Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
 9 Months Ended
Sep. 30, 2015
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

10. STOCKHOLDERS’ EQUITY

 

The Company has 45,000,000 shares of its $0.0001 par value common stock authorized at both September 30, 2015 and December, 2014, and 21,238,830 and 7,249,442 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively.

 

The Company has 5,000,000 shares of its no par value preferred stock authorized at both September 30, 2015 and December 31, 2014. No shares have been issued or outstanding at either September 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.

 

On September 22, 2015, the Company completed a rights offering, receiving subscriptions (including both basic and oversubscriptions) for 4,894,692 shares of its common stock for net proceeds of $6.0 million.

 

From July through September 2015, convertible debt holders converted an aggregate of $425,000 principal into 289,176 shares of the Company’s common stock.

 

During the first nine months of 2015, the Company issued 49,800 shares of common stock and warrants for services valued at $231,857. 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.

 

Options and Warrants

 

There are no options outstanding as of September 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     $ 5.17       2.2  
Granted     840,500       2.55          
Exercised     -       -          
Forfeited     -       -          
Outstanding September 30, 2015     9,556,304     $ 4.94       2.3  
                         
Exercisable September 30, 2015     9,556,304     $ 4.94       2.3  

 

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

 

Exercise Price      Outstanding
Number of
Warrants 		    Weighted
Average
Remaining Life in Years 		    Exerciseable Number of Warrants  
                     
>$5.00       3,554,514       2.1       3,554,514  
$4.00-$4.99       3,935,117       2.2       3,935,117  
$3.00-$3.99       413,901       3.7       413,901  
$2.00-$2.99       1,340,272       3.1       1,340,272  
$1.00-$1.99       312,500       4.2       312,500  
        9,556,304               9,556,304  

 

Warrant amortization is summarized as follows:

 

    Three Months Ended     Nine Months Ended  
     September 30, 2015     September 30, 2014      September 30, 2015     September 30, 2014  
                                 
Interest expense   $ 407,263     $ 259,442     $ 1,356,365     $ 930,392  
Consulting expense     -       22,375       22,375       152,325  
    $ 407,263     $ 281,817     $ 1,378,740     $ 1,082,717