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Capital Stock Transactions | 12 Months Ended
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Mar. 31, 2013
Capital Stock Transactions |
13. | Capital Stock Transactions
Preferred Stock There are 2,000,000 shares of Series A Convertible Preferred Stock (“Series A”) authorized and 100,000 shares, issued and outstanding. The Series A has a par value of $0.0001 per share. The Series A holders are entitled to: (1) vote on an equal per share basis as common stock, (2) dividends paid to the common stock holders on an as if-converted basis and (3) a liquidation preference equal to the greater of $10 per share of Series A (subject to adjustment) or such amount that would have been paid to the common stock holders on an as if-converted basis. Common Stock and Warrants In May 2012, the Company issued 30,000 shares of common stock of the Company to an advisory board member for consulting services. The shares vest over one year. The shares were valued at the closing market price on that date of $5.00 per share. The overall value was determined to be $150, of which $135 was recorded through the period ended March 31, 2013. In May 2012, the Company issued 86,667 shares of common stock of the Company to a director of the Company. The shares were valued at the closing market price on that date of $5.00 per share. The overall value was determined to be $433, of which $391 was recorded through the period ended March 31, 2013. In June 2012, the Company issued 30,000 shares of common stock of the Company to a vendor. The shares were issued based on a service agreement that began in March 2012. The overall value was determined to be $135, of which $133 was recorded through the period ended March 31, 2013. In June 2012, the Company sold 285,714 shares of common stock of the Company to an investor for $3.50 cents per share. In connection with this sale of common stock, the Company issued warrants to purchase 71,428 shares of common stock of the Company at an exercise price of $3.50 cents per share with a term of 5 years. The fair value of the warrants on the day of issue was determined to be $255. In July 2012, the Company issued 5,031 shares of common stock of the Company to a vendor. The shares were valued at the closing market price on that date of $4.00 per share. The overall value was determined to be $20, of which $20 was recorded through the period ended March 31, 2013. In September 2012, the Company issued 187,500 shares of common stock of the Company as consideration for an acquisition. The shares were valued at the closing market price on that date of $4.20 per share. The overall value was determined to be $787 and was recorded through the purchase price allocation of the acquisition in the period ended March 31, 2013. In September 2012, the Company issued 300,000 shares of common stock of the Company in connection with an employment agreement. The shares were valued at the closing market price on that date of $4.00 per share. The overall value was determined to be $1,200, of which $267 was recorded through the period ended March 31, 2013. In December 2012, the Company sold 285,714 shares of common stock of the Company to an investor for $3.50 per share. In connection with this sale of common stock, the Company issued warrants to purchase 71,428 shares of common stock of the Company at an exercise price of $3.50 per share with a term of 5 years. The fair value of the warrants on the date of issuance was determined to be $251. In December 2012, the Company issued 30,000 shares of common stock of the Company to a vendor. The shares were issued as settlement for services. The overall value was determined to be $113, of which $113 was recorded through the period ended March 31, 2013. In December 2012, the Company issued 92,857 shares of common stock of the Company to a vendor. The shares were issued as settlement for services. The overall value was determined to be $348, of which $348 was recorded through the period ended March 31, 2013. In connection with this issuance of common stock, the Company issued warrants to purchase 23,214 shares of common stock of the Company at an exercise price of $3.50 per share with a term of 5 years. The fair value of the warrants on the date of issuance was determined to be $82. In December 2012, the Company issued 133,333 shares of common stock of the Company as a non-refundable deposit for a pending acquisition. The shares were valued at the closing market price on that date of $4.00 per share. The overall value was determined to be $533 and was recorded to deposits as of March 31, 2013. In January 2013, the Company issued 59,542 shares of common stock of the Company to three vendors. The shares were issued as settlement for services. The overall value was determined to be $216, of which $216 was recorded through the period ended March 31, 2013. In January 2013, the Company sold 157,143 shares of common stock of the Company to an investor for $3.50 per share. In connection with this sale of common stock, the Company issued warrants to purchase 39,286 shares of common stock of the Company at an exercise price of $3.50 per share with a term of 5 years. The fair value of the warrants on the date of issuance was determined to be $134. In March 2013, the Company issued 10,000 shares of common stock of the Company to a vendor. The shares were issued as settlement for services. The overall value was determined to be $47, of which $47 was recorded through the period ended March 31, 2013. Derivative liabilities As of March 31, 2012, the Company determined that certain warrants were considered derivatives because they did not meet the scope exception in ASC 815-10-15-74. In May 2012, the warrants were exercised. Prior to exercise the Company recorded a loss on the fair value of the warrant of $21. The fair market value of the shares at the time of exercise was $473. The holder forfeited 26,998 shares as a part of a cashless exercise, and the Company issued 73,002 shares of common stock of the Company to the holder. The fair value of these warrants was $0 and $452 at March 31, 2013 and March 31, 2012, respectively. On March 26, 2012, the Senior Secured Convertible Note holders issued a waiver to the Company stating that they would not convert their notes until the Company has notified them in writing that the Company has increased its authorized capital sufficiently so that the conversion, exchange or exercise of all convertible securities can be effectuated without the Company exceeding its authorized capital. On June 6, 2012, the Taja Convertible Note holder issued a waiver to the Company stating that they would not convert their notes until the Company has notified them in writing that the Company has increased its authorized capital sufficiently so that the conversion, exchange or exercise of all convertible securities can be effectuated without the Company exceeding its authorized capital. On June 7, 2012, a holder of a warrant to purchase 2.5 million shares of common stock of the Company issued a waiver to the Company stating that they would not exercise their warrants until the Company has notified them in writing that the Company has increased its