| An offering statement pursuant to Regulation A relating to these securities has been filed with the Securities and Exchange Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any state in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such state. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending you a notice within two business days after the completion of our sale to you that contains the URL where the Offering Circular was filed may be obtained.
Preliminary Offering Circular
Subject
to Completion. Dated January 22 , 2016
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Stack-It Storage, Inc.
Minimum offering of 1,000,000 shares / Maximum offering of 10,000,000 shares
This is a public offering of shares of common stock of Stack-It Storage, Inc.
The
offering will be at a fixed price of $0.70 per share. The end date of the
offering will be April 15, 2016 (unless extended by the Company, in its own discretion, for up to another 60 days).
Our
common stock currently trades on the OTC Pink market under the symbol “STAK” and the closing price of our common stock
on January 21 , 2016 was $0.85. Our common stock currently trades on a sporadic and limited basis.
We are offering our shares without the use of an exclusive placement agent, however, we may engage various securities brokers to place shares in this offering with investors for commissions of up to 10% of the gross proceeds. Until we achieve the sale of the minimum offering amount of 1,000,000 shares, the proceeds from the offering will be kept in an escrow account. Upon achievement of the minimum offering amount, we will be entitled to release the funds held in escrow and the proceeds will be disbursed to us and the purchased shares will be disbursed to the investors. If the offering does not close, for any reason, the proceeds for the offering will be promptly returned to investors without interest.
We expect to commence the sale of the shares as of the date on which the Offering Statement of which this Offering Circular is a part is declared qualified by the United States Securities and Exchange Commission.
See “Risk Factors” to read about factors you should consider before buying shares of common stock.
Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
The United States Securities and Exchange Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.
This Offering Circular is following the offering circular format described in Part II (a)(1)(ii) of Form 1-A.
Offering
Circular dated _____________, 2016
TABLE OF CONTENTS
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Summary
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1
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Risk Factors
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3
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Cautionary Note Regarding Forward-Looking Statements
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8
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Use of Proceeds
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9
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Dividend Policy
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Capitalization
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10
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Dilution
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11
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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12
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Business
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15
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Management
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Relationships and Related Party Transactions
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Principal Stockholders
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Description of Capital Stock
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20
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Shares Eligible for Future Sale
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Plan Of Distribution
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23
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Validity of Common Stock
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24
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Experts
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24
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Reports
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24
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No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this Offering Circular. You must not rely on any unauthorized information or representations. This Offering Circular is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this Offering Circular is current only as of its date.
SUMMARY
This summary highlights information contained elsewhere in this Offering Circular. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire Offering Circular carefully, including the “Risk Factors” section, our historical consolidated financial statements and the notes thereto, and unaudited pro forma financial information, each included elsewhere in this Offering Circular. Unless the context requires otherwise, references in this Offering Circular to “the Company,” “we,” “us” and “our” refer to Stack-It Storage, Inc.
Our Company
Stack-it Storage, Inc. has historically been a small, public oil and gas production company operating under a predecessor name (Caprock Oil, Inc.) in Houston, Texas. In May 2015, we sold the majority of our oil and gas properties and repaid all of our property related debt. In July 2015, we changed our name from Caprock Oil, Inc. to Stack-it Storage, Inc. as a prelude to our transition into the self-storage business. In August 2015, we reached a binding agreement to acquire our initial self-storage facility near Lake Houston in Harris County, Texas, for a purchase price of $1,500,000. We closed the transaction in October 2015. We are considering a substantial expansion of that facility to commence in 2016.
Once we have completed the integration of the Lake Houston storage facility, we plan to undertake a program to acquire additional self-storage facilities. For this acquisition program, we are expecting to seek fully operational self-storage facilities with at least 30,000 net rentable square feet, located primarily in the south and southwest. We are currently targeting the acquisition of up to thirteen such self-storage facilities, with total capacity of as much as 700,000 net rentable square feet, within the next 12 to 24 months. We are projecting continuing growth in subsequent years through our acquisition program. Our ability to execute on this expansion program is entirely dependent on our ability to raise sufficient financing in this offering. If we are only able to complete the minimum offering, we will be required to raise additional financing in the future in order to execute on our expansion strategy.
In
order to supplement our existing management team, we have entered into a contract with Donald Jones Consulting Services, LLC (“DJCS”)
to manage our daily storage operations at Lake Houston as well as the other storage assets that we may acquire. DJCS
was established in 2004 and is dedicated to self-storage management. It provides direct management support to self-storage
owners and has been a top 100 management company since 2011. DJCS currently manages 20 self-storage facilities
and has two fulltime regional managers with over 18 years of combined experience. In addition to management services
at Lake Houston, DJCS assisted in the due diligence review process and will advise on the Lake Houston expansion plan.
On December 30, 2015,
the Company sold the equity ownership of its two main oil and gas subsidiaries to affiliates of a minority shareholder for a total
sales price of $50,000, thus completing its exit from the oil and gas business. The sales price was represented by a promissory
note payable by the purchaser to the Company with a term of 2 years. The note accrues interest at a rate of 5% per annum until
maturity (if the NYMEX future oil price does not close at $80 per barrel for 20 consecutive trading prior to maturity, the note
is redeemable at maturity for $5,000). One of the subsidiaries sold in this transaction was the owner of the operated oil and
gas fields in Texas at the time such properties were sold to another company in May 2015. Primarily due to the extinguishment
of liabilities remaining after the May 2015 sale of those properties, the Company expects to report a gain of approximately $600,000
on the December 2015 sale for the fourth quarter of 2015. The other subsidiary included in the December 2015 sale was the owner
of non-operated oil and gas properties in Louisiana.
