| Convertible Note, Series D Preferred Stock, And Series D-1 Preferred Stock | CONVERTIBLE NOTE, SERIES D PREFERRED STOCK, AND SERIES D-1 PREFERRED STOCK Convertible Note and Series D Preferred Stock Financing Transaction On November 14, 2014, the Company entered into the November 2014 Purchase Agreement with the Investor. Pursuant to the terms of the November 2014 Purchase Agreement, the Company sold to the Investor (i) $3,000,000 ( 3,000 shares) of Series D Convertible Preferred Stock, (ii) $32,000,000 original principal amount of senior secured convertible notes, and (iii) Warrants to purchase up to 7,777,778 shares of the Company’s common stock, par value $0.0001 per share. At the closing of the sale of the Financing, the Company entered into (i) a registration rights agreement with the Investor, (ii) a security and pledge agreement in favor of the collateral agent for the Investor, and (iii) certain account control agreements with several banks with respect to restricted control accounts described in the November 2014 Purchase Agreement. The Financing closed on November 19, 2014. Proceeds Received and Restricted Cash The Company received gross proceeds of approximately $4.5 million at closing. The remaining $30.5 million of gross proceeds from the Financing was deposited on the closing date by the Investor into restricted control accounts. $2.5 million of these restricted proceeds were released on December 22, 2014 to the Company. Thereafter, additional funds from the control accounts shall be released to the Company (i) in connection with certain conversions of the Notes and redemptions of the Series D Preferred Stock, and (ii) up to $6 million in any 90 day period, provided that the Company meets certain equity conditions. During the nine months ended September 30, 2015 , $9 million has been released to the Company. Description of the Notes and Series D Preferred Stock The Notes rank senior to the Company’s outstanding and future indebtedness, except for certain existing permitted indebtedness of the Company. The Notes are secured by a first priority perfected security interest in all of the Company’s and its subsidiaries’ current and future assets (including a pledge of the stock of the Company’s subsidiaries), other than those assets which already secure the Company’s existing permitted indebtedness. So long as any Notes remain outstanding, the Company and its subsidiaries will not incur any new indebtedness, except for permitted indebtedness under the Notes, or create any new encumbrances on the Company’s or its subsidiaries’ assets, except for permitted liens under the Notes. Under certain circumstances, subsidiaries of the Company will be required to guarantee the Company’s obligations under the Notes. The Series D Preferred Stock ranked pari passu with the Company’s existing Series A Preferred Stock with respect to dividends and rights upon liquidation. The Series D Preferred Stock ranked senior to the Company’s Common Stock with respect to dividends and rights upon liquidation. The Series D Preferred Stock ranked junior to all existing and future indebtedness. The Series D Preferred Stock was unsecured. Unless earlier converted or redeemed, the Notes mature 42 months after the closing date (the “Maturity Date"), subject to the right of the Investors to extend the date under certain circumstances. The Series D Preferred Stock had no fixed maturity date or mandatory redemption date. All amounts due under the Notes and the Series D Preferred Stock were convertible at any time, in whole or in part, at the option of the Investor into shares of Common Stock at a fixed conversion price, which was subject to adjustment for stock splits, stock dividends, combinations or similar events. The Notes and the Series D Preferred Stock were convertible into shares of Common Stock at the initial price of $2.25 per share (the "Conversion Price"). If and whenever on or after the closing date, the Company issued or sold any shares of Common Stock for a consideration per share (the "New Issuance Price"), less than a price equal to the Conversion Price in effect immediately prior to such issuance or sale (a "Dilutive Issuance"), then, immediately after such Dilutive Issuance, the Conversion Price then in effect would be reduced to an amount equal to the New Issuance Price. The Company could redeem all, but not less than all, of the Notes or the Series D Preferred Stock at any time after 30 calendar days after the earlier of (A) the date that a resale registration statement for the resale of a portion of the Common Stock underlying the Notes and Warrants becomes effective or (B) the date that the shares of Common Stock underlying the Notes and Warrants are eligible for resale under Rule 144, provided that the Company met certain equity conditions. In the case of an optional redemption of Notes or Series D Preferred Stock by the Company, the Notes would have been redeemed in cash at a price with a redemption premium of 120% calculated by the formula specified in the Notes and the Series D Preferred Stock. The Company would have been required to provide holders of the Notes or Series D Preferred Stock with at least 90 trading days prior notice of its election to redeem the Notes or the Series D Preferred Stock. The Investor had the option to convert a portion of the Notes or the Series D Preferred Stock into shares of Common Stock at an “Alternate Conversion Price” equal to the lowest of (i) the Conversion Price then in effect and (ii) 85% of the quotient of the sum of the volume-weighted average price of the Common Stock for each of the three lowest trading days during the ten consecutive trading day period ending and including the trading day immediately prior to the date of the applicable conversion date, divided by three . During the nine months ended September 30, 2015 , the Investor exercised their option to convert $2,305,000 of Notes value at an Alternate Conversion