Short-term notes payable

12 Months Ended

Dec. 31, 2013

Short-term notes payable [Abstract]

Short-term notes payable

7. Short-term notes payable:

In April 2013, the Company borrowed $250 in the form of a demand note from Phoenix Banner Holdings LLC, with an interest rate of 10% per annum. The demand note plus accrued $2 in accrued interest was paid in May 2013.

From August 2013 through December 2013 the Company secured $1,150 in 10% demand notes from related parties and others that was used for working capital and general corporate purposes. In November, the Board of Directors approved the issuance of warrants in addition to the interest on these demand notes. The Company issued 21,667 warrants, 14,583 of which were issued for the notes secured prior to November 6, 2013, and a total of 7,084 warrants were issued for demand notes secured on November 26, and December 13, 2013. The Company ascribed a value of $406, recorded as interest expense, to the warrants issued prior to November 6, 2013, and ascribed a value of $111, recorded as a debt discount to the warrants issued with notes secured after November 6, 2013. The Company recorded $44 in debt discount amortization expense and $67 in loss on extinguishment upon conversion of the notes. The warrants have a three year life from the date of grant and an exercise price of $0.03. Detail on these demand notes and warrants is as follows:

Date	Phoenix Banner Holdings LLC		Michael W. Engmann		Kendu Partners Company		JAG Multi Investments		Philip Sassower
	Note Amount	Warrants	Note Amount	Warrants	Note Amount	Warrants	Note Amount	Warrants	Note Amount	Warrants
8/2/2013	$ 250
9/3/2013					$ 250
9/27/2013			$ 250
11/1/2013							$ 125	2,083
11/6/2013		4,167		4,167		4,167
12/13/2013			$ 150	5,000
12/17/2013									$ 125	2,083
Total	$ 250	4,167	$ 400	9,167	$ 250	4,167	$ 125	2,083	$ 125	2,083

The warrants were valued using the Black Sholes pricing model with the following assumptions:

Date	Expected Term	Volatility	Risk free interest rate	Dividend yield
11/6/2013	Three years	202.9%	0.58%	$0.00
11/26/2013	Three years	200.8%	0.55%	$0.00
12/3/2013	Three years	198.8%	0.68%	$0.00
12/17/2013	Three years	198.0%	0.68%	$0.00

On December 31, 2013, the Company's note holders converted the notes discussed above into 786 shares of Series D-1 Preferred Stock and 393 shares of Series D-2 preferred Stock.

In November 2013, in addition to the above, the Company borrowed, in the form of demand notes, $60 from an employee of the Company. The notes plus accrued interest of $1 were repaid at December 31, 2013, from the proceeds of the financing.

In February and March 2012, the Company borrowed $25 and $100 from Phoenix, respectively, at 10% per annum in the form of demand notes. All principal and accrued interest was repaid in cash in the amount of $132 in September 2012.

In April 2012, the Company entered into the April 2012 Purchase Agreement with the April 2012 Investors, and issued the April 2012 Notes for $1,000, receiving $982 in cash, net of expenses of $17. In connection with the issuance of the April 2012 Notes, the Company recorded a discount on notes for $64, and, as the result of the conversion of the April 2012 Notes in November 2012, the discount was fully amortized to interest expense. The April 2012 Notes had an interest at the rate of 10% per annum and a maturity date of April 22, 2013. In connection with the issuance of the April 2012 Notes, the Company also issued to the April 2012 Investors warrants to purchase 5,000 shares of Common Stock at an exercise price of $0.05 per share. The April 2012 Warrants are exercisable for a period of three years from the date of issue. The Company ascribed a value of $47 to the April 2012 Warrants, which was recorded as a discount to notes payable and as a derivative liability. In connection with the April 2012 Purchase Agreement, the Company paid $17 in consulting fees and issued an aggregate of 349 warrants at an exercise price of $0.05 per share to two consultants. These warrants are exercisable for three years from the date of issue, and the Company ascribed to them a value of $3, using a modified Black Scholes pricing model. The related warrant value was recorded as a professional service fee expense and as a derivative liability. The April 2012 Notes and accrued interest were automatically converted into shares of Series D-2 Preferred Stock at a price of $1.00 per share at a closing that occurred on November 15, 2012 (the "Final Closing"), for $1,057.

In August and September 2012, the Company borrowed $50 and $50 from Phoenix Banner Holdings LLC, respectively, at 10% per annum in the form of demand notes. All principal and accrued interest was repaid in cash in the amount of $102 from the proceeds of the November 2012 closing.

In September 2012, the Company entered into the September 2012 Subscription Agreements with the September 2012 Investors. Under the terms of the September 2012 Subscription Agreements, the September 2012 Investors purchased approximately $1,103 of September 2012 Notes, and, subject to the satisfaction of certain closing conditions, agreed to purchase at the Final Closing approximately 1,103 shares of Series D-2 Preferred Stock at a purchase price of $1.00 per share. The Company received $778 net of expenses in cash for the September 2012 Notes, and proceeds of $967 net of offering costs of $115 for 1,082 of Series D-2 Preferred Stock at the Final Closing. The September 2012 Notes had an interest at the rate of 10% per annum, and a maturity date of December 31, 2012. The September 2012 Notes and accrued unpaid interest were converted into 1,121 shares of Series D-2 Preferred Stock at a price of $1.00 per share upon the consummation of the Final Closing. The Series D-2 Preferred Stock is convertible into shares of the Company's Common Stock at a conversion price of $0.05 per share (subject to adjustment). The Final Closing was subject to stockholder approvals and the satisfaction of customary closing conditions. A portion of the proceeds from the September 2012 Notes was used to repay approximately $225 in demand notes to a related party and an employee of the Company, and for working capital and general corporate purposes in the ordinary course of business. In connection with the September 2012 Subscription Agreements, the Company, after the Final Closing, issued an aggregate of 294 warrants to four consultants as a finder's fee and 3,000 warrants to SG Phoenix LLC as and administrative fee. These fee warrants have an exercise price of $0.05 per share and the Company recorded a derivative liability in the amount of $1 and $7, respectively.

In November 2012, shareholders approved an increase in the Company's authorized capital and the issuance of Series D Preferred Stock. In November 2012 the Company converted approximately $3,099 of short-term debt and accrued interest into shares of Series D Preferred Stock net of offering costs of $190. The Company sold, for cash in a private placement, 1,082 of additional shares of Series D Preferred Stock at a purchase price of $1.00 per share and received $967 net of offering costs of $115.