Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.2.0.727
Stockholders' Equity
 6 Months Ended
Jun. 30, 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 June 30, 2015 and December, 2014, and 13,681,330 and 7,249,442 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively.

 

The Company has 5,000,000 shares of its no par value preferred stock authorized at both June 30, 2015 and December 31, 2014. No shares have been issued or outstanding at either June 30, 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 oversubscriptions) for 3,899,742 shares of its common stock for net proceeds of $7,062,325.

 

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 June 2015, a convertible debt holder converted $1,000,000 principal into 500,000 shares of the Company’s common stock.

 

On June 19, 2015, the Company entered into an agreement with an institutional investor and accredited investors for a registered direct placement of 860,000 shares of common stock at $2.50 per share. The agreement also provides an overallotment right for the investor(s) to purchase up to 860,000 additional shares of common stock at $2.50 per share during the 75 days following the initial closing.

 

During the first six months of 2015, the Company issued 30,100 shares of common stock and warrants for services valued at $186,830 of which $97,898 and $88,932 was expensed in the first and second quarters of 2015, respectively. The recorded value for common stock issued for services was based on the closing market prices for the Company’s common stock. The recorded value of the warrants issued for services valued utilizing the Black-Scholes model.

 

See Note 16 Subsequent Events for information regarding issuances of Common Stock subsequent to June 30, 2015.

 

Options and Warrants

 

There are no options outstanding as of June 30, 2015 and December 31, 2014.

 

Fair value of any warrant issuances are valued utilizing the Black-Scholes model. 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     $ 5.23       2.5  
Granted     840,500       2.55          
Exercised     -       -          
Forfeited     -       -          
Outstanding June 30, 2015     9,556,304     $ 4.99       2.6  
                         
Exercisable June 30, 2015     9,556,304     $ 4.99       2.6  


 

The following table presents information related to stock warrants as of June 30, 2015:

 

Exercise Price   Outstanding
Number of
Warrants 		    Weighted
Average
Remaining Life
in Years 		    Exerciseable
Number of
Warrants 		 
                   
>$5.00     3,554,514       2.3       3,554,514  
$4.00-$5.00     3,935,117       2.5       3,935,117  
$3.00-$4.00     663,901       4.4       663,901  
$2.00-$3.00     1,402,772       3.4       1,402,772  
      9,556,304               9,556,304  

 

Warrant amortization is summarized as follows:

 

    Three Months Eneded     Six Months Ended  
    June 30, 2015     June 30, 2014     June 30, 2015     June 30, 2014  
                         
Interest expense   $ 1,117,540     $ 259,442     $ 1,592,414     $ 582,617  
Consulting expense     -       22,375       22,375       44,750  
    $ 1,117,540     $ 281,817     $ 1,614,789     $ 627,367