Convertible Debt - Related Party

9 Months Ended

Sep. 30, 2016

Convertible Debt - Related Party [Abstract]

Note 10.

Convertible Debt – Related Party

The following table is a summary as of September 30, 2016 of our convertible debt issued to a related party:

	Gross Principal Amount		Unamortized Debt Discount			Net Amount

Note Payable A	$	20,000,000	$	(3,048,813	)	$	16,951,187

Note Payable B		3,500,000		(470,720	)		3,029,280

Note Payable C		4,990,000		(797,326	)		4,192,674
	$	28,490,000	$	(4,316,859	)	$	24,173,141

The convertible debt is held by Mr. Lewis C. Pell, a member of the Company’s board of directors, and consists of three convertible promissory notes.

• Note Payable A accrues annual interest at the rate of 0.84%. The outstanding principal amount of Note Payable A is convertible into shares of our common stock at a conversion price of $6.00 per share.

• Note Payable B accrues annual interest at the rate of 1.66%. The outstanding principal amount of Note Payable B is convertible into shares of our common stock at a conversion price of $4.45 per share.

• Note Payable C accrues annual interest at the rate of 1.91%. The outstanding principal amount of Note Payable C is convertible into shares of our common stock at a conversion price of $5.55 per share.

At September 30, 2016, we had an aggregate amount of $1,019,120 in accrued interest under the convertible notes payable, which is shown as interest payable on our condensed consolidated balance sheet.

The convertible promissory notes mature on March 31, 2020 or earlier upon a change of control (as defined therein). The convertible promissory notes generally cannot be converted by Mr. Pell prior to March 31, 2018. The convertible promissory notes may be converted earlier prior to a change in control or in connection with our prepayment of the convertible promissory notes. The convertible promissory notes may be prepaid, at our option and upon 15 days’ notice to Mr. Pell, without other premium or penalty, with a combination of cash and common stock. Interest on the convertible promissory notes is payable on the maturity date or upon repayment or conversion of all or any portion of the principal under the note.

Under purchase accounting for the Merger, the convertible promissory notes were recorded at fair value on the effective date of the Merger, resulting in a discount from their face value of $5,960,000 as of March 31, 2015. The discount is being amortized over the remaining term based on the effective interest rate method with an imputed interest rate of 4.72%.