5. LONG-TERM DEBT

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

5. LONG-TERM DEBT

Long-term loan and notes payable to related party consist of the following (in thousands):

	September 30,  2013		December 31, 2012
Note payable asset purchase agreement (a)	$	--	$	700
Note payable – related party (b)		--		1,773
Other long-term debt (c)		700		1,036
	$	700	$	3,509

(a)	In January 2010, per the Asset Purchase Agreement, the Company entered into an unsecured convertible promissory note with SOAdesk for $700,000 with an annual interest rate of 5%.  The note was originally scheduled to mature on March 31, 2010 but was subsequently amended to extend the maturity date to September 30, 2010 and was secured with shares of the Company’s Series B Preferred Stock.  As of September 30, 2010, the maturity date was extended to March 31, 2011.  Through a series of amendments, the maturity date was extended to December 31, 2012.  In January 2013, the Company and SOAdesk LLC agreed to extend the maturity on the note to April 1, 2014 and as such the Company has reclassed the debt to long term as of December 31, 2012.  As of  September 30, 2013, the Company has reclassed the debt to short term debt. (See Note 4).
	The note is convertible into shares of Series B Convertible Preferred Stock at the rate of one share per every $150 of principal and interest due under the note.  The Company is obligated to repay any principal of the loan with fifty percent of any gross proceeds of any Series B Preferred capital raise through maturity of the note.  The note is convertible at the holder’s option at any time or at maturity.
(b)	From time to time during 2010 through 2013, the Company entered into several short term notes payable with John L. (Launny) Steffens, the Chairman of the Board of Directors, for various working capital needs. The notes bear interest at 12% per year and are unsecured. In March 2012, Mr. Steffens converted $3,000,000 of his debt, which included $350,000 which was lent to the Company in the first quarter of 2012, into 20,000,000 shares of common stock of the Company at a price of $0.15 per share.  In March 2012, Mr. Steffens agreed to refinance $465,000 of debt and $417,000 of accrued interest at an interest rate of 12% and a maturity date of March 31, 2013.  In December 2012, Mr. Steffens converted $300,000 of his debt into a subscription of 6,000,000 shares of the Company’s common stock at a price of $0.05 per share as part of a private investment in the Company’s stock, which was subsequently converted into shares of common stock of the Company in the first quarter of 2013.  At December 31, 2012, the Company was indebted to Mr. Steffens in the approximate amount of $1,773,000 of principal and $168,000 in interest.  In March 2013, Mr. Steffens agreed to extend the maturity date of all outstanding short term notes until April 1, 2014.  As such this amount has been reclassified to long-term debt as of December 31, 2012.  As of  September 30, 2013, the Company has reclassed the debt to short term debt.  (See Note 4)
(c)	In January 2010, as part of the Asset Purchase Agreement, the Company entered into an unsecured Convertible Promissory Note with SOAdesk in the amount of $1,000,000.  The note bears interest at 5% and is due November 14, 2015.  The note is only convertible into shares of the Company’s common stock at the rate of one share for every $0.15 of principal and interest due under the note.  The note is convertible at the option of the holder with one-third convertible in January 2011, two-thirds convertible in January 2012, and the entire note convertible in January 2013 or at maturity.  In March 2012, SOAdesk elected to convert $300,000 of the outstanding note balance into 2,000,000 shares of Company’s Common Stock.  At September 30, 2013 and December 31, 2012 the Company was indebted to SOAdesk in the amount of $700,000.
	In March 2012, certain private lenders agreed to refinance $83,000 of debt and $253,000 of accrued interest at an interest rate of 12% and a maturity date of March 31, 2013.  In March 2013, the same private lenders agreed to extend the maturity date to April 4, 2014.  As such this amount has been classified as long term debt as of December 31, 2012. As of  September 30, 2013, the Company has reclassed the debt to short term debt. (See Note 4)