Stockholders' Equity

12 Months Ended

Dec. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Convertible Preferred Stock

The Company has three different series of convertible preferred stock as described below.

Series A-1 Convertible Preferred Stock

Each share of the Series A-1 convertible preferred stock has a stated value of $1,000 per share and is convertible, at the holder’s election, into 1,536 shares of common stock at a conversion price of $0.651 per share. Each share is also entitled to a liquidation and change of control preference equal to the stated value plus any accrued and unpaid dividends and any other fees outstanding. Each share of Series A-1 is entitled to five times the number of votes per share of common stock into which it can be converted. The Series A-1 convertible preferred stock may not be automatically converted into common stock by the Company (unlike the other series of convertible preferred stock that may be automatically converted under the circumstances described below).

In October 2013, 2012 and 2011, the Company issued 862.5 shares of Series A-1 convertible preferred stock, to Northern Comstock LLC (“Northern Comstock”), a related party of the Company, in prepayment of an annual mineral rights lease pursuant to the Northern Comstock LLC operating agreement. The Company estimated the fair value of the Series A-1 convertible preferred stock issued using a Monte Carlo model. The determination of the fair value was based on Level 3 inputs such as stock price, volatility, expected life, risk free interest rate, and expected dividends. Of the total fair value of the convertible preferred stock issued, $2,328,367, $2,027,323 and $2,092,382 was expensed as an equity-based payment to non-employees for the amount earned during the years ended December 31, 2013, 2012 and 2011, respectively, and a remaining fair value of $1,706,313 and $1,987,104 was recorded as a prepaid expense as of December 31, 2013 and 2012, respectively. The conversion option embedded in the convertible preferred stock issued was considered a beneficial conversion feature at each issuance date because the effective conversion price of the conversion option was less than the Company’s common stock price at the date of issuances. The Company recorded a deemed dividend in additional paid-in-capital for this beneficial conversion feature of $304,724, $1,242,927 and $638,276 for the October 2013, 2012, and 2011 issuances, respectively.

Series A-2 Convertible Preferred Stock

Each share of the Series A-2 convertible preferred stock has a stated value of $1,000 per share and is convertible, at the holder’s election, into 1,536 shares of common stock at a conversion price of $0.651 per share. Each share is also entitled to a liquidation and change of control preference equal to the stated value plus any accrued and unpaid dividends and any other fees outstanding. Each share of Series A-2 convertible preferred stock automatically converts into shares of common stock when the average common stock price exceeds $4.50 per share (for at least 20 trading days during any consecutive 30-trading day period), as adjusted for stock splits and similar transactions. Each share entitles the holder to vote with the holders of common stock as a single class on all matters submitted to the vote of the common stock (on an as-converted basis).

Series B Convertible Preferred Stock

Each share of the Series B convertible preferred stock has a stated value of $1,000 per share and is convertible, at the holder’s election, into 606 shares of common stock at a conversion price of $1.65 per share. Each share is also entitled to a liquidation and change of control preference equal to the stated value plus any accrued and unpaid dividends and any other fees outstanding. Each share of Series B convertible preferred stock automatically converts into shares of common stock when the average common stock price exceeds $4.50 per share (for at least 20 trading days during any consecutive 30-trading day period), as adjusted for stock splits and similar transactions. Each share entitles the holder to vote with the holders of common stock as a single class on all matters submitted to the vote of the common stock (on an as-converted basis).

The Series A-1, Series A-2, and Series B convertible preferred stock are senior to all other classes of equity of the Company, in the event of the liquidation or change of control of the Company and, are entitled to semi-annual dividends at a rate of 7.5% per annum, payable in cash, common stock, preferred stock or any combination of the foregoing, at the Company’s option. The Series A-1, Series A-2, and Series B convertible preferred stock also contain provisions providing weighted average anti-dilution protection. As of December 31, 2013, there were approximately $2.0 million in arrears of cumulative dividends resulting in a ($0.03) impact on loss per share at December 31, 2013.

As long as 25% or more of the Series A-1, Series A-2, and Series B convertible preferred stock originally issued is outstanding, the Company will be not be permitted, in each case without the consent of the majority of the holders of the Series A-1, Series A-2, and Series B convertible preferred stock, to execute certain strategic and business decisions, as provided in the related preferred stock documents. The Company is currently restricted from declaring or paying common stock dividends in cash under the terms of its convertible preferred stock.

From January 1, 2014 through March 14, 2014, preferred shareholders converted 1,009 shares of convertible preferred stock into 611,514 common shares.

Common Stock

In November 2013, the Company entered into agreements to purchase two properties for a total purchase price of $1.7 million. Total consideration transferred by the Company as of December 31, 2013 included cash payments of $70,000 and 738,888 common stock shares. The Company has guaranteed that the sellers will receive total consideration for shares issued of $1.3 million by December 31, 2014. Should the value of the equity issued as of December 31, 2014 not be sufficient to satisfy the total consideration, Comstock may make additional cash payments to the sellers. Titles to the properties will not transfer until full consideration is received; therefore, as of December 31, 2013, the seller has not performed under the agreement. Accordingly, the related properties and equity issued were not given accounting consideration in the Company’s consolidated financial statements. The 738,888 common stock shares issued during the year ended December 31, 2013 have no impact on the basic and diluted earnings per share amounts.

During the year ended December 2013, the Company declared and issued 2,167,398 shares of common stock in payment of dividends with a fair value of $4.2 million on the convertible preferred stock. As the Company cannot pay dividends out of accumulated deficits under Nevada laws, the dividends were recorded as a reduction to additional paid-in capital.

In January 2014, the Company declared and issued 1,141,142 shares of common stock in payment of dividends, with a fair value of $2.0 million, on the convertible preferred stock.

On January 11, 2013, the Company’s registration statement on Form S-3 filed in December 2012 (the “Registration Statement”) was declared effective by the Securities and Exchange Commission (the “SEC”). The Registration Statement covers the offer of up to $50,000,000 of any combination of securities described in the prospectus.

In March 2013, the Company raised $10.00 million in gross proceeds (approximately $9.70 million, net of $0.3 million issuance costs) through an underwritten public offering of 5,000,000 shares of our common stock at a price of $2.00 under the Company’s Registration Statement on Form S-3.

In August 2013, the Company raised $8.75 million in gross proceeds (approximately $8.6 million, net of $0.2 million issuance costs) through an underwritten public offering of 4,146,920 shares of our common stock at a price of $2.11 per share under the Company’s Registration Statement on Form S-3.     

During the year ended December 31, 2013, the Company issued 1,037,141 shares of common stock valued at $1,915,000 for payment on its "Dayton Property Golden Goose" long-term debt obligation. (see Note 11).

During the year ended December 31, 2013, 1,199,300 shares of vested restricted stock were issued under the 2011 Equity Incentive Plan. 

During the year ended December 31, 2013, preferred shareholders converted 3,661 shares of Series A-2 convertible preferred stock and 4,206 shares of Series B convertible preferred stock into 5,623,003 and 2,548,908 shares of common stock, respectively.