Quarterly report pursuant to Section 13 or 15(d)

RELATED PARTY TRANSACTIONS (Details Textual)

v2.4.0.8
RELATED PARTY TRANSACTIONS (Details Textual) (USD $)
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Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2012
Jun. 30, 2011
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Unsecured Convertible Notes Payable [Member]
Sep. 30, 2012
Unsecured Convertible Notes Payable [Member]
Feb. 28, 2010
Engagement Agreement [Member]
Jun. 30, 2013
Engagement Agreement [Member]
Nov. 03, 2010
October Purchase Agreement [Member]
Jun. 30, 2013
Consulting Agreement Agreement [Member]
Dec. 31, 2012
Consulting Agreement Agreement [Member]
Jan. 31, 2012
October 2011 Note [Member]
Jun. 30, 2013
October 2012 Notes [Member]
Dec. 10, 2012
October 2012 Notes [Member]
Nov. 30, 2012
October 2012 Notes [Member]
Oct. 26, 2012
October 2012 Notes [Member]
Sep. 30, 2012
October 2012 Notes [Member]
Jun. 30, 2012
Bridge Financing 2012 [Member]
October 2011 Note [Member]
Sep. 30, 2012
Bridge Financing 2012 [Member]
October 2011 Note [Member]
Oct. 31, 2010
John Pappajohn [Member]
October Purchase Agreement [Member]
Dec. 27, 2011
John Pappajohn [Member]
Bridge Note Purchase Agreement 2011 [Member]
Additional Notes Issue [Member]
Nov. 30, 2012
John Pappajohn [Member]
Amended and Restated Bridge Financing Purchase Agreement [Member]
Nov. 28, 2012
John Pappajohn [Member]
Amended and Restated Bridge Financing Purchase Agreement [Member]
Nov. 17, 2011
John Pappajohn [Member]
October 2011 Note [Member]
Nov. 30, 2011
John Pappajohn [Member]
October 2011 Note [Member]
Oct. 31, 2011
John Pappajohn [Member]
October 2011 Note [Member]
Oct. 18, 2011
John Pappajohn [Member]
October 2011 Note [Member]
Jun. 30, 2013
John Pappajohn [Member]
October 2012 Notes [Member]
Nov. 28, 2012
John Pappajohn [Member]
October 2012 Notes [Member]
May 25, 2012
John Pappajohn [Member]
October 2012 Notes [Member]
Apr. 26, 2012
John Pappajohn [Member]
October 2012 Notes [Member]
Nov. 03, 2010
BGN Acquisition [Member]
October Purchase Agreement [Member]
Feb. 15, 2011
Immediate Family Member of Management or Principal Owner [Member]
January Purchase Agreement [Member]
Mar. 31, 2011
Immediate Family Member of Management or Principal Owner [Member]
January Purchase Agreement [Member]
Unsecured Convertible Notes Payable [Member]
Feb. 23, 2011
Mr Andy Sassine [Member]
Unsecured Convertible Notes Payable [Member]
Jun. 30, 2013
Mr Andy Sassine [Member]
November 2012 Notes [Member]
Jun. 30, 2011
Sail 2010 Co Investment Partners L P [Member]
January Purchase Agreement [Member]
Mar. 31, 2011
Sail 2010 Co Investment Partners L P [Member]
January Purchase Agreement [Member]
Apr. 30, 2011
Sail 2010 Co Investment Partners L P [Member]
January Purchase Agreement [Member]
Apr. 25, 2011
Sail 2010 Co Investment Partners L P [Member]
January Purchase Agreement [Member]
Feb. 28, 2011
Sail 2010 Co Investment Partners L P [Member]
January Purchase Agreement [Member]
Feb. 28, 2011
Sail 2010 Co Investment Partners L P [Member]
January Purchase Agreement [Member]
Convertible Notes Payable [Member]
Apr. 25, 2011
Cummings Bay Healthcare Fund [Member]
Purchase Agreement 2011 [Member]
Unsecured Convertible Notes Payable [Member]
Feb. 29, 2012
Zanett Opportunity Fund, Ltd [Member]
Bridge Note Purchase Agreement 2011 [Member]
Jan. 31, 2012
Zanett Opportunity Fund, Ltd [Member]
Bridge Note Purchase Agreement 2011 [Member]
Jan. 29, 2012
Zanett Opportunity Fund, Ltd [Member]
Bridge Note Purchase Agreement 2011 [Member]
Nov. 17, 2011
Zanett Opportunity Fund, Ltd [Member]
Bridge Note Purchase Agreement 2011 [Member]
Unsecured Convertible Notes Payable [Member]
Jun. 30, 2013
Zanett Opportunity Fund, Ltd [Member]
October 2011 Note [Member]
Jun. 30, 2013
Follman Trust [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Extuple Limited Partnership [Member]
October 2012 Notes [Member]
Oct. 25, 2012
Extuple Limited Partnership [Member]
October 2012 Notes [Member]
Sep. 30, 2012
Sail Entities [Member]
Aug. 27, 2012
Sail Entities [Member]
Jun. 30, 2011
Sail Entities [Member]
January Purchase Agreement [Member]
Apr. 30, 2011
Sail Entities [Member]
January Purchase Agreement [Member]
Apr. 30, 2011
Sail 2010 Co-Investment Partners [Member]
January Purchase Agreement [Member]
Apr. 15, 2011
Sail 2010 Co-Investment Partners [Member]
January Purchase Agreement [Member]
Oct. 26, 2012
Sail 2010 Co-Investment Partners [Member]
October 2012 Notes [Member]
Oct. 26, 2012
Sail 2011 Co-Investment Partners [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Sail Venture Partners [Member]
Jun. 30, 2011
Sail Venture Partners [Member]
January Purchase Agreement [Member]
Oct. 31, 2010
Sail Venture Partners [Member]
October Purchase Agreement [Member]
Oct. 26, 2012
Sail Venture Partners [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Mark and Jill Oman [Member]
Jun. 30, 2013
Mark and Jill Oman [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Ronald Dozoretz [Member]
October 2012 Notes [Member]
Mar. 31, 2011
Andy Sassine [Member]
Jun. 30, 2013
Andy Sassine [Member]
November 2012 Notes [Member]
Jun. 30, 2013
Andy Sassine [Member]
October 2012 Notes [Member]
Mar. 31, 2013
Tierney Family Trust [Member]
Jun. 30, 2013
Tierney Family Trust [Member]
Jun. 30, 2013
Tierney Family Trust [Member]
October 2012 Notes [Member]
Jun. 30, 2013
John Pappajohn One [Member]
October 2012 Notes [Member]
Jun. 30, 2013
John Pappajohn Two [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Mr. Larry Hopfenspirger [Member]
October 2011 Note [Member]
Nov. 28, 2012
Mr. Larry Hopfenspirger [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Mr. Larry Hopfenspirger [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Sail Venture Partners L P [Member]
Jun. 30, 2011
Sail Venture Partners L P [Member]
January Purchase Agreement [Member]
Mar. 31, 2011
Sail Venture Partners L P [Member]
January Purchase Agreement [Member]
Apr. 30, 2011
Sail Venture Partners L P [Member]
January Purchase Agreement [Member]
Apr. 15, 2011
Sail Venture Partners L P [Member]
January Purchase Agreement [Member]
Feb. 28, 2011
Sail Venture Partners L P [Member]
January Purchase Agreement [Member]
Mar. 31, 2011
Sail Venture Partners L P [Member]
January Purchase Agreement [Member]
Convertible Notes Payable [Member]
Jun. 30, 2013
Sail Venture Partners L P [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Sail Venture Partners L P [Member]
Six January 2011 Notes [Member]
Jun. 30, 2013
Sail Venture Partners L P [Member]
Four October 2012 Note [Member]
Mar. 31, 2011
Carpenter [Member]
January Purchase Agreement [Member]
Unsecured Convertible Notes Payable [Member]
Feb. 15, 2011
Carpenter [Member]
January Purchase Agreement [Member]
Unsecured Convertible Notes Payable [Member]
Mar. 31, 2013
Carpenter [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Carpenter [Member]
October 2012 Notes [Member]
Nov. 28, 2012
Carpenter [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Meyer Proler Md [Member]
Aug. 31, 2012
Meyer Proler Md [Member]
August 2012 Purchase Agreement [Member]
Aug. 22, 2012
Meyer Proler Md [Member]
August 2012 Purchase Agreement [Member]
Apr. 30, 2013
Meyer Proler Md [Member]
August 2012 Notes [Member]
Jan. 31, 2013
Meyer Proler Md [Member]
August 2012 Notes [Member]
Jun. 30, 2013
Meyer Proler Md [Member]
August 2012 Notes [Member]
Apr. 30, 2013
Meyer Proler Md [Member]
November 2012 Notes [Member]
Jun. 30, 2013
Meyer Proler Md [Member]
October 2012 Notes [Member]
Jun. 30, 2013
Mr Paul Buck [Member]
Feb. 15, 2011
Mr Paul Buck [Member]
January Purchase Agreement [Member]
Jun. 30, 2013
Decision Calculus Associates [Member]
May 31, 2013
Decision Calculus Associates [Member]
Accrued Consulting Fees                         $ 90,000                                                                                                                                                                                          
Notes Payable, Related Parties 6,522,600       6,522,600   3,500,000 4,083,300             2,000,000 2,000,000   90,000       250,000 750,000           250,000         250,000 50,000   200,000         125,000 62,500   150,000 90,000   40,000 250,000           100,000       250,000 20,000 20,000     250,000 50,000                                     250,000 187,500           50,000           50,000             50,000    
Retainer Fees                 10,000                                                                                                                                                                                                  
Retainer Fees Paid                   155,000                                                                                                                                                                                                
Accrued Retainer Fees                   312,600                                                                                                                                                                                                
Retainer Fees Outstanding                   157,600                                                                     25,000                                                                                                                          
Debt Instrument, Convertible, Number of Equity Instruments                       850,000                     250,002       83,334 41,667               8,334     20,834         10,417   30,000 13,334   83,334                 41,667         20,834           33,334                           41,667     31,250       8,334                                
Beneficial Ownership Percentage                                                                                         5.00%             5.00%                           5.00%     5.00%       5.00%                                                                  
Percentage Of Shares Issuable Upon Conversion Of Warrants                                       50.00% 100.00%         100.00%                                                                                                                                                                
Proceeds From Notes Payable         1,368,300 2,195,300                           3,000,000 10,000,000     300,000       250,000                     125,000 62,500 500,000                             250,000 250,000                                               125,000 187,500 250,000                         50,000                    
Proceeds from Secured Notes Payable       125,000                                     750,000                                             90,000 40,000   250,000         100,000                                                               250,000                                        
Short-term Debt                                                             200,000 100,000 100,000                                                                                                                                                  
Debt Instrument, Face Amount 6,523,900       6,523,900   3,500,000 [1],[2]       762,200     2,000,000 2,000,000   1,600,000   1,998,100 1,860,000 2,000,000 761,700     500,000         500,000                                       250,000 200,000 200,000 200,000                           250,000 100,000     25,000     200,000     90,000 150,000 60,000                             50,000                        
Percentage Of Beneficial Ownership                                                                                                     5.00% 5.00%                             5.00% 5.00%           5.00%       5.00%                                                        
Notes Issued For Cash Value                                                           300,000                                                                                                                                                        
Weighted Average Exercise Price, Granted $ 0 $ 0.06 $ 0.04718                 $ 0.04718                                                                                                                                                                                            
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period                       36 months                                                                                                                                                                                            
Accrued Consulting Fees Waived Amount                       90,000                                                                                                                                                                                            
Debt Conversion, Original Debt, Amount         3,088,100                   1,838,100                                             25,000                           50,000                             250,000 100,000     25,000     200,000 200,000 300,000     60,000 1,440,000             190,000 1,000,000 190,000     50,000 50,000           50,000   50,000 50,000        
Debt Conversion, Converted Instrument, Shares Issued         41,873,745                   40,403,929                                             550,021                         4,491,310 1,121,237                             5,500,212 2,223,929   550,021 550,021     4,403,349 4,300,551 6,538,258     1,287,303 5,631,699             303,313 1,166,503 4,161,883     1,091,299 1,091,299         1,121,238 1,121,238     1,121,238        
Debt Instrument, Convertible, Conversion Price                             $ 0.04718           $ 3.00                                 $ 0.04718                         $ 0.04718 $ 0.04718                             $ 0.04718 $ 0.04718   $ 0.04718 $ 0.04718     $ 0.04718 $ 0.04718 $ 0.04718     $ 0.04718               $ 0.04718 $ 1.00 $ 0.04718     $ 0.04718 $ 0.04718           $ 0.04718 $ 0.04718   $ 0.04718        
Debt Instrument, Convertible, Latest Date                                                                                                     Jun. 14, 2013 Jun. 14, 2013                   Jan. 31, 2013         Apr. 30, 2013       Apr. 30, 2013       Jan. 25, 2013 Mar. 21, 2013     Jan. 18, 2013 Jan. 31, 2013                         Mar. 27, 2013                 Apr. 11, 2013        
Interest Payable                                                                                                                                                               226,200             53,300 166,500 7,000                                  
Common Stock, Value, Subscriptions                                                                                                                                               100,000                                             25,000               12,500      
Common Stock Shares Subscriptions Shares                                                                                                                                               400,000                                             100,000               50,000      
Common Stock Shares Subscriptions Per Share Value                                                                                                                                               $ 0.25                                             $ 0.25               $ 0.25      
Proceeds From Share Subscriptions                                                                                                                                               100,000                                             25,000               12,500      
Marketing Expense                                                                                                                                                                                                                 10,000 10,000
Accrued Marketing Costs, Current                                                                                                                                                                                                                 $ 20,000  
[1] The October 2011 Bridge Notes: The 2011 Bridge Financing Purchase Agreement provides for the issuance and sale of October 2011 Notes (including the notes issued in October 2011) in the aggregate principal amount of up to $2,000,000, and warrants to purchase a number of shares corresponding to 100% of the number of shares issuable on conversion of the Bridge Notes, in one or multiple closings to occur no later than April 1, 2012. The 2011 Bridge Financing Purchase Agreement also provides that the Company and the holders of the October 2011 Notes will enter into a registration rights agreement covering the registration of the resale of the shares underlying the October 2011 Notes and the related warrants.Initially, the October 2011 Notes were to mature one year from the date of issuance (subject to earlier conversion or prepayment), earn interest equal to 9% per year with interest payable at maturity, be convertible into shares of common stock of the Company at a conversion price of $3.00, be secured by a second position security interest in the Company’s assets that is pari passu with the interest recently granted to the holders of the January 2011 Notes, be subordinated in all respects to the Company’s obligations under its October 2010 Notes and the related guaranties issued to certain investors by SAIL Venture Partners, L.P. be are pari passu to the obligations under the January 2011 Notes. The second position security interest is governed by the Amended and Restated Security Agreement.The conversion price of the October 2011 Notes was subject to adjustment upon (1) the subdivision or combination of, or stock dividends paid on, the common stock; (2) the issuance of cash dividends and distributions on the common stock; (3) the distribution of other capital stock, indebtedness or other non-cash assets; and (4) the completion of a financing at a price below the conversion price then in effect. At the closing of a public offering by the Company of shares of its common stock and/or other securities with gross proceeds to the Company of at least $10 million (the “Qualified Offering”), each 2011 Bridge Note would be either redeemed or converted (in whole or in part) at a conversion price equal to the lesser of the public offering price or the conversion price then in effect, with the choice between redemption and conversion being at the sole option of the holder. The October 2011 Notes can be declared due and payable upon an event of default, defined in the October 2011 Notes to occur, among other things, if the Company fails to pay principal and interest when due, in the case of voluntary or involuntary bankruptcy or if the Company fails to perform any covenant or agreement as required by the 2011 Bridge Note or materially breaches any representation or warranty in the 2011 Bridge Note or the 2011 Bridge Financing Purchase Agreement.The warrants related to the October 2011 Notes were to expire five years from the date of issuance and were exercisable for shares of common stock of the Company at an exercise price of $3.00. Exercise price and number of shares issuable upon exercise were subject to adjustment (1) upon the subdivision or combination of, or stock dividends paid on, the common stock; (2) in case of any reclassification, capital reorganization or change in capital stock and (3) upon the completion of a financing at a price below the exercise price then in effect (including the Qualified Offering), except that subsequent to the Qualified Offering, the exercise price would not be adjusted for any further financings. The warrants contained a cashless exercise provision.With the exception of each holder’s option to redeem or convert their 2011 Bridge Note at the closing of the Qualified Offering, any provision of the October 2011 Notes or related warrants can be amended, waived or modified upon the written consent of the Company and holders of a majority of the aggregate principal amount of such notes outstanding. Any such majority consent will affect all October 2011 Notes or warrants, as the case may be, and will be binding on the Company and all holders of the October 2011 Notes or warrants. Each holder’s option to redeem or convert the 2011 Bridge Note at the closing of the Qualified Offering cannot be amended, waived or modified without the written consent of the Company and such holder and such amendment, waiver or modification will be binding only on the Company and such holder.The Amended and Restated Security Agreement and the corresponding security interest terminate (1) with respect to the October 2010 Notes, if and when holders of a majority of the aggregate principal amount of October 2010 Notes issued have converted their notes into shares of common stock and (2) with respect to the January 2011 Notes and 2011 Bridge Notes, if and when holders of a majority of the aggregate principal amount of January 2011 Notes and October 2011 Notes (on a combined basis) have converted their notes.On June 1, 2012, the Company, having received on or prior to such date the consent of holders of October 2011 Notes in the aggregate principal amount of $1,860,000 (out of a total outstanding aggregate principal amount of $2,000,000), amended such notes to add a mandatory conversion provision to the terms of such notes. Under that provision, the October 2011 Notes would be automatically converted upon the closing of a public offering by the Company of shares of its securities with gross proceeds to the Company of at least $3 million (except for October 2011 Notes in the aggregate amount of $50,000 which were not subject to the mandatory conversion requirement upon a $3 million public offering, but rather a $5 million public offering). If the public offering price were less than the conversion price then in effect, the conversion price would be adjusted to match the public offering price. Pursuant to the agreements amending the October 2011 Notes, the exercise price of the warrants that were issued in connection with the notes would be adjusted to match such public offering price, if such price were lower than the exercise price then in effect. The warrants were also amended to remove the full-ratchet provision from the warrants for securities offerings occurring after any such public offering. The Company agreed to issue to each holder of the October 2011 Notes who executed the agreements, as consideration for the above, warrants to purchase a number of shares of common stock corresponding to 50% of the number of shares issuable upon conversion of the principal amount and accrued and unpaid interest of his or her notes. These warrants would be issued on or within 10 business days after any public offering.
[2] The 2012 Bridge Notes: On August 17, 2012, the Company entered into a new Note Purchase Agreement (the “2012 Bridge Financing Purchase Agreement”) in connection with a bridge financing (the “2012 Bridge Financing”), with SAIL Holdings LLC. The 2012 Bridge Financing Purchase Agreement initially provided for the issuance and sale of August 2012 Bridge Notes in the aggregate principal amount of up to $2,000,000, in one or multiple closings to occur no later than October 15, 2012. The consummation of the 2012 Bridge Financing and issuance of the August 2012 Bridge Notes, and corresponding security interest, had to be approved by the Majority Holders of each tranche of our October 2010 Notes, January 2011 Notes, October 2011 Notes and the Unsecured Note. If the Company did not obtain such consent, the holders could declare a default under such notes and seek all remedies available under such notes.On October 19, 2012 the original 2012 Bridge Financing Purchase Agreement in connection with the 2012 Bridge Financing was amended and restated (the “Amended and Restated Bridge Financing Purchase Agreement”) thereby extending the period for closing the sale of August 2012 Bridge Notes from October 15, 2012 to November 30, 2012. Additionally, the revised notes (“October 2012 Notes”) eliminated the mandatory conversion provision (upon a subsequent equity financing) included in the August 2012 Bridge Notes at the request of a prospective investor. Otherwise the October 2012 Bridge Notes have substantially the same terms as the August 2012 Notes.The Amended and Restated Bridge Financing Purchase Agreement provided for the issuance and sale of Bridge Notes in the aggregate principal amount of up to $2,000,000, in one or multiple closings to occur no later than November 30, 2012. Additionally this amended and restated agreement also provided for the reissuance and replacement of five August 2012 Notes with the revised October 2012 Notes. The Amended and Restated Bridge Financing Purchase Agreement also provides that the Company and the holders of the Bridge Notes will enter into a registration rights agreement covering the registration of the resale of the shares underlying the August 2012 Bridge Notes.The October 2012 Notes mature on the later of October 1, 2013 or one year from the date of issuance (subject to earlier conversion or prepayment), earn interest at a rate of 9% per year with interest payable at maturity, are convertible into shares of common stock of the Company at a conversion price of $0.04718 and are secured by a first position security interest in the Company’s assets, with the security interest of all previously outstanding convertible promissory notes subordinated. The conversion price is subject to adjustment upon (1) the subdivision or combination of, or stock dividends paid on, the common stock; (2) the issuance of cash dividends and distributions on the common stock; and (3) the distribution of other capital stock, indebtedness or other non-cash assets. The October 2012 Notes are convertible at any time at the option of their holders and can be declared due and payable upon an event of default, defined in the October 2012 Notes to occur, among other things, if the Company fails to pay principal and interest when due, in the case of voluntary or involuntary bankruptcy or if the Company fails to perform any covenant or agreement as required by the October 2012 Notes or materially breaches any representation or warranty in the October 2012 Notes or the Bridge Financing Purchase Agreement. Among the restrictive covenants imposed on the Company pursuant to the Bridge Financing Purchase Agreement is a covenant not to borrow, guaranty or otherwise incur indebtedness that is senior or pari passu with the October 2012 Bridge Notes in excess of $250,000, and a covenant not to effect a merger, reorganization, or sell, exclusively license or lease, or otherwise dispose of any assets of the Company with a value in excess of $20,000, other than in the ordinary course of business.The Company issued October 2012 Notes in the aggregate principal amount of $2.0 million. Furthermore, the consents to the 2012 Bridge Financing obtained from holders of previously outstanding convertible promissory notes have taken effect, since the Company raised more than $1.35 million in the 2012 Bridge Financing. Such consents had been given pursuant to the terms of the Amended and Restated Consent, Note Amendment and Warrant Forfeiture Agreement, dated as of October 24, 2012 (the “Consent Agreement”), between the Company and the holders of at least a majority in aggregate principal amount outstanding (“Majority Holders”) of each tranche of the Company’s secured convertible promissory notes issued in October and November 2010 (the “October 2010 Notes”), secured convertible promissory notes issued between January and April 2011 (the “January 2011 Notes”), secured convertible promissory notes issued between October 2011 and January 2012 (the “October 2011 Notes”) and an unsecured convertible promissory note issued in February 2012 (the “February 2012 Note”). As a result, all of such notes were amended to (a) extend the maturity date of October 1, 2013, (b) set the conversion price at $1.00, subject to adjustment as provided in the notes and (c) remove full-ratchet anti-dilution protection. In addition, the holders forfeited the warrants they received in connection with the issuance of the notes, and consented to the 2012 Bridge Financing, the issuance of the October 2012 Notes and to the subordination of their notes to these October 2012 Notes.The October 2012 Bridge Notes are secured by a first position security interest in the Company’s assets, with the security interest of all previously outstanding convertible promissory notes subordinated. Holders of the October 2010 Notes would hold a second position security interest and holders of the January 2011 and October 2011 Notes would hold a third position security interest, in the assets of the Company. The security interests relating to all such notes will be governed by the second amended and restated security agreement, dated as of August 16, 2012, between the Company and David Jones, as administrative agent for the secured parties (the “Second Amended and Restated Security Agreement”), which replaces the security agreement entered into in September 2011. Until his resignation from the Board on November 30, 2012, David Jones was the Chairman of our Board of Directors and a limited partner and former managing partner of SAIL Venture Partners LP.The Second Amended and Restated Security Agreement and the corresponding security interest terminate upon the earlier of (a) repayment of the notes and (b)(1) with respect to the August 2012 Bridge Notes, if and when the Majority Holders of August 2012 Bridge Notes have converted their notes into shares of common stock, (2) with respect to the October 2010 Notes, if and when the Majority Holders of October 2010 Notes have converted their notes into shares of common stock and (3) with respect to the January 2011 and October 2011 Notes, if and when holders of the Majority Holders of January 2011 and October 2011 Notes (on a combined basis) have converted their notes.The agreement also provides that the Company and the holders of the August 2012 Bridge Notes will enter into a registration rights agreement covering the registration of the resale of the shares underlying the August 2012 Bridge Notes.As of June 30, 2013 the majority of the October 2012 Notes had converted their notes to shares of common stock, consequently pursuant to section 7.13 of the Second Amended and Restated Security Agreement dated August 16, 2012, the security interest for the October 2012 Notes is terminated.The Company recorded a beneficial conversion feature for the August 2012 Bridge Notes, in accordance with FASB ASC 470-20. The Company measures the embedded beneficial conversion feature by allocating a portion of the proceeds equal to the intrinsic value of the embedded beneficial conversion feature to additional paid-in capital. Intrinsic value is calculated as the difference between the effective conversion price and the fair value of the common stock into which the debt is convertible, multiplied by the number of shares into which the debt is convertible. A beneficial conversion feature totaling $400,000 was recorded as loan discount for fiscal year 2012. The loan discount is amortized over the life of the convertible note. For the nine months ended June 30, 2013, $661,000 of amortization of loan discount was recorded as interest expense.The Company did not record a beneficial conversion feature for the October 2012 Bridge Notes as a very low volume of shares traded on the open market during the period from October 1, 2012 through November 30, 2012, the date of the closing of the 2012 Bridge Financing. Management judged that the Company’s stock was not actively traded as only $13,800 worth of stock was traded on 9 of 42 trading days during this period at prices ranging from $0.76 to $0.83. The contemporaneous bridge financing of $2 million of Senior Secured Convertible Notes (“October 2012 Notes”) with a conversion price of $0.04718 involving accredited third party investors was considered a better determinant of fair value. Consequently, management’s judgment was that the pricing of the October 2012 Notes at $0.04718 represented a better determinant of fair value of the convertible notes and therefore there was no beneficial conversion feature associated with the October 2012 Notes.From January 18, 2013 through June 30, 2013 October 2012 Notes in the aggregate amount of $1,838,100 plus interest thereon converted to 40,403,929 shares of common stock at a conversion price of $0.04718 per share. Additionally an October 2010 Note of $250,000 plus interest thereon and six January 2011 Notes in aggregate $1,000,000 plus interest thereon converted to 1,469,816 shares of common stock at a conversion price $1.00 per share. For the nine months ended June 30, 2013 $661,000 of amortization of loan discount was recorded as interest expense.As of June 30, 2013 outstanding senior subordinated convertible promissory notes (October 2010 Notes) were $2,773,900 (including $23,900 corresponding to accrued and unpaid interest on the exchanged notes) and debt discount was $0. During the nine months ended June 30, 2013 the Company amortized no debt discount.As of June 30, 2013 outstanding subordinated secured convertible promissory notes (January 2011 Notes) were $1,500,000 and debt discount was $0. During the nine months ended June 30, 2013 the Company amortized no debt discount.As of June 30, 2013 outstanding subordinated secured convertible promissory notes (October 2011 Notes) were $2,000,000 and debt discount was $0. During the nine months ended, June 30, 2013 the Company amortized $277,100 of the debt discount.As June 30, 2013 outstanding unsecured convertible promissory notes (Unsecured Bridge Notes) were $90,000 and debt discount was $0. During the nine months ended June 30, 2013 the Company amortized $15,000 of the debt discount.As of June 30, 2013 outstanding Unsecured convertible promissory note (October 2012) promissory notes (October 2012 Bridge Notes) were $160,000 and debt discount was $1,300. During the nine months ended June 30, 2013 the Company amortized $368,900 of the debt discount.The combined outstanding senior secured, subordinated secured and unsecured (including October 2012 Notes whose security has terminated) convertible promissory notes as of June 30, 2013 were $6,523,900 and debt discounts were $1,300. During the nine months ended June 30, 2013 the Company amortized $661,000 of the debt discount.