Note 5. Current Liabilities and Debt Obligations

Accounts Payable and Other Accrued Payables

As of September 30, 2013 and December 31, 2012, the accounts payable and other accrued payables consisted of $22.1 million and $16.4 million, respectively, in trade account payables and $13.1 million and $6.7 million, respectively, in accrued payables.

Senior Revolving Credit Facility

On July 31, 2013, we amended our $30 million revolving credit facility (the "Facility") with Wells Fargo Capital Finance, LLC ("Wells Fargo") to extend the maturity date to November 13, 2014 from May 17, 2014. The Facility has a term loan component with a balance of $6.3 million as of July 31, 2013. The principal of the term loan component will be repaid in quarterly installments of $93,750, with a final installment of the unpaid principal amount payable on November 13, 2014. The interest rate on the term loan component is the same as that on the revolving credit component of the Facility, which is the higher of the Wells Fargo Bank "prime rate" plus 1%, the Federal Funds rate plus 1.5%, or the 3-month LIBOR rate plus 2%. In lieu of having interest charged at the foregoing rates, the Company may elect to have the interest on all or a portion of the advances on the revolving credit component be a rate based on the LIBOR Rate (as defined in the Facility) plus 3.75%. As of September 30, 2013, we have not elected the LIBOR Rate option. Borrowings under the Facility are collateralized by substantially all of the Company's assets including inventory, equipment, and accounts receivable.

As of September 30, 2013, the interest rate on the Facility was 4.25%. We incurred interest expense in the amount of $0.2 million and $0.6 million for each of the three and nine months ended September 30, 2013 and 2012, respectively.

On May 11, 2012, the Facility was amended to allow for the redemption of Senior Redeemable Preferred Stock, under certain conditions, at a discount from par value plus accrued dividends of at least 10%, at an aggregate price not to exceed $4.0 million. On May 16, 2012 and on August 24, 2012, a portion of the Senior Redeemable Preferred Stock was redeemed (see Note 6 – Redeemable Preferred Stock).

On June 11, 2013, the Facility was further amended to allow for the further redemption of Senior Redeemable Preferred Stock, under certain conditions, at a discount from par value plus accrued dividends of at least 10%, at an aggregate price not to exceed $2.0 million. On June 14, 2013, a portion of the Senior Redeemable Preferred Stock was redeemed (see Note 6 – Redeemable Preferred Stock).

The Facility has various covenants that may, among other things, affect our ability to merge with another entity, sell or transfer certain assets, pay dividends and make other distributions beyond certain limitations. The financial covenants also include minimum EBITDA (as defined in the Facility), minimum recurring revenue and a limit on capital expenditures. As of September 30, 2013, we were in compliance with the Facility's financial covenants, including the minimum EBITDA covenants. The term loan component of the Facility amortizes at 5% per year, or $0.4 million, which is paid in quarterly installments and is classified as current on the condensed consolidated balance sheets. The remaining balance of the term loan, or $6.0 million, and the revolving component of the Facility mature over the period 2013 through 2014.

At September 30, 2013, we had outstanding borrowings of $19.3 million on the Facility, which included the $6.3 million term loan, of which $0.4 million was short-term. At December 31, 2012, we had outstanding borrowings of $18.9 million on the Facility, which included the $6.6 million term loan, of which $0.4 million was short-term. At September 30, 2013 and December 31, 2012, we had unused borrowing availability on the Facility of $10.2 million and $2.2 million, respectively. The effective weighted average interest rates on the outstanding borrowings under the Facility were 5.3% and 5.4% for the nine months ended September 30, 2013 and 2012, respectively.

The following are maturities of the Facility presented by year (in thousands):

	2013		2014		Total
Short-term:
Term loan	$	375	$	-	$	375	¹
Long-term:
Term loan	$	-	$	5,906	$	5,906	¹
Revolving credit		-		13,047		13,047	²
Subtotal	$	-	$	18,953	$	18,953
Total	$	375	$	18,953	$	19,328

The principal will be repaid in quarterly installments of $93,750, with a final installment of the unpaid principal amount payable on November 13, 2014.

Balance due represents balance as of September 30, 2013, with fluctuating balances based on working capital requirements of the Company.

Warranty Liability

We provide warranty services to our customers primarily in the network solutions deliverables of the Cyber Operations and Defense business line. The majority of our warranty services involves contractual coverage with the Original Equipment Manufacturer ("OEM") and primarily involves referrals to the OEM for service calls. Additionally, certain contracts and programs require that we provide an enhanced level of warranty coverage. The balance of our accrued warranty liability as of September 30, 2013 and December 31, 2012 was $0.1 million and $0.2 million, respectively.