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Subsequent Event
12 Months Ended
Dec. 31, 2011
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

NOTE 10   -   SUBSEQUENT EVENTS:

Amendments made to the Preferred Stock and Warrant Agreements.

After review of the Section 5(b) of the original Series A 10% Convertible Preferred Stock and Section 9(c) and Section 9(d) of the original Warrant Agreement of the Preferred Stock and Warrant Agreement, and the resulting accounting consequence as mentioned in note 2, the Company decided to amend the respective agreements to delete these sections. The Company explained to the holders of these instruments that these were unintended consequences, and the holders of the instruments were not materially disadvantaged due to these amendments.

On or before June 30, 2012, the holders of the Convertible Preferred Stock agreed to an amendment to the Series A 10% Convertible Preferred Stock which deleted the liquidation provision. As a result, the Convertible Preferred Stock will be shown as equity (rather than temporary equity) in all filings beginning with the quarter ended June 30, 2012.

Effective June 30, 2012, the Company entered into amendments to its Warrant Agreement. The amendments were as follows:

l     Extend the term of the warrants from September 7, 2012 to September 7, 2014.

l     Remove the contingent put feature contained in Section 9(c) which would provide the holder of the Warrant a right to "put" in the event of a fundamental transaction as defined in the agreement (contingent put).

l     Remove the "down round" protection contained in Section 9(d).

 

The amendment to remove the put and the down round protection feature allows for the Warrants to be treated as equity for all filings beginning with the quarter ended June 30, 2012.    The amendments to the Warrants resulted in an approximate increase in value of $10,600 which was based on comparing the valuation of the modified warrants using the current assumptions to the valuation immediately prior to the modification. Because the warrants are fully vested the total was recognized immediately upon modification. A Binomial Lattice valuation model was used to value the instrument before and after modification since this model incorporates assumptions a marketplace participant would likely consider including the down round protection, the fundamental transaction provision and potential for early exercise. Since the majority of the holders of the Convertible Preferred Stock and the Warrants are the same, the amendments to the Warrants were considered as consideration for all holders.