2.4.0.80009 - Disclosure - 3. DEBTtruefalsefalse1false falsefalseFrom2013-01-01to2013-06-30http://www.sec.gov/CIK0001113513duration2013-01-01T00:00:002013-06-30T00:00:001true 1us-gaap_DebtDisclosureAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Debt Disclosure [Abstract]2false 2us-gaap_DebtDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse003. DEBT   The table below summarizes the Companys debt at June 30, 2013 and December 31, 2012:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: bottom; background-color: white"> <td style="text-align: center"> </td> <td colspan="3" style="text-align: center">June 30,</td> <td nowrap="nowrap" style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="text-align: center">December 31,</td> <td nowrap="nowrap" style="text-align: center"> </td> <td style="text-align: center"> </td> <td style="text-align: center"> </td> <td nowrap="nowrap" style="text-align: center"> </td> <td style="text-align: center"> </td> <td colspan="2" style="text-align: center"> </td> <td nowrap="nowrap" style="text-align: center"> </td></tr> <tr style="vertical-align: bottom"> <td style="padding-bottom: 1.15pt">Note Description</td> <td colspan="3" style="border-bottom: black 1pt solid; background-color: white; text-align: center">2013</td> <td nowrap="nowrap" style="background-color: white; padding-bottom: 1.15pt; text-align: center"> </td> <td style="padding-bottom: 1.15pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; background-color: white; text-align: center">2012</td> <td nowrap="nowrap" style="background-color: white; padding-bottom: 1.15pt; text-align: center"> </td> <td style="padding-bottom: 1.15pt; text-align: center"> </td> <td style="border-bottom: black 1pt solid; background-color: white; text-align: center">Maturity</td> <td nowrap="nowrap" style="background-color: white; padding-bottom: 1.15pt; text-align: center"> </td> <td style="padding-bottom: 1.15pt; text-align: center"> </td> <td colspan="2" style="border-bottom: black 1pt solid; background-color: white; text-align: center">Rate</td> <td nowrap="nowrap" style="background-color: white; padding-bottom: 1.15pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td nowrap="nowrap"> </td> <td> </td> <td colspan="2"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 53%">IDB Bank</td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">5,000,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%">$</td> <td style="width: 9%; text-align: right">5,000,000</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 9%; text-align: center">May-14</td> <td nowrap="nowrap" style="width: 1%"> </td> <td style="width: 1%; text-align: right"> </td> <td style="width: 1%"> </td> <td style="width: 9%; text-align: right">4.0</td> <td nowrap="nowrap" style="width: 1%">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Insurance premium note</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">-</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">23,987</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="text-align: center">Jun-13</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">6.9</td> <td nowrap="nowrap">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Capital lease obligations</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">141,375</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">150,072</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="text-align: center">Aug-19</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">8.0</td> <td nowrap="nowrap">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Convertible notes - related parties</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">14,557,051</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">14,557,051</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="text-align: center">Nov-16</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">8.0</td> <td nowrap="nowrap">%</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Convertible notes, net of discount</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">8,543,979</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5,942,949</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td style="text-align: center">Nov-16</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">8.0</td> <td nowrap="nowrap">%</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Total debt</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">28,242,405</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">25,674,059</td> <td nowrap="nowrap"> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>Less: current portion of long term debt</td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>Capital lease obligations</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">18,476</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">17,754</td> <td nowrap="nowrap"> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td>IDB Bank</td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5,000,000</td> <td nowrap="nowrap"> </td> <td style="text-align: right"> </td> <td> </td> <td style="text-align: right">5,000,000</td> <td nowrap="nowrap"> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td> <td> </td> <td> </td> <td style="text-align: right"> </td> <td nowrap="nowrap"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1.15pt">Insurance premium note</td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">-</td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">23,987</td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1.15pt">Total current portion of long term debt</td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">5,018,476</td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td style="border-bottom: black 1pt solid"> </td> <td style="border-bottom: black 1pt solid; text-align: right">5,041,741</td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt"> </td> <td style="padding-bottom: 1.15pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 1.15pt"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.3pt">Debt - long term</td> <td style="padding-bottom: 2.3pt; text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">23,223,929</td> <td nowrap="nowrap" style="padding-bottom: 2.3pt"> </td> <td style="padding-bottom: 2.3pt; text-align: right"> </td> <td style="border-bottom: black 2.25pt double">$</td> <td style="border-bottom: black 2.25pt double; text-align: right">20,632,318</td> <td nowrap="nowrap" style="padding-bottom: 2.3pt"> </td> <td