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DEBT FINANCING

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

DEBT FINANCING

5.	DEBT FINANCING

(a) Debt Summary

On July 8, 2016, the Company amended certain debt financing arrangements, terms and conditions of which are disclosed in Note 14, Subsequent Events. The Company’s debt financing arrangements as of June 30, 2016 and December 31, 2015 consist of the following:

						June 30, 2016																December
		Original Date of Financing		Maturity Date		Interest Rate				Principal				Unamortized Discount				Net Balance				31, 2015 Net Balance

Term loans:
April 2015 Term Loans		April 2015		April 2018			12.0	%		$	41,214			$	(2,422	)		$	38,792			$	38,027
June 2015 Term Loan		June 2015		April 2018			12.0	%			6,000				-				6,000				6,000
October 2015 Term Loan		October 2015		April 2018			12.0	%			18,000				-				18,000				18,000
January 2016 Term Loan ⁽¹⁾		October 2015		April 2018			12.0	%			9,043				-				9,043				-

Total Term Loans											74,257				(2,422	)			71,835				62,027
Forbearance Agreement ⁽²⁾		September 2015		March 2017			14.0	%			1,251				-				1,251				1,251
Convertible Debt ⁽³⁾		January & February 2014		July & August 2016			8.0	%			19,457				-				19,457				19,785
VIP Promissory Notes ⁽⁴⁾		April 2014		December 2017			5.4	%			7,130				-				7,130				7,400
Unsecured Note ⁽⁵⁾		March 2015		March 2016			0.4	%			-				-				-				450

Total										$	102,095			$	(2,422	)			99,673				90,913
Less current maturities																			(33,359	)			(22,942	)

Long-term																		$	66,314			$	67,971

As of June 30, 2016, Calm Waters Partnership (“Calm Waters”) is the holder of $77,543 of the Company’s debt, including $35,000 of the April 2015 Term Loans, all of the June 2015, October 2015 and January 2016 Term Loans, all of the Forbearance Agreement and $8,249 of the Convertible Debt, representing 76% of the outstanding balance.

⁽¹⁾ Credit Agreements. In January 2016, the Company and Calm Waters entered into an amendment that provided for an additional term loan of $9,043 with terms and conditions the same as those provided in the April 2015, June 2015 and October 2015 Term Loans (the “January 2016 Term Loan”).

The January 2016 Term Loan proceeds were used for (i) payment of $5,300 to settle patent infringement litigation and other legal settlements, (ii) repayment of convertible debt of $351 and delinquent accrued interest of $1,735 due Calm Waters, (iii) settlement of delinquent trade payables and costs of the financings for $650, (iv) repayment of $270 of principal on the VIP Promissory Notes, and (v) the remaining $737 was available for working capital and other general corporate purposes. For the period from October 2016 through March 2018, the Company is required to make monthly principal payments of $1,267 under the April 2015, June 2015, October 2015 and January 2016 Term Loans.

As of June 30, 2016, the Company was delinquent in making an aggregate of $4,225 of interest payments due on the term loans, of which $4,039 was payable to Calm Waters.

⁽²⁾ Forbearance Agreement. As of June 30, 2016, $133 of accrued interest was payable to Calm Waters.

⁽³⁾ Convertible Debt. As of June 30, 2016, the Company was delinquent in making an aggregate of $778 of interest payments due on the convertible debt agreements, of which $330 was payable to Calm Waters.

⁽⁴⁾ VIP Promissory Notes. The Company made a principal payment of $270 in January 2016 as a concession to obtain the January 2016 Term Loan discussed above, resulting in an outstanding principal balance of $7,130 as of June 30, 2016.

⁽⁵⁾ Unsecured Note. The Unsecured Note was due March 1, 2016 and was paid off at maturity.

(b) Future Maturities under Debt Financing Agreements

Based on debt agreements in effect as of June 30, 2016, the future principal payment requirements are shown below:

Year ending June 30,

2017		$	34,811
2018			67,284

Total		$	102,095

(c) Interest Expense

Interest expense consists of the following:

		Three Months Ended June 30,								Six Months Ended June 30,
		2016				2015⁽²⁾				2016				2015

Interest at stated rate of debt agreement		$	2,784			$	1,913			$	5,487			$	3,885
Amortization of discount on debt issuance⁽¹⁾			383				12,148				787				22,628
Interest related to warrant issuance and other			-				-				-				26,705
Amortization of debt issuance costs			142				-				283				-

Total		$	3,309			$	14,061			$	6,557			$	53,218

⁽¹⁾ Except for the debt financing inducements, at the date of a financing the fair value of Common Stock purchase warrants and compound embedded derivatives associated with debt conversion features are calculated and recorded as a debt discount. Such debt discounts are amortized to interest expense using the effective interest method over the remaining terms. If the holder of a convertible note elects to convert prior to the maturity date, the unamortized discount on the conversion date is charged to interest expense.

⁽²⁾ See Note 1, Basis of Presentation, Revision of 2015 Statement of Operations.