Redeemable Convertible Preferred Stock

6 Months Ended

Jun. 30, 2015

Notes to Financial Statements

Note 6 - Redeemable Convertible Preferred Stock

As further detailed below, holders of Series A, A-1, A-2, B and B-1 redeemable convertible preferred stock can take control of the board of directors in the event the Company does not accept a redemption request or the Company fails to pay dividends. In addition, a majority of the current members of the board of directors own various classes of preferred shares. As a result, these instruments have conditions for their redemption that are not within the control of the Company. Accordingly, the fair value of the Series A, A-1, A-2, B and B-1 redeemable convertible preferred stock are recorded outside of stockholders’ deficiency as temporary equity in the mezzanine section of the balance sheet. The Company recognizes changes in the redemption value of the convertible preferred stock immediately as they occur, and the carrying amount of the instrument is adjusted to equal the redemption value at the end of each reporting period. The adjustment to record preferred stock at its redemption value was charged to the redeemable convertible preferred stock carrying value and additional paid in capital for the six months ended June 30, 2015 and is further detailed in the following schedule:

	Series A		Series A-1		Series A-2		Series B		Series B-1		Total
Fair Value of Redeemable Preferred Stock as of December 31, 2014	$	2,948,312	$	408,606	$	-	$	1,378,552	$	1,512,829	$	6,248,299
New Issuances		-		-		44,975		-		-		44,975
Preferred Stock Dividends		235,858		33,431		1,098		107,888		75,612		453,887
Fair Value of Redeemable Preferred Stock as of June 30, 2015	$	3,184,170	$	442,037	$	46,073	$	1,486,440	$	1,588,441	$	6,747,161

With respect to the new issuances of Series A-2 preferred, $15,964 of the proceeds were allocated to transaction costs, fair value of related warrants and beneficial conversion feature, and then immediately accreted to Fair Value of Redeemable Preferred Stock. Accumulated dividends on the Series A-2 Preferred of $1,098 were paid in additional shares of Series A-2 Preferred.