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Stock-Based Compensation
12 Months Ended
Dec. 31, 2014
Stock Based Compensation [Abstract]  
STOCK-BASED COMPENSATION

19.   STOCK-BASED COMPENSATION

 

On August 4, 2014, the Board appointed Michael Feinsod as Chairman of the Board and approved the issuance of common stock to Infinity Capital, LLC (“Infinity Capital”), an investment management company Mr. Feinsod founded in 1999 (the “Feinsod Agreement”). 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. The Board also approved terms that may result in the issuance of additional common stock to Infinity Capital, provided Mr. Feinsod meets specific performance criteria, which could include: (i) the issuance of 1,000,000 shares of the Company’s common stock to Infinity Capital upon the uplisting of the Company’s common stock; (ii) the issuance of 150,000 shares of common stock to Infinity Capital on August 4, 2015, provided that Mr. Feinsod remains a member of the Board on that date, and (iii) the issuance of 150,000 shares of common stock to Infinity Capital on August 4, 2016, provided that Mr. Feinsod remains a member of the Board on that date. The Feinsod Agreement requires the issuance of a number of shares of common stock to Infinity Capital equal to 10% of any new issuance not to exceed 600,000 shares of common stock in the aggregate during the time that Mr. Feinsod remains a member of the Board, which will not be triggered upon issuances relating to convertible securities existing as of the date hereof.

 

Pursuant to the Feinsod Agreement, for accounting purposes, shares issued to Mr. Feinsod have been accounted for as compensation for his services performed as a member of the Board (See Note 18). On the date of issue, the 200,000 shares issued to Infinity Capital had an initial fair value of $1,040,000, based on a closing price per share of the Company of $5.20 on August 4, 2014. The 150,000 shares the Company believes it will issue to Mr. Feinsod on both August 4, 2015 and August 4, 2016 had a total fair value of $1,560,000, based on a closing price per share of the Company of $5.20 on August 4, 2014. Due to restrictions in the ability to trade the Company’s shares, a discount of fifteen percent (15%) was applied to the fair value of the shares the Company issued and anticipates issuing to Infinity Capital and the net amount is being amortized over the relative service periods.

 

In connection with the 200,000 shares issued to Infinity Capital on August 4, 2014, approximately $884,000 and was recorded to stock-based compensation for the year ended December 31, 2014. In connection with the 300,000 shares the Company anticipates it will issue to Mr. Feinsod to remain as a member of the Board through at least August 4, 2016, approximately $414,000 was recorded to accrued stock payable and to stock compensation expense for the year ended December 31, 2014. At December 31, 2014, the Company’s unrecognized compensation expense in connection with the Feinsod Agreement was approximately $912,000. In connection with the Feinsod Agreement, the Company anticipates that it will record stock compensation expense of approximately $718,000 in 2015 and $194,000 in 2016. If the Company’s stock had been uplisted at December 31, 2014, the estimated additional liability recognized by the Company would have been approximately $1,000,000, based on a closing price per share of $1.00 at December 31, 2014, however, no liability or expense was recognized.

 

On October 29, 2014, the Board authorized the adoption of the Company's 2014 Equity Incentive Plan (the “Plan”), which, subject to stockholder approval, is designed to provide an additional incentive to executives, employees, directors and key consultants, aligning the long term interests of participants in the Plan with those of the Company and the Company's stockholders. The Plan provides that up to 10 million shares of the Company's common stock may be issued under the Plan.

 

Also on October 29, 2014, the Board granted certain Plan participants 175,000 non-qualified options to purchase shares of the Company's common stock pursuant to the Plan. As the Plan has not yet been approved by the Company's stockholders, the options are not considered to have been approved and therefore not granted. If approved by the shareholders, the options will vest immediately and will be valued and recorded as stock-based compensation on such date. If stockholder approval of the Plan is not obtained, the options will be cancelled and deemed void. Had stockholder approval of the Plan not been necessary, the Company estimated that stock compensation expense would have increased by approximately $150,000 for the year ended December 31, 2014.