Common Stock | 12 Months Ended |
Dec. 31, 2013 |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' |
Common Stock | ' |
NOTE 11. COMMON STOCK |
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Net Income per Common Share |
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A reconciliation of the components of basic and diluted net income per common share is presented in the tables below: |
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| | For the Year Ended December, 31 | | | | | | | |
| | | 2013 | | | 2012 | | | | | | | |
Income (loss) attributable to common stock | | $ | -26,394,459 | | $ | -3,707,629 | | | | | | | |
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Weighted average number of shares outstanding, basic | | | 30,932,541 | | | 29,378,542 | | | | | | | |
Incremental shares from assumed conversion of dilutive stock options and warrants | | | - | | | - | | | | | | | |
Weighted average number of shares outstanding, diluted: | | | 30,932,541 | | | 29,378,542 | | | | | | | |
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Net Income (loss) per share, basic | | | -0.85 | | | -0.13 | | | | | | | |
Net Income (loss) per share, diluted | | | -0.85 | | | -0.13 | | | | | | | |
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Number of antidilutive stock options and warrants excluded from calculation above | | | 1,754,497 | | | 416,188 | | | | | | | |
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Common Stock Activity |
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During the year ended December 31, 2012, the Company issued an aggregate of 208,599 shares of common stock upon the exercise of outstanding stock options by individuals, including two non-executive employees and a non-employee director. Of the shares issued, 163,500 shares were issued for gross proceeds of $405,256, or $2.48 a share, and 45,099 shares were issued pursuant to “cashless” exercise provisions wherein the intrinsic value of the stock options were delivered to the Company in lieu of cash payment of the exercise price of 70,000 stock options, with a weighted average exercise price $2.38 per share. See “-Stock Option Activity” below. |
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During the year ended December 31, 2012, the Company issued an aggregate of 892,327 shares of common stock upon the exercise of outstanding warrants for which the Company received $4,461,635 of proceeds, or $5.00 per share. In conjunction with the exercise of 213,996 of those warrants, the Company granted three year warrants to purchase an aggregate of 106,997 shares of common stock at $8.00 per share. See “-Warrant Activity” below. |
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On May 24, 2012, the Company sold, in a private placement, an aggregate of 3,089,360 shares of common stock to certain institutional and accredited investors at a price of $6.25 per share, for net proceeds of approximately $18.4 million. |
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During the year ended December 31, 2013, the Company issued an aggregate of 6,500 shares of common stock upon the exercise of outstanding stock options by a former employee. The shares were issued for gross proceeds of $9,945, or $1.53 a share. See “-Stock Option Activity” below. |
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During the year ended December 31, 2013, the Company issued an aggregate of 35,000 shares of common stock upon the exercise of outstanding warrants for gross proceeds of $13,850, or $0.40 per share. See “-Warrant Activity” below. |
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Stock-Based Compensation |
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The Company periodically grants restricted stock and stock options to employees, directors and consultants. The Company is required to make estimates of the fair value of the related instruments when granted and recognize expense over the period benefited, usually the vesting period. |
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In September 2011, the Company’s board of directors adopted, and in June 2012 the Company’s stockholders approved, the Saratoga Resources, Inc. 2011 Omnibus Equity Plan (the “2011 Plan”). The 2011 Plan reserves a total of 3,000,000 shares for issuance to eligible employees, officers, directors and other service providers pursuant to grants of options, restricted stock, performance stock and other equity based compensation agreements. |
