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Convertible Securities
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12 Months Ended |
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Dec. 31, 2013
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| Convertible Securities [Abstract] | |
| Convertible Securities |
Convertible Securities
In June 2010, we entered into a Securities Exchange Agreement with Platinum which caused certain of Platinum's security holdings to be exchanged for 10,000 shares of Series B Preferred Stock, convertible into 32,700,000 shares of common stock. The Series B Preferred Stock is convertible at the option of Platinum and carries no dividend requirement. In the event of the liquidation of the Company, the holders of shares of the Series B Preferred Stock have preference over the common stock. After payment of the full liquidation preference amount to which each holder is entitled, such holders of shares of Series B Preferred Stock will not be entitled to any further participation as such in any distribution of the assets of the Company. As consideration for the exchange, the Company issued additional Series B Preferred Stock which is convertible into 1.3 million shares of common stock.
Also in June 2010, we entered into a Securities Exchange Agreement with David C. Bupp, then our President and CEO, and certain members of his family (the Bupp Investors), which caused certain of the Bupp Investors’ security holdings to be exchanged for 1,000 shares of Series C Convertible Preferred Stock (the Series C Preferred Stock), convertible into 3,226,000 shares of common stock.
In May 2011, Platinum converted 917 shares of their Series B Preferred Stock into 2,998,590 shares of our common stock under the terms of the Series B Preferred Stock. In July 2012, Platinum converted 3,063 shares of their Series B Preferred Stock into 10,016,010 shares of our common stock under the terms of the Series B Preferred Stock. In November 2012, we entered into a Securities Exchange Agreement with Platinum Partners Value Arbitrage Fund, L.P. (PPVAF), an affiliate of Platinum, pursuant to which PPVAF exchanged 3,001,860 shares of our common stock owned by PPVAF for 918 shares of our Series B Preferred Stock.
In December 2012, we entered into a Waiver Agreement (the Waiver) pursuant to which Platinum and PPVAF, as the sole holders of the Series B Preferred Stock, agreed to irrevocably waive the provisions set forth in the certificate of designations for the Series B Preferred Stock (the Certificate) which provided that all outstanding shares of Series B Preferred Stock would automatically convert into shares of common stock on December 31, 2012. The Waiver was to remain in effect until December 31, 2013, upon which date all outstanding shares of Series B Preferred Stock were to automatically convert into common stock pursuant to the terms of the Certificate. In addition, we amended the terms of Platinum’s Series X warrant to extend the expiration date from April 16, 2013 to December 31, 2013. Also in December 2012, the Series C Preferred Stock held by the Bupp Investors automatically converted into 3,226,000 shares of our common stock under the terms of the Series C Preferred Stock.
As discussed in Note 9, in June 2013, the Company and Platinum entered into a Warrant Exercise Agreement, pursuant to which Platinum exercised its Series X warrant and Series AA warrant for 2,364.9 shares of the Company's Series B Preferred Stock, convertible into 7,733,223 shares of our common stock in the aggregate.
Also in June 2013, we amended the Series B Preferred Stock to eliminate the date certain for automatic conversion. As a result of this amendment, all outstanding shares of Series B Preferred Stock will automatically convert into common stock of the Company at the conversion rate of 3,270 shares of common stock for each share of Series B Preferred Stock upon the earlier to occur of either of the following: (i) the closing of a firm commitment underwritten public offering of common stock of the Company pursuant to an effective registration statement under Section 5 of the Securities Act in which the gross cash proceeds to the Company (before underwriting discounts, commissions and fees) from such public offering are at least $10,000,000, or (ii) one hundred eighty (180) days following the first trading date upon which the price per share of the common stock equals or exceeds $7.00 per share, but excluding from such 180-day period any trading day on which the price is less than $5.00 per share.
In July 2013, Platinum converted 580 shares of the Series B Preferred Stock into 1,896,600 shares of our common stock under the terms of the Series B Preferred Stock. In September 2013, Platinum converted 710.9 shares of the Series B Preferred Stock into 2,324,643 shares of our common stock and in December 2013 Platinum converted 447 shares of the Series B Preferred Stock into 1,461,690 shares of our common stock. Both the September 2013 and December 2013 conversions were completed in accordance with the terms of the Series B Preferred Stock.
As of December 31, 2013, there are 7,565 shares of Series B Preferred Stock outstanding which are convertible into 24,737,550 shares of our common stock.
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