|
Note 7 - Convertible Term Notes
|
12 Months Ended |
|---|---|
|
Dec. 31, 2014
|
|
| Convertible Debt [Abstract] | |
| Convertible Debt [Text Block] |
7. Convertible Term Notes
On September 9, 2010, the Company entered into a convertible note and warrant purchase agreement with a group of existing preferred stockholders, which provided for a total of up to $6,000,000 in borrowings by the Company. On September 9, 2010 and December 15, 2010, the Company received the proceeds under the agreement in two separate tranches of $4,872,066 and $1,127,925, respectively. The convertible notes issued pursuant to the agreement bore interest at a rate of 10% and provided for conversion into series C preferred stock of the Company. The note purchasers were also issued warrants to purchase series C preferred stock of the Company (Note 11). The proceeds from the convertible notes were allocated among the notes and the associated warrants based on the fair value of the warrants with the residual balance assigned to the convertible notes. The Company increased the value
assigned to the convertible notes through interest expense using the effective interest method such that the value of the convertible notes will equal the accrued principal and interest of $6,603,333 as of maturity. The Company recognized $193,402 of interest expense related to the convertible notes during the years ended December 31, 2012.
On July 27, 2011, the Company entered into a convertible note and warrant purchase agreement with a group of existing preferred stockholders, which provided for a total of up to $3,500,000 in borrowings by the Company. On July 27, 2011, the Company received the proceeds under the agreement of $3,500,000. The convertible notes bore interest at a rate of 10% and provided for conversion into series C preferred stock of the Company. The note purchasers were also issued warrants to purchase series C preferred stock of the Company (Note 11). The proceeds from the convertible notes were allocated among the notes and the associated warrants based on the fair value of the warrants with the residual balance assigned to the convertible notes. The Company increased the value assigned to the convertible notes through interest expense using the effective interest method such that the value of the
convertible notes will equal the accrued principal and interest of $3,686,250 as of maturity. The Company recognized $98,662 of interest expense related to the July 2011 convertible notes during the years ended December 31, 2012.
In December 2011, the Company and the holders of the 2010 convertible notes and the July 2011 convertible notes agreed to extend the maturity dates of the notes to March 31, 2012. The Company did not record any gain or loss in connection with the extension of the maturity date of the notes because it determined that the extension of the maturity date of the notes met the criteria of a troubled debt restructuring outlined in ASC Topic 470-60, Troubled Debt Restructurings. The Company recognized $292,064 of interest expense related to the 2010 convertible notes and the July 2011 convertible notes during the year ended December 31, 2012.
On April 10, 2012, the principal and interest on the convertible term notes totaling $10,668,185 converted into an aggregate of 3,023,661 shares of series D preferred stock of the Company (see Note 10).
|