Company Information
We are incorporated in the State of Nevada. Our principal executive offices are located at 11011 Richmond Avenue, Suite 525, Houston, Texas, 77042 and our telephone number is (713) 479-7050. Our web site is www.stackitstorage.com. Information contained on our web site is not incorporated by reference into this Offering Circular. You should not consider information contained on our web site as part of this Offering Circular.
The Offering
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Common
Stock we are offering .............................................
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Minimum of 1,000,000 shares of common stock
Maximum of 10,000,000 shares of common stock
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Common
Stock outstanding before this offering ...................
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19,898,015 shares of common stock (as of September 30, 2015).
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Use
of proceeds ......................................................................
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We intend to use the proceeds from this offering to expand our Lake Houston facility, to acquire new self-storage facilities and for general corporate purposes, including possible repayment of debt. See “Use of Proceeds.”
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Risk
Factors ...........................................................................
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See “Risk Factors” and other information appearing elsewhere in this Offering Circular for a discussion of factors you should carefully consider before deciding whether to invest in our common stock.
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Escrow
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The
offering will terminate upon the earlier of: (i) a date after which at least 1,000,000 shares of common stock have been subscribed
for or (ii) April 15, 2016 (unless extended by the Company, in its own discretion, for up to another 60 days). Until at
least 1,000,000 shares are sold, all investor funds will be held in an escrow account at a nationally chartered bank, which is
serving as the escrow agent for this offering. If at least 1,000,000 shares are not sold by April 15, 2016 (unless extended
by the Company, in its own discretion, for up to another 60 days), all funds will be promptly returned to investors (within
one business day) without interest or deduction.
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The number of shares of common stock to be outstanding after this offering does not give effect to:
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1,000,000 shares of common stock underlying outstanding options to our officers, directors and employees pursuant to the Stack-It Storage, Inc. Stock Equity Plan; and
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1,000,000 shares of common stock available for future issuance under the Stock Equity Plan.
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Investing in our common stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this Offering Circular, including the consolidated financial statements and the related notes, before making a decision to buy our common stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Related to Our Self-Storage Operations
We have recently entered the self-storage business and we have no track record of operating self-storage facilities.
We have historically been a small, public oil and gas production company. In May 2015, we sold the majority of our oil and gas properties. In August 2015, we reached a binding agreement to acquire our initial self-storage facility near Lake Houston in Harris County, Texas and we closed this acquisition in October 2015.
With respect to the self-storage business, we are a start-up company with one facility and no meaningful operating history. In addition, our management has no experience operating self-storage facilities. As such, you will be investing in an early stage company and your investment will be subject to the risks involved in investments in such companies.
Adverse economic or other conditions in the markets in which we do business could negatively affect our occupancy levels and rental rates and therefore our operating results.
Our operating results are dependent upon our ability to maximize occupancy levels and rental rates in our facilities. Adverse economic or other conditions in the markets in which we operate may lower our occupancy levels and limit our ability to increase rents or require us to offer rental discounts. Initially, we will have one facility located near Houston, Texas. As such, unless and until we are able to acquire additional facilities, we will be subject to the conditions in the geographic area near our initial facility.
We face competition for the acquisition of storage assets, which may impede our ability to make future acquisitions or may increase the cost of these acquisitions.
We compete with many other entities engaged in real estate investment activities for acquisitions of storage assets, including national, regional and local operators and developers of stores. This competition may cause the price we pay for stores or other assets we seek to increase, or we maybe unsuccessful in in acquiring those stores or assets. In addition, our potential acquisition targets may find our competitors to be more attractive suitors because they may have greater resources, may be willing to pay more or may have a more compatible operating philosophy. In addition, the number of entities and the amount of funds competing for suitable investment in stores may increase. This competition would result in increased demand for these assets and therefore increased prices paid for them. Due to an increased interest in single-store acquisitions among tax-motivated individual purchasers, we may pay higher prices if we purchase single stores in comparison with portfolio acquisitions. If we pay higher prices for stores or other assets, our profitability may be reduced.
We may not be successful in identifying and consummating suitable acquisitions that meet our criteria, which may impede our growth.
Our ability to expand through acquisitions is integral to our business strategy and requires us to identify suitable acquisition candidates or investment opportunities that meet our criteria and are compatible with our growth strategy. We may not be successful in identifying suitable stores or other assets that meet our acquisition criteria or in consummating acquisitions or investments on satisfactory terms or at all. Failure to identify or consummate acquisitions will slow our growth, which could in turn adversely affect our stock price. Our ability to acquire stores on favorable terms and successfully integrate and operate them may be constrained by significant risks such as competition from other acquirers with significant capital, including publicly-traded REITs and institutional investment funds; the inability to achieve satisfactory completion of due diligence investigations and other customary closing conditions; and failure to finance an acquisition on favorable terms or at all. In addition, strategic decisions by us, such as acquisitions, may adversely affect the price of our securities.
We may not be successful in integrating and operating acquired self-storage assets.
We have just completed our first acquisition and expect to make future acquisitions of self-storage assets. If we acquire any stores, we will be required to integrate them into our then existing portfolio. The acquired stores may turn out to be less compatible with our growth strategy than originally anticipated, may cause disruptions in our operations or may divert management’s attention away from day-to-day operations, which could impair our operating results as a whole.
Adverse economic or other conditions in the markets in which we do business could negatively affect our occupancy levels and rental rates and therefore our operating results.
