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Item 3. Source and Amount of Funds or Other Consideration

On May 8, 2008, the LLC purchased 684 shares of Common Stock, warrants to purchase 1,851 shares of Common Stock (the “Warrants”) and 2,450 shares of Series I Convertible Preferred Stock of the Company (the “Series I Preferred Stock”) from M.A.G. Capital, LLC (“MAG”), Monarch Pointe Fund, Ltd. (“MPF”) and Mercator Momentum Fund III L.P. (“MMF” and, together with MAG and MPF, the “Sellers”), for the aggregate amount of $1,200,000, pursuant to a Securities Purchase Agreement (the “Securities Purchase Agreement”), dated as of May 5, 2008, by and among the LLC and the Sellers. The shares of Series I Preferred Stock purchased by the LLC pursuant to the Securities Purchase Agreement are convertible into 33,793 shares of Common Stock. Pursuant to the terms of the Certificate of Determination for the Series I Preferred Stock, the holder of the shares of Series I Preferred Stock may not convert any shares of Series I Preferred Stock if, after such conversion, such holder would have beneficial ownership of over 9.99% of the outstanding shares of Common Stock. Because the LLC currently beneficially holds 77.0% of the outstanding shares of Common Stock, the LLC may not convert the shares of Series I Preferred Stock into shares of Common Stock at this time. Accordingly, the shares of Common Stock underlying the shares of Series I Preferred Stock have not been included in this Amendment.

This brief description of the Securities Purchase Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreement, annexed hereto as Exhibit 2, which is incorporated herein by reference.

Item 4. Purpose of Transaction

The information set forth in Item 3 is hereby incorporated by reference in this Item 4. The deregistration of the Common Stock, contemplated by the Term Sheet (as defined in Item 3 of Amendment No. 2) was effected on May 8, 2008. The Reporting Persons acquired the securities reported herein for portfolio investment purposes, in the ordinary course of business. Except as contemplated in this Item 4, none of the Reporting Persons has any plan or proposal of the types referred to in clauses (a) through (h) or (j) of Item 4 of Schedule 13D.

Each of the Reporting Persons intends to continuously review its investment in the Issuer, and may in the future determine, either alone or as part of a group, (i) to acquire additional securities of the Issuer, through open market purchases, privately negotiated transactions or otherwise, (ii) to dispose of all or a portion of the securities of the Issuer owned by it in the open market, in privately negotiated transactions or otherwise or (iii) to take any other available course of action, which could involve one or more of the plans or proposals referred to in clauses (a) through (h) or (j) of Item 4 of Schedule 13D. Notwithstanding anything contained herein, each of the Reporting Persons specifically reserves the right to change its intention with respect to any or all of such matters. In reaching any decision as to its course of action (as well as to the specific elements thereof), each of the Reporting Persons currently expects that it would take into consideration a variety of factors, including, but not limited to, the following: the Issuer’s business and prospects; other developments concerning the Issuer and its businesses generally; other business opportunities available to the Reporting Persons; developments with respect to the businesses of the Reporting Persons; changes in law and government regulations; general economic conditions; and money and stock market conditions, including the market price of the securities of the Issuer.