XML 63 R13.htm IDEA: XBRL DOCUMENT

Long-Term Debt

12 Months Ended

Dec. 31, 2012

NOTE 6 — LONG-TERM DEBT

Long-term debt consists of the following as of December 31 (amounts in thousands):


	2012			2011
Note holders unrelated to the Company:
7¹/ ₂% convertible subordinated debentures due April 2010, interest payable semi-annually in April and October (1)	$	537		$	549
10% senior promissory notes due April 2012, interest payable semi-annually in April and October (2)		17			1,738
10% note due in equal monthly principal installments plus interest (3)		380			430
14% convertible notes due February 2013, interest payable quarterly (4)		1,800			1,800
14% convertible notes due May 2013, interest payable quarterly (5)		700			700
14% convertible notes due June 2013, interest payable quarterly (6)		100			100
12% promissory note due February 2014		100			—
Other		25			—
Capitalized lease obligations (7)		176			343

		3,835			5,660
Related party notes:
14% note due May 2013, interest payable quarterly (8)		1,000			1,000

Less unamortized discount		(36	)		(290	)

		4,799			6,370
Less current portion		(3,067	)		(2,467	)

	$	1,732		$	3,903

(1)

Represents our 7¹/ ₂% convertible subordinated debentures that matured on April 15, 2010, and have not been repaid or exchanged for senior notes. The outstanding debentures are convertible into 12,198 shares of our common stock at $44.02 per share. Except for their classification among current liabilities, we are not able to estimate the financial effect resulting from the state of default with respect to these outstanding debentures (Note 7b).

(2)	Represents a 10% senior promissory note that was not repaid on its maturity date of April 15, 2012. Due to a lack of contact from the holder, we were not able to modify this note to a 14% senior promissory note due April 15, 2013.

(3)	Represents a promissory note for the sum of two notes that were consolidated into one in August 2011 now payable in monthly installments of $10,000 of principal plus interest at 10%. At December 31, 2012, eight of the required principal payments had not been paid.

(4)

In connection with these notes, we issued to the noteholders 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. The notes are additionally convertible into our common stock at $0.25 per share. In March 2013, we repaid $400,000 of the notes and executed an agreement to extend the maturity of the remaining $1.4 million to January 31, 2014, reduce the conversion price to $0.125 per share, and decrease the warrant exercise price to $0.22 per share. We also agreed to assign certain receivables and a potential arbitration recovery to the creditor as a source of future repayment, but not in excess of $300,000.

(5)

In November 2011, we issued convertible promissory notes to one entity and one individual in exchange for aggregate cash proceeds of $700,000. The notes bear interest at the rate of 14%, payable quarterly, and the principal is due in May 2013. At any time during the term of the notes, the holders may elect to convert the principal and unpaid interest to our common stock at $0.25 per share. The holders also received warrants to purchase an aggregate of 350,000 shares of our common stock at $0.44 per share. The warrants, which were vested at issuance, expire in 2016. In March 2013, the warrant price was decreased to $0.22 per share and we agreed to assign certain receivables and a potential arbitration recovery to the creditor as a source of future repayment, but not in excess of $700,000.

(6)

This is a 14% convertible promissory note issued in December 2011 with interest only payable in quarterly installments until June 2013 when all principal comes due. At any time during the term of the note, the holder may elect to convert the principal and unpaid interest to our common stock at $0.25 per share. In connection with this note, we also issued a five-year warrant to purchase 50,000 shares of our common stock at $0.44 per share. The warrant was vested at issuance.

(7)	Capital leases were used to finance the acquisition of certain computer and telephone equipment and currently require future minimum lease payments as follows:


	December 31,
	2012		2011
2012			$	234
2013	$	155		127
2014		34		34

		189		395
Less amount representing interest		13		52

	$	176	$	343

(8)	The note was issued in November 2011 to a major stockholder, is due in full in May 2013.