Our operating results are dependent upon our ability to maximize occupancy levels and rental rates in our initial facility at Lake Houston as well as the other storage assets that we may acquire. Adverse economic or other conditions in the markets in which we operate may lower our occupancy levels and limit our ability to maintain or increase rents. If our stores fail to generate revenues sufficient to meet our cash requirements, including operating and other expenses, debt service and capital expenditures, our net income, cash flow, financial condition, and the trading price of our securities could be adversely affected.
If we are unable to promptly re-let our units or if the rates upon such re-letting are significantly lower than expected, our business and results of operations would be adversely affected.
Virtually all of our leases are on a month-to-month basis. Any delay in re-letting units as vacancies arise would reduce our revenues and harm our operating results. In addition, lower than expected rental rates upon re-letting could adversely affect our revenues and impede our growth.
We will depend upon our contracted operations manager to maximize tenant satisfaction, and any difficulties we encounter in hiring, training and maintaining skilled field personnel may harm our operating performance.
We have entered into a contract with Donald Jones Consulting Services, LLC to manage our daily storage operations at Lake Houston as well as the other storage assets that we may acquire. We will rely upon such consultant to maintain clean and secure stores. If our consultant is unable to successfully recruit, train and retain qualified field personnel, the quality of service we strive to provide at our stores could be adversely affected, which could lead to decreased occupancy levels and reduced operating performance.
Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition and our cash flow.
We expect to maintain comprehensive liability, fire, flood, wind (as deemed necessary or as required by our lenders), extended coverage and rental loss insurance with respect to Lake Houston and the other storage assets that we may acquire. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to hurricanes, tornadoes, riots, acts of war or terrorism. Should an uninsured loss occur, we could lose both our investment in, and anticipated profits and cash flow from, a store. In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. As a result, our operating results may be adversely affected.
Increases in taxes and regulatory compliance costs may reduce our income.
Increases in income, property or other taxes generally are not passed through to tenants under leases and may reduce our net income, cash flow, financial condition, ability to pay or refinance our debt obligations, and the trading price of our securities. Similarly, changes in laws increasing the potential liability for environmental conditions existing on facilities or other conditions may result in significant unanticipated expenditures, which could similarly adversely affect our business and results of operations.
Environmental compliance costs and liabilities associated with operating our facilities may affect our results of operations.
Under various U.S. federal, state and local laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or materials. The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner’s or operator’s ability to lease, sell or rent such property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person.
We will rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.
We will rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personally identifiable information, and tenant and lease data. We will purchase some of our information technology from vendors, on whom our systems depend. We will rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential tenant and other sensitive information. Although we expect to take commercially reasonable efforts to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, divert significant management attention and resources to remedy any damages that result, subject us to liability claims or regulatory penalties and have a material adverse effect on our business and results of operations.
Risks Related to the Real Estate Industry
Our primary business involves the ownership and operation of self-storage assets.
Our current strategy is to own, operate, manage, acquire, develop and redevelop only self-storage assets. Consequently, we are subject to risks inherent in investments in a single industry. Because investments in real estate are inherently illiquid, this strategy makes it difficult for us to diversify our investment portfolio and to limit our risk when economic conditions change. Decreases in market rents, negative tax, real estate and zoning law changes and changes in environmental protection laws may also increase our costs, lower the value of our investments and decrease our income, which would adversely affect our business, financial condition and operating results.
Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our stores.
Because real estate investments are relatively illiquid, our ability to promptly sell one or more stores in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any store for the price or on the terms set by us or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a store. We may be required to expend funds to correct defects or to make improvements before a store can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements.
Any negative perceptions of the self-storage industry generally may result in a decline in our stock price.
To the extent that the investing public has a negative perception of the self-storage industry, the value of our securities may be negatively impacted, which could result in our securities trading below the inherent value of our assets.
Disruptions in the financial markets could affect our ability to obtain equity and debt financing on reasonable terms and have other adverse effects on us.
Uncertainty in the equity and credit markets may negatively impact our ability to access additional equity and debt financing or to refinance existing debt maturities on favorable terms (or at all), which may negatively affect our ability to make acquisitions and fund development projects. A downturn in the equity or credit markets may cause us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plan accordingly. In addition, these factors may make it more difficult for us to sell stores or may adversely affect the price we receive for stores that we do sell, as prospective buyers may experience increased costs of equity or debt financing or difficulties in obtaining such financing.
Increases in interest rates may increase our interest expense and adversely affect our cash flow and our ability to service our indebtedness.
We expect to finance up to 75% of the cost of our acquired storage assets with long term debt. Interest rates that we would pay on such debt are subject to change, accordingly, increases in interest rates on this variable rate debt would increase our interest expense, which could harm our cash flow and our ability to service our acquisition debt.
Risks Related to Ownership of Our Common Stock
If we only complete the minimum offering, we will need to raise additional
capital in the near future, for which we have no commitments.
We are offering our common stock on an "all-or-none" basis with respect to the
minimum offering and on a "best efforts" basis with respect to the maximum offering. If we are only able to complete the minimum
offering, we will receive net proceeds of approximately $597,500. If we are able to complete the minimum offering, there can be
no assurance that we will able to complete any portion of the maximum offering.
Raising only the minimum offering would leave us with only a modest amount of
funds to support our continued operations, and raising less than the maximum offering will not allow us to pursue our growth strategy.
If we only complete the minimum offering, we estimate that we will need to raise additional financing before the end of 2016 in
order to continue our operations. We have no commitments for such financing, and any financing we receive may not be on favorable
terms and may be highly dilutive to our shareholders.
Our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the public offering price.
