8. Stockholders' Equity

9 Months Ended

Sep. 30, 2015

Notes

8. Stockholders' Equity

8.  STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of preferred stock.  These shares may be issued in series with such rights and preferences as may be determined by the Board of Directors.

Series A Convertible Redeemable Preferred Stock

The Company’s Board of Directors has authorized 2,000,000 shares of $2.00 stated value, Series A Preferred Stock.  The preferred stock has a senior liquidation preference value of $2.00 per share, has no voting or redemption rights and does not accrue dividends.

As of September 30, 2015 and December 31, 2014, the Company has 200,500 shares of Series A Preferred stock outstanding.

Series D Convertible Preferred Stock

The Company has established a class of preferred stock designated “Series D Convertible Preferred Stock” (Series D preferred stock) and authorized an aggregate of 1,000,000 non-voting shares with a stated value of $1.00 per share.  Holders of the Series D preferred stock are entitled to receive dividends at the annual rate of eight percent (8%) based on the stated value per share computed on the basis of a 360 day year and twelve 30 day months.  Dividends are cumulative, shall be declared quarterly, and are calculated from the date of issue and payable on the fifteenth day of April, July, October and January.  The dividends may be paid, at the option of the holder either in cash or by the issuance of shares of the Company’s common stock valued at the market price on the dividend record date.  Shares of the Series D preferred stock are redeemable at the Company’s option.  At the option of the holder, shares of the Series D preferred stock plus any declared and unpaid dividends are convertible to shares of the Company’s common stock at a conversion rate of $1.00 per share.

During April 2014, holders of 325,000 shares of Series D Preferred Stock converted their shares to the Company’s common stock.  As of September 30, 2015, the Company had 375,000 shares of Series D preferred stock outstanding.

Dividends of $7,561 were declared on September 30, 2015.  All quarterly dividends previously declared have been paid.

Common Stock

On March 14, 2014, the Company completed its private offering of common stock which commenced on December 4, 2013.  The Company sold an aggregate of 4,776,115 shares of common stock at $0.75 per share for gross proceeds of $3,190,717 during 2014.  Of the total subscriptions, $153,432 in principal and accrued interest of notes were exchanged for shares, 150,000 shares were issued in consideration for a 100% membership interest in Scottsburg Investors, LLC, which initially owned a 32.5% membership interest in Wood Moss, and the balance was received in cash.  After deducting $285,501 for placement agent fees, non-accountable expense allowance, and expense reimbursements, the Company realized net cash proceeds of $2,905,216 during 2014.  In addition, the Company granted to the placement agent warrants equal to 10% of the number of shares sold in the offering, exercisable for five years at an exercise price of $0.75 per share of common stock.

A dividend of $0.01 per outstanding share of common stock (a total of $218,317) was declared in March 2015 and paid in April 2015.  In June 2015, a dividend of $0.01 per outstanding share of common stock (a total of $222,463) was declared and paid in July 2015.

The Company issued 16,601 shares of common stock to an officer for compensation during the three months ended September 30, 2015.  The fair value of the common stock issued for compensation was measured at the volume weighted average price of the Company’s common stock for the ten trading days prior to issuance.  The fair value of the shares in the amount of $14,667 was recognized as general and administrative expense in the consolidated statements of operations.

The Company issued 44,668 shares of common stock to an employee for compensation during the nine months ended September 30, 2014.  The fair value of common stock issued for compensation was measured at the market price on the date of grant and the fair value of the shares was recognized as general and administrative expense in the consolidated statement of operations on the date of grant.

Restricted Stock Awards

The following table summarizes the restricted stock unit activity during the nine months ended September 30, 2015.

Outstanding Non-Vested Restricted Stock Units  January 1, 2015	-
Granted	251,549
Vested	(201,549)
Cancelled / Forfeited	(50,000)
Outstanding Non-Vested Restricted Stock Units  September 30, 2015	-

In connection with these non-employee director restricted stock grants, the Company recognized stock-based compensation of $21,667 and $179,999 for the three and nine months ended September 30, 2015.  There was no restricted stock unit activity during the nine months ended September 30, 2014.

Common Stock Warrants

As of September 30, 2015, the Company had 2,862,739 of outstanding warrants to purchase common stock at a weighted average exercise price of $0.76.  Activity related to common stock warrants follows:

	Number of Warrants	Weighted Average Exercise Price
Balance at January 1, 2015	3,541,731	$ 0.74
Exercised	(22,242)	0.65
Cashless Exercise	(466,300)	0.75
Expired	(131,453)	0.50
Balance at September 30, 2015	2,921,736	$ 0.76