2. Liquidity and Going Concern	3 Months Ended
Mar. 31, 2013
Liquidity And Going Concern
Liquidity and Going Concern	We have prepared our condensed consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have historically experienced recurring operating losses and negative cash flows from operations and have maintained our financial position through strategic management of our resources, including the sale of equity securities, borrowings and debt instruments. At March 31, 2013, we had total cash and cash equivalents of approximately $0.3 million and working capital deficit of $22.0 million. In February 2013, the Company entered into promissory note agreements by and among the Company and certain lenders in aggregate principal amount of $600,000 (collectively, the "Bridge Notes"). The Bridge Notes mature on the earlier of (a) the date on which the Company closes a preferred stock financing of at least $1.0 million, and (b) the date that is 90 days after the note was issued. The Bridge Notes require the Company to pay the original principal amount of the Bridge Notes plus a 10% financing fee on the maturity date in cash or Series A1 Preferred Stock at the option of the holder. The Bridge Notes are secured by a security interest in certain assets of the Company. In addition, in March 2013, we entered into a securities purchase agreement with accredited investors pursuant to which we agreed to sell an aggregate of 9,000 shares of newly created Series A1 Convertible Preferred Stock at a purchase price of $100 per share, raising aggregate gross proceeds of approximately $0.9 million. In January 2013, we entered into a securities purchase agreement with accredited investors pursuant to which we sold 1,744 shares of Series A Convertible Preferred Stock at a purchase price of $115 per share, raising aggregate gross proceeds of approximately $0.2 million. For the three months ended March 31, 2013, we reported a net loss from operations of approximately $9.4 million, and for the three months ended March 31, 2012, we reported a net loss from operations of approximately $2.2 million. For the three months ended March 31, 2013 and 2012, we had negative cash flows from operations of $2.0 million and $2.3 million, respectively. We anticipate we will continue to incur losses in the future. Our ability to generate positive cash flows from operations and net income is dependent, among other things, on the acceptance of our products in the marketplace, market conditions, cost control, and our ability to raise capital on acceptable terms. In addition to our working capital deficit, as of March 31, 2013, we had outstanding the Senior Secured Promissory Notes in an aggregate principal amount of $4.0 million and the Larsen Note in the amount of $2.2 million We also had $2.1 million of retention bonus obligations and an aggregate of $2.6 million outstanding under subordinated notes as further described below. In connection with the Archer USA Inc. (“Archer USA”) acquisition, on December 27, 2011, we issued $2.6 million of subordinated promissory notes to certain Archer USA debt holders. We are required to repay 30% of the outstanding principal amount of the subordinated notes on each of the first and second anniversary of the date of issuance and the remainder of the principal amount on the third anniversary of the date of issuance. These notes are non-recourse and upon default the sole remedy is a default annual interest rate of 14%. We have not made any payments on these notes and plan on repaying when we have sufficient resources to satisfy these obligations. Additionally, retention bonus obligations of $2.1 million as of March 31, 2013, were issued to certain employees in conjunction with the acquisition of Archer USA. A portion of these obligations was due on July 1, 2012, December 27, 2012, and January 1, 2013. The agreements specifically state that upon non-payment interest accrues at an annual rate of 6%. In January, 2013, Mathew Harris elected to convert $0.6 million of his retention bonus agreement into 5,207 shares of our Series A Preferred Stock. We do not plan on paying the remaining obligations until such time as our resources permit. We may need to raise additional capital to fund our working capital requirements, capital expenditures and operations. Our ability to fund our capital needs will depend on many factors, including our future operating performance, our ability to successfully realign our costs or the effect of any strategic and financing alternatives we may pursue. Financing, if available, may be on terms that are significantly dilutive to our stockholders, and the prices at which investors would be willing to purchase our securities may be lower than the current price of our common stock. The holders of new securities may also receive rights, preferences or privileges that are senior to those of existing holders of our common stock. If new sources of financing are required but are insufficient or unavailable, we would be required to modify our growth and operating plans accordingly.

2. Liquidity and Going Concern

3 Months Ended

Mar. 31, 2013

We have prepared our condensed consolidated financial statements assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. We have historically experienced recurring operating losses and negative cash flows from operations and have maintained our financial position through strategic management of our resources, including the sale of equity securities, borrowings and debt instruments. At March 31, 2013, we had total cash and cash equivalents of approximately $0.3 million and working capital deficit of $22.0 million. In February 2013, the Company entered into promissory note agreements by and among the Company and certain lenders in aggregate principal amount of $600,000 (collectively, the "Bridge Notes"). The Bridge Notes mature on the earlier of (a) the date on which the Company closes a preferred stock financing of at least $1.0 million, and (b) the date that is 90 days after the note was issued. The Bridge Notes require the Company to pay the original principal amount of the Bridge Notes plus a 10% financing fee on the maturity date in cash or Series A1 Preferred Stock at the option of the holder. The Bridge Notes are secured by a security interest in certain assets of the Company.