The market price for our common stock is volatile and the trading in our common stock is limited and sporadic. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including:
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Unplanned delays in acquiring new storage assets;
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Stock price performance of our competitors;
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Default on our indebtedness;
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Actions by our competitors;
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Changes in senior management or key personnel;
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Incurrence of indebtedness or issuances of capital stock; and
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Economic, legal and regulatory factors unrelated to our performance.
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In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies in our industry. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.
Substantial future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.
Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales could occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional shares. The shares of common stock offered in this offering will become freely tradable without restriction under the Securities Act.
We will continue to incur certain costs as a result of being a public company and in the administration of our organizational structure.
After the offering, we may incur higher legal, accounting, insurance and other expenses than at the level that we are currently experiencing. We also have incurred and will continue to incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the Securities and Exchange Commission ("SEC"). We will continue to incur ongoing periodic expenses in connection with the administration of our organizational structure. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations could also make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.
This is a fixed price offering and the fixed offering price may not accurately represent the current value of us or our assets at any particular time. Therefore, the purchase price you pay for our shares may not be supported by the value of our assets at the time of your purchase.
This is a fixed price offering, which means that the offering price for our shares is fixed and will not vary based on the underlying value of our assets at any time. Our Board of Directors has determined the offering price in its sole discretion without the input of an investment bank or other third party. The fixed offering price for our shares has not been based on appraisals of any assets we own or may own, or of our company as a whole, nor do we intend to obtain such appraisals. Therefore, the fixed offering price established for our shares may not be supported by the current value of our company or our assets at any particular time.
We do not currently pay any cash dividends.
As an oil and gas company, we did not generate sufficient earnings and cash flow to pay any dividends on shares of our common stock. As we become a fully operational self-storage company, we expect to be in position to generate earnings and cash flow that will enable us to begin paying dividends, however, the projected timing of reaching that point is presently uncertain. Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board of Directors deems relevant. Our ability to pay dividends may also be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of ours or of our subsidiaries. Accordingly, if you purchase shares in this offering, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our common stock.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make forward-looking statements under the “Summary,” “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in other sections of this Offering Circular. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” and the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. In particular, you should consider the numerous risks and uncertainties described under “Risk Factors.”
While we believe we have identified material risks, these risks and uncertainties are not exhaustive. Other sections of this Offering Circular describe additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this Offering Circular to conform our prior statements to actual results or revised expectations, and we do not intend to do so.
Forward-looking statements include, but are not limited to, statements about:
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our business’ strategies and investment policies;
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our business’ financing plans and the availability of capital;
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potential growth opportunities available to our business;
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the risks associated with potential acquisitions by us;
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the recruitment and retention of our officers and employees;
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our expected levels of compensation;
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the effects of competition on our business; and
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the impact of future legislation and regulatory changes on our business.
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We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this Offering Circular.
USE OF PROCEEDS
After deducting estimated expenses of this offering, we expect net proceeds from this offering of approximately $597,500, assuming completion of the minimum offering, or $6,425,000, assuming completion of the maximum offering at the public offering price of $0.70 per share. In both cases, we have assumed that we will pay commissions of 10% of the gross proceeds to various securities brokers for 75% of the shares sold in the offering and that our other offering expenses will amount to $50,000.
We
intend to use the net proceeds of this offering as follows: approximately $675,000 to expand our Lake Houston facility, approximately
$5,600,000 to acquire new self-storage facilities and the remainder for general corporate purposes,
including possible repayment of debt, assuming the maximum offering size. If
the offering size is less than the maximum amount but greater than the minimum amount, we would expect to reduce the net proceeds
used to acquire new self-storage facilities accordingly (see “Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Liquidity and Capital Resources of the Company Following the Lake Houston Acquisition”).
Until we use the net proceeds as described above, we intend to invest the net proceeds in short-term securities.
DIVIDEND POLICY
As
we become a fully operational self-storage company, we expect to be in position to generate earnings and cash flow that will enable
us to begin paying dividends on our Common Stock, however, the projected timing of reaching that point is presently uncertain. Once
we have attained that level, our annual dividend target is anticipated to be approximately 90% of the prior year’s net income
adjusted for unusual items. The decision to pay a dividend, however, remains within the discretion of our Board of Directors and
may be affected by various factors, including our earnings, financial condition, capital requirements, level of indebtedness and
other considerations our Board of Directors deems relevant. Future credit facilities, other future debt obligations
and statutory provisions, may limit, or in some cases prohibit, our ability to pay dividends.
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 2015:
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on an adjusted basis to give effect to the incurrence of the long term bank debt and the convertible debentures issued in the Lake Houston acquisition in October 2015, as well as the following:
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•
the receipt of the net proceeds of the minimum offering of 1,000,000 shares in the amount of $597,500; and
|
|
|
|
• the receipt
of the net proceeds of the maximum offering of 10,000,000 shares in the amount of $6,425,000.
|
You should read this capitalization table together with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes appearing elsewhere in this Offering Circular.
