Notes Payable
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Sep. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | 7. Notes Payable The Company issues notes from which the proceeds were used to finance operations. The notes contain conversion features and were issued with warrants to purchase common stock. For convertible notes, the Company allocates the proceeds received between convertible notes payable and warrants on a relative fair value basis or the residual method, whichever is applicable. The resulting discount for the warrants is amortized using the effective interest method over the life of the debt instrument. After allocating a portion of the proceeds to the warrants, the effective conversion price of the convertible note payable can be determined. If the effective conversion price is lower than the market price of the Company's common stock on the date of issuance, a beneficial conversion feature is recorded as an additional discount to the convertible notes payable. The beneficial conversion feature discount is also amortized using the effective interest method over the life of the debt instrument. The amortization is recorded as interest expense on the condensed consolidated statements of operations. During the nine months ended September 30, 2013 and September 30, 2012, the Company received proceeds from the issuance of notes of $1.0 million and $13.2 million, respectively. The notes are payable on various dates through May 2015 and have interest rates between 0% and 12%. During the nine months ended September 30, 2013 and September 30, 2012, the Company recorded a debt discount related to the beneficial conversion feature for convertible notes and detachable warrants of $0 million and $0.5 million, respectively. During the nine months ended September 30, 2013, the Company converted notes and accounts payable of $13.9 million into approximately 3.96 million shares of common stock. During the nine months ended September 30, 2012, $7.8 million of notes were converted into 2.0 million shares of common stock. During the nine months ended September 30, 2013, the Company repaid $1.5 million of notes payable. Notes payable consist of the following at September 30, 2013 and December 31, 2012 (in thousands):
(1) This $0.934 million note, which was originally due in July 2011 is currently under dispute with the creditor as to the validity of the note payable balance, which the Company believes has already been paid in full and is not outstanding. (2) This $0.160 million consists of three separate 6% notes in the amounts of $0.110 million, $0.025 million and $0.025 million. In regard to the $0.110 million note, the Company has made ongoing attempts to locate the creditor to repay or convert this note, but has been unable to locate them to date. In regard to each of the two $0.025 million notes, the respective holder has elected to convert the note into equity, the Company has delivered the applicable conversion documents to the holder, and the Company is waiting for the holder to execute and return the documents. (3) In regard to this $0.100 million note, the holder elected to convert it in full into equity, and the Company has issued the shares to the holder, but the holder has not yet surrendered the note for cancellation. Until the note is surrendered and cancelled, the Company is continuing to reflect this note as outstanding. (4) This $0.050 million demand note is held by an officer of the Company. The holder has made no demand for payment, and is not expected to make a demand any time in the near term. |