XML 54 R16.htm IDEA: XBRL DOCUMENT v2.4.0.8
LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT
3 Months Ended
Mar. 31, 2014
Liabilities Assigned To Liability Purchase Agreement [Abstract]  
LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT

10.          LIABILITIES ASSIGNED TO LIABILITY PURCHASE AGREEMENT

 

During the third quarter of 2013, the Company negotiated a LPA with Southridge, Partners II, L.P. ("Southridge"). The LPA takes advantage of a provision in the Securities Act of 1933, Section 3(a)(10), that allows the exchange of claims, securities, or property for stock when the arrangement is approved for fairness by a court proceeding. The process, approved by the court in August 2013, has the potential to eliminate nearly $2.1 million of our financial obligations to existing creditors who agreed to participate and executed claims purchase agreements with Southridge's affiliate ASC Recap" accounting for $2,093,303 of existing payables, accrued expenses and other current liabilities, and notes payable. The process began with the issuance in September 2013 of 1,618,235 shares of the Company's common stock to ASC Recap. During September and October 2013, ASC Recap sold the Company's common stock and during the three months ended March 31, 2014 paid creditors approximately $80,000 from the proceeds and retained a service fee of approximately $27,000. As of May 14, 2014, no further shares of the Company's common stock had been issued to ASC Recap to settle creditors' balances.

 

There can be no assurance that the Company will be successful in completing this process with Southridge, and the Company retains ultimate responsibility for this debt, until fully paid.