Related Party Transactions

3 Months Ended

Jun. 30, 2012

Related Party Transactions [Abstract]

Related Party Transactions

7.     Related Party Transactions

Between June 2009 and April 2012, an employee who is the son of the managing member of a limited liability company that beneficially owns approximately 12% of the Company’s common stock received advances from the Company in various forms.  Through June 30, 2012, such advances totaled $388,967 including interest, and as of June 30, 2012, the outstanding balance of these advances was $160,466.  The Company also provided fulfillment services at no charge to a business partly owned by a member of his household through September 30, 2012.  The Company’s Board of Directors determined that not all of these advances were approved in accordance with the Company’s policy on related party transactions, documented appropriately or recorded correctly in the Company’s accounting system. As a result, the Company was not able to monitor the outstanding amount of these advances on a continuous basis.   In April 2012, this employee voluntarily resigned from the Company.  Principal repayments towards the outstanding advances aggregating $235,000 have been made through June 30, 2012. The individual agreed to repay the remaining balance by September 30, 2012 with interest based on prime rate on the first business day of the calendar quarter, and provided security for his repayment obligation. The remaining balance has not been paid in full t

On October 31, 2012, the Company entered into a letter agreement (the “Series C Letter”) relating to its Series C Preferred Stock with New Atlantic Venture Fund III, L.P., New Atlantic Entrepreneur Fund III, L.P. and NAV Managers Fund, LLC (together, “New Atlantic”).  New Atlantic and its affiliates beneficially own 10,000 shares of the Company’s Series C Preferred Stock, which is all the outstanding shares of such stock, and approximately 22.45% of the Company’s common stock, on a fully diluted basis. Pursuant to the Series C Letter, New Atlantic has agreed to exchange (the “Exchange”) all its shares of Series C Preferred Stock for common stock of the Company if (i) the Company receives at least $4 million in proceeds from qualifying private placements of common stock (as defined) on or prior to December 31, 2012 (the “Private Placements”) and (ii) all the Company’s 7% Senior Secured Convertible Promissory Notes due December 31, 2012 and all the Company’s 7% Senior Secured Promissory Notes due January 15, 2013 cease to be outstanding, and have not been replaced with other debt securities, other than debt securities issued to lenders approved by New Atlantic. If the Exchange occurs, for each share of Series C Preferred it exchanges, New Atlantic will receive a number of shares of common stock equal to $100 divided by the weighted average price of the shares of common stock sold in the Private Placements.

During the six months ended June 30, 2012, the Company received and repaid advances of $605,000 and $283,812, respectively, from certain stockholders. Such advances are due on demand and are non-interest bearing.