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Note 7 - Debt | 9 Months Ended
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Sep. 30, 2013
Debt Disclosure [Abstract] |
Debt Disclosure [Text Block] | NOTE 7. DEBT Credit Facilities On December 22, 2011, the Company entered into a $4.5 million revolving line of credit (“credit facility”) with Rosenthal & Rosenthal. The total loan amount available to the Company under the line of credit is equal to 85% of its net amount of eligible receivables, plus available inventory (the lesser of 50% of the lower of cost or market value of eligible inventory, or $250 thousand). The credit facility is secured by a lien on the domestic assets of the Company. The interest rate for borrowing on accounts receivable is 8.5%, on inventories 10.0% and on overdrafts 13.0%. Additionally, there is an annual 1% facility fee on the entire amount of the credit facility payable at the beginning of the year. The credit facility is a three year agreement, expiring on December 31, 2014, unless terminated sooner. There are liquidated damages if the credit facility is terminated prior to December 31, 2014, which are based on the maximum credit facility amount then in effect. The damages are: 2% if terminated prior to December 31, 2013, and 1% if terminated prior to December 31, 2014. The Company is required to comply with certain financial covenants, measured quarterly, including, as defined in the agreement: a tangible net worth amount and a working capital amount. The Company was in compliance with the financial covenants at September 30, 2013. Borrowings under the revolving line of credit were $836 thousand at September 30, 2013, and $1.6 million at December 31, 2012, and are recorded in the Company’s Condensed Consolidated Balance Sheets as a current liability under the caption “Credit line borrowings.” Borrowings The components of the Company’s debt at September 30, 2013 and December 31, 2012 were as follows (in thousands):
|  | September 30, 2013 |  |  | December 31, 2012 |
Unsecured Convertible Notes |  | $ | 5,745 |  |  | $ | 1,500 |
Convertible Promissory Note - TLC Investments LLC |  |  | - |  |  |  | 500 |
Cognovit Note - Keystone Ruby, LLC |  |  | 237 |  |  |  | 277 |
Letter of Credit Agreement - Mark Plush |  |  | - |  |  |  | 250 |
Unsecured Promissory Note - Quercus Trust |  |  | 70 |  |  |  | 70 |
Discounts on long-term borrowings |  |  | (1,742 | ) |  |  | (48 | )
Subtotal |  |  | 4,310 |  |  |  | 2,549 |
Less: Current maturies of long-term debt |  |  | (58 | ) |  |  | (756 | )
Long-term debt |  | $ | 4,252 |  |  | $ | 1,793 |
The unsecured convertible debt has a five percent annual interest rate, and is convertible into common stock of the Company at the rate of $0.23 per share as follows (in thousands):
April 30, 2013 |  | $ | 500 |
July 31, 2013 |  |  | 1,750 |
September 30, 2013 |  |  | 2,350 |
October 31, 2013 |  |  | 700 |
December 31, 2013 |  |  | 150 |
January 31, 2014 |  |  | 295 |
|  | $ | 5,745 |
$500 thousand of the convertible debt matures on December 31, 2015 and the remaining $5.2 million matures on December 31, 2016. During the second quarter, $1 million of the debt was converted into 4.3 million shares of Common Stock of the Company. Additionally, effective October 16, 2013, an additional $500 thousand of the debt was converted into 2.2 million shares of Common Stock of the Company. As a provision of the settlement agreement between the Company and the former owners of SRC, the Company’s obligation to pay a $500 thousand convertible promissory note was cancelled in its entirety during the second quarter of 2013. See Note 9, Settlement of Acquisition Obligations. On July 3, 2013, the Letter of Credit Agreement with Mark Plush was paid in full. See Note 13, Related Party Transactions. For a full description of the Company’s debt financing, reference is made to Note 8, Debt, of the Company’s 2012 Annual Report on Form 10-K. Future maturities of remaining borrowings are (in thousands):
Year ending December 31, |  | Long-Term Debt |
2013 October through December |  | $ | 14 |
2014 |  |  | 59 |
2015 |  |  | 566 |
2016 |  |  | 5,317 |
2017 |  |  | 26 |
2018 and thereafter |  |  | 70 |
Gross long-term borrowings |  |  | 6,052 |
Less: discounts on long-term borrowings |  |  | (1,742 | )
Total commitment, net |  |  | 4,310 |
Less: portion classified as current |  |  | (58 | )
Long-term borrowings, net |  | $ | 4,252 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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