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Convertible Debt and Stockholders' Equity
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12 Months Ended | ||||||||||||||||||||||||||||||
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Dec. 31, 2011
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| Convertible Debt and Stockholders' Equity [Abstract] | |||||||||||||||||||||||||||||||
| Convertible Debt and Stockholders' Equity | 6. Convertible Debt and Stockholders' Equity Convertible Debt On March 15, 2005, we entered into several purchase agreements with a group of institutional investors, pursuant to which we issued and sold to such investors certain 5.5% convertible notes in the aggregate principal amount of $35.0 million, which convert into a certain number of shares of our common stock (the “2005 Notes”) as well as warrants to purchase our common stock (the “2005 Warrants”). On March 1, 2010, our final payments to the holders of the remaining 2005 Notes were paid. The 2005 Warrants expired on March 15, 2010. Common and Preferred Stock On December 1, 2010, we entered into an Agreement and Plan of Merger (the Merger) with Transave. Under the terms of the Merger Agreement, the Transave stockholders received an aggregate of 2.6 million newly issued shares of the common stock, par value $0.01 per share, of the Company and 9.2 million shares of newly created Series B Preferred Stock, par value $0.01 per share, of the Company. The Transave stockholders also received an aggregate of $0.6 million in cash. Collectively, the shares of the Company's common stock and the Company's preferred stock (on an as converted basis) issued in connection with the Merger represent approximately 47% of the capital stock of the Company on a fully diluted basis at the time of issuance. On March 1, 2011, we held a special meeting of our shareholders to consider proposals relating to the conversion of our Series B Preferred Stock and a one-for-ten reverse stock split of the common stock. At the special meeting of shareholders, the shareholders approved the proposals. As a result of the approval of the conversion of the Series B Preferred Stock, the 91.7 million shares of the Series B Preferred Stock outstanding (on a pre-reverse stock-split basis) were automatically and immediately converted into 91.7 million shares of our common stock. In addition, we filed Articles of Amendment (the Amendment) to our Articles of Incorporation, as amended, to affect a one-for-ten reverse stock split of our common stock. The Amendment became effective on March 2, 2011. As a result of the Amendment, each holder of 10 shares of common stock immediately prior to the effectiveness of the reverse stock split became the holder of one share of our common stock. Shareholders received a cash payment in lieu of any fractional shares of common stock they are entitled to receive. Below is a table detailing the conversion of the preferred shares and the reverse stock split.
As a result of the conversion of the Series B Preferred Stock, we recorded a non-cash charge for the beneficial conversion feature of the Series B Preferred Stock in the amount of $9.2 million, which reduced net income available to holders of our common shares and, in turn, reduced our earnings per common share on a basic and diluted basis by $0.40 for year ended December 31, 2011. The charge represents the $1.00 difference between the conversion price of the Series B Preferred Stock of $7.10 per share and its carrying value of $6.10 per share. The carrying value of Series B Preferred Stock was based on its fair value at issuance, which was estimated using the common stock price reduced for a lack of marketability between the acquisition date (or issuance date) and the anticipated date of conversion. |
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