Convertible Loan, Related Party

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Convertible Loan, Related Party

6. CONVERTIBLE LOAN, RELATED PARTY

On November 13, 2013, the Company, together with each of its subsidiaries as guarantors, entered into a loan agreement (the “Loan Agreement”) with Resource Capital Fund V L.P. (“RCF”), whereby RCF agreed, subject to the terms and conditions set forth in the Loan Agreement, to provide a secured convertible loan facility of up to $15,000 to the Company. The facility initially consisted of three tranches of $5,000 each. RCF advanced $3,000 of the first $5,000 tranche shortly following the closing of the Loan Agreement in November 2013 and on January 29, 2014, the Company’s stockholders, excluding RCF, approved the Loan Agreement and the issuance of shares thereunder. Following such approval, RCF advanced the remaining $2,000 of the first tranche on February 4, 2014. On April 29, 2014, the Company and RCF executed an amendment to the Loan Agreement which reduced the amount available thereunder from $15,000 to $8,000, and on April 30, 2014, the Company requested, and RCF advanced, the final $3,000 available under the Loan Agreement. The total amount drawn under the Loan Agreement after receipt ofthis advance is $8,000. No additional amounts may be drawn under the Loan Agreement.

Amounts drawn under the Loan Agreement mature on December 31, 2016 and bear interest at 12% per annum through January 29, 2014 and 10% per annum thereafter, payable quarterly in arrears in shares of the Company’s common stock or, at RCF’s election, in cash. Additionally, the Company paid a commitment fee quarterly equal to 1% of the amount available, but not drawn, under the Loan Agreement. In connection with the Loan Agreement the Company also paid, in shares of the Company’s common stock, a 2% loan establishment fee in the amount of $300 to RCF. The number of shares to be issued as payment for interest and fees is determined based upon the volume weighted-average price (“VWAP”) of the Company’s common stock for the 20 trading days preceding the last day of each quarter for interest payments and commitment fees and the 20 trading days preceding October 17, 2013 for the loan establishment fee. Accordingly, the Company has issued the following shares of common stock for settlement of interest expense, commitment fees and the establishment fee:

	Amount		Shares of common stock issued		VWAP		Date of issuance
Establishment fee	$	300		117,188	$	2.5600		February 4, 2014
Q4 2013 Interest payment and commitment fee		63		21,218	$	2.9731		February 4, 2014
Q1 2014 Interest payment and commitment fee		138		45,737	$	3.0209		April 10, 2014
Q2 2014 Interest payment and commitment fee		175		69,233	$	2.6561		July 25, 2014
Q3 2014 Interest payment		164		72,477	$	2.7595		October 2, 2014
Q4 2014 Interest payment		198		102,912	$	1.9434		January 2, 2015
Total	$	1,038		428,765

As of December 31, 2014, interest expense of $198 relating to the three months ended December 31, 2014 was included in accrued liabilities on the Company’s Consolidated Balance Sheets.

The Company’s obligations under the Loan Agreement are secured by pledges on the equity interests of the Company’s subsidiaries and a lien on substantially all of the assets of the Company and its subsidiaries. The Company may prepay all or any portion of the amounts drawn under the Loan Agreement without penalty, subject to a minimum prepayment amount of $5,000 or (if lower) the full amount then outstanding. Prepaid amounts may not be redrawn. The loan agreement contains customary representations, warranties, covenants and events of default and grants RCF the right to designate two nominees to the Company’s Board of Directors so long as any obligations remain outstanding under the Loan Agreement.

RCF may convert amounts drawn under the Loan Agreement into shares of the Company’s common stock at any time prior to maturity on December 31, 2016. The conversion price was initially set at $2.60 per share and was subject to customary anti-dilution adjustments and further downward adjustment, subject to a floor of $1.00 per share, in the case of certain equity issuances by the Company before November 13, 2014.

As discussed in Note 7 below, the conversion feature prior to the expiration of the anti-dilution clause was considered to be an embedded derivative. The initial fair value measurement of the derivative liability as determined on the date of each advance has been recognized as a debt discount and is amortized over the life of the Loan Agreement.

The following table represents the key components of our convertible loan:

	December 31,
	2014			2013
Debt principal		8,000			3,000
Unamortized discount		(3,655	)		(1,975	)
Carrying value of convertible loan, end of period		4,345		$	1,025

For the periods ended December 31, 2014 and 2013, the Company recorded amortization of debt discount of $1,567 and $87, which has been included in interest expense in the Company’s Consolidated Statement of Operations.

As of March 19, 2015, RCF owned approximately 6.9 million shares or 23.5% of the Company’s outstanding common stock. If RCF were to convert the entire $8,000 outstanding under the Loan Agreement, RCF would receive 3,076,923 shares of the Company’s common stock, and RCF’s ownership percentage in the Company would increase to approximately 30.6%.