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Supplemental Cash Flow Information
9 Months Ended
Sep. 30, 2011
Supplemental Cash Flow Information [Abstract] 
Supplmental Cash Flow Information
Note 12 - Supplemental Cash Flow Information

2011

During the nine months ended September 30, 2011, we granted options to acquire up to 600,000 shares of our common stock valued at $389,000 to two consultants in consideration of consulting services to be rendered by the consultants over a one year period pursuant to a written consulting agreement. The value of options is being recognized over the contract period and for the nine months ended September 30, 2011, $263,572 was included in stock based compensation.

On March 21, 2011, the Company, converted $784,292 of its short-term debt into equity through the issuance of common stock and warrants to two lenders at the same unit pricing as the Equity Financing. In consideration of converting the short- term loans on the basis of $1.20 for two shares of common stock plus one warrant at an exercise price of $1.00, the Company issued 1,307,153 shares of common stock and warrants to acquire up to 653,576 shares of common stock, which warrants have a five year term and are exercisable at $1.00 per share. The Company's objective for converting the short-term debt into equity is to conserve cash for further market development.

In March 2011, we granted to the holder of our senior unsecured convertible note a warrant to acquire 400,000 shares of our common stock at an exercise price of $.05 per share in consideration of a waiver of the holder's reset provision that allowed us to convert certain short terms loans to equity without causing an adjustment in the conversion price of our senior note.  The warrants had a 5 - year life from the date of grant, contained full-ratchet anti-dilution price protection provisions and were valued $404,000 using a Black Scholes pricing model on the date of grant. During the three and nine months ended September 30, 2011 the warrant holder exercised these warrants using a cashless provision resulting in the company issuing 372,272 shares of our common stock.

For the nine months ended September 30, 2011 an aggregate non-cash expense of $250,002 was recorded for the accretion of the unsecured convertible note.

For the nine months ended September 30, 2011, we recognized $1,117,703 in depreciation and amortization expense from the following: (i) $599,952 related to cost of sales for equipment used directly by or for customers, (ii) $510,138 related to other property and equipment, and (iii) $7,613 for patent amortization.

2010

During the nine months ended September 30, 2010, we issued 406,927 shares of our common stock valued in aggregate at $399,466 to three companies and three individuals for consulting services rendered, the expense of which is included in our general and administrative expense.

During the nine months ended September 30, 2010 we issued 200,000 shares our common stock valued at $216,000 to a corporation for the purchase of a H.264 codec software license to be used in our CodecSys product development. We have included it as an asset on our balance sheet and will amortize it as part of cost of sales.

During the nine months ended September 30, 2010, we issued 3,000,000 shares our common stock valued at $3,290,000 to our senior secured 6.25% convertible note holder as part of amendment and extension agreements. We included it as an asset on our balance sheet as additional note acquisition costs and will amortize it over the remaining term of the note.

For the nine months ended September 30, 2010, an aggregate non-cash expense of $3,251,360 was recorded for the accretion of our convertible notes as follows, (i) $3,143,475 for the senior secured 6.25% convertible note and (ii) $107,885 for our unsecured 3% convertible notes.

For the nine months ended September 30, 2010, we recognized $1,179,380 in depreciation and amortization expense from the following: (i) $603,524 related to cost of sales for equipment used directly by or for customers, (ii) $568,390 related to other property and equipment, and (iii) $7,466 for patent amortization.

During the nine months ended September 30, 2010, the conversion to common stock of all of our unsecured 3% convertible notes and the conversion of $50,000 to common stock of our unsecured short term notes resulted in an $802,190 extinguishment of debt primarily due to unrealized note discounts and accrued interest.