SHAREHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2016

Stockholders' Equity Note [Abstract]

SHAREHOLDERS' EQUITY

5. SHAREHOLDERS’ EQUITY

Private Placement. On January 30, 2015, A-III purchased 8,450,704 shares of the company’s common stock at a purchase price of $1.42 per share, for an aggregate purchase price of $12,000,000, and the company, for no additional consideration, issued to A-III warrants to purchase up to an additional 26,760,563 shares of the company’s common stock at an exercise price of $1.42 per share ($38,000,000 in the aggregate). The purchase price per share and the exercise price of the warrants are subject to a potential post-closing adjustment upon completion of the sale of the company’s four existing land parcels, which could result in the issuance of additional shares of common stock to A-III and an increase in the number of shares of common stock issuable upon exercise of the warrants.

Warrants. Each of the aforementioned warrants entitles the holder to acquire one share of the company’s common stock. At the time of issuance, each warrant had an exercise price of $1.42 per share, subject to post-closing adjustments related to the sales of the legacy properties. The company evaluated the warrants to determine their relative fair value, using a variation of the adjusted Black-Scholes option valuation model at their time of issuance and allocated $4,910,000 of the proceeds from the private placement to the warrants based on their fair value. The warrants were recorded as a component of equity. The warrants expire on January 31, 2018. As of June 30, 2016, the warrants remained unexercised.

Redemption of Units for Shares. In accordance with the conversion factor explained in Note 4 – Non-controlling Interest – Operating Partnership, 71,412 OP Units were redeemed for 117,619 shares of the company’s common stock for the six months ended June 30, 2016, and 597,799 OP Units were redeemed for 984,572 shares of the company’s common stock for the twelve months ended December 31, 2015. Redemptions are reflected in the accompanying consolidated financial statements at the closing price of the company’s stock on the date of redemption.

Contribution of Shares to the Operating Partnership. In accordance with the contribution factor explained in Note 4 – Non-controlling Interest – Operating Partnership, for the six months ended June 30, 2016 and the year ended December 31, 2015, there were no contribution of shares to the operating partnership. Contributions, if any, are reflected in the accompanying consolidated financial statements based on the closing price of the company’s stock on the date of contribution.

Restricted Stock. Shareholders of the company approved and adopted the company’s 2006 Restricted Stock Plan (the “Plan”) in August 2006. The Plan provides for the grant of stock awards to employees, directors, consultants, and advisors. Under the Plan, as amended, the company may grant up to 654,000 shares of restricted common stock, subject to the anti-dilution provisions of the Plan. The maximum number of shares of restricted stock that may be granted to any one individual during the term of the Plan may not exceed 20% of the aggregate number of shares of restricted stock that may be issued. The Plan is administered by the Compensation Committee of the company’s Board. On October 12, 2015, based on the recommendation of the Compensation Committee of the Board of Directors, the Board approved a restricted stock grant of 260,000 shares of common stock to the independent directors and certain officers of the company, which was issued on March 28, 2016. The restricted stock was awarded pursuant to the Plan. The company’s independent directors were each awarded 20,000 shares of restricted common stock, which vested on January 30, 2016. Certain of the company’s officers were awarded an aggregate of 180,000 shares of restricted common stock, which vest in equal one-third installments on January 30, 2016, October 12, 2016 and October 12, 2017. On January 30, 2016, 60,000 shares vested for the company’s officers. The vesting of the awards for the independent directors and officers is subject to continued service through each of the vesting periods. Compensation expense related to restricted stock was $110,824 and $0 for the six months ended June 30, 2016 and June 30, 2015, respectively. On June 30, 2016, the company had unamortized compensation expense of $77,069 which is expected to be recognized over a weighted average period of 0.98 years. On June 30, 2015 the company did not have any unamortized compensation expense.

Treasury Stock. The company has a stock repurchase plan under which it is authorized to repurchase up to 600,000 shares of its outstanding common stock. Under the stock repurchase plan, as of June 30, 2016, the company had authority to repurchase up to 540,362 shares of its outstanding common stock. The stock repurchase plan does not have an expiration date. The company did not repurchase any shares during the six months ended June 30, 2016 or 2015.

Earnings Per Share. The following table shows the reconciliations of income (loss) available for common shareholders and the weighted average number of shares used in the company’s basic and diluted earnings per share computations.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Numerator	2016		2015		2016		2015
Net (loss) income attributable to common shareholders – basic	$	(1,138,590)	$	185,179	$	(2,004,724)	$	(937,853)
(Loss) income attributable to non-controlling interest		(45,446)		8,584		(83,269)		(180,644)
Net (loss) income  – diluted	$	(1,184,036)	$	193,763	$	(2,087,993)	$	(1,118,497)
Denominator
Weighted average common shares – basic		20,318,219		20,068,192		20,262,828		17,866,360
Effect of potential dilutive securities:
Weighted average operating partnership units, assuming conversion of all units to common shares		820,205		930,232		853,288		1,778,084
Warrants		—		1,647,797		—		—
Weighted average common shares – diluted(a)		21,138,424		22,646,221		21,116,116		19,644,444

(a) Due to the net loss for the three and six months ended June 30, 2016, the incremental shares related to the unvested restricted stock and the warrants were excluded as they were anti-dilutive.  Due to the net loss for six months ended June 30, 2015, the incremental shares related to the warrants were excluded as they were anti-dilutive.  There were no unvested restricted stock for three months and six months ended June 30, 2015