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11. Related Party Transactions
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9 Months Ended |
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Jun. 30, 2014
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| Related Party Transactions [Abstract] | |
| Related Party Transactions |
Convertible Notes with ICG
As described in Note 5, during 2012 and 2013 the Company entered into a Note Purchase Agreement with ICG, an entity owned by Jon Isaac, the Company’s President and Chief Executive Officer and a director of the Company, and subsequently issued a series of Subordinated Convertible Notes thereunder to ICG. In connection with these transactions, the Company received gross proceeds of $0 and $1,250,000 during the nine months ended June 30, 2014 and 2013, respectively.
Under the terms of the Note Purchase Agreement and the Subordinated Convertible Notes, ICG executed its conversion option on all then-outstanding notes during the quarter ended December 31, 2012. In exchange for the conversion of $250,000 of convertible notes during the quarter ended December 31, 2012, ICG received an aggregate of 371,487 of shares of common stock and, upon conversion ICG also received warrants to acquire an additional 371,487 shares of common stock.
Because the conversion price under ICG’s notes was less than the fair market value of the stock on the date of issuance, the Company recognized a beneficial conversion feature which was treated as a debt discount and amortized on a straight line basis as interest expense until the date of conversion, at which time all remaining debt discount was recognized as interest expense. Additionally, the fair value of the warrants that were contingently issuable to ICG upon conversion were recognized as additional interest expense.
During the nine months ended June 30, 2013, the Company recognized total interest expense of $3,291,466 associated with the ICG notes.
On January 23, 2014, the Company issued a Note to ICG in the principal amount of $500,000. During the nine months ended June 30, 2014, the Company recognized total interest expense of $14,333 associated with this note. |