Note 5 - Loan Credit Agreement with Related Party

3 Months Ended

Mar. 31, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

Note 5. Loan Credit Agreement with Related Party

The Company entered a credit facility with an affiliate of a stockholder on September 6, 2013. The credit facility provides financing for the Company, primarily for the purchase of eligible investments. The facility matures on September 6, 2017 and provides that the loan shall accrue interest at the LIBOR rate plus a 6.50% margin. As of March 31, 2014 and December 31, 2013, the applicable interest rate was 6.73% and 6.75%, respectively. The principal is repayable in full at maturity. The facility works as a delayed draw credit facility with the Company having the ability to drawdown, as necessary, over the first 18 months (the "Draw Period") up to $30,000,000, based on certain conditions. The credit facility provided for an initial $15,000,000 to be available at closing. The Company executed a draw of $5,000,000 on December 9, 2013. During the three months ended March 31, 2014, the Company has executed of an additional draw of $6,000,000 to fund certain eligible investments. The balances of $11,000,000 and $5,000,000 are reflected as Loan credit agreement in the unaudited condensed consolidated balance sheet as of March 31, 2014 and December 31,2013, respectively. On or before the last day of the Draw Period, the Company can request the loan amount to be increased to $30 million upon the Company realizing net proceeds of at least $10 million in cash through the issuance of new equity securities. Repayment of the facility is due upon maturity, four years from the closing date. The stockholder’s affiliate, as lender, has received a security interest in basically all assets of the Company as collateral for the facility. In conjunction with the credit facility, the Company issued warrants to the stockholder’s affiliate for 1,000,000 shares of the Company’s common stock at a strike price of $1.3875. In connection with the credit agreement, the Company and the stockholder and certain of the stockholder’s affiliates, including the lender entered into a Voting Rights Agreement restricting the stockholder’s and such affiliates’ voting rights under certain circumstances and providing the stockholder and such affiliates a right of first offer on certain future share issuances.

Due to certain provisions within the warrant agreement, the warrants meets the definition of a derivative and do not qualify for a scope exception as it is not considered indexed in the Company’s stock. As such, the warrants with a value of $250,000 and $292,000 at March 31, 2014 and December 31, 2013, are reflected as a warrant liability in the unaudited condensed consolidated balance sheet. An unrealized gain of $42,000 was included in interest and other income in the unaudited condensed consolidated statements of income for the three months ended March 31, 2014. The Company determined the fair value using the Black-Scholes option pricing model with the following assumptions:

	March 31, 2014			December 31, 2013
Dividend rate		0	%		0	%
Risk-free rate		2.3	%		2.5	%
Expected life (years)		6.4			6.7
Expected volatility		28.6	%		27	%

During the three months ended March 31, 2014, the Company recognized interest expense totaling $189,000. Interest expense included $153,000 of interest due the lender and $36,000 of debt issuance cost amortization.