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<div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">On May<font style="DISPLAY: inline; FONT-STYLE: italic"> 7, </font>2009, Brian Murphy, derivatively on behalf of the Company, commenced a lawsuit in the Supreme Court of the State of New York, County of New York, against the Chairman of the Company’s Board of Directors, certain of former directors and officers of the Company, and the Company as a nominal defendant. The Complaint filed by Mr. Murphy in the action alleges, among other things, that the defendants breached fiduciary duties owed to the Company and its stockholders by failing to ensure that the Company’s financial statements for its fiscal year ended March 31, 2008 and quarter ended June 20, 2008 were prepared correctly, and by causing the Company to enter into the December 2009 financing on terms dilutive to the Company’s stockholders. The Company is a nominal defendant for purposes of the derivative action claims, and is not aware of any claims for affirmative relief being made against it. However, the Company has obligations to provide indemnification to its officers and directors (and former officers and directors), including for all legal costs incurred by them in defending these claims. The defendants currently have until June 30, 2010 to file a response to the Complaint. The Company believes the lawsuit is without merit and intends to defend this action vigorously. However, the ultimate outcome of any litigation is uncertain and could result in substantial damages.</font></div>
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<div><font>(c)</font></div>
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<div><font><font>Derivative Complaint</font></font></div>
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<div><font>On May<font> 7, </font>2009, Brian Murphy, derivatively on behalf of the Company, commenced a lawsuit in the Supreme Court of the State of New York, County of New York, against the Chairman of the Company’s Board of Directors, certain of former directors and officers of the Company, and the Company as a nominal defendant. The Complaint filed by Mr. Murphy in the action alleges, among other things, that the defendants breached fiduciary duties owed to the Company and its stockholders by failing to ensure that the Company’s financial statements for its fiscal year ended March 31, 2008 and quarter ended June 20, 2008 were prepared correctly, and by causing the Company to enter into the December 2009 financing on terms dilutive to the Company’s stockholders. The Company is a nominal defendant for purposes of the derivative action claims, and is not aware of any claims for affirmative relief being made against it. However, the Company has obligations to provide indemnification to its officers and directors (and former officers and directors), including for all legal costs incurred by them in defending these claims. The defendants currently have until June 30, 2010 to file a response to the Complaint. The Company believes the lawsuit is without merit and intends to defend this action vigorously. However, the ultimate outcome of any litigation is uncertain and could result in substantial damages.</font></div>
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