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In conjunction with the adoption of the 2011 Plan, the Company’s board of directors approved the termination of the Saratoga Resources, Inc. 2008 Long-term Incentive Plan (the “2008 Plan”) and the Saratoga Resources, Inc. 2006 Employee and Consultant Stock Plan (the “2006 Plan”). At the time of their termination, no awards were outstanding under the 2008 Plan or the 2006 Plan. |
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Stock Option Activity |
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In January 2012, a non-executive employee exercised stock options to purchase 10,000 shares of common stock at $3.00 per share. The stock options were exercised pursuant to “cashless” exercise provisions wherein the intrinsic value of the stock options were delivered to the Company in lieu of cash payment of the exercise price and, as a result, the Company issued an aggregate of 5,275 shares of common stock pursuant to the exercise of the stock options. |
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In March 2012, the Company’s board of directors approved a stock option grant to purchase an aggregate of 5,000 shares of common stock to a non-executive employee. The options are exercisable for a term of seven years at $6.40 per share and vest ½ on the date of grant and ½ on the first anniversary of the grant date. The grant date value of the options was $31,850. The options were valued using the Black-Scholes model with the following assumptions: 296% volatility; 3.75 year estimated life; zero dividends; 0.64% discount rate; and, quoted stock price and exercise price of $6.40. |
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In April 2012, a non-executive employee exercised stock options to purchase 25,000 shares of common stock at $1.53 per share. The stock options were exercised pursuant to “cashless” exercise provisions wherein the intrinsic value of the stock options were delivered to the Company in lieu of cash payment of the exercise price and, as a result, the Company issued an aggregate of 19,650 shares of common stock pursuant to the exercise of the stock options. |
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In May 2012, a non-employee director exercised stock options to purchase 35,000 shares of common stock at $2.80 per share. The stock options were exercised pursuant to “cashless” exercise provisions wherein the intrinsic value of the stock options were delivered to the Company in lieu of cash payment of the exercise price and, as a result, the Company issued an aggregate of 20,174 shares of common stock pursuant to the exercise of the stock options. |
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In June 2012, the Company’s board of directors approved stock option grants to purchase an aggregate of 105,000 shares of common stock to non-employee directors. The options are exercisable for a term of seven years at $6.65 per share and vest ½ on the date of grant and ½ on the first anniversary of the grant date. The grant date value of the options was $695,100. The options were valued using the Black-Scholes model with the following assumptions: 292% volatility; 3.75 year estimated life; zero dividends; 0.50% discount rate; and, quoted stock price and exercise price of $6.65. |
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During the year ended December 31, 2012, stock options to purchase 163,500 shares of common stock at prices ranging from $1.53 to $3.00 were exercised for cash proceeds totaling $405,255. |
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In April 2013, the Company’s management approved a stock option grant to purchase an aggregate of 75,000 shares of common stock to two non-executive employees. The options are exercisable for a term of seven years at prices ranging from $2.34 to $2.42 per share and vest 1/3 on each of the first three grant date anniversaries. The grant date value of the options was $178,200. The options were valued using the Black-Scholes model with the following assumptions: 240% volatility; 4.5 year estimated life; zero dividends; 0.60% to 0.62% discount rate; and, quoted stock price and exercise price of $2.34 to $2.42. |
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In June 2013, the Company’s board of directors approved a stock option grant to purchase an aggregate of 500,000 shares of common stock to two executive officers. The options are exercisable for a term of five years at $3.00 per share and vest 1/8 per quarter. The grant date value of the options was $505,000. The options were valued using the Black-Scholes model with the following assumptions: 83% volatility; 3.06 year estimated life; zero dividends; 0.57% discount rate; and, quoted stock price of $2.18. |
