Debt |
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| Debt |
Note Payable
On
March 31, 2011 as a part of settlement of debt, the Company
incurred a Note Payable to a service provider of $100.
ValueAct Note
On
June 21, 2010 the ValueAct Note was amended and restated in its
entirety and reduced to $3,500 of principal (the “Amended
ValueAct Note”).
Senior Secured Convertible Notes
In
addition, for purposes of capitalizing the Company, the Company
sold and issued $2,500 of Senior Secured Convertible Notes due June
21, 2013 of the Company (the “New Senior Secured
Notes”) to certain of the Company’s significant
stockholders. The New Senior Secured Notes have a three
year term and bear interest at a rate of 10% per annum payable in
arrears semi-annually. The entire principal balance is due in one
lump sum payment on June 21, 2013. Notwithstanding the foregoing,
at any time on or prior to the 18th month following the
original issue date of the New Senior Secured Notes, the Company
may, at its option, in lieu of making any cash payment of interest,
elect that the amount of any interest due and payable on any
interest payment date on or prior to the 18th month following the
original issue date of the New Senior Secured Notes be added to the
principal due under the New Senior Secured Notes. The accrued and
unpaid principal and interest due on the New Senior Secured Notes
are convertible at any time at the election of the holder into
shares of common stock of the Company at a conversion price of
$0.15 per share, subject to adjustment. The New Senior Secured
Notes are secured by a first lien on substantially all of the
assets of the Company and its subsidiaries pursuant to the terms of
that certain Guarantee and Security Agreement, dated as of June 21,
2010, among Twistbox, the Company, each of the subsidiaries thereof
party thereto, the investors party thereto and Trinad Management.
The Amended ValueAct Note is subordinated to the New Senior Secured
Notes pursuant to the terms of that certain Subordination
Agreement, dated as of June 21, 2010, by and between Trinad Fund,
and ValueAct, and each of the Company and Twistbox.
Each
purchaser of a New Senior Secured Note also received a warrant
(“Warrant”) to purchase shares of common stock of the
Company at an exercise price of $0.25 per share, subject to
adjustment. For each $1 of New Senior Secured Notes
purchased, the purchaser received a Warrant to purchase 3.33 shares
of common stock of the Company. Each Warrant has a five
year term.
The
Warrants granted to the New Senior Secured Note holders on June 21,
2010 and conversion feature in the New Senior Secured Notes are not
considered derivative instruments since the Warrants and the New
Senior Secured Notes have a set conversion price and all of the
requirements for equity classification were met. The Company
determined the fair value of the detachable warrants issued in
connection with the New Senior Secured Notes to be $1,678, using
the Black-Scholes option pricing model and the following
assumptions: expected life of 5 years, a risk free
interest rate of 2.05%, a dividend yield of 0% and volatility
of 54.62%. In addition, the Company determined the value of
the beneficial conversion feature to be $5,833. The combined total
discount for the New Senior Secured Notes is limited to
the face value of the New Senior Secured Notes of $2,500 and
is being amortized over the term of the New Senior Secured Notes.
For the period ended September 30, 2011, the Company amortized $418
of the aforesaid discounts as interest and financing costs in the
accompanying consolidated statements of operations.
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