EQUITY

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

EQUITY

Common and Preferred Stock

The Company is authorized to issue 150,000,000 shares of common stock, $0.01 par value, of which 8,002,952 common shares were issued and outstanding as of September 30, 2015. The Company is authorized to issue 10,000,000 shares of preferred stock in the aggregate, which may include up to 10,000,000 shares of Series A Convertible Preferred Stock, $0.01 par value, 1,000 shares of its 10% Cumulative Perpetual Series B Preferred Stock, $0.01 par value, and 500 shares of its Series C Convertible Preferred Stock, par value $0.01, none of which were issued and outstanding as of September 30, 2015.

As of September 30, 2015, 39,828 shares of common stock were approved for issuance by the Board of Directors, but remain unissued.

Options

As of September 30, 2015, 590,000 options to purchase common stock of the Company were issued and outstanding, 370,000 of which had an exercise price equal to $2.30 per share, 40,000 of which had an exercise price equal to $2.20 per share, 60,000 of which had an exercise price equal to $1.00 per share, and 120,000 of which had a strike price of $0.90 per share. During the three month period ended September 30, 2015, the Company did not issue options to management, key employees and members of the board of directors, and therefore recorded $0 expense.

Warrants

The Company values all warrants using the Black-Scholes option-pricing model.  Critical assumptions for the Black-Scholes option-pricing model include the market value of the stock price at the time of issuance, the risk-free interest rate corresponding to the term of the warrant, the volatility of the Company’s stock price, dividend yield on the common stock, as well as the exercise price and term of the warrant.  The Black Scholes option-pricing model was the best determinable value of the warrants that the Company “knew up front” when issuing the warrants in accordance with Topic 505. Other than as expressly noted below, the warrants are not subject to any form of vesting schedule and, therefore, are exercisable by the holders anytime at their discretion during the life of the warrant.  No discounts were applied to the valuation determined by the Black-Scholes option-pricing model; provided, however, that in determining volatility the Company utilized the lesser of the 90-day volatility as reported by Bloomberg or other such nationally recognized provider of financial markets data and 40.0%.  

As of September 30, 2015, 50,000 warrants to purchase common stock of the Company were issued and outstanding, additional information about which is included in the following table:

Issued		Exercise Price		Issuance Date	Expiration Date	Vesting
	25,000	$	3.000	11/01/13	11/01/16	No
	25,000	$	2.000	11/01/13	11/01/16	No
	50,000

Expected Dividend Yield	0.0	%
Volatility	40.0	%
Weighted average risk free interest rate	0.4	%
Weighted average expected life (in years)	1.1

Private Placements, Other Issuances and Cancellations

The Company periodically issues shares of its common stock, as well as options and warrants to purchase shares of common stock to investors in connection with private placement transactions, and to advisors, consultants and employees for the fair value of services rendered. Absent an arm’s length transaction with an independent third-party, the value of any such issued shares is based on the trading value of the stock at the date on which such transactions or agreements are consummated. The Company expenses the fair value of all such issuances in the period incurred. During the quarter ended September 30, 2015, the Company issued (i) 6,494 shares of common stock subscribed for services rendered by directors that elected to take their board fees in shares of common stock in lieu of cash payment and recorded an expense of $10,001 for the fair value of services rendered, and (ii) 33,334 shares of common stock for services rendered by the Chief Executive Officer subject to time-based vesting that vested during the quarter, for which the Company recorded an expense of $57,330. In addition to the foregoing, the Company also repurchased 46,387 shares of common stock during the quarter ended September 30, 2015 for aggregate purchase price, excluding transaction costs, of $73,521.