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PREFERRED STOCK
 12 Months Ended
Dec. 31, 2015
PreferredStockAbstract  
PREFERRED STOCK

9.25% Series A Cumulative Redeemable Preferred Stock - On October 23, 2014, the Company held an initial closing of its public offering of 9.25% Series A Cumulative Redeemable Preferred Stock, no par value per share, with a liquidation preference of $25.00 per share (the “Series A Preferred Stock”). The Company issued 477,273 shares at a public offering price of $22.00 per share, for gross proceeds of $10,500,006. On October 24, 2014, the Company held an additional closing for 30,466 shares of Series A Preferred Stock at a public offering price of $22.00 per share for gross proceeds of $670,252. In total, the Company received $10,430,894 net of the underwriters’ discount and underwriters’ expenses. Proceeds net of all expenses were $9,983,335.  Preferred stock is also net of $25,118 in costs through December 31, 2014 to initiate an At Market Issuance Sales Agreement (“Sales Agreement”) (see Note 23 – At Market Security Sales).  The $870,386 increase to preferred stock during 2015 represents the net proceeds from the sale of 46,857 shares (37,769 shares sold under the Sales Agreement during the quarter ended March 31, 2015 and 9,088 shares sold during the quarter ended June 30, 2015).  The shares of Series A Preferred Stock trade on the NYSE MKT under the symbol “YUMAprA”. The Series A Preferred Stock cannot be converted into common stock (except upon a change in control and in the event the Company chooses to not redeem the Series A Preferred Stock), but may be redeemed by the Company, at the Company’s option, on or after October 23, 2017 (or in certain circumstances, prior to such date as a result of a change in control of the Company), at a redemption price of $25.00 per share plus any accrued and unpaid dividends.  The Series A Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption, and will remain outstanding indefinitely unless repurchased, redeemed or converted into common stock in connection with a change in control.  Holders of the Series A Preferred Stock are entitled to receive, when, as and if declared by the Board of Directors, cumulative dividends at the rate of 9.25% per annum (the dividend rate) based on the liquidation price of $25.00 per share of the Series A Preferred Stock, payable monthly in arrears on each dividend payment date, with the first payment date of December 1, 2014.  The Series A Preferred Stock is presented in the permanent equity section of the financial statements.

 

Dividends on the Series A Preferred Stock are declared monthly based on the assessment of the Company’s financial position by the Board of Directors.  Due to the current depressed commodity price environment as well as other factors which have adversely affected the Company’s cash flows and liquidity, the monthly dividends on the Series A Preferred Stock were suspended beginning with the month ended November 30, 2015 until such time as the Company and the Board of Directors have deemed that the Company has sufficient liquidity to restore their payment.

 

Pursuant to the merger agreement with Davis, the Company has agreed as part of the reincorporation from California to Delaware, subject to approval of the holders of Series A Preferred Stock, to convert each share of the Company’s existing Series A Preferred Stock into 35 shares of common stock prior to giving effect for the reverse split (3.5 shares post reverse split). See Note 24 – Subsequent Events for a discussion of the merger agreement with Davis. 

 

Series A and Series B Preferred Stock of Yuma Co. – Prior to the closing of the merger on September 10, 2014, Yuma Co. had two classes of preferred stock outstanding, the Series A and Series B.  Immediately prior to the closing of the merger, these shares of preferred stock were converted to common stock of Yuma Co.  At the closing of the merger, the common stock of Yuma Co. was converted into common stock of the Company.

 

The Series A and Series B Preferred Stock is presented on the Company’s balance sheet between Other Noncurrent Liabilities and Equity (the mezzanine section) since it has characteristics of both debt and equity.  The carrying amount on the Company’s balance sheets represents the net proceeds increased by accretion of stock issue costs less the value at time of origination of the embedded conversion feature.  The accretion of issue costs increased the Preferred Stock by amortizing the costs to equity through the trigger date for the Company’s repurchase of such shares.

 

On June 30, 2013, December 31, 2013, and June 30, 2014, Yuma Co. elected to pay the semi-annual dividends to the preferred stockholders in additional shares of preferred stock (in kind), with cash payments being made in lieu of any fractional shares.  The following shares and cash payments were issued to the existing preferred stockholders as of the record dates:

 

    June 30, 2013     December 31, 2013     June 30, 2014  
    Additional           Additional           Additional        
    preferred     Cash     preferred     Cash     preferred     Cash  
    shares     payments     shares     payments     shares     payments  
                                     
Series A Preferred Stock     403     $ 35,150       630     $ 45,360       893     $ 45,280  
Series B Preferred Stock     533     $ 24,700       533     $ 40,690       536     $ 53,680  

 

On September 15, 2014, the Company made the final cash dividend payment to the holders of record of the Series A and Series B Preferred Stock.  The amount of the preferred stock dividends paid was as follows:

 

Series A Preferred Stock Dividends   $ 214,903  
Series B Preferred Stock Dividends     131,289  
Total Dividends   $ 346,192  

 

The payment in kind to preferred stockholders was recorded at fair value using the valuation of the common stock performed by an outside consulting firm as further described in Note 8 – Fair Value Measurements, at the preferred conversion rate to common stock as of June 30, 2013 and December 31, 2013.  Components of the total fair value of $4,133,380 for fiscal year 2014 and $5,412,281 for fiscal year 2013 for the preferred stock dividends consist of:

 

    December 31, 2014     December 31, 2013  
    Additional           Additional        
    preferred     Dividends     preferred     Dividends  
    shares     in kind     shares     in kind  
                         
Series A Preferred Stock     893     $ 3,299,603       1,033     $ 3,779,521  
Series B Preferred Stock     536     $ 833,777       1,066     $ 1,632,760  

 

Yuma Co. issued the above additional preferred shares to each class of preferred stock.  The outstanding shares at December 31, 2014 and 2013 are as follows:

 

                Shares           Shares     Shares  
          2013     outstanding     2014     converted to     outstanding  
    Original     stock     December 31,     stock     common stock     December 31,  
    shares     dividends     2013     dividends     in 2014     2014  
                                     
Series A Preferred Stock     14,605       1,033       15,638       893       (16,531 )     -  
Series B Preferred Stock     18,590       1,066       19,656       536       (20,192 )     -  

 

At the closing of the merger, the shares of Series A and Series B preferred stock were converted to common stock as reflected in the table below.

 

    Number     Conversion     Conversion        
    of     ratio to     ratio to     Number  
    preferred     Yuma Co.     Company     of  
    shares     common stock     common stock     shares  
                         
Series A Preferred Stock     16,531       1.207101257       757.3374389993       15,112,295  
Series B Preferred Stock     20,192       .508185000       757.3374389993       7,771,192