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6 - Vendor Settlements, Contingent Gains and Gain of Forgiveness of Debt
9 Months Ended
Sep. 30, 2012
Other Income and Other Expense Disclosure [Text Block]
 6 — Vendor Settlements, Contingent Gains and Gain of Forgiveness of Debt

During the nine months ended September 30, 2012, the Company entered into cash payment plan agreements with vendors for amounts less than the liability recorded in accounts payable and accrued expenses.  As a result of these agreements, the Company recorded a gain on forgiveness of debt of $216,000 and $329,000 for the three and nine months ended September 30, 2012, respectively.  Also, the Company has a policy, based on the statute of limitations, as prescribed by law, to write-off accounts payable with written contract more than four years old with no current activity and two years when there is no written agreement. The Company recorded a gain of $0 and $293,000 for the three and nine months ended September 30, 2012, respectively, related to these write-offs which is included in accounts payable write-off.  At September 30, 2012, the balance in vendor settlements payable was $2,531,000 including $837,000 of deferred gains subject to timely payments.  The settlements will be paid in periods ranging from one to fifty one months with an aggregate current monthly payment of approximately $92,000.   The Company may continue to approach vendors to enter into similar agreements as well as continuing to write-off certain accounts payable under statute of limitations.

During the nine months ended September 30, 2011, the Company entered into numerous cash payment plan agreements with vendors for amounts less than the liability recorded in accounts payable and accrued expenses and, in some cases, in exchange for the issuance of shares of the Company’s common stock.  As a result of these agreements, the Company recorded a gain on forgiveness of debt of $1,087,000 and $3,009,000 for the three and nine months ended September 30, 2011, respectively.  In addition, the Company wrote-off certain accounts payable for Competitive Local Exchange Carriers (“CLEC”) that resulted in a gain of $527,000 and $865,000 for the same periods, and is included in accounts payable write-off.  The CLEC accounts payable were written off based on a two year statute of limitations on such accounts payable balances.