Item 2.03 Creation of a Direct Financial Obligation

On March 17, 2009 the Company entered into a $250,000 short-term note with three private institutional lenders. The proceeds of this note were used primarily for a new business venture as well as to meet short-term working capital requirements of the Company. The note carries a rate of 10 percent per annum and matures on June 17, 2009.

The lenders have the right, at their sole discretion, to convert the principal balance of the note plus accrued but unpaid interest, in whole or in part, into common stock of the Company at a conversion price of $0.25 per share.

The lenders presently hold 16 million warrants to purchase stock of the Company, which were issued at various times during 2007 and 2008 in conjunction with certain convertible instruments. The lenders have agreed to exchange their 16 million warrants for 10 million shares of the Company's common stock from time to time so long as the lenders combined beneficial ownership never exceeds 9.99%. The shares issuable upon exchange of the warrants will be issued without restrictions on resale under Rule 144. This exchange agreement will result in a reduction in dilution of 6 million shares of the Company's common stock.

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