style="padding-bottom: 2.3pt"> </td> <td style="padding-bottom: 2.3pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 2.3pt"> </td> <td style="padding-bottom: 2.3pt"> </td> <td> </td> <td style="padding-bottom: 2.3pt; text-align: right"> </td> <td nowrap="nowrap" style="padding-bottom: 2.3pt"> </td></tr> </table>       Convertible Notes   On June 26, 2013, the Company entered into the Sixth Amendment and Agreement to Join as a Party to Convertible Secured Subordinated Note Purchase Agreement, Fourth Amendment to Convertible Secured Subordinated Promissory Notes and Fifth Amendment and Agreement to Join as a Party to Registration Rights Agreement (the "Sixth Amendment"), with the holders of a majority of the aggregate outstanding principal amount of the Convertible Secured Subordinated Promissory Notes (the "Notes"), issued by the Company under the Convertible Secured Subordinated Note Purchase Agreement, dated November 14, 2007, as amended (as so amended, the "Note Purchase Agreement"), and an additional purchaser of the Notes, Grasford Investments Ltd. (together, the "Noteholders"). The modification to our convertible instrument applied to $23,075,000 of Notes outstanding as of the date of modification and to all future Notes. As amended by the Sixth Amendment, the convertible instrument has the following characteristics:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>a maturity date of November 16, 2016;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>an interest rate of 8% per year;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>optional conversion at a Noteholders' request;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>the borrowing commitment was increased by $10 million to $33.3 million;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>a conversion price that is the greater of (i) 80% of the lowest closing price of the Common Stock in the twelve-month period immediately preceding the date of conversion or (ii) $0.50; and</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>if at the time any particular requested conversion the Company does not have the number of authorized shares of Common Stock sufficient to allow for such particular conversion, the Noteholders may request that the Company call a special meeting of the stockholders specifically for the purpose of increasing the number of the authorized shares of Common Stock to cover the remaining portion of the Notes outstanding.</td></tr> </table>   The modification of the Note Purchase Agreement was accounted for as debt extinguishment. The total value of the convertible instrument immediately after the modification was determined to be $44,868,055, of which $21,793,055 was allocated to the intrinsic value of the embedded conversion feature of the instrument immediately after the modification (beneficial conversion feature) in accordance with ASC 470 Debt and recorded as part of additional paid-in capital.   The difference between the fair value of the new convertible instrument and the carrying value of the old convertible notes in the amount of $21,793,055 was recognized as loss on extinguishment of debt in the statement of operations.   On June 27, 2013, the Company sold $450,000 in Notes to Union Bancaire Privée ("UPB") under the amended Note Purchase Agreement at a conversion price of $0.72 on the date of sale. The Company recorded a beneficial conversion feature of $425,000 and corresponding debt discount, which will be amortized into interest expense through the maturity of the Note.   During the six-month period ended June 30, 2013, the Company sold Notes to UBP totaling $3,025,000 (including the $450,000 described above) under the same terms as previously-sold Notes under the convertible instrument.   Fair Value of Modified Convertible Notes   The modified convertible debt instrument was recorded at fair value of $44,868,055. The Company used a binomial model to determine the fair value of the instrument. The binomial model method uses significant unobservable inputs and falls within Level III measurement method under Fair Value Hierarchy under ASC 820 "Fair Value Measurements"       The significant unobservable inputs and information used to develop those inputs include the following:   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>volatility of stock price was determined to be 47% and was based on the volatility of the Company's stock price as quoted on the Over-the-Counter Bulletin Board (the "OTCBB") for the period of 3.4 years, which approximates the period remaining until maturity of the convertible instrument;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>the risk free rate of 1.41%;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>the credit spread over the risk free rate was determined to be approximately 20%, which was derived from a combination of the credit spread of CCC rated bonds with added premium for lack of marketability of the convertible instrument;</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>the nodes of the binomial model were extended for 3 years, which approximates time period until maturity of the convertible instrument; and</td></tr> </table>   <table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 24px"> </td> <td style="width: 24px">●</td> <td>the conversion ratio varied from approximately 1.39 to .56 shares per dollar, depending on the node of the conversion tree. The conversion ratio varied due to projected change in value of the stock driven by historical volatility of 47%.</td></tr> </table>   IDB Credit Facility   On June 28, 2013, the Company extended its secured credit facility (the "IDB Credit Facility"), with Israel Discount Bank of New York ("IDB"), as lender, effective as of May 31, 2013, for an additional one-year period for the $5,000,000 already outstanding, and we deposited additional $203,000 in a Restricted Cash Account held at IDB for future interest payments to increase the balance to the required $250,000. All other terms remained unchanged. To date, the Company has borrowed $5,000,000 under the IDB Credit Facility. Borrowings under the IDB Credit Facility are guaranteed by Atlas Capital SA ("Atlas"), a majority Noteholder and a related party, and further secured by an extended irrevocable standby letter of credit issued by UBS Private Bank ("UBS") with an expiration date of November 30, 2015.falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 false03. 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