No, it is in addition to the 12% so the effective interest rate is higher than the 12. The 12% is just added to the balance due which helps eGain's cash flow situation.
The high interest rate is an indication of the significant risk that exists. If Ash is getting higher than 12% imagine how much risk we have!
Always important to remember the risk as one gangbuster quarter doesn't indicate they will do the same thing next quarter. Right Now is the only company in the sector to get to profitability that I know of. Maybe eGain will get there but Ashu is only giving the company a shot and unfortunately the odds of long-term failure remain high.