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Notes Payable
9 Months Ended
Sep. 30, 2011
Notes Payable
6. Notes Payable

On September 2, 2011, the Company entered into a Loan and Security Agreement (the “Loans”) with two lenders.  Under the terms of the Loans, the Company borrowed $1,500,000 from each lender, or a total of $3,000,000, at an interest rate of 7% per annum each with a maturity date of January 15, 2013. The loans may be prepaid in whole or in part at any time by the Company without penalty. In connection with the Loans, the Company granted each Lender a warrant to purchase 250,000 shares of Common Stock at a purchase price of $2.90 per share.  Each warrant may be exercised in whole or in part and from time to time for a term of five years from its grant date. The warrants contain customary anti-dilution and purchase price adjustment provisions. The warrants are transferable in whole or in part, so long as the transfers comply with applicable securities laws. The relative fair value of the warrants was estimated at $1,131,303 using the Black Scholes method and has been recorded as a debt discount on the condensed consolidated balance sheet as of September 30, 2011.

During the three and nine months ended September 30, 2011, the Company recognized $56,100 of amortization of the deferred debt discount on notes payable. During the three and nine months ended September 30, 2010 the Company recognized $117,152 and $250,110, respectively, of amortization of the deferred debt discount on notes payable.

On September 12, 2011, the Company entered into a Promissory Note Agreement for $300,000 with a stockholder, at an interest rate of 5% per annum and due on demand at any time after November 12, 2011.