in whole or in part, upon 60 calendar days prior written notice to the holders thereof. Interest accrues on the 8% Notes at a rate of 8.0% per annum, payable during the first three years that the 8% Notes are outstanding in shares of common stock, valued at the weighted average price of a share of common stock for the twenty consecutive trading days prior to the interest payment date, pursuant to the terms of the 8% Notes. During the fourth and fifth years that the 8% Notes are outstanding, interest that accrues under the 8% Notes shall be payable in cash.

The 8% Note Warrants are exercisable at an exercise price of $0.60 per share of common stock, subject to adjustment as provided for by the terms thereof, for a period commencing on the date of issuance and ending on the earlier to occur of the date that is (i) three years after the date upon which the weighted average price of a share of Common Stock for the 90 consecutive trading days prior to such date is at least $2.00 per share, and (ii) five years after the date on which the 8% Notes to which the applicable 8% Note Warrant is related has been repaid in full.

8% Convertible Note

Subsequent to December 31, 2013, we issued and sold to a certain investor an aggregate principal amount of $1,000,000 of our 8% convertible note which is initially convertible into shares of our common stock, at a conversion price equal to $0.74 per share of common stock, subject to adjustment as provided on the terms of the 8% convertible note, and associated warrants to purchase, in the aggregate, 900,901 shares of common stock, subject to adjustment as provided on the terms of the warrant.

The 8% convertible note, including all outstanding principal and accrued and unpaid interest, are due and payable on the earlier of November 25, 2018 or upon the occurrence of an Event of Default (as defined in the 8% convertible note). We may prepay the 8% convertible note, in whole or in part, upon 60 calendar days prior written notice to the holder thereof. Interest accrues on the 8% convertible note at a rate of 8.0% per annum, payable during the first three years that the 8% convertible note is outstanding in shares of common stock, valued at the weighted average price of a share of common stock for the twenty consecutive trading days prior to the interest payment date, pursuant to the terms of the 8% convertible note. During the first three years that the 8% convertible note is outstanding, interest that accrues under the 8% convertible note shall be payable in shares of common stock.

The related warrant is exercisable at an exercise price of $1.11 per share of common stock, subject to adjustment as provided for by the terms thereof, for a period commencing on the date of issuance and ending on the earlier to occur of the date that is (i) three years after the date upon which the weighted average price of a share of common stock for the 90 consecutive trading days prior to such date is at least $2.00 per share, and (ii) five years after the date on which the 8% convertible note to which the applicable warrant is related has been repaid in full.