| |
|
Actual Amounts
|
|
|
Minimum Offering Size
|
|
|
Maximum Offering Size
|
|
| |
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$ |
394,487 |
|
|
$ |
991,987 |
|
|
$ |
6,819,487 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Indebtedness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long term debt - bank
|
|
|
- |
|
|
|
800,000 |
|
|
|
800,000 |
|
|
Convertible debentures
|
|
|
- |
|
|
|
630,000 |
|
|
|
630,000 |
|
|
Total indebtedness
|
|
|
- |
|
|
|
1,430,000 |
|
|
|
1,430,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value per share, 1,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
|
|
None issued
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Common stock, $.01 par value per share, 200,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
|
|
5,181,348 shares outstanding (Actual), 6,181,348 shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
(Minimum), and 15,181,348 shares outstanding (Maximum)
|
|
|
51,813 |
|
|
|
61,813 |
|
|
|
151,813 |
|
|
Additional paid in capital
|
|
|
15,788,467 |
|
|
|
16,375,967 |
|
|
|
22,113,467 |
|
|
Accumulated deficit
|
|
|
(16,132,379 |
) |
|
|
(16,132,379 |
) |
|
|
(16,132,379 |
) |
|
Total stockholders’ equity (deficit)
|
|
|
(292,099 |
) |
|
|
305,401 |
|
|
|
6,132,901 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total indebtedness and stockholders’ equity (deficit)
|
|
$ |
(292,099 |
) |
|
$ |
1,735,401 |
|
|
$ |
7,562,901 |
|
DILUTION
Purchasers of our common stock in this offering will experience an immediate dilution of net tangible book value per share from the public offering price. Dilution in net tangible book value per share represents the difference between the amount per share paid by the purchasers of shares of common stock and the net tangible book value per share immediately after this offering.
After
giving effect to (i) the sale of our common stock in this offering at an assumed public offering price of $0.70 per share
and after deducting the estimated offering expenses payable by us and (ii) the issuance of a total of 14,716,667 shares of
common stock to our majority shareholder and three other accredited investors in the third quarter of 2015 for gross proceeds
of $232,500, our adjusted net tangible book value at June 30, 2015 would have been $537,901 or $0.03 per share,
assuming minimum offering size, and $6,365,401 or $0.22 per share, assuming maximum offering size. This represents
an immediate increase in net tangible book value per share of $0.04 to the existing stockholders and dilution in net tangible
book value per share of $0.67 to new investors who purchase shares in the offering, assuming minimum offering size, and
an immediate increase in net tangible book value per share of $0.23 to the existing stockholders and dilution in net tangible
book value per share of $0.48 to new investors who purchase shares in the offering, assuming maximum offering size.
The
following table sets forth the estimated net tangible book value per share after the offering and the dilution to persons purchasing
Common Stock based on the foregoing minimum and maximum offering assumptions.
|
|
|
Minimum Offering
|
|
|
Maximum Offering
|
|
|
Assumed public offering price per share
|
|
$ |
0.70 |
|
|
$ |
0.70 |
|
|
Net
tangible book value per share at June 30, 2015, as adjusted
|
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
Increase in net tangible book value per share to the existing stockholders attributable to this offering
|
|
$ |
0.04 |
|
|
$ |
0.23 |
|
|
Adjusted net tangible book value per share after this offering
|
|
$ |
0.03 |
|
|
$ |
0.22 |
|
|
Dilution in net tangible book value per share to new investors
|
|
$ |
0.67 |
|
|
$ |
0.48 |
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto of the Company, as well as the financial statements and the notes thereto of Lake Houston Storage, LLC, the previous owner of the Lake Houston storage facility, included in this Offering Circular. The following discussion contains forward-looking statements. Actual results could differ materially from the results discussed in the forward-looking statements. See “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” above.
Consolidated Financial Statements of the Company for the Years Ended December 31, 2014 and 2013
Information regarding management’s discussion of our consolidated financial statements for the years ended December 31, 2014 and 2013 is incorporated by reference to Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2014 (see link below).
http://www.sec.gov/Archives/edgar/data/1277998/000135448815001369/roko_10k.htm
Consolidated Financial Statements of the Company for the Six Months Ended June 30, 2015 and 2014
Information regarding management’s discussion of our consolidated financial statements for the six month periods ended June 30, 2015 and 2014 is incorporated by reference to Item 2 of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 (see link below).
http://www.sec.gov/Archives/edgar/data/1277998/000135448815003680/roko_10q.htm
Financial Statements of Lake Houston Storage, LLC for the Year Ended December 31, 2014
The Company acquired the Lake Houston storage facility from Lake Houston Storage, LLC ("LHS"), a Texas limited liability company, on October 30, 2015. The acquisition was structured as an asset purchase, however, we have included the audited financial statements of LHS for the year ended December 31, 2014 herein, as the Company has acquired the “business” of LHS. For the period covered by such financial statements, LHS was a single purpose entity which owned and operated the Lake Houston storage facility in Huffman, Texas.
The following management discussion addresses the revenues, expenses and various other amounts of LHS as reflected in the audited financial statements for the year ended December 31, 2014. Management believes that LHS is typical of most self-storage facilities with relatively simple accounting processes and no unusual accounting policies.
Rental revenues from LHS storage units for the year ended December 31, 2014 were $165,000. As with most storage facilities, rental income at LHS was earned pursuant to month-to-month leases for customer storage space. The storage rates charged by LHS in the year ended December 31, 2014 ranged from as low as $35 per month for the smallest units to as much as $150 per month for the largest units. For the year ended December 31, 2014, customer occupancy of storage units at LHS averaged approximatively 90% and was generally consistent during the year with a relatively small amount of seasonal variation.
Storage operating expenses of LHS for the year ended December 31, 2014 were $68,000. Such amounts consisted largely of items such as repairs and maintenance, property taxes, utilities, insurance, and management fees. As was the case previously noted with rental revenues, storage operating expenses were generally consistent from month-to-month with little seasonal variation.