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In June 2013, the Company’s board of directors approved a stock option grant to purchase an aggregate of 105,000 shares of common stock to non-employee directors. The options are exercisable for a term of seven years at $2.18 per share and vest ½ on the date of grant and ½ on the first anniversary of the grant date. The grant date value of the options was $174,300. The options were valued using the Black-Scholes model with the following assumptions: 121% volatility; 3.75 year estimated life; zero dividends; 0.77% discount rate; and, quoted stock price and exercise price of $2.18. |
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In July 2013, the Company’s management approved a stock option grant to purchase an aggregate of 60,000 shares of common stock to a non-executive employee. The options are exercisable for a term of seven years at price of $1.53 per share and vest 1/3 on each of the first three grant date anniversaries. The grant date value of the options was $90,600. The options were valued using the Black-Scholes model with the following assumptions: 231% volatility; 4.5 year estimated life; zero dividends; 1.18% discount rate; and, quoted stock price and exercise price of $1.53. |
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In August 2013, the Company’s management approved a stock option grant to purchase an aggregate of 90,000 shares of common stock to a non-executive employee. The options are exercisable for a term of seven years at price of $1.72 per share and vest 1/3 on each of the first three grant date anniversaries. The grant date value of the options was $150,300. The options were valued using the Black-Scholes model with the following assumptions: 204% volatility; 4.5 year estimated life; zero dividends; 1.18% discount rate; and, quoted stock price and exercise price of $1.72. |
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During the year ended December 31, 2013, stock options to purchase 6,500 shares of common stock at $1.53 per share were exercised for cash proceeds totaling $9,945. |
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Stock based compensation expense attributable to common shares and grants of options was $1,001,160 and $1,205,919, during the years ended December 31, 2013 and 2012, respectively. The unamortized amount of stock-based compensation that had not been recorded was $614,885 and $517,646 as of December 31, 2013 and 2012, respectively. |
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The following table presents the options outstanding at December 31, 2013: |
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| Number of | | Weighted | | Weighted | | Weighted | | Aggregate |
Shares | Average | Average | Average | Intrinsic |
Underlying | Exercise | Grant | Remaining | Value (1) |
Options | Price per | Date Fair | Contractual | |
| Share | Value per | Life (in | |
| | Share | Years) | |
Outstanding at December 31, 2011 | | 982,500 | | $ | 3.09 | | $ | 3.07 | | 7.6 | | $ | 4,133,025 |
Granted | | 110,000 | | | 6.64 | | | 6.61 | | 0.6 | | | - |
Exercised | | -233,500 | | | 2.45 | | | 2.38 | | - | | | - |
Forfeited | | -75,000 | | | 4.26 | | | 4.26 | | - | | | - |
Outstanding at December 31, 2012 | | 784,000 | | $ | 3.66 | | $ | 3.65 | | 6.5 | | $ | 474,240 |
Granted | | 830,000 | | | 2.6 | | | 1.32 | | 5.2 | | | - |
Exercised | | -6,500 | | | 1.53 | | | 1.53 | | - | | | - |
Forfeited | | - | | | - | | | - | | - | | | - |
Outstanding at December 31, 2013 | | 1,607,500 | | | 3.13 | | | 2.46 | | 5.4 | | | 39,000 |
Exercisable at December 31, 2013 | | 875,000 | | $ | 3.43 | | $ | 3.1 | | 5.4 | | $ | 39,000 |
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(1) The intrinsic value of an option is the amount by which the market value of our common stock at the indicated date, or at the time of exercise, exceeds the exercise price of the option. On December 31, 2013, the last reported sales price of our common stock on the NYSE MKT was $1.14 per share. |
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The following table summarizes information about stock options outstanding and exercisable at December 31, 2013: |
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Options Outstanding and Exercisable | | | | | |
