Stockholders' Equity

12 Months Ended

Dec. 31, 2014

Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

15.   STOCKHOLDERS’ EQUITY

Common Stock

On June 30, 2013, ACSI sold 12,400,000 shares at a price of $0.001 per share to investors (see Note 18). On August 14, 2013, the stockholders of ACSI exchanged 12,400,000 shares of their ACSI common stock for 12,400,000 shares of the Company’s common stock.

Between July 11, 2013 and August 8, 2013, the Company issued 707,000 shares of its common stock for cash consideration of $1.00 per share.

Upon recapitalization of the Company on August 14, 2013, the Company issued 9,724,200 shares of its common stock and recorded a reduction of additional paid-in capital of $10,663. On August 14, 2013, the Company purchased 8,000,000 shares of its outstanding common stock from a former officer of the Company for $100,000. These shares were then cancelled and returned to the status of authorized but unissued shares.

Between August 14, 2013 and September 19, 2013, the Company issued 266,000 shares of its common stock for cash consideration of $1.00 per share.

On December 9, 2013, the Company issued 40,000 shares of its common stock for the creation of tailored multimedia.

On January 5, 2014, the Company re-acquired 1,750,000 shares of its common stock for no consideration from existing common stockholders. The re-acquired shares were returned to the Company’s, authorized but unissued share account. The $1,750 gain on the return of these shares of common stock has been charged to stockholders’ equity.

On August 4, 2014, the Company approved the Feinsod Agreement and the board of directors of the Company (the “Board”) approved the issuance of 200,000 shares of the Company’s common stock, with a par value of $0.001 per share to Infinity Capital, LLC (“Infinity Capital”) (See Note 19).

On December 2, 2014, the Company entered into a settlement agreement with a former stockholder whereby an aggregate of 1,185,000 shares of the Company’s common stock were returned to the Company. As of December 22, 2014, the shares were returned and cancelled.

On December 12, 2014, the Company agreed to issue 50,000 shares of its common stock to an unrelated party for architectural services. The value of the shares have a fair value of approximately $50,000 on the date of the agreement, which was recorded to CIP and to accrued stock payable as of December 31, 2014 (See Note 7).

Through December 31, 2014, seven of the January 2014 Issuance note holders converted their loan notes with principal balances totaling $485,000 and accrued interest of approximately $4,000 into 97,733 shares of the Company’s common stock at a conversion price of $5.00 per share.

Warrants

Warrants consists of the following at December 31, 2014:

	Exercise  Price		Warrants  Outstanding		Weighted  Average  Life of  Outstanding Warrants in Months		Date of  Expiration
Series A Warrants	$	10.00		973,000		19	7/31/2016
Series B Warrants		5.00		42,700		46	10/31/2018
Series C Warrants		4.00		1,400,000		25	1/21/2017
Evans Warrants		4.40		600,000		22	10/21/2016
Spector Warrants		4.40		150,000		23	12/12/2016
	$	5.95		3,165,700		23

Series A Warrants

Between July 11, 2013 and August 8, 2013, the Company issued 707,000 shares of its common stock and 707,000 fully-vested Series A Warrants for cash consideration of $1.00 per share. Each Series A Warrant entitles the holder to purchase one share of the Company’s common stock at a price of $10.00 per share. The Series A Warrants expire on the earlier of August 1, 2016, or twenty days following written notification from the Company that its common stock had a closing bid price at or above $12.00 for any ten consecutive trading days. This condition has been met as of April 30, 2014; however, the Company has chosen not to force this conversion feature at this time.

Between August 14, 2013 and September 19, 2013, the Company issued an additional 266,000 shares and 266,000 fully-vested Series A Warrants of its common stock for cash consideration of $1.00 per share. The Series A Warrants expire on the earlier of August 1, 2016, or twenty days following written notification from the Company that its common stock had a closing bid price at or above $12.00 for any ten consecutive trading days. This condition has been met as of April 30, 2014; however, the Company has chosen not to force this conversion feature at this time. At December 31, 2014, there were 973,000 Series A Warrants issued and outstanding.

Series B Warrants

In December 2013 and January 2014, the Company issued 213.5 fully-vested Series B Warrants, convertible to 42,700 shares of its common stock, to a broker-dealer as compensation for placement of convertible notes payable totaling $2,135,000. Each Series B Warrant allows the holder to purchase 200 shares of the Company’s common stock at an exercise price of $5.00 per share at any time on or before October 31, 2018. At the time the warrants were issued, they had an estimated fair market value of approximately $84,000, based on the Black-Scholes pricing model which has been recognized on a relative fair value basis as part of the debt discount of approximately $1,689,000 related to this note issuance, and is being amortized over the life of the notes from January 29, 2014 through October 31, 2018 on a straight-line basis that approximates the effective interest method. At December 31, 2014, there were 213.5 Series B Warrants issued and outstanding in respect of 42,700 shares of the Company’s common stock.