Depreciation expense of LHS for the year ended December 31, 2014 was $34,000. The majority of this expense represents deprecation on self-storage buildings and facilities acquired by LHS from the previous owner of the Lake Houston storage facility in the year ended December 31, 2012. Such long-lived assets were depreciated by LHS on a straight-line basis over their estimated useful lives ranging up to 39 years.
General and administrative expenses of LHS for the year ended December 31, 2014 were $9,000. Such amounts consisted largely of items such as advertising and promotion, professional fees, and computer/telephone expenses. Such expense amounts were generally consistent from month-to-month with little seasonal variation.
Interest expense of LHS for the year ended December 31, 2014 was $32,000. Such amount consisted solely of interest expense on a long term, secured bank loan incurred by LHS in the acquisition of the Lake Houston storage facility from the previous owner in the year ended December 31, 2012.
LHS was treated as a partnership for federal and state income tax purposes, therefore, all tax related attributes were allocated directly to the members. Accordingly, LHS did not record any income tax related amounts for the year ended December 31, 2014.
Financial Statements of Lake Houston Storage, LLC for the Six Months Ended June 30, 2015 and 2014
The following discussion addresses the revenues and expenses of LHS as reflected in the unaudited financial statements for the six months ended June 30, 2015 compared to the six months ended June 30, 2014.
Rental revenues from LHS storage units for the six months ended June 30, 2015 were $87,000 compared to $85,000 for the six months ended June 30, 2014. This increase was largely due to higher rental rates as occupancy levels were generally equivalent in both periods.
Storage operating expenses of LHS for the six months ended June 30, 2015 were $29,000 compared to $29,000 for the six months ended June 30, 2014, as operating expenses were maintained at essentially the same level in both periods.
Depreciation expense of LHS for the six months ended June 30, 2015 was $14,000 compared to $17,000 for the six months ended June 30, 2014. This decrease was due to the declining balance method being used to depreciate office equipment and furniture.
General and administrative expenses of LHS for the six months ended June 30, 2015 were $4,000 compared to $4,000 for the six months ended June 30, 2014, as administrative expenses were maintained at essentially the same level in both periods.
Interest expense of LHS for the six months ended June 30, 2015 was $16,000 compared to $16,000 for the six months ended June 30, 2014. Such amounts in both periods consisted solely of interest expense on a long term, secured bank loan incurred by LHS in the acquisition of the Lake Houston storage facility from the previous owner in the year ended December 31, 2012.
Liquidity and Capital Resources of the Company Following the Lake Houston Acquisition
As previously
noted, we completed the acquisition of our initial self-storage facility near Lake Houston in October 2015 for a purchase
price of $1,500,000. We financed this transaction with a combination of (i) a new secured bank term loan in the principal
amount of $800,000, (ii) new convertible debentures issued to shareholders and other investors in the principal amount of
$630,000 (for which the noteholders were granted a security interest in the member units of the Company's wholly-owned subsidiary that
was formed to acquire the Lake Houston storage facility), and (iii) available cash resources. With the completion of this acquisition, we are planning to undertake a
significant acquisition and expansion mode in the self-storage business in the near term. However, there can be no assurance
that we will be successful in acquiring additional self-storage facilities on economic terms and under favorable financing
arrangements that will enable us to ultimately achieve profitable operations in the self-storage business.
With the sale of the majority of our oil and gas properties in May 2015, we no longer face the substantial financing demands of that business where significant capital expenditures may be required in order to maintain production levels in a depleting asset base. In contrast, we expect there to be relatively low maintenance capital expenditure requirements as we transition to the self-storage business. Accordingly, we anticipate that our self-storage capital expenditures will be incurred largely on a discretionary basis, whether they are related to either the expansion of our existing storage facilities or the acquisition of new storage facilities.
As
previously indicated, we plan to expand our ownership of self-storage facilities to as much 700,000 net rentable square feet,
within the next 12-24 months. In order to achieve that level of growth, we would expect to make up to thirteen substantial
acquisitions of existing self-storage facilities. We presently intend to finance such acquisitions with a combination
of equity from this offering and other sources, plus the proceeds of secured bank debt for up to 75% of the acquisition
cost.
Assuming the maximum offering size, we intend to use approximately $675,000 of the net proceeds of this offering to expand our recently acquired Lake Houston self-storage facility and approximately $5,600,000 of such proceeds for the equity component of the acquisitions of other, unidentified self-storage facilities, as noted above. The latter amount of equity proceeds, when combined with secured bank debt covering as much as 75% of the cost of such facilities, could provide us with total acquisition purchasing power of approximately $22,400,000, which would enable us to make substantial progress toward reaching the goal of 700,000 net rentable square feet.
Assuming the minimum offering size, we intend to use the $597,500 in net proceeds of this offering toward the expansion of our recently acquired Lake Houston self-storage facility (for which the estimated expansion is approximately $700,000), or combine that amount with secured bank debt covering as much as 75% of the cost of acquiring other self-storage facilities, thus providing us with total acquisition purchasing power of approximately $2,390,000 to apply toward one or more such acquisitions.
Prior to the completion
of this offering, we expect to borrow up to $250,000 from one or more of the noteholders to whom the convertible debentures used
to finance the Lake Houston acquisition were issued in October 2015 (see "Description of Common Stock - Convertible Debentures").
Such borrowings will be made for working capital purposes and will be substantially similar in terms to the debentures used to
finance the Lake Houston acquisition, except that there will be no common stock conversion feature. As these borrowings will be
utilized for short term purposes, the Company expects to repay them in approximately six months following the completion of this
offering.
