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Subsequent Events
6 Months Ended
Jun. 30, 2011
Subsequent Events [Abstract]  
Subsequent Events [Text Block]
17.  Subsequent Events

On May 5, 2011 and July 8, 2011, the Company amended the Stock Purchase Agreement dated April 7, 2009 for the purchase of all the common stock of CSSS, Inc., which the Company had entered into with the former stockholders of CSSS, Inc.  Under the July 8, 2011 amendment: (i) the date for the payment to the former stockholders of a $500,000 general holdback of the purchase price was extended from July 1, 2011 to August 15, 2011; and (ii) $50,000 of reduced contingent liability holdbacks were paid to the former stockholders, $25,000 on July 18, 2011 and $25,000 on August 5, 2011.

Under the May 5, 2011 amendment: (i) the date for the payment to the former stockholders of a $500,000 general holdback of the purchase price was extended from May 1, 2011 to July 1, 2011; (ii) a purchase price holdback relating to a service contract for telephone lines was reduced from $300,000 to $250,000 and the holdback, as reduced, is to be paid to the former stockholders by July 10, 2015, if no legal proceeding has been initiated to collect any amounts owed on the service contract by July 6, 2015; (iii) a purchase price holdback relating to a contract for long distance telephone lines was reduced from $200,000 to $150,000 and the holdback, as reduced, is to be paid to the former stockholders by January 15, 2013, if no legal proceeding has been initiated to collect any amounts owed on the contract for long distance telephone lines by January 12, 2013; and (iv) the $100,000 of reduced holdbacks was and is to be paid to the former stockholders in the amount of $50,000 on May 12, 2011 and $50,000 on July 15, 2011.  The amendment also provided for payment of interest at the rate of 2% per annum on the holdback amounts.

The Company conducted a rights offering (the "Rights Offering") to raise working capital.  The Rights Offering was completed on August 1, 2011. A total of 22,372,616 shares of common stock were purchased in the Rights Offering. Of the 22,372,616 shares of common stock purchased, 16,305,144 were purchased under the basic subscription right and 6,067,472 were purchased through the oversubscription privilege. Net proceeds after expenses from the Rights Offering were approximately $4.3 million.  The Rights Offering was made pursuant to a Registration Statement filed with the Securities and Exchange Commission (the “SEC”), as declared effective June 29, 2011 (the “Registration Statement”), and under a Prospectus dated June 30, 2011, (the “Prospectus”).  The Rights Offering granted the Company's stockholders the right to purchase three shares of common stock for each share of common stock owned on the record date of June 27, 2011 at an exercise price of $0.20 per share. The 22,372,616 shares issued under the Rights Offering were registered under the Securities Act. Shares registered in the Registration Statement but not sold in the Rights Offering (the “Available Stock”) were offered for sale by the Company during the period commencing on August 2, 2011, and concluding on August 15, 2011.

As disclosed in Note 12. Related Party Transactions, on August 2, 2011, Merlin and two assignees (the “Purchasers”) purchased 20 million shares of the Company's common stock at a price of $0.20 per share (the "Additional Stock").  The sale of Additional Stock resulted in net proceeds to the Company of $3.75 million. The Purchasers of the Additional Stock were paid a fee of $250,000 in connection with the purchase under the Securities Purchase Agreement.  The Additional Stock was registered for resale by the Purchasers of the Additional Stock under the Securities Act.

On August 8, 2011 the Company paid Merlin the remaining principal of $675,000 and accrued interest of $13,950 owed to Merlin under the loan of $1.35 million dated December 28, 2010. As part of the consideration for the $1.35 million loan, Merlin was granted a Common Stock Purchase Warrant to purchase up to 314,715 shares of the Company’s common stock at an exercise price of $0.20 per share, expiring December 28, 2015.  The warrant contained an anti-dilution provision providing that Merlin will receive additional warrants exercisable into 2% of any common stock of the Company issued by the Company through December 28, 2011. On August 2, 2011, after completion of the Rights Offering, a warrant for 847,452 shares was issued to Merlin under the anti-dilution provision.  The new warrant will be accounted for under the equity method with the Black-Scholes fair value of the warrant of approximately $71,000 recorded as expense in the period of issuance.

As compensation for a $1.4 million loan Merlin made to the Company on March 30, 2011, Merlin received a five year warrant exercisable into 157,357 shares of common stock at an exercise price of $0.20 per share.  The warrant contained an anti-dilution provision that provides that the Company will issue Merlin a warrant equal to 1% percent of any shares issued by the Company for one year after the date the warrant was issued.  Any new warrant issued will be exercisable at $0.20 per share.  On August 2, 2011, after the completion of the Rights Offering, a warrant for 423,726 shares was issued to Merlin under the anti-dilution provision.  The new warrant will be accounted for under the equity method with the Black-Scholes fair value of the newly issued warrant of  approximately $35,000 recorded as an additional discount to the $1.4 million Merlin loan and as additional paid-in capital in the period of issuance. The discount will be charged to interest expense over the remainder of the 24-month maturity period of the loan, with an offsetting credit to the loan balance.