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Subordinated Notes | 12 Months Ended
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Dec. 31, 2012
Subordinated Notes [Abstract] |
Subordinated Notes |
10. | Subordinated Notes
On November 26, 2009, the Company issued $10.8 million principal amount of subordinated convertible promissory notes to a group of investors (the “Investor Notes”) which at December 31, 2011 included related parties: Icarus Investment Corp. (“Icarus”), which is controlled by Phillip DeZwirek, our Chairman and former Chief Executive Officer, and Jason DeZwirek, a director and Secretary, ($2,200,000), JMP Fam Holdings, Inc., which is controlled by Jonathan Pollack, a Company Director, ($150,000), Jason DeZwirek ($800,000), and Harvey Sandler Revocable Trust ($800,000), which trust owns over 10% of our outstanding common stock. Interest accrued under the Investor Notes at the annual rate of 6% and was payable as of the end of each calendar quarter. Interest paid on the Investor Notes for 2012 and 2011 was $505,000 and $625,000, respectively. We used the proceeds of the Investor Notes to repay all of our previously existing subordinated debt in the amount of approximately $4.5 million, which debt was accruing interest at rates between 11-12%. The balance of the proceeds was available to be used for general working capital. Fees of $320,000 were paid for the issuance of this debt and are fully amortized over the term of the Investor Notes. The Investor Notes were due on November 26, 2014 and were not repayable prior to maturity except upon a change of control, or upon the consent of the holder. The outstanding principal amount of the Investor Notes or any portion thereof, but not the interest, was convertible at the holder’s option, at any time after the issuance of the Investor Notes at a conversion price of $4.00 per share, such price being greater than the Company’s share price at the date of issuance of the Investor Notes. Following three years from the date of the Investor Notes, if the closing price of the common stock of the Company was greater than $8.00 for five consecutive days, the Company could also cause conversion of the Investor Notes. The remaining outstanding $8.8 million balance of the Investor Notes was converted to common stock during the fourth quarter of 2012. The amount of Investor Notes converted in 2012 was $9.6 million resulting in the issuance of 2.4 million shares of common stock. During 2011, $1.2 million of Investor Notes were converted into 300,000 shares of common stock.

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- Definition The entire disclosure for borrowings under subordinated debt agreements that qualify as available in computing net capital under SEC's uniform net capital rule, including restrictive covenants, collateral, interest rates and due dates, amounts due by date and amount owed in total. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-BRD -Paragraph 80 -Subparagraph Exhibit 4-8, 9 -IssueDate 2006-05-01 -Chapter 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Audit and Accounting Guide (AAG) -Number AAG-BRD -Paragraph 08 -IssueDate 2006-05-01 -Chapter 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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