Quarterly report pursuant to Section 13 or 15(d)

Temporary Equity

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Temporary Equity
3 Months Ended
Mar. 31, 2016
Temporary Equity [Abstract]  
TEMPORARY EQUITY

9. TEMPORARY EQUITY

 

Series E Preferred Stock

 

The following table summarizes the Company’s Series E Preferred Stock activities for the three months ended March 31, 2016 (amount in thousands):

 

    Series E convertible
preferred stock
 
    Shares     Value  
Balances as of January 1, 2016     -     $ -  
Reclass Series E to temporary equity     9,766       8,764  
Proceeds from sale of Series E preferred stock     256       230  
Common stock issued in conversion of Series E convertible preferred stock     (1,205 )     (1,205 )
Deemed dividends on conversion of Series E convertible preferred stock to common stock     -       130  
Repurchase of Series E preferred stock     (248 )     (248 )
Offering cost related to repurchase of Series E preferred stock     -       (10 )
Deemed dividends on repurchase of Series E convertible preferred stock     -       27  
Deemed dividends related to accretion of redemption value     -       3,137  
Legal fees related to stock financing     -       (51 )
Balance as of March 31, 2016     8,569     $ 10,774  

 

Securities Purchase Agreement

 

On February 8, 2016, the Company entered into a Securities Purchase Agreement with institutional investors for the sale of 255.56 (including 10% OID) shares of the Company’s 12% Series E Preferred Stock (the “Series E Preferred Stock”) in a registered direct offering, subject to customary closing conditions. The gross proceeds to the Company from the offering were $230,000. Each share of Series E Preferred Stock has a stated value of $1,000 and is convertible into shares of common stock at a conversion price of $7.50 provided if the Holder delivers a conversion notice within 5 trading days following a period that the average of 3 consecutive VWAPs is less than $9.00, the conversion price shall be equal to lesser of the then conversion price and 65% of the lowest 2 consecutive VWAPs out of the prior 10 consecutive trading days prior to the delivery of the conversion notice.

 

Repurchase agreement of Series E Preferred Stock

 

The Company entered into repurchase agreements with one of its institutional investors pursuant to which the Company repurchased an aggregate of 248 shares of Series E Preferred Stock at a price of $385,000, including offering costs of $10,000.

 

Conversion of Series E Preferred Stock

 

During the quarter ended March 31, 2016, 1,205 shares of Series E Preferred were converted to 10.3 million shares of common stock. Upon conversion, the Company recorded an additional deemed dividend of $130,000.

 

Temporary equity

 

The Series E Preferred Stock is being classified as temporary equity because it has redemption features that are outside of the Company’s control upon certain triggering events, such as the failure of the Company to at all times have an effective registration statement or usable prospectus that would allow for the resale the Conversion Shares.

 

Redemption value

 

The Company is carrying the Series E at its maximum redemption amount at March 31, 2016 as the security is not currently redeemable, but is redeemable subsequent to March 31, 2016. The Company recognized the change immediately as if the redemption was to occur as of March 31, 2016. The current redemption amount is $10.8 million as of March 31, 2016.

 

Series H Preferred Stock

 

The following table summarizes the Company’s Series H Preferred Stock activities for the three months ended March 31, 2016 (amount in thousands):

 

    Series H convertible
preferred stock
 
    Shares     Value  
Balance as of January 1, 2016     2,816     $ 3,154  
Series H preferred stock issued for note conversion     110       100  
Proceeds from sale of Series H preferred stock, net of issuance cost of $0.5 million     4,883       3,890  
Beneficial conversion feature of Series H convertible preferred stock     -       (610 )
Deemed dividends related to immediate accretion of beneficial conversion feature of Series H convertible preferred stock     -       610  
Fair Value of common stock warrant issued with Series H convertible preferred stock     -       (1,456 )
Common stock issued in conversion of Series H convertible preferred stock     (1,354 )     (1,354 )
Deemed dividends on conversion of Series H convertible preferred stock to common stock     -       923  
Repurchase of Series H convertible preferred stock     (413 )     (413 )
Offering cost related to repurchase of Series H convertible preferred stock     -       (10 )
Deemed dividends on repurchase of Series H convertible preferred stock     -       48  
Deemed dividends related to accretion of redemption value     -       5,095  
Balance as of March 31, 2016     6,042     $ 9,977  

 

Securities Purchase Agreement

 

During the quarter ended March 31, 2016, the Company entered into multiple Securities Purchase with accredited investors for sale of an aggregate of 4,883 (including 10% OID) shares of 12% Series H Preferred Stock and warrants to purchase 13,920,000 shares of common stock in registered direct offerings. The warrants are immediately exercisable, expire on the five-year anniversary from issuance and have an exercise price of $0.40 per share. The aggregate gross proceeds to the Company were $4.4 million. The Company also incurred $535,000 related offering cost. Each share of Series H Preferred Stock has a stated value of $1,000 and is convertible into shares of common stock $0.06 as of March 31, 2016.

 

During the quarter ended March 31, 2016, the Company recorded a deemed dividend of $610,000 related to the beneficial conversion feature of the Series H Convertible Preferred stock.

 

The Company entered into repurchase agreements with one of its institutional investor pursuant to which the Company repurchased an aggregate 413 shares of Series H Preferred Stock at a price of $635,000, including offering costs of $10,000.

 

Conversion of Series H Preferred Stock

 

During the quarter ended March 31, 2016, 1,354 shares of Series H Preferred were converted to 18.4 million shares of common stock. Upon conversion the Company recorded an additional deemed dividend of $923,000 associated with the make-whole provision.

 

Redemption value

 

The Company is carrying the Series H at its maximum redemption amount at March 31, 2016 as the security is currently redeemable. The Company recognized the change immediately as if the redemption was to occur as of March 31, 2016. The current redemption amount is $10.0 million as of March 31, 2016.