Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
 3 Months Ended
Mar. 31, 2015
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

11. Stockholders’ Equity

 

The Company has 45,000,000 shares of its $0.0001 par value common stock authorized at both March 31, 2015 and December, 2014, and 12,306,230 shares issued and 7,249,442 shares outstanding at March 31, 2015 and December 31, 2014, respectively.

 

The Company has 5,000,000 shares of its no par value preferred stock authorized at both March 31, 2015 and December 31, 2014. No shares have been issued or outstanding at either March 31, 2015 or December 31, 2014.

 

In January 2015, a convertible debt holder converted $500,000 principal plus accrued interest into 373,333 shares of the Company’s common stock. In addition, another convertible debt holder converted $250,000 principal plus accrued interest into 168,713 shares of the Company’s common stock. In March 2015, the Company issued 100,000 shares of its common stock to repay $100,000 of long term debt and related accrued interest and penalties. (See Note 7 – Long Term Debt and Notes Payable and Note 8 – Convertible Notes Payable).

 

On March 16, 2015, the Company completed a rights offering, receiving subscriptions (including both basic and over subscriptions) for 3,899,742 shares of its common stock for net proceeds of $7,062,325 (gross proceeds of $7,799,484). The Company used the proceeds for the BGR acquisition and for general corporate purposes.

 

Effective March 15, 2015, the Company closed the purchase of BGR Holdings, LLC. In consideration of the purchased assets, the Company issued 500,000 shares of the Company’s common stock as a component of the total purchase price (See Note 3- Acquisitions).

 

In March 2015, the Company issued 15,000 shares valued at $30,000 for consulting services.

 

Options and Warrants

 

There are no options outstanding as of March 31, 2015 and December 31, 2014.

 

Fair value of any warrant issuances are valued utilizing the Black-Scholes mode. The model includes subjective input assumptions that can materially affect the fair value estimates. The Company determined the fair value of the Binomial Lattice Model and the Black-Scholes Valuation Model to be materially the same. The expected stock price volatility for the Company’s warrants was determined by the historical volatilities for industry peers and used an average of those volatilities.

 

A summary of warrant activity is presented below:

 

    Number of
Warrants 		    Weighted
Average
Exercise Price 		    Weighted
Average
Remaining Life 		 
Outstanding January 1, 2015     8,715,804     $ 5.49       2.7  
Granted     754,500       2.50          
Exercised     -       -          
Forfeited     -       -          
Outstanding March 31, 2015     9,470,304     $ 5.25       2.8  
                         
Exercisable March 31, 2015     9,470,304     $ 5.25       2.8  

 

The following table presents information related to stock warrants as of March 31, 2015:

 

Exercise Price     Outstanding
Number of Warrants 		    Weighted Average
Remaining Life
in Years 		    Exercisable
Number of Warrants 		 
                     
>$5.00       3,554,514       2.6       3,554,514  
$4.00-$5.00       3,935,117       2.7       3,935,117  
$3.00-$4.00       663,901       4.6       663,901  
$2.00-$3.00       1,316,772       3.5       1,316,772  
        9,470,304               9,470,304  

 

Warrant amortization is summarized as follows:

 

    Three Months Ended  
    March 31, 2015     March 31, 2014  
             
Additional paid-in capital   $ 22,375     $ 22,375  
    $ 22,375     $ 22,375  
                 
Interest expense     474,874       259,442  
Consulting expense     22,375       22,375  
    $ 497,249     $ 281,817