In addition, in March 2013, we entered into a securities purchase agreement with accredited investors pursuant to which we agreed to sell an aggregate of 9,000 shares of newly created Series A1 Convertible Preferred Stock at a purchase price of $100 per share, raising aggregate gross proceeds of approximately $0.9 million.

In January 2013, we entered into a securities purchase agreement with accredited investors pursuant to which we sold 1,744 shares of Series A Convertible Preferred Stock at a purchase price of $115 per share, raising aggregate gross proceeds of approximately $0.2 million.

For the three months ended March 31, 2013, we reported a net loss from operations of approximately $9.4 million, and for the three months ended March 31, 2012, we reported a net loss from operations of approximately $2.2 million. For the three months ended March 31, 2013 and 2012, we had negative cash flows from operations of $2.0 million and $2.3 million, respectively. We anticipate we will continue to incur losses in the future. Our ability to generate positive cash flows from operations and net income is dependent, among other things, on the acceptance of our products in the marketplace, market conditions, cost control, and our ability to raise capital on acceptable terms.

In addition to our working capital deficit, as of March 31, 2013, we had outstanding the Senior Secured Promissory Notes in an aggregate principal amount of $4.0 million and the Larsen Note in the amount of $2.2 million We also had $2.1 million of retention bonus obligations and an aggregate of $2.6 million outstanding under subordinated notes as further described below.

In connection with the Archer USA Inc. (“Archer USA”) acquisition, on December 27, 2011, we issued $2.6 million of subordinated promissory notes to certain Archer USA debt holders. We are required to repay 30% of the outstanding principal amount of the subordinated notes on each of the first and second anniversary of the date of issuance and the remainder of the principal amount on the third anniversary of the date of issuance. These notes are non-recourse and upon default the sole remedy is a default annual interest rate of 14%. We have not made any payments on these notes and plan on repaying when we have sufficient resources to satisfy these obligations.

Additionally, retention bonus obligations of $2.1 million as of March 31, 2013, were issued to certain employees in conjunction with the acquisition of Archer USA. A portion of these obligations was due on July 1, 2012, December 27, 2012, and January 1, 2013. The agreements specifically state that upon non-payment interest accrues at an annual rate of 6%. In January, 2013, Mathew Harris elected to convert $0.6 million of his retention bonus agreement into 5,207 shares of our Series A Preferred Stock. We do not plan on paying the remaining obligations until such time as our resources permit.

We may need to raise additional capital to fund our working capital requirements, capital expenditures and operations. Our ability to fund our capital needs will depend on many factors, including our future operating performance, our ability to successfully realign our costs or the effect of any strategic and financing alternatives we may pursue. Financing, if available, may be on terms that are significantly dilutive to our stockholders, and the prices at which investors would be willing to purchase our securities may be lower than the current price of our common stock. The holders of new securities may also receive rights, preferences or privileges that are senior to those of existing holders of our common stock. If new sources of financing are required but are insufficient or unavailable, we would be required to modify our growth and operating plans accordingly.

- Definition

Disclosure of accounting policy for reporting when there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). Disclose: (a) pertinent conditions and events giving rise to the assessment of substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time, (b) the possible effects of such conditions and events, (c) management's evaluation of the significance of those conditions and events and any mitigating factors, (d) possible discontinuance of operations, (e) management's plans (including relevant prospective financial information), and (f) information about the recoverability or classification of recorded asset amounts or the amounts or classification of liabilities. If management's plans alleviate the substantial doubt about the entity's ability to continue as a going concern, disclosure of the principal conditions and events that initially raised the substantial doubt about the entity's ability to continue as a going concern would be expected to be considered. Disclose whether operations for the current or prior years generated sufficient cash to cover current obligations, whether waivers were obtained from creditors relating to the company's default under the provisions of debt agreements and possible effects of such conditions and events, such as: whether there is a possible need to obtain additional financing (debt or equity) or to liquidate certain holdings to offset future cash flow deficiencies. Disclose appropriate parent company information when parent is dependent upon remittances from subsidiaries to satisfy its obligations.

+ References+ Details