Events subsequent to June 30, 2013 have been evaluated through the date these financial statements were issued, to determine whether they should be disclosed to keep the financial statements from being misleading.  The following events have occurred since June 30, 2013.

 

On July 22, 2013, one affiliated accredited investor, the Tierney Family Trust, of which Thomas Tierney our Chairman of the Board is a trustee, purchased an aggregate of 400,000 shares of common stock at a price of $0.25 per share pursuant to a Private Placement Offering Memorandum dated May 23, 2013. The Company received gross aggregate cash proceeds of $100,000.

 

On August 12, 2013, all of the holders of $1.00 convertible notes (“$1 Note(s)”) (see Note 4 above) converted $1 Notes in the aggregate principal amount of $6,363,900, plus $1,359,400 in accrued interest thereon, into shares of common stock at the price of $0.25 per share. The conversion followed an amendment of the Notes to permit a temporary reduction in the conversion price from $1.00 per share to $0.25 per share. All $1.00 Note holders consented to the amendment and converted their Notes and interest thereon at a conversion price of $0.25 per share of common stock with the resultant issuance of  30,893,419 shares. The $1.00 Note holders included four affiliates of the Company:

·

Mr. John Pappajohn, a Director of the Company converted six notes with an aggregate principal amount of $1,511,700, plus $317,900 of interest thereon, into 7,318,228 shares of common stock;

·

Mr. Andy Sassine, a Director of the Company, converted two notes with an aggregate principal amount of $700,000, plus $174,600 of interest thereon, into 3,498,200 shares of common stock;

·

Mr. Zach McAdoo, a Director of the Company, converted three notes held by the Zanett Opportunity Fund, Ltd., of which he is the President, with an aggregate principal amount of $380,000, plus $57,200 of interest thereon, into 1,748,720 shares of common stock;

·

Mr. Paul Buck, the CFO of the Company, converted one note with a principal amount of $75,000, plus $14,900 of interest thereon, into 359,450 shares of common stock;

 

As of August 12, 2013, all of our convertible debt has been converted to equity except for two October 2012 Notes with an aggregate balance of $160,000 and interest thereon of $11,680.