Series B Mandatorily Redeemable Preferred Stock

3 Months Ended

Mar. 31, 2017

Other Liabilities And Shares Subject To Mandatory Redemption [Abstract]

Series B Mandatorily Redeemable Preferred Stock

8.  SERIES B MANDATORILY REDEEMABLE PREFERRED STOCK

In August 2014, the Company closed on a private placement offering of its mandatorily redeemable Series B Preferred Stock. The financing, was funded in installments and completed on December 24, 2015. As of December 31, 2015, the Company had issued 35,000 shares of its Series B Preferred Stock. The Company has classified the Series B Preferred Stock as a liability in accordance with ASC Topic No. 480, “Distinguishing Liabilities from Equity,” which states that mandatorily redeemable financial instruments should be classified as liabilities and therefore the related dividend payments are treated as a component of interest expense in the accompanying consolidated statements of operations.

The Series B preferred stock has a $0.01 par value and a $1,000 liquidation preference. The Series B preferred stock shall be redeemed through a cash payment of the face value of the shares outstanding at redemption. The preferred return on the funds invested is 14% and shall be paid on a monthly basis. The Series B Preferred Stock is scheduled to be redeemed on August 1, 2017; however, the Company has two one year options to extend the redemption date. The Company incurred approximately $3.1 million in legal and underwriting costs related to this transaction. These costs have been recorded as deferred financing costs on the accompanying consolidated balance sheets as a direct deduction from the carrying amount of that debt liability and are being amortized over the term of the agreement. Amortization expense totaling approximately $254,000 and $254,000 was included in interest expense for the three months ended March 31, 2017 and 2016 in the accompanying consolidated statement of operations. The unamortized deferred stock costs totaled $338,000 and $592,000 as of March 31, 2017 and December 31, 2016, respectively.

During 2016, the Company redeemed 300 shares in June, 1,000 shares in July and 1,000 shares in August for a total of $2.3 million. During the three months ended March 31, 2017, the Company redeemed 1,000 shares for $1.0 million. As of March 31, 2017, the remaining outstanding share balance was 31,700.  On August 1, 2017, the redemption date, $31.7 million is due with two one year options to extend the redemption date at a cost of .05% per extension.