(7)           Subsequent Events

On October 25, 2012, we entered into a Preferred Stock and Warrant Purchase Agreement (the "Purchase Agreement") with existing investors whereby we agreed to sell 1,000 shares of a newly created series of our preferred stock, designated "Series B Cumulative Convertible Preferred Stock", par value $0.01 per share, for an issue price of $10,000 per share, (the "Series B Preferred Stock") and agreed to issue warrants to purchase 20,000,000 shares of our common stock at an exercise price of $0.50 per share, for an aggregate purchase price of $10,000,000.The financing consisted of $4,703,000 of new investment and the conversion of approximately $5,297,000 of outstanding dividends payable on our Series A Preferred Stock. Certain terms of the Series B Preferred Stock are senior in right to the Company's outstanding Series A Preferred Stock.  The Series B financing was approved by the requisite percentage of the holders of the Company's Series A Preferred Stock and closed on October 25, 2012.

On November 2, 2012 we paid in full our secured noteholder $2,750,000 plus accrued interest. The note and the security agreement are terminated and no further amounts are owed under the note or the security agreement.