Series C Warrants

On January 21, 2014, the Company issued to Full Circle, for $500,000, fully-vested warrants which allow Full Circle to purchase up to 1,000,000 shares of the Company’s common stock at any time on or prior to January 21, 2017 at a price of $5.50 per share. As part of the $500,000 proceeds from the warrant being issued to Full Circle, $100,000 was retained by Full Circle to cover legal and deal related expenses of future financing transactions, which was recorded as deferred financing costs (See Note 10). On September 24, 2014, the Company and Full Circle entered into Amendment No. 1 to the SPA, which changed the exercise price of the warrants issuable to $4.00 per share of the Company’s common stock, and increased the amount of warrants issuable to 1,400,000 warrants to purchase shares of the Company’s common stock. At December 31, 2014, there were 1,400,000 Series C Warrants issued and outstanding (See Notes 14 and 16).

Evans Warrants

On October 21, 2014, 6565 E. Evans Avenue, LLC (“6565 LLC”), a wholly-owned subsidiary the Company, purchased a commercial real estate property located in Denver, Colorado for approximately $1,100,000. The Company issued fully-vested warrants to Evans Lendco, LLC to purchase 600,000 shares of the Company’s common stock at a conversion price of $4.40 per share, subject to customary adjustments in the event of reclassification of the Company, consolidation of the Company, merger, subdivision of shares of the Company’s common stock, combination of shares of the Company’s common stock or payment of dividends in the form of the Company’s common stock (the “Evans Warrants”). The Evans Warrants expire two years after their initial issuance date. On the date of grant, the Evans Warrants had a relative fair value of approximately $418,000 based on the Black-Scholes pricing model, which was recorded on a relative fair value basis as debt discount to the Greenhouse Mortgage and is being amortized over the life of the mortgage on a straight-line basis that approximates the effective interest method.

Spector Warrants

On December 12, 2014, the Company engaged Spector Group, to act as the design architect for The Greenhouse, the Company’s shared workspace facility located at 6565 East Evans Avenue, Denver, Colorado 80224. The Spector Group’s design of The Greenhouse will become the model for future locations. In connection with this agreement, the Company issued to Spector Group fully-vested warrants to purchase 150,000 shares of the Company’s common stock at a conversion price of $4.40 per share, subject to customary adjustments in the event of reclassification of the Company, consolidation of the Company, merger, subdivision of shares of the Company’s common stock, combination of shares of the Company’s common stock or payment of dividends in the form of the Company’s common stock (the “Spector Warrants”). The Spector Warrants expire two years after their initial issuance date. On the date of grant, the Spector Warrants had a fair value of approximately $60,000 based on the Black-Scholes pricing model, which was capitalized to CIP (See Note 7).

The following tables summarize the changes warrants issued and outstanding for the year ended December 31, 2014 and 2013 Fiscal Period:

	2014		2013
Beginning balance		983,600		973,000
Warrants issued to placement agent – Series B Warrants		32,100		10,600
Warrants issued to Full Circle for $500,000 consideration – Series C Warrants		1,000,000		-
Additional warrants issued to Full Circle		400,000		-
Warrants issued to Evans Lendco related to Greenhouse Mortgage		600,000		-
Warrants issued to Spector Group for services		150,000		-
Ending balance, December 31		3,165,700		983,600

Fair Value of Warrants

Fair value is generally based on independent sources such as quoted market prices or dealer price quotations. To the extent certain financial instruments trade infrequently or are non-marketable securities, they may not have readily determinable fair values. The Company estimated the fair value of the warrants using a Black-Scholes option pricing model and available information that management deems most relevant. The stock price is the closing price of the Company’s stock on the valuation date; the risk-free interest rate is based on the U.S. Government Securities average rate for five or two-year maturities on the date of issuance; the volatility is a statistical measure (standard deviation) of the tendency of the Company’s stock price to change over time; the exercise price is the price at which the Warrants can be purchased by exercising prior to expiration; the dividend yield is not applicable due to the Company not intending to declare dividends; the expected term is based on the contractual life of the warrants; and the fair market value is value of the warrants based on the Black Scholes model on the valuation date. The following assumptions were used to derive the value of the each of the following warrants granted using the Black-Scholes pricing model:

	Series B			Evans			Spector
Grant date		1/29/2014			10/21/2014			12/12/2014
Stock price on Grant date	$	13.75		$	3.75		$	1.11
Risk-free interest rate		1.81	%		0.56	%		0.56	%
Expected dividend yield		0.00	%		0.00	%		0.00	%
Expected term (in years)		4.8			2.0			2.0
Expected volatility		171	%		129	%		129	%

From July through September 2013, the Company issued the Series A Warrants in conjunction with its sale of 973,000 shares of its common stock for $1.00 per share and recorded $973,000 to equity. The Series A Warrants were not distinctly valued. The Series C Warrants were valued using the lattice method (see Note 16). The intrinsic value of the warrants was $0 and $0 at December 31, 2014 and 2013, respectively.