Long-Term Debt, Net Of Current Portion

9 Months Ended

Sep. 30, 2011

Long-Term Debt, Net Of Current Portion [Abstract]

Long-Term Debt, Net Of Current Portion

NOTE 3 – LONG-TERM DEBT, NET OF CURRENT PORTION

Long-term debt consists of the following at September 30, 2011 (amounts in thousands):

7  1/2% convertible subordinated debentures due April 2010, interest payable semi-annually in April and October	$	549
10% senior promissory notes due April 2012, interest payable semi-annually each April and October		1,738
14% convertible promissory notes due February 2013, interest payable quarterly*		1,800
10% promissory note subject to monthly principal payments plus interest		450
Capitalized lease obligations		405
Less unamortized discount		(362	)
Total long-term debt		4,580
Less current portion		(2,360	)
Total long-term debt, net of current portion	$	2,220

* Interest is payable quarterly, and the entire principal is due in February 2013. The note holders also received five-year warrants to purchase an aggregate of 900,000 shares of our common stock at $0.44 per share. The warrants were vested and exercisable at issuance. We used the Black-Scholes option valuation model in determining the allocation of the relative values of debt and warrants. The warrants in the aggregate were valued at $112,000, which was recorded as a discount on notes payable and which will be amortized over the term of the notes using the effective interest method. At the stated interest rate, we recognized approximately $22,000 of interest expense for both the three and nine months ended September 30, 2011. For accounting purposes, we also recognized as interest expense approximately $6,000 for the three and nine months ended September 30, 2011, attributable to the amortization of the discount recorded on the notes. The overall theoretical return to the lenders, taking into account the coupon rate and the warrants, is 18.8%.