8. Convertible Revolving Notes Payable to Shareholder

May 2010 Note Financing—On May 28, 2010, we entered into an unsecured promissory note with a conversion provision (the "May 2010 Note") to the Koski Family Limited Partnership (the "KFLP") pursuant to which we borrowed $1,000,000 from the KFLP. Interest on the May 2010 Note accrued at the rate of LIBOR plus 6.0% and the principal of the May 2010 Note, together with all accrued interest thereon, was due and payable the earlier of: (i) the closing date of a registered public offering of newly issued equity securities by us resulting in cash proceeds to us, other than in connection with employee option plans, or (ii) the May 24, 2011 maturity date; provided, however, that in the event we completed a subsequent private offering of equity securities prior to the May 24, 2011 maturity date, we could elect to convert the principal of the May 2010 Note into the same equity securities being sold in the private offering at the same price and terms to the KFLP. The May 2010 Note was repaid through the issuance of common stock in connection with the July 2010 Financing Transaction (See Note 9).

Credit Facility- On July 30, 2010, in connection with the July 2010 Financing Transaction, the Company entered into an unsecured revolving credit facility agreement with the KFLP (the "Credit Facility") Pursuant to the Credit Facility, the Company is able to borrow up to $2,000,000 from the KFLP at LIBOR plus 6.0%. The term of the Credit Facility is for 12 months commencing August 1, 2010. Our continued ability to draw on the Credit Facility is subject to (i) the receipt by the KFLP of a certificate of no adverse change from us in form and substance acceptable to the KFLP, (ii) the receipt by the KFLP of a revolving unsecured promissory note from us in the principal drawn down in the form attached to the Credit Facility and (iii) our compliance with the terms of the Credit Facility.

On each of September 13, 2010 and November 8, 2010, the Company borrowed $1,000,000 under the Credit Facility and executed a revolving unsecured promissory note for such amounts initially to mature on July 30, 2011.

On January 24, 2011, the Company entered into a First Amendment to its Credit Facility (the "First Amendment") to increase the available borrowing from $2,000,000 to $2,500,000 and simultaneously therewith the Company drew on the Credit Facility, as amended, to borrow the additional $500,000 in available funds and executed another revolving unsecured promissory note initially due on July 30, 2011.

On February 4, 2011, the Company entered into a Second Amendment (the "Second Amendment") to its Credit Facility to increase the available borrowings from $2,500,000 to $5,000,000. Future draws under the Credit Facility, as amended, are limited to $500,000 per month commencing no earlier than March 2011. Under the Second Amendment, the due date of the amounts borrowed and outstanding under the Credit Facility, were extended by one year from July 30, 2011 to July 30, 2012. The interest rate remained at LIBOR plus 6.0%. The Second Amendment further provided for the automatic conversion of any amounts borrowed and outstanding under the Credit Facility into Company securities that may be issued by the Company in subsequent securities offerings. Any automatic conversion of amounts outstanding under the Credit Facility would be on the same terms of any such offering. In addition, the Second Amendment provides the KFLP with the right to put any undrawn available amounts under the Credit Facility, as amended, to the Company and thereby have a note issued to the KFLP. The KFLP can exercise its put right to the extent it desires to fully participate, through the automatic conversion provision, in any subsequent offering by the Company.

On each of March 15, 2011, April 5, 2011, May 5,2011, June 3, 2011, and July 8, 2011, the Company borrowed an additional $500,000 under the Credit Facility, as amended, and executed a revolving unsecured promissory notes for such amounts that each mature on July 30, 2012.

On June 29, 2011, the Company entered into a Third Amendment (the "Third Amendment") to its Credit Facility. As a result of the Third Amendment, the Company increased its availability under the Credit Facility by $2,000,000 from $5,000,000 to $7,000,000. Future draws of the $2,000,000 in increased availability provided by the Third Amendment to the Credit Facility are limited to $1,000,000 increments beginning no earlier than August 2011 and October 2011, respectively. All other terms of the Credit Facility remained the same.

On each of August 1, 2011 and October 5, 2011, the Company borrowed an additional $1,000,000 under the Credit Facility, as amended and executed a revolving unsecured promissory note in such amounts that mature on July 30, 2012.

On December 9, 2011, the Company entered into a Fourth Amendment (the "Fourth Amendment") to its Credit Facility with the KFLP. The entering into of the Fourth Amendment was approved by the Company's Audit Committee and disinterested directors. The Fourth Amendment increased the available borrowing under the Credit Facility by $500,000 from $7,000,000 million to $7,500,000. On December 9, 2011, the Company drew down on the Credit Facility as amended to borrow $500,000 in the newly available funds. All other terms of the Credit Facility remained the same.

As of December 31, 2011 the Company had borrowed an aggregate of $7,500,000 from the KFLP under the Credit Facility, as amended and owed accrued interest of $356,689 to the KFLP with no remaining availability. See Note 16 for subsequent events regarding the further amendment of the Credit Facility followed by the conversion of the outstanding debt owed thereunder into equity and the termination of the Credit Facility.