Price resulting in the issuance of 8,318,690 Common Shares. The Company had agreed to make amortization payments with respect to the principal amount of the Notes and the liquidation value of the Series D Preferred Stock in shares of its Common Stock, subject to the satisfaction of certain equity conditions, or at the Company’s option, in cash or a combination of shares of Common Stock and cash, in equal installments payable once every month. Per the terms of the Financing, the Company was required to make pre-payments on the monthly amortization payments twenty trading days prior to the installment due date. During the nine months ended September 30, 2015 , the Company made installment payments towards the Series D Preferred Stock totaling $565,341 , resulting in the issuance of 1,465,972 shares of common stock. Amortization payments were first applied to the redemption of shares of Series D Preferred Stock until all shares of the Series D Preferred Stock were redeemed. Thereafter, amortization payments were applied to pay principal and interest on the Notes. During the nine months ended September 30, 2015 , the Company made installment payments towards the Notes totaling $3,703,293 , resulting in the issuance of 21,424,686 shares of common stock. For amortization payments paid in shares of Common Stock, the number of shares of Common Stock that were issued as an installment conversion amount was determined based on an installment conversion price (the “Installment Conversion Price") of the lowest of (i) the Conversion Price then in effect and (ii) 85% of the quotient of (A) the sum of the volume-weighted average price of the Common Stock for each of the five lowest trading days during the 20 consecutive trading day period ending and including the trading day immediately prior to the applicable installment date, divided by five . The Company classified the Series D Preferred Stock as a liability pursuant to ASC 480 at December 31, 2014 due to the structure of the financing agreement, whereby the Company had an unconditional obligation that the Company settled by issuing a variable number of common shares with a monetary value that was fixed and known at inception. There are 0 shares of Series D Preferred Stock outstanding as of September 30, 2015 . The Investor could elect to defer the payment of the installment amount due on any installment dates, in whole or in part, to another installment date, in which case the amount deferred became part of such subsequent installment date and continued to accrue interest and dividends as applicable. During an installment period, the Investor could elect to accelerate the amortization of the Notes or the Series D Preferred Stock at the Installment Conversion Price of the current installment date if, in the aggregate, all such accelerations in such period did not exceed five times the installment amount. Such accelerated amounts were payable in the Company’s common stock. During the nine months ended September 30, 2015 , the Investor elected to defer $1,707,317 of amortization payments to a later installment date. As a result of the deferral, $351,899 of interest expense was added to the principal balance of the Notes. During the nine months ended September 30, 2015 , the Investor elected to accelerate $5,145,375 of the Notes, resulting in the issuance of 12,651,059 shares of common stock. The Notes bore interest at a rate of 7% per annum, subject to increase to 15% per annum upon the occurrence and continuance of an event of default. Holders of the Series D Preferred Stock were entitled to receive dividends in the amount of 7% per annum, subject to increase to 15% per annum upon the occurrence and continuance of certain events of default. Interest on the Notes and dividends on the Series D Preferred Stock were payable monthly in shares of Common Stock or cash, at the Company’s option. Interest on the Notes and dividends on the Series D Preferred Stock was computed on the basis of a 360 -day year and twelve 30 -day months and was payable in arrears monthly and was compounded monthly. During the nine months ended September 30, 2015 , the Company paid dividends in the amount of $3,572 on the Series D Preferred Stock, resulting in the issuance of 11,241 shares of common stock, and interest in the amount of $984,632 on the Note, resulting in the issuance of 3,420,461 shares of common stock. The Notes and the Series D Preferred Stock contained standard and customary events of default including but not limited to: (i) failure to make payments when due under the Notes and the Series D Preferred Stock; (ii) bankruptcy or insolvency of the Company; and (iii) certain failures (in the case of the Notes) to comply with the requirements under the registration rights agreement. If there was an event of default, a holder of the Notes or the Series D Preferred Stock could require the Company to redeem all or any portion of the Notes or the Series D Preferred Stock (including all accrued and unpaid interest and dividends and all interest and dividends that have accrued through the Maturity Date), in cash, at a price equal to the greater of: (i) up to 125% of the amount being redeemed, depending on the nature of the default, and (ii) the product of (A) the conversion rate in effect at such time multiplied by (B) the product of (1) up to 125% , depending on the nature of the default, multiplied by (2) the highest closing sale price of the Common Stock on any trading day during the period beginning on the date immediately before the event of default and ending on the date of redemption. Additionally, if there was an event of default, a holder of the Notes or the Series D Preferred Stock could convert all or any portion of the Notes or the Series D Preferred Stock into shares of Common Stock. In such event, the conversion price would have been the lowest of (i) the Conversion Price then in effect and (ii) 85% of the quotient of (A) the sum of the volume-weighted average price of the Common Stock for each of the three lowest trading days during the 10 consecutive trading day period ending and including the trading day immediately prior to the date of the applicable conversion date, divided by three . