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CAPITAL LEASE OBLIGATIONS
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
Note 15. CAPITAL LEASE OBLIGATIONS

The Company has several capital lease obligations, one of which is a $1,000,000 equipment lease facility entered into with an equipment leasing company in October 2009. The terms of this agreement allow for use of the facility for 24 months and for use of the facility in multiple tranches with each individual tranche having a 24 month term. As of June 30, 2012, the Company had utilized $743,000 of this facility, which has been accounted for as a capital lease. As of June 30, 2012, $150,000 remained outstanding for those tranches that have not yet expired under this facility. Pursuant to the terms of the agreements related to this facility, the Company has given the equipment leasing company notice of its intent to terminate each individual lease that was reaching the 24 month term as well as its intent to purchase the equipment under the expiring lease at fair market value. The Company and the leasing company are in dispute over the terms of the lease agreements and the fair market value of the equipment, and as a result, the leasing company has notified the Company that it is in default of the leasing agreements and has filed suit against the Company in Minnesota federal court. The Company maintains that it is not in default under the agreements and is entitled to purchase the equipment at its fair market value. However, if the parties are unable to resolve the dispute, and a court finds against the Company, then a default could be triggered on all the equipment under this lease facility. The estimated cost to purchase the equipment under the expired leases is reflected in the Company’s accompanying consolidated financial statements. The actual cost to purchase such equipment may differ from the estimate, though the Company does not expect any such difference to be material.