Shareholders' Equity

6 Months Ended

Jun. 30, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 8 — Shareholders’ Equity

Stock-Based Compensation

The Company has made stock grants to key members of its management. Mr. Avery, the Company’s President and Chief Executive Officer, received stock-based compensation of 1,500,000 shares of common stock on August 17, 2010, which vests over a two-year period. 500,000 of Mr. Avery’s shares vested on August 17, 2010, 250,000 shares vested on December 1, 2010, 500,000 shares will vest on August 17, 2011 and the remaining 250,000 shares will vest on August 17, 2012. Mr. Bloomfield, the Company’s Chief Financial Officer, received stock-based compensation of 500,000 shares of common stock on September 1, 2010, which vests on a two-year schedule. 100,000 of Mr. Bloomfield’s shares vested on September 1, 2010, his first day of employment with the Company, 200,000 shares will vest on September 1, 2011 and 200,000 shares will vest on September 1, 2012. The stock grants were deemed to have a nominal value and were valued at a par value of $0.001 per share and are expensed as the stock is issued and vested. The Company determined that the stock had a nominal value because the Company had nominal assets and had not begun commercial operations as of the date of the grants. The Company did not record any stock based compensation in the first quarter of 2011. Total compensation for non-vested awards was $456 as of June 30, 2011. The Company has also made stock grants totaling 1,425,000 shares to its directors, excluding shares issued to Mr. Avery.

Common Stock Purchase Warrants

The Company has issued a warrant to Buffalo to purchase a number of shares of common stock equal to 5% of the Company’s issued outstanding shares of common stock on a fully-diluted basis on the exercise date at an exercise price per share to be determined based on the average market price of the common stock during a specified period. The warrants will become exercisable following the first day on which the Company’s market capitalization for each trading day in a period of 30 consecutive days exceeds $50,000,000 based on the market price of the common stock determined in accordance with the terms of the warrant. On June 21, 2011, the warrants became exercisable. The warrant terms were evaluated and we have concluded that they did not meet the criteria for equity classification. Accordingly, our analysis resulted in the conclusion that these warrants require classification in our financial statements in liabilities.

Refer to Note 6 — Derivative Financial Instruments, for additional information on the Buffalo warrant and our other common stock purchase warrants.

Common Stock

The Company is authorized to issue 100,000,000 shares of common stock, with a par value of $0.001 per share, under the terms of the Company’s Amended and Restated Articles of Incorporation. As of June 30, 2011, there were 21,648,864 shares of common stock issued and outstanding.

On January 7, 2011, the Company and Buffalo reached an agreement whereby Buffalo received 1,516,667 shares of the Company’s common stock in lieu of cash for amounts due for management fees, office expenses and advisory fees. The shares had a fair value of approximately $288,167.

On January 19, 2011, the Company issued 11,250 shares of common stock to Spouting Rock Capital Advisors, LLC as payment for investment banking services valued at $2,138 and 63,750 shares of common stock to Cobrador Capital Advisors as payment for investment banking services valued at $12,113.

On February 4, 2011, the Company issued 25,000 shares of common stock to Lambros Piscopos as payment for consulting services valued at $4,750.

On April 21, 2011, the Company authorized the issuance of 150,000 shares of common stock to Marc Holtzman in consideration for serving as a director of the Company.

Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, with a par value of $0.001 per share, under the terms of the Company’s Amended and Restated Articles of Incorporation. As of June 30, 2011, no shares of preferred stock have been issued.

Non-Controlling Interest

The Company included Karlsson’s initial $11,000,000 contribution of property to AWP in non-controlling interest on the balance sheet, net of its share of losses. Through this contribution, Karlsson earned its 50% interest in AWP. While the Company has earned its 50% interest in AWP through its contributions both during and subsequent to this quarter, it will need to contribute an additional $6,800,000 to maintain this interest. As such, the Company did not reduce Karlsson’s non-controlling interest by any amount for the Company’s interest in the contributed property due to the further obligation of contributed capital to maintain the Company’s 50% interest.