BUSINESS
Overview
Stack-it Storage, Inc. has historically been a small, public oil and gas production company operating under a predecessor name (Caprock Oil, Inc.) in Houston, Texas. In May 2015, we sold the majority of our oil and gas properties and repaid all of our property related debt. In July 2015, we changed our name from Caprock Oil, Inc. to Stack-it Storage, Inc. as a prelude to our transition into the self-storage business. In August 2015, we reached a binding agreement to acquire our initial self-storage facility near Lake Houston in Harris County, Texas, for a purchase price of $1,500,000. We closed the transaction in October 2015. We are considering a substantial expansion of that facility to commence in 2016.
Once we have completed the integration of the Lake Houston storage facility, we plan to undertake a program to acquire additional self-storage facilities. For this acquisition program, we are expecting to seek fully operational self-storage facilities with at least 30,000 net rentable square feet, located primarily in the south and southwest. We are currently targeting the acquisition of up to thirteen such self-storage facilities, with total capacity of as much as 700,000 net rentable square feet, within the next 12 to 24 months. We are projecting continuing growth in subsequent years through our acquisition program. Our ability to execute on this expansion program is entirely dependent on our ability to raise sufficient financing in this offering. If we are only able to complete the minimum offering, we will be required to raise additional financing in the future in order to execute on our expansion strategy.
In
order to supplement our existing management team, we have entered into a contract with Donald Jones Consulting Services, LLC (“DJCS”)
to manage our daily storage operations at Lake Houston as well as the other storage assets that we may acquire. DJCS
was established in 2004 and is dedicated to self-storage management. It provides direct management support to self-storage
owners and has been a top 100 management company since 2011. DJCS currently manages 20 self-storage facilities
and has two fulltime regional managers with over 18 years of combined experience. In addition to management services
at Lake Houston, DJCS assisted in the due diligence review process and will advise on the Lake Houston expansion plan.
On December 30, 2015, the
Company sold the equity ownership of its two main oil and gas subsidiaries to affiliates of a minority shareholder for a total
sales price of $50,000, thus completing its exit from the oil and gas business. The sales price was represented by a promissory
note payable by the purchaser to the Company with a term of 2 years. The note accrues interest at a rate of 5% per annum until
maturity (if the NYMEX future oil price does not close at $80 per barrel for 20 consecutive trading prior to maturity, the note
is redeemable at maturity for $5,000). One of the subsidiaries sold in this transaction was the owner of the operated oil and
gas fields in Texas at the time such properties were sold to another company in May 2015. Primarily due to the extinguishment
of liabilities remaining after the May 2015 sale of those properties, the Company expects to report a gain of approximately $600,000
on the December 2015 sale for the fourth quarter of 2015. The other subsidiary included in the December 2015 sale was the owner
of non-operated oil and gas properties in Louisiana.
Lake Houston Facility
In October 2015, we completed the acquisition of our Lake Houston facility for a purchase price of $1,500,000. In this transaction, we acquired a fully operational self-storage facility with approximately 22,000 net rentable square feet located in Huffman, Texas. The acquired facility is located in close proximity to Lake Houston, a major water reservoir and aquatic recreational area, and presently consists of 202 non-climate controlled self-storage units situated on approximately 2.57 acres of land. It was originally constructed in stages from 1996 to 2004 and current occupancy of the self-storage units is approximately 95%. We financed this transaction with a combination of (i) a new secured bank term loan in the principal amount of $800,000, (ii) new convertible debentures issued to shareholders and other investors in the principal amount of $630,000, and (iii) available cash resources.
Our Industry
Self-storage stores offer month-to-month storage space rental for personal or business use and are a cost-effective and flexible storage alternative. Tenants rent fully enclosed spaces that can vary in size according to their specific needs and to which they have unlimited, exclusive access. Tenants have responsibility for moving their items into and out of their units. Self-storage unit sizes typically range from 5 feet by 10 feet and 10 feet by 10 feet to 20 feet by 20 feet, with an interior height of 8 feet to 12 feet. Stores generally have on-site managers who supervise and run the day-to-day operations, providing tenants with assistance as needed on either a full time or part time basis. Self-storage provides a convenient way for individuals and businesses to store their possessions due to life changes, or simply because of a need for storage space. The mix of residential tenants using a store is determined by a store’s local demographics and often includes people who are looking to downsize their living space or others who are not yet settled into a permanent residence. Items that residential tenants place in self-storage range from cars, boats and recreational vehicles, to furniture, household items and appliances. Commercial tenants tend to include small business owners who require easy and frequent access to their goods, records, inventory or storage for seasonal goods.
The self-storage industry has been one of the fastest growing sectors of the U.S. commercial real estate industry over the past 40 years. There are over 48,500 primary self-storage facilities in the United States as of year-end 2014, and the distribution of self-storage facilities as of the second quarter of 2015 is 32% urban, 52% suburban and 16% rural. As of the second quarter of 2015, occupancy rates for self-storage were 90%. As of 2013, approximately 9.5% of all American households rented a self-storage unit. (All data is from the Self-Storage Association International – 2015-2016 Self Storage Industry Fact Sheet)
The industry is also characterized by fragmented ownership. The six top self-storage companies, including five public REITs, own, operate or manage about 5,800 self-storage facilities representing 12% of all U.S. facilities. Additionally, over 150 private companies own and operate 10 or more facilities each, and some 4,000 firms own and operate 2 to 9 self-storage facilities. Lastly, more than 26,000 firms own and operate just one facility. (All data is from the Self-Storage Association International – 2015-2016 Self Storage Industry Fact Sheet)
Since inception in the early 1970’s, the self-storage industry has experienced significant growth. According to the Self-Storage Almanac (the “Almanac”), in 2008 there were only 41,100 stores in the United States, with an average physical occupancy rate of 83.0% of net rentable square feet, compared to 51,475 stores in 2014 with an average physical occupancy rate of 89.1% of net rentable square feet.
