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Convertible Preferred Stock
3 Months Ended
Dec. 31, 2013
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]  
Convertible Preferred Stock

 

Series A Preferred Stock

 

At December 31, 2013, September 30, 2013, and September 30, 2012 the Company had 0, 0, and 353 shares, respectively, of Series A Cumulative Convertible Preferred Stock (the “Series A Stock”) outstanding. The Series A Stock was originally issued to investors for $100 per share. The following summarizes the terms of the Series A preferred stock outstanding:

 

Face Value:  Each share of Series A Stock has a face and par value of $100 and $.001 per share, respectively.

 

Voluntary Conversion:  Each share of Series A Stock is convertible at the election of the holders at any time into approximately 20 shares of our common stock, subject to increase under the anti-dilution provisions under the Certificate of Designation and the Subscription Agreement upon the occurrence of events as defined therein.  

 

Dividends:  Except in the event of default under the terms of the Subscription Agreement, the Series A Stock pays no dividends.  In the event of an uncured default by our Company, the Series A Stock pays dividends of 12% per annum during the period our Company is in default as described under the Certificate of Designation.  

 

Redemption:  The Series A Stock is not required to be redeemed by our Company.

 

Liquidation Rights:  Upon the occurrence of a liquidation event (as defined in the Certificate of Designation), the holders of Series A Stock will be repaid their full face value and cumulative accrued dividends prior to the receipt of any other class of preferred or common stock.

 

Forced Conversion:  The Company has the right to force conversion of each share of Series A Stock into approximately 20 shares of common stock at any time provided the Company’s common stock has maintained a closing price of $15.00 per share for three consecutive trading days prior to conversion.  

 

Voting Rights: The Company’s Series A Stock has no voting rights.

 

Covenants: The Subscription Agreement imposes certain covenants on the Company, including restrictions against incurring additional indebtedness, issuing any additional equity except certain permitted issuances, creating any liens on the Company’s property, amending its certificate of incorporation or bylaws in a manner which may adversely affect the Series A Stock holders, redeeming or paying dividends on shares of the Company’s outstanding common stock, and entering into certain related party transactions.

 

At December 31, 2013, September 30, 2013, and September 30, 2012, the Series A preferred stock was convertible into 0, 0, and 7,121 shares, respectively, of the Company’s common stock at an effective price of $4.95 per share. 

 

Series B Preferred Stock

 

The Company’s Series B Convertible Preferred Stock (“Series B Stock”) automatically converted to common stock on January 19, 2013 as in accordance with the registration statement which states that six months from the date of the final closing, as defined in the related subscription agreement, each share of Series B will automatically convert into common stock. 10,165 outstanding shares of Series B Stock automatically converted into 1,694,167 common shares at an effective price of $600 per share when adjusted for the 1:15 stock split.

 

At September 30, 2012, the Company had 10,165 shares of Series B convertible preferred stock (“Series B Stock”) outstanding that were issued to investors for $1,000 per share. The following summarizes the terms of the Series B Stock outstanding:

 

Face Value: Each share of Series B Stock has a face and par value of $1,000 and $0.001 per share, respectively.

 

Voluntary Conversion: Each share of Series B Stock is convertible at the election of the holders at any time into 167 shares of our common stock.  Dividends:  None.

 

Redemption: The Series B Stock is not required to be redeemed by the Company.

 

Liquidation Rights: Upon the occurrence of a liquidation event and after any payments to the holders of Series A Stock, the holders of Series B Stock will be repaid their full face value prior to the receipt of any other class of preferred or common stock.

 

Forced Conversion: Each share of Series B Stock shall automatically convert into common stock at the earlier of: 1) the effective date of registration of common shares into which Series B Stock is convertible; or 2) six months from the date of the final closing as defined in the related subscription agreement. The Series B Stock automatically converted to common stock on January 19, 2013 due to (2) above (the final closing date was July 19, 2012).

 

Voting Rights: Equal to the largest number of full shares of common stock into which the shares can be converted.