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Convertible Notes Payable | 6 Months Ended
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Sep. 30, 2015
Convertible Notes [Abstract] |
Convertible Notes Payable |
| 7. | Convertible Notes Payable
Convertible notes payable consist of the following:
|  | September 30, |  | March 31, |
|  | 2015 |  | 2015 |
9% Senior Subordinated Convertible Notes due February 15, 2016, net of debt discount of $24,770 (September 30, 2015) and $62,182 (March 31, 2015) |  | $ | 1,075,230 |  | $ | 1,037,818 |
8% Senior Subordinated Convertible Note Payable to NNA due March 28, 2019, net of debt discount of $913,904 (September 30, 2015) and $985,255 (March 31, 2015) |  |  | 1,086,096 |  |  | 1,014,745 |
Conversion feature liability |  |  | 388,150 |  |  | 442,358 |
|  | $ | 2,549,476 |  | $ | 2,494,921 |
9% Senior Subordinated Callable Convertible Promissory Notes due February 15, 2016 The 9% Notes, issued January 31, 2013, bear interest at a rate of 9% per annum, payable semi-annually on August 15 and February 15, and mature February 15, 2016, and are subordinated. The principal of the 9% Notes, plus any accrued yet unpaid interest, is convertible, at any time by the holder at a conversion price of $4.00 per share, subject to adjustment for stock splits, stock dividends and reverse stock splits, into shares of the Company’s common stock. On 60 days’ prior notice, the 9% Notes are callable in full or in part by the Company at any time after January 31, 2015. If the Average Daily Value of Trades (“ADVT”) during the prior 90 days as reported by Bloomberg is greater than $100,000, the 9% Notes are callable at a price of 105% of the 9% Notes’ par value, and if the ADVT is less than $100,000, the 9% Notes are callable at a price of 110% of the 9% Notes’ par value. In connection with the issuance of the 9% Notes, the holders of the 9% Notes received warrants to purchase 66,000 shares of the Company’s common stock at an exercise price of $4.50 per share, subject to adjustment for stock splits, reverse stock splits and stock dividends, which warrants are exercisable at any date prior to January 31, 2018, and were classified in equity. The $186,897 fair value of the 9% Notes warrants was based on the Company’s closing stock price at the transaction date and inputs to the Black-Scholes option pricing model: term of 5.0 years, risk free rate of 0.70%, and volatility of 36.7%. 8% Convertible Note Payable to NNA The NNA 8% Convertible Note commitment provided for the Company to borrow up to $2,000,000. On July 31, 2014, the Company exercised its option to borrow $2,000,000, received $2,000,000 of proceeds and recorded a debt discount of $1,065,775 related to the fair value of a conversion feature liability and a warrant liability discussed below. Borrowings bear interest at the rate of 8.0 % per annum payable semi-annually, are due March 28, 2019, and are convertible into shares of the Company’s common stock at an initial exercise price of $10.00 per share, subject to adjustment for stock splits, stock dividends and reverse stock splits. The conversion price is also subject to adjustment in the event of subsequent down-round equity financings, if any, by the Company. The conversion feature included a non-standard anti-dilution feature that has been bifurcated and recorded as a conversion feature liability at the issuance date of $578,155. The fair value of the conversion feature liability issued in connection with the 8% Convertible Note at September 30, 2015 was estimated using the Monte Carlo valuation model which used the following inputs: term of 3.7 years, risk free rate of 1.3%, no dividends, volatility of 48.6%, share price of $6.90 per share based on the trading price of the Company’s common stock adjusted for a marketability discount, and a 100% probability of down-round financing. In addition the Company was required to issue 100,000 warrants to NNA with an initial exercise price of $10.00 per share, subject to adjustment for stock splits, stock dividends and reverse stock splits. The conversion price will also be subject to adjustment in the event of subsequent down-round financings, if any, by the Company. The fair value of the warrant liability related to 100,000 common shares issuable in connection with the 8% Convertible Note as of September 30, 2015 was estimated using the Monte Carlo valuation model which used the following inputs: term of 5.7 years, risk free rate of 1.8%, no dividends, volatility of 57.6%, share price of $6.90 per share based on the trading price of the Company’s common stock adjusted for a marketability discount, and a 100% probability of down-round financing. From the proceeds of the transactions with NMM (see Note 11 to the Notes to the Condensed Consolidated Financial Statements) on October 15, 2015, the Company repaid its outstanding term loan and revolving credit facility with NNA pursuant to the Credit Agreement in the then-outstanding aggregate amount of $7,304,506, consisting of $7,282,500 principal plus $22,006 of accrued interest. Additionally, NNA has agreed in principle to convert the Convertible Note and exercise all of its related Warrants (See Note 11 to the Notes to the Unaudited Condensed Consolidated Financial Statements). Interest expense associated with the convertible notes payable consisted of the following:
|  | Three Months Ended |  | Six Months Ended |
|  | September 30, |  | September 30, |
|  | 2015 |  | 2014 |  | 2015 |  | 2014 |
Interest expense |  | $ | 66,102 |  | $ | 52,856 |  | $ | 131,571 |  | $ | 77,881 |
Amortization of loan fees and discount |  |  | 73,568 |  |  | 60,884 |  |  | 144,219 |  |  | 97,322 |
|  | $ | 139,670 |  | $ | 113,740 |  | $ | 275,790 |  | $ | 175,203 |

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