Our Strategy
Our primary business objectives are to expand our Lake Houston facility and to acquire additional self-storage facilities, with the goal of maximizing earnings and cash flow available for distribution to our stockholders. If we are able to raise sufficient financing, we intend to pursue the acquisition of additional facilities in the near-term. Our goal is to acquire additional facilities over the next 12-24 months after the closing of this offering that represent 700,000 rentable square feet. Our goal is for our acquisition targets to have at least an 80% occupancy rate, and have room to improve profits through efficiencies, higher rental rates and increased occupancy.
Regulation
Generally, our facilities will be subject to various laws, ordinances and regulations, including regulations relating to lien sale rights and procedures. Changes in any of these laws or regulations that increase the potential liability for environmental conditions or circumstances existing or created by tenants or others on facilities, or laws affecting development, construction, operation, upkeep, safety and taxation may result in significant unanticipated expenditures, loss of self-storage stores or other impairments to operations, which may adversely affect our financial position, results of operations or cash flows.
Under the Americans with Disabilities Act of 1990 (the “ADA”), places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. A number of additional U.S. federal, state and local laws also exist that may require modifications to the stores, or restrict further renovations thereof, with respect to access thereto by disabled persons. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, thereby requiring substantial capital expenditures. To the extent our stores are not in compliance, we are likely to incur additional costs to comply with the ADA. Changes in any of the laws governing our conduct could have an adverse impact on our ability to conduct our business or could materially affect our financial position, results of operations or cash flows.
Employees
As of January 21 ,
2016, we had three employees and believe our relationship with our employees is good. Our employees are not represented by a collective
bargaining agreement. Our onsite self-storage operations and certain administrative functions are performed substantially
by independent contractors.
MANAGEMENT
Information regarding our current Directors and Officers is incorporated by reference to Item 10 of our Annual Report on Form 10-K for the year ended December 31, 2014 (see link below).
http://www.sec.gov/Archives/edgar/data/1277998/000135448815001369/roko_10k.htm
As noted above under “Business,” we have engaged an experienced storage operations consultant, Donald Jones, to manage our daily storage operations at Lake Houston as well as the other storage assets that we may acquire. His services will be provided to us under a contract with his consulting company, DJCS. Information regarding background and experience of DJCS can be found in that section.
Executive
Compensation
The following table summarizes
certain information with respect to the compensation earned by the Company's executive officers for services rendered in all capacities
during the years indicated.
| Name
& Principal Position | |
| Fiscal
Year | | |
| Annual
Compensation
Salary | | |
| Bonus | | |
| Stock
Awards | | |
| Option
Awards | | |
| Incentive
Comp. | | |
| All
Other
Comp. | | |
| Total
Comp. | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Steven
H. Mikel | |
| 2015 | | |
$ | 120,000 | | |
$ | — | | |
$ | — | | |
$ | 408,514 | (2) | |
$ | — | | |
$ | 4,800 | (3) | |
$ | 533,314 | |
| Chief Executive Officer | |
| 2014 | | |
$ | 75,000 | (1) | |
$ | — | | |
$ | — | | |
$ | 371,400 | (2) | |
$ | — | | |
$ | 2,800 | (3) | |
$ | 449,200 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| D. Hughes Watler,
Jr. | |
| 2015 | | |
$ | 90,000 | | |
$ | — | | |
$ | 229,166 | (2) | |
$ | 37,114 | | |
$ | — | | |
$ | 2,700 | (3) | |
$ | 358,980 | |
| Chief Financial Officer | |
| 2014 | | |
$ | 90,000 | | |
$ | — | | |
$ | 190,970 | (2) | |
$ | — | | |
$ | — | | |
$ | 2,700 | (3) | |
$ | 283,670 | |
(1) Represents Mr. Mikel's salary since he joined the Company as Chief Executive
Officer in May 2014.
(2) Reflects amortized grant date fair value of stock option awards or restricted
stock awards granted to each officer, as further described in Notes 10 and 13 to our Consolidated Financial Statements for the
six months ended June 30, 2015.
(3) Represents the Company's annual matching contribution to a company sponsored
401(k) Plan on behalf of each officer.
Outstanding
Equity Awards at 2015 Fiscal Year-End
The
following table sets forth all outstanding stock and option awards held by our named executive officers as of December 31,
2015.
| | |
| Stock
and Option Awards |
Name
| |
| Number
of Securities Underlying Unexercised Options Exercisable (#)
| | |
| Number
of Securities Underlying Unexercised Options Unexercisable (#)
| | |
| Option Exercise Price ($)
| | |
Option Expiration Date
|
| Steven
H. Mikel | |
| 80,000 | | |
| 120,000 | | |
$ | 6.50 | | |
5/19/2017 |
| | |
| -0- | | |
| 400,000 | | |
$ | 1.00 | | |
8/25/2018 |
| | |
| | | |
| | | |
| | | |
|
| D.
Hughes Watler, Jr. | |
| -0- | | |
| 400,000 | | |
$ | 1.00 | | |
8/25/2018 |
Director
Independence
Information
regarding director independence is incorporated by reference to Item 13 of our Annual Report on Form 10-K for
the year ended December 31, 2014 (see link below).
http://www.sec.gov/Archives/edgar/data/1277998/000135448815001369/roko_10k.htm