Exercise | | Number of | | Weighted | | Weighted | | | | | |
Price | Shares | Average | Average | | | | | |
| Underlying | Exercise | Remaining | | | | | |
| Options | Price per | Contractual | | | | | |
| | Share | Life (in | | | | | |
| | | Years) | | | | | |
$ | 0.36 | | 50,000 | | $ | 0.01 | | 0.16 | | | | | |
| 1.39 | | 10,000 | | | 0.01 | | 0.01 | | | | | |
| 1.53 | | 100,000 | | | 0.1 | | 0.4 | | | | | |
| 1.71 | | 2,500 | | | 0 | | 0.01 | | | | | |
| 1.72 | | 90,000 | | | 0.1 | | 0.37 | | | | | |
| 2.18 | | 105,000 | | | 0.14 | | 0.42 | | | | | |
| 2.34 | | 15,000 | | | 0.02 | | 0.06 | | | | | |
| 2.42 | | 60,000 | | | 0.09 | | 0.23 | | | | | |
| 2.75 | | 30,000 | | | 0.05 | | 0.14 | | | | | |
| 3 | | 755,000 | | | 1.41 | | 2.09 | | | | | |
| 3.05 | | 70,000 | | | 0.13 | | 0.18 | | | | | |
| 4.59 | | 150,000 | | | 0.43 | | 0.05 | | | | | |
| 4.62 | | 30,000 | | | 0.09 | | 0.09 | | | | | |
| 5.11 | | 30,000 | | | 0.1 | | 0.09 | | | | | |
| 6.4 | | 5,000 | | | 0.02 | | 0.02 | | | | | |
| 6.65 | | 105,000 | | | 0.43 | | 0.36 | | | | | |
| | | 1,607,500 | | $ | 3.13 | | 5.08 | | | | | |
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Warrant Activity |
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In January 2012, an investor exercised a warrant, originally issued in April 2011, to purchase 500,000 shares of common stock at $5.00 per share for proceeds of $2,500,000. |
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In May 2012, investors exercised warrants, originally issued in April 2011, to purchase 213,996 shares of common stock at $5.00 per share for proceeds of $1,069,980. In conjunction with the exercise of these warrants, the Company granted three year warrants to purchase an aggregate of 106,997 shares of common stock at $8.00 per share. |
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In June and July 2012, investors exercised warrants, originally issued in April 2011, to purchase 178,331 shares of common stock at $5.00 per share for proceeds of $891,655. |
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In May and July 2013 service providers exercised warrants, originally issued in 2008, to purchase 35,000 shares of common stock at prices ranging from $0.17 to $1.75 per share for total proceeds of $13,850. |
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The following table presents the warrants outstanding at December 31, 2013: |
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| Number of | | Weighted | | Weighted | | Weighted | | Aggregate |
Shares | Average | Average | Average | Intrinsic |
Underlying | Exercise | Grant | Remaining | Value (1) |
Warrants | Price per | Date Fair | Contractual | |
| Share | Value per | Life (in | |
| | Share | Years) | |
Outstanding at December 31, 2011 | | 1,357,958 | | $ | 4.82 | | $ | 2.61 | | 1.4 | | $ | 3,365,703 |
Granted | | 106,997 | | | 8 | | | 6.2 | | 0.4 | | | - |
Exercised | | -892,327 | | | 5 | | | 2.65 | | - | | | - |
Forfeited | | - | | | - | | | - | | - | | | - |
Outstanding at December 31, 2012 | | 572,628 | | $ | 5.14 | | $ | 3.22 | | 0.8 | | $ | 132,900 |
Granted | | - | | | - | | | - | | - | | | - |
Exercised | | -35,000 | | | 0.4 | | | 0.22 | | - | | | - |
Forfeited | | -390,630 | | | 5 | | | 2.69 | | - | | | - |
Outstanding at December 31, 2013 | | 146,998 | | $ | 6.64 | | $ | 5.33 | | 1.4 | | $ | - |
Exercisable at December 31, 2013 | | 146,998 | | $ | 6.64 | | $ | 5.33 | | 1.4 | | $ | - |
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(1) The intrinsic value of a warrant is the amount by which the market value of our common stock at the indicated date, or at the time of exercise, exceeds the exercise price of the warrant. On December 31, 2013, the last reported sales price of our common stock on the NYSE MKT was $1.14 per share. |
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The following table summarizes information about stock warrants outstanding and exercisable at December 31, 2013: |
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Warrants Outstanding and Exercisable | | | | | |
Exercise | | Number of | | Weighted | | Weighted | | | | | |
Price | Shares | Average | Average | | | | | |
| Underlying | Exercise | Remaining | | | | | |
| Warrants | Price per | Contractual | | | | | |
| | Share | Life (in | | | | | |
| | | Years) | | | | | |
$ | 3 | | 40,000 | | $ | 0.82 | | 0.35 | | | | | |
| 8 | | 106,998 | | | 5.82 | | 1.01 | | | | | |
| | | 146,998 | | $ | 6.64 | | 1.36 | | | | | |