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Stockholders' Equity
 12 Months Ended
Dec. 31, 2012
Stockholders' Equity [Abstract]  
Stockholders' Equity

15. Stockholders' Equity

 

Convertible Preferred Stock

 

The Company has three different series of preferred stock outstanding as described below.

 

Series A-1 Convertible Preferred Stock

 

Each share of the Series A-1 convertible preferred stock has a stated value of $1,000 per share and is convertible, at the holder's election, into 1,536 shares of common stock at a conversion price of $0.651 per share. Each share is also entitled to a liquidation and change of control preference equal to the stated value plus any accrued and unpaid dividends and any other fees outstanding. Each share of Series A-1 is entitled to five times the number of votes per share of common stock into which it can be converted. The Series A-1 convertible preferred stock may not be automatically converted into common stock by the Company (unlike the other series of convertible preferred stock that may be automatically converted under the circumstances described below). In the event that the other series of convertible preferred stock are automatically converted prior to the third anniversary of the issuance of the Series A-1 convertible stock, the holders of the Series A-1 convertible preferred stock will be entitled to a payment equal to the then net present value of the future dividend payments such holders would have received up until the third anniversary of the issuance of the Series A-1 convertible preferred stock.

 

In October 2012, 2011 and 2010, the Company issued 862.5 shares of Series A-1 convertible preferred stock, to Northern Comstock LLC ("Northern Comstock"), a related party of the Company, in prepayment of an annual mineral rights lease pursuant to the Northern Comstock LLC operating agreement. Of the total fair value of the convertible preferred stock issued, $2,027,323, $2,092,382 and $419,728 was expensed as an equity-based payment to non-employees for the amount earned during the years ended December 31, 2012, 2011 and 2010, respectively, and a remaining fair value of $1,987,104 and $1,547,677 was recorded as a prepaid expense as of December 31, 2012 and 2011, respectively.

 

Series A-2 Convertible Preferred Stock

 

Each share of the Series A-2 convertible preferred stock has a stated value of $1,000 per share and is convertible, at the holder's election, into 1,536 shares of common stock at a conversion price of $0.651 per share. Each share is also entitled to a liquidation and change of control preference equal to the stated value plus any accrued and unpaid dividends and any other fees outstanding. Each share of Series A-2 convertible preferred stock automatically converts into shares of common stock when the average common stock price exceeds $4.50 per share (for at least 20 trading days during any consecutive 30-trading day period), as adjusted for stock splits and similar transactions. In the event that the Series A-2 is automatically converted prior to the third anniversary of the issuance of the Series A-2 convertible preferred stock, the holders of the Series A-2 convertible preferred stock will be entitled to a payment equal to the then net present value of the future dividend payments such holders would have received up until the third anniversary of the issuance of the Series A-2 convertible preferred stock. Each share entitles the holder to vote with the holders of common stock as a single class on all matters submitted to the vote of the common stock (on an as-converted basis).

 

Series B Convertible Preferred Stock

 

Each share of the Series B convertible preferred stock has a stated value of $1,000 per share and is convertible, at the holder's election, into 606 shares of common stock at a conversion price of $1.65 per share. Each share is also entitled to a liquidation and change of control preference equal to the stated value plus any accrued and unpaid dividends and any other fees outstanding. Each share of Series B convertible preferred stock automatically converts into shares of common stock when the average common stock price exceeds $4.50 per share (for at least 20 trading days during any consecutive 30-trading day period), as adjusted for stock splits and similar transactions. In the event that the Series B convertible preferred stock is automatically converted prior to the third anniversary of the issuance of the Series B convertible preferred stock, the holders of the Series B convertible preferred stock will be entitled to a payment equal to the then net present value of the future dividend payments such holders would have received up until the third anniversary of the issuance of the Series B convertible preferred stock. Each share entitles the holder to vote with the holders of common stock as a single class on all matters submitted to the vote of the common stock (on an as-converted basis).

 

The Series A-1, Series A-2, and Series B convertible preferred stock are senior to all other classes of equity of the Company, in the event of the liquidation or change of control of the Company and, are entitled to semi-annual dividends at a rate of 7.5% per annum, payable in cash, common stock, preferred stock or any combination of the foregoing, at the Company's option. The Series A-1, Series A-2, and Series B convertible preferred stock also contain provisions providing weighted average anti-dilution protection. As of December 31, 2012, there were approximately $2.2 million in arrears of cumulative dividends (($0.05) impact on loss per share at December 31, 2012).

 

As long as 25% or more of the Series A-1, Series A-2, and Series B convertible preferred stock originally issued is outstanding, the Company will be not be permitted, in each case without the consent of the majority of the holders of the Series A-1, Series A-2, and Series B convertible preferred stock, to execute certain strategic and business decisions, as provided in the related preferred stock documents. The Company is currently restricted from declaring or paying common stock dividends in cash under the terms of its convertible preferred stock.

 

In October 2010, the Company issued 35,749 shares of Series B convertible preferred stock for cash of approximately $35.75 million in gross proceeds (approximately $33.2 million net of issuance costs).

 

From January 1, 2013 through March 15, 2013, preferred shareholders converted 2,220 shares of convertible preferred stock into 2,601,021 common shares.

 

Common Stock

 

During the year ended December 2012, the Company declared and issued 2,148,934 shares of common stock in payment of dividends with a fair value of $4,457,262 on the convertible preferred stock. As the Company cannot pay dividends out of accumulated deficits under Nevada laws, the dividends were recorded as a reduction to additional paid-in capital.

 

In January 2013, the Company declared and issued 958,974 shares of common stock in payment of dividends, with a fair value of $2,173,557, on the convertible preferred stock.

 

In February 2012, the Company raised $17.25 million in gross proceeds (approximately $15.3 million, net of issuance costs) through an underwritten public offering of 9,078,948 shares under the Company's Registration Statement on Form S-3, of our common stock at a price of $1.90 per share. Of the total $1.9 million in issuance costs, approximately $1.4 million were related to underwriting expenses and were netted against the total proceeds received by the Company.

 

In November and December 2012, the Company raised $9.30 million in gross proceeds (approximately $8.3 million, net of issuance costs) through an underwritten public offering of 4,246,573 shares under the Company's Registration Statement on Form S-3, of our common stock at a price of $2.19 per share. Of the total $1.0 million in issuance costs, approximately $0.8 million were related to underwriting expenses and were netted against the total proceeds received by the Company.

 

During the year ended December 31, 2012, preferred shareholders converted 1,401 shares of Series A-2 convertible preferred stock and 1,508 shares of Series B convertible preferred stock into 2,152,217 and 913,910 shares of common stock, respectively.

 

On January 11, 2013, the Company's registration statement on Form S-3 filed in December 2012 (the "Registration Statement") was declared effective by the Securities and Exchange Commission (the "SEC"). The Registration Statement covers the offer of up to $50,000,000 of any combination of securities described in the prospectus.