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Issuance of Convertible Preferred Stock and Extinguishment of Debt | 12 Months Ended
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Dec. 31, 2012
Issuance of Convertible Preferred Stock and Extinguishment of Debt [Abstract] |
Issuance of Convertible Preferred Stock and Extinguishment of Debt | 3. Issuance of Convertible Preferred Stock and Extinguishment of Debt On October 20, 2010, the Company exchanged all of its senior secured convertible debentures, promissory notes and related interest obligations for shares of its newly created Series A convertible preferred stock pursuant to the Series A Purchase Agreement (debt to equity exchange). The number of shares of Series A convertible preferred stock exchanged was based on the carrying amount of debt and accrued interest at August 31, 2010 divided by the stated value of the convertible preferred stock. The convertible debentures, promissory notes, and related interest exchanged for Series A convertible preferred stock were as follows: Debt Exchanged for Series A Preferred Convertible Stock
|  | August 31, 2010 |
|  |  |  |  | Accrued |  |  |  |
Note Descriptions |  | Principal |  |  | Interest |  |  | Total |
15% convertible notes payable - investors |  | $ | 1,078,157 |  |  | $ | 264,131 |  |  | $ | 1,342,288 |
18% convertible debentures payable - mandatory redemption payment |  |  | 4,412,058 |  |  |  | 1,505,343 |  |  |  | 5,917,401 |
18% convertible notes payable - 2006 - 2007 |  |  | 2,170,000 |  |  |  | 1,498,063 |  |  |  | 3,668,063 |
11% convertible notes payable - June - November 2008 |  |  | 2,500,000 |  |  |  | 643,457 |  |  |  | 3,143,457 |
11% convertible note payable - July 2008 amended and restated |  |  | 2,782,563 |  |  |  | 204,776 |  |  |  | 2,987,339 |
11% convertible notes payable - December 2008 |  |  | 500,000 |  |  |  | 108,803 |  |  |  | 608,803 |
9% convertible notes payable - May - August 2009 |  |  | 1,000,000 |  |  |  | 112,300 |  |  |  | 1,112,300 |
8% convertible notes payable - December 2009 |  |  | 4,500,000 |  |  |  | 165,135 |  |  |  | 4,665,135 |
8% convertible notes payable - June 2010 |  |  | 1,100,000 |  |  |  | 16,558 |  |  |  | 1,116,558 |
17% promissory notes payable - July 2005 |  |  | 1,200,000 |  |  |  | 1,631,552 |  |  |  | 2,831,552 |
18% promissory notes payable - December 2007 financing |  |  | 600,000 |  |  |  | 251,154 |  |  |  | 851,154 |
18% promissory notes payable - January 2008 financing |  |  | 600,000 |  |  |  | 236,071 |  |  |  | 836,071 |
5% debt seller note (Plum Mine) |  |  | 250,000 |  |  |  | 64,584 |  |  |  | 314,584 |
|  | $ | 22,692,778 |  |  | $ | 6,701,927 |  |  | $ | 29,394,705 |
In calculating the loss on extinguishment of debt, we measured the Series A convertible preferred stock at fair value at date of issuance. The summary of the components of loss on the extinguishment of debt is as follows:
Principal and interest exchanged at August 31, 2010 |  | $ | 29,394,705 |
Discount on debt eliminated |  |  | (1,691,770 | )
Interest accrued from September 1, 2010 -October 20, 2010 |  |  | 526,258 |
Convertible debt beneficial conversion feature derivative eliminated |  |  | 21,840,398 |
Issuance Series A-1 convertible preferred stock at fair value |  |  | (51,589,904 | )
Issuance Series A-2 convertible preferred shares at fair value |  |  | (20,969,237 | )
Accrual of tax indemnification related to exchange (Note 22) |  |  | (3,861,340 | )
Loss on extinguishment of debt |  | $ | (26,350,890 | )
The Company estimated the fair value of the convertible preferred stock using a Monte Carlo model. The determination of the fair value was based on inputs such as stock price, volatility, expected life, risk free interest rate, and expected dividends. The conversion option embedded in the convertible preferred stock is a beneficial conversion feature because the effective conversion price of the conversion option is less than the Company's common stock price at the date of the debt to equity exchange. At October 20, 2010, the Company recorded a deemed dividend in additional paid-in-capital for this beneficial conversion feature of $39,482,123. For the issuance of Series A-1 preferred stock in 2012 and 2011, the Company recorded a deemed dividend in additional paid-in-capital for this beneficial conversion feature of $1,242,927 and $638,276, respectively.

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