authorized capital sufficiently so that the exercise of all convertible securities can be effectuated without the Company exceeding its authorized capital. On August 15, 2012, the Company amended its charter with the State of Delaware to increase its total number of shares of common stock of the Company to 200,000,000 and preferred shares of the Company to 2,000,000. With this amendment, the waivers obtained are no longer in force, since the Company has increased its authorized shares sufficiently so that the conversion, exchange or exercise of all convertible securities can be effectuated without the Company exceeding its authorized capital. Restricted Stock Agreements During the year ended March 31, 2013, the Company entered into restrictive stock agreements (“RSAs”) with certain employees and consultants. The RSAs have performance conditions, market conditions, time conditions or a combination. Once the stock vests, the individual is restricted from selling the shares of stock for a certain defined period from three months to two years depending on the RSA. Certain RSA are granted voting rights while other RSAs are not granted voting rights. Performance and Market Condition RSAs On December 28, 2011, the Company issued 3,170 restricted shares with vesting criteria based on both performance and market conditions. The vesting is as follows: (i) one third (1/3) shall vest immediately upon the completion of one or more debt or equity financings during the period ending two (2) years from the date hereof (the “Measurement Period”) in favor of the Company of gross proceeds of at least $5 million; (ii) one third (1/3) shall vest immediately if on any date during the Measurement Period the Company’s total enterprise value (computed by multiplying the number of outstanding shares of Common Stock on a fully diluted (taking into account only those stock options that are in-the-money on such date), as-converted basis by the average daily trading price for Common Stock for the thirty (30) trading day period immediately preceding the date of determination) equals or exceeds $100 million; and (iii) one third (1/3) shall vest immediately if on any date during the Measurement Period the Company’s total enterprise value (calculated as set forth in clause (ii) above) equals or exceeds $200 million; provided, however, that all unvested shares of restricted common stock shall vest immediately upon the sale of all or substantially all of the assets of the Company, upon the merger or reorganization of the Company following which the equity holders of the Company immediately prior to the consummation of such merger or reorganization collectively own less than 50% of the voting power of the resulting entity, or upon the sale of equity securities of the Company representing 50% or more of the voting power of the Company or 50% or more of the economic interest in the Company in a single transaction or in a series of related transactions. Each share is restricted from the individual selling the stock for a period of one year from the date of vesting. On December 28, 2011, one third of the restricted shares vested due to the $7,000 financing agreement entered into by the Company. The Company valued the 1,057 vested RSAs at $3,223 using the Company’s ending share price at December 28, 2011 of $3.05. For accounting purposes, the one third unvested shares related to the $100,000 enterprise value and the one third unvested shares related to the $200,000 enterprise value are considered to have a market condition. The effect of the market condition is reflected in the grant date fair value of the award and, thus compensation expense is recognized on this type of award provided that the requisite service is rendered (regardless of whether the market condition is achieved). The Company estimated the grant date fair value to be $1.40 per share and $1.03 per share for the $100,000 enterprise value and $200,000 enterprise value, respectively, using a Monte Carlo simulation that uses the following assumptions:
| • |  | Volatility – 100%
| • |  | Restricted stock discount – 36.1%
| • |  | Risk free interest rate of 0.1%
| • |  | Dividend yield of 0%
The Company expensed $4,831 through the period ended March 31, 2013 related to the 3,170 RSAs issued on December 28, 2011 and will expense the remaining $955 over the periods ended December 28, 2013. Time and Performance Condition RSAs On January 3, 2012, the Company issued 445 restricted shares with vesting criteria based on both time and performance conditions. At January 3, 2012, 175 restricted shares vested immediately and the remaining 270 unvested shares must meet certain performance criteria. In September 2012, 85 shares vested in connection with a significant acquisition by the Company. In December 2012, 50 shares vested in connection with the termination of employment of an employee. In April 2013, 85 shares vested in connection with a significant acquisition by the Company. The remaining 50 which has not been defined by the Board of Directors or the Company, has determined that the probability of meeting the performance criteria is 0%. Each share is restricted from the individual selling the stock for a period from one year up to two years from the date of vesting. All restricted shares, vested and unvested, have been included in the outstanding shares as of March 31, 2013. For accounting purposes, the Company determined the grant date fair value to be $3.25 per share which is the closing price of the Company’s stock price on January 3, 2012. The Company expensed $1,130, related to the 445 RSAs issued on January 3, 2012. The Company will expense the 85 shares vested in April 2013, but no further expense will be taken until the Board of Directors details the performance criteria. Time Condition RSAs On various dates during the years ended March 31, 2013 and March 31, 2012, the Company issued 365 and 1,450 restricted shares with vesting criteria based on time conditions. The Company has expensed $5,219 related to the 1,815 time condition RSAs issued. As of March 31, 2013, 1,488 restricted shares were vested with each share being restricted from the individual selling the stock for a period from three months up to two years from the date of vesting. The following table summarizes the RSA activity:
(in thousands, except grant date fair value) |  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Unvested at March 31, 2011 |  |  | — |  |  | $ | — |
Granted |  |  | 5,065 |  |  |  | — |
Canceled |  |  | — |  |  |  | — |
Vested |  |  | (1,992 | ) |  |  | — |
Unvested at March 31, 2012 |  |  | 3,113 |  |  | $ | 1.91 |
Granted |  |  | 365 |  |  |  | 4.16 |
Canceled |  |  | — |  |  |  | — |
Vested |  |  | (903 | ) |  |  | 3.35 |
Unvested at March 31, 2013 |  |  | 2,575 |  |  | $ | 1.73 |

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- Definition The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Article 4 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 29, 30, 31 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Research Bulletin (ARB) -Number 43 -Section B -Paragraph 7, 11A -Chapter 1 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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