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion options in the Notes were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2014 , the derivative liability value associated with the Notes was $17.4 million . Cancellation of the Notes On September 4, 2015, the Company entered into a Cancellation and Waiver Agreement (the “Cancellation Agreement”) with the Investor. Pursuant to the Cancellation Agreement, the Company agreed to retire all $21.2 million outstanding Notes as of September 4, 2015. Under the terms of the Cancellation Agreement, the Company will pay the Investor an aggregate of $25.1 million to retire all $21.2 million aggregate principal amount of Notes outstanding as of September 4, 2015. $18.8 million was paid immediately to the Investor and was funded from the Company’s restricted control account relating to the Notes. The remaining $6.3 million (the "Investor Payable") will be paid in two installments; $2.4 million will be due in late October 2015 and $3.9 million will be due in early December 2015. Upon the full payment of the Investor Payable, all of the Notes shall cease to be outstanding and the security interest in substantially all of the Company’s assets (other than the Company’s Thornton, Colorado real estate assets which currently secures other outstanding indebtedness) securing the Notes will be released. The Cancellation Agreement provides that there will be no further issuances of the Company’s common stock in connection with payments on or conversions of the Notes so long as the Company does not default in making the required payments of the Investor Payable. If the Company does not pay the Investor Payable, the Investor may convert the remaining outstanding portion of the Notes into shares of Common Stock using a conversion price calculated as 85% of the price computed as the quotient of the sum of the three lowest volume-weighted average prices of the Common Stock during the sixty consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable Exchange Notice, divided by three . The Investor Payable is convertible only upon an event of default, as defined, and upon an event of default, the Investor Payable becomes share-settled debt that is subject to ASC 480. As a result, the Company recorded the Investor Payable at fair value as of September 4, 2015 and will amortize the debt discount to Interest expense over the three-month term of the payable. As of September 30, 2015 , the Investor Payable was $6.2 million , net of discount. The terms of the Cancellation Agreement were amended subsequent to September 30, 2015 . Refer to Note 16. Subsequent Events for further information. A net loss on extinguishment of the Notes and related embedded derivative of $11.6 million was recorded to "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 . Description of Series D-1 Preferred Stock On February 19, 2015, the Company entered into a securities purchase agreement to issue 2,500 shares of Series D-1 Preferred Stock to an investor in exchange for $2,500,000 . The proceeds were received on the closing date, February 25, 2015. All amounts due under the Series D-1 Preferred Stock were convertible at any time, in whole or in part, at the option of the investor into shares of Common Stock at a fixed conversion price, which was subject to adjustment for stock splits, stock dividends, combinations or similar events. The Series D-1 Preferred Stock were convertible into shares of Common Stock at the initial price of $2.31 per share. If and whenever on or after the closing date, the Company issues or sells any shares of Common Stock for a consideration per share, less than a price equal to the conversion price in effect immediately prior to such issuance or sale, then, immediately after such dilutive issuance, the conversion price then in effect shall be reduced to an amount equal to the new issuance price. The investor had the option to convert a portion of the Series D-1 Preferred Stock into shares of Common Stock at a “D-1 Alternate Conversion Price” equal to the lowest of (i) $2.31 per share and (ii) 85% of the lowest volume-weighted average price of the Common Stock on any trading day during the five consecutive trading day period ending and including the trading day immediately prior to the date of the applicable conversion date. During the nine months ended September 30, 2015 , the investor exercised their option to convert 2,500 Preferred Shares, representing a value of $2,500,000 , at a D-1 Alternate Conversion Price resulting in the issuance of 2,305,824 Common Shares. Holders of the Series D-1 Preferred Stock were entitled to receive dividends in the amount of 7% per annum, subject to increase to 15% per annum upon the occurrence and continuance of certain events of default. Dividends on the Series D-1 Preferred Stock were payable monthly in shares of Common Stock or cash, at the Company’s option. Dividends on the Series D-1 Preferred Stock were computed on the basis of a 360 -day year and 12 30 -day months and were payable in arrears monthly and were compounded monthly. During the nine months ended September 30, 2015 , the Company paid dividends in the amount of $6,944 on the Series D-1 Preferred Stock, resulting in the issuance of 3,896 shares of common stock. The Company classified the Series D-1 Preferred Stock as a liability pursuant to ASC 480 on the closing date due to the structure of the financing agreement, whereby the Company had an unconditional obligation that the Company may settle by issuing a variable number of common shares with a monetary value that is fixed and known at inception. There are 0 shares of Series D-1 Preferred Stock outstanding as of September 30, 2015 . Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion options in the Series D-1 Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At closing, a derivative liability and a corresponding debt discount in the amount of $3.4 million was recorded. The debt discount of $3.4 million was charged to interest expense. As of September 30, 2015 , the value of the derivative liability associated with the Series D-1 Preferred Stock is $0 as the Series D-1 Preferred Stock was fully converted as of September 30, 2015 . A net gain of $2.7 million was recorded to "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 upon extinguishment of the D-1 Preferred Stock liability and the related embedded derivative. Embedded derivative associated with the Series D Preferred Stock Pursuant to a number of factors outlined in ASC Topic 815, Derivatives and Hedging, the conversion options in the Series D Preferred Stock were deemed to include an embedded derivative that required bifurcation and separate accounting. As such, the Company ascertained the value of the conversion option as if separate from the convertible issuance and appropriately recorded that value as a derivative liability. At December 31, 2014 , the derivative liability value associated with the Series D Preferred Stock was $0.4 million . As of September 30, 2015 , the value of the derivative liability associated with the Series D Preferred Stock is $0 as the Series D Preferred Stock was fully converted as of September 30, 2015 . A gain of $0.4 million was recorded to "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 . Description of the Warrants Associated with the Notes and Series D Preferred Stock, and Series D-1 Preferred Stock The warrants associated with the Notes and Series D Preferred Stock ("November Warrants") entitled the Investor to purchase, in the aggregate, up to 7,777,778 shares of Common Stock. The November Warrants were exercisable at any time on or after the six month anniversary of the closing date through the fifth anniversary of such date. The November Warrants were exercisable at an initial exercise price equal to $2.25 per share. The warrants associated with the Series D-1 Preferred Stock (the "February Warrants") entitled the Investor to purchase, in the aggregate, up to 541,126 shares of Common Stock. The February Warrants were exercisable at any time on or after the six month anniversary of the closing date through the fifth anniversary of such date. The February Warrants were exercisable at an initial exercise price equal to $2.31 per share. The exercise price of the November and February Warrants was subject to adjustment for stock splits, stock dividends, combinations or similar events. In addition, the exercise price was also subject to a “full ratchet” anti-dilution adjustment, subject to customary exceptions, in the event that the Company issued securities at a price lower than the then applicable exercise price. On July 22, 2015, the Company entered into an Amendment and Exchange Agreement (the “Exchange Agreement”), between the Company and the Investor. Pursuant to the Exchange Agreement, the November and February Warrants have been canceled, and the Company has issued to the Investor a right to receive a fixed number of shares of common stock of the Company in accordance with the terms of a Right to Receive Common Stock dated July 22, 2015 (the “Right”). The Right obligates the Company to issue to the Investor (without the payment of any additional consideration) an aggregate of 8.3 million shares of Common Stock (the "Right Shares"). The Right is immediately exercisable for 1.5 million Right Shares. The Right is not exercisable for the remaining 6.8 million Right Shares until November 22, 2015. In the Exchange Agreement, the Holder has agreed to limit sales of the Right Shares (i) during the period until November 22, 2015 to 750,000 shares during any 30 -day period, and (ii) during the six -month period from November 22, 2015 through May 22, 2016 to approximately 1.1 million shares during any 30 -day period. During the three months ended September 30, 2015 , the Investor has exercised their Right to receive and the Company has delivered 1,500,000 shares of common stock. Pursuant to ASC 815, the Company was required to report the value of the November and February Warrants as a liability at fair value and record the changes in the fair value of the warrant liability as a gain or loss in its statement of operations due to the price-based anti-dilution provisions. The Company utilized the Monte Carlo simulation valuation method to value the liability classified warrants. At December 31, 2014 , the value of the liability associated with the November Warrants was calculated to be $15.9 million . At February 25, 2015, the closing date of the February Warrants, the value of the liability associated with the February Warrants was calculated to be $0.9 million . As a result of the Exchange Agreement and cancellation of the November and February warrants, a net gain on extinguishment of the warrant liability associated with the November and February Warrants of $13.9 million was recorded to "Change in fair value of derivatives and gain/(loss) on extinguishment of liabilities, net" in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2015 . The terms of the Exchange Agreement were amended subsequent to September 30, 2015 . Refer to Note 16. Subsequent Events for further information. The fair value of the February Warrants as of February 25, 2015 was determined using Level 3 inputs. Inherent in the Monte Carlo valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimated the volatility of its common stock to be 69% based on the expected remaining life of the February Warrants, 5.50 years . The risk-free interest rate of 1.47% is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the February Warrants. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero . |
