Page 10 of 15 SEC Filing
CUSIP No. 381119106
Page 10 of 15
Convertible Note
On October 27, 2015, the Issuer, entered into a Loan Agreement (the Loan Agreement ) with Fund IV (Fund IV ). At that time the Reporting Persons own, in the aggregate, approximately 27% of the Issuers outstanding Common Stock (excluding restricted Common Stock held by the Issuers employees and excluding shares reserved for issuance pursuant to the exercise of warrants and conversion of the Note described herein).
Pursuant to the terms of the Loan Agreement, on October 27, 2015, the Issuer borrowed from Fund IV $5.0 million, the entire amount available under the Loan Agreement, and the Issuer delivered a Senior Secured Convertible Note (the Note ) in favor of Fund IV, with principal and accrued interest thereunder due on October 27, 2016. Pursuant to the Loan Agreement and as required by NYSE MKT rules, the conversion features of the Note would only be effective if approved by the Issuers shareholders which approval occurred on January 19, 2016. As a result at the option of Fund IV, all or any of the the outstanding principal balance together with accrued and unpaid interest evidenced by the Note became convertible into shares of the Issuers Common Stock at a conversion price equal to the lowest of (i) $0.29 (90 percent of the 15-day volume weighted average price (VWAP) for the period immediately preceding the loan funding date), (ii) 90 percent of the 15-day VWAP for the period immediately preceding any election to convert, or (iii) an anti-dilution adjusted price based on the lowest price for which the Issuer has sold its stock following the borrowing date (subject to certain exceptions set forth in the Note).
On February 11, 2016, Sentient converted a portion of the Note ($3,874,416 in principal and $132,772 in accrued interest) (the Partial Note Conversion) leaving an unpaid principal balance of $1,125,584. The partial conversion of principal and interest was at a conversion price of $0.1715773, which was 90% of the 15 day VWAP for the period immediately preceding the conversion date. The Partial Note Conversion resulted in the acquisition by Fund IV of an additional 23,355,000 shares of Common Stock and an additional 102,182 September 2012 Warrants, defined below, pursuant to the anti-dilution adjustment feature of the September 2012 Warrants triggered by the Partial Note Conversion..
Warrant Adjustments
In September 2012, the Issuer closed on a public offering and concurrent private placement with Sentient in which it sold units consisting of one share of Common Stock and a five-year warrant to acquire one half of a share of Common Stock at an exercise price of $8.42 per share (the September 2012 Warrants). The exercise price was subsequently adjusted downward to $7.17 per share based on the weighted average anti-dilution provision in the September 2012 Warrants as a result of the September 2014 public offering and concurrent Fund IV private placement described below. As a result of the Partial Note Conversion, the number of shares of Common Stock issuable upon exercise of the September 2012 Warrants beneficially owned by Fund IV was increased from 1,027,690 shares to 1,129,872 shares, an increase of 102,182, and the exercise price was decreased to approximately $5.09 per share due to the anti-dilution provisions of the September 2012 Warrants (the 2012 Warrant Adjustment).
In September 2014, the Issuer closed on a public offering and concurrent private placement with Fund IV in which the Issuer sold units, consisting of one share of Common Stock and a five-year warrant to acquire one half of a share of Common Stock at an exercise price of $1.21 per share (the September 2014 Warrants and together with the September 2012 Warrants, the Warrants). Fund IV purchased September 2014 Warrants exercisable to purchase an aggregate of 2.9 million shares in that private placement. As a result of the Partial Note Conversion, pursuant to the anti-dilution provisionsin theSeptember 2014 Warrants, the number of shares of Common Stock issuable upon exercise of the September 2014 Warrants held by Fund IV did not change, but the September 2014 Warrants exercise price was decreased to approximately $0.91 per share (the 2014 Warrant Adjustment, and together with the 2012 Warrant Adjustment, the Warrant Adjustment).
