STOCKHOLDERS' EQUITY

12 Months Ended

Mar. 31, 2012

Stockholders' Equity

STOCKHOLDERS' EQUITY

NOTE 9 – STOCKHOLDERS’ EQUITY

Common Stock

The following summarizes Lucas’ common stock activity for each of the two years ended March 31, 2012:

			Common Shares
			Issued
	Amount (a)		Per Share		Shares		Treasury			Outstanding
Balance at March 31, 2010						12,837,220		(36,900	)		12,800,320
Unit Offering	$	5,403,300	(b) 2.38			2,510,506		-			2,510,506
At-The-Market Offering		1,209,301		1.55		778,170		-			778,170
Warrants Exercised		45,000		1.00		45,000		-			45,000
Property Acquisitions		503,205		1.77		284,788		-			284,788
Property Sale Commission		38,757		0.98		39,502		-			39,502
Share-Based Compensation		450,823		1.94		232,527		-			232,527
Balance at March 31, 2011						16,727,713		(36,900	)		16,690,813
Series C Warrants Exercise		5,760,374		2.29		2,510,506		-			2,510,506
Property Acquisitions		441,000		2.94		150,000		-			150,000
Share-Based Compensation		136,118		1.99		68,438		-			68,438
Retirement of Accrued Liability		498,750		3.99		125,000		-			125,000
Balance at March 31, 2012						19,581,657		(36,900	)		19,544,757

(a) Net proceeds or fair market value on grant date, as applicable.

(b) Purchase price for each Unit.  See below.

Fiscal Year 2012.  During the year ended March 31, 2012, Series C Warrants were exercised for 2,510,506 shares of common stock.  The exercise price of the Series C Warrants was $2.48 per share. The per share price of $2.29 shown in the above tabulation was net of commissions paid to the placement agent, see "Warrants" below for additional information.  Common stock issuances for property acquisitions and share-based compensation are recorded at the grant date fair value of the shares on the date of issuance.  See Note 4 – Property, and Equipment for information on common stock issuances related to property acquisitions. See Note 10 – Share-Based Compensation for information on common stock activity related to Share-Based Compensation, including shares granted to the board of directors, officers, employees and consultants. 

Fiscal Year 2011.  On December 30, 2010, Lucas sold an aggregate of 2,510,506 units pursuant to a Securities Purchase Agreement to institutional investors, each consisting of (a) one share of common stock, (b) one Series B Warrant to purchase one share of common stock at an exercise price of $2.86 per share, and (c) one Series C Warrant to purchase one share of common stock at an exercise price of $2.62 per share (each a “Unit”).  The Warrants have cashless exercise rights if the registration statement pursuant to which the Warrants were issued is not effective and available for use at the time of any proposed exercise. The Warrants also include a provision whereby the investors are not eligible to exercise any portion of the Warrants that would result in them becoming a beneficial owner of more than 9.99% of Lucas’ common stock. Each Unit had a purchase price of $2.38, and Lucas received net proceeds of approximately $5,403,300 (net of offering costs of approximately $517,700). The placement agent received 150,630 warrants to purchase one share of common stock with an exercise price of $2.98 and a three year exercise period.

The 2,510,506 Series B Warrants and the 2,510,506 Series C Warrants had relative fair values of $2,016,430 and $1,847,219, respectively. The relative fair value of the 2,510,506 shares of common stock issued in the transaction was $1,586,352, based upon the market price on the transaction date. The fair value of the warrants was determined using the Black-Scholes option pricing model. The 150,630 placement agent warrants had a fair value of $126,062. The Series B, Series C and placement agent warrants were valued using the Black Scholes model with the following weighted average assumptions used for grants; dividend yield of 0.00%; expected volatilities from 101% to 113%; risk-free interest rates from 0.20% to 1.14% and expected terms ranging from 0.3 to 2.0 years.  See "Warrant" below for additional information.

On March 26, 2010, Lucas entered into a Placement Agent Agreement with a brokerage firm, under which Lucas could issue and sell up to 4 million shares of common stock from time to time in an at-the-market (ATM) public equity offering program.  Under the ATM offering, Lucas sold a total of 778,170 newly issued shares during the period April 12, 2010 through May 6, 2010 with gross proceeds of approximately $1,381,100 (net proceeds of $1,209,300). The ATM program was terminated in September 2010.

During the year ended March 31, 2011, the Company issued a total of 284,788 shares of common stock in connection with certain purchases of various oil and gas properties. Based on the stock price on the date of the agreements, the shares issued had a grant date fair value of approximately $503,200.  In connection with certain sales of oil and gas properties, the Company issued a total of 39,502 shares of common stock as commission and based on the stock price on the date of agreement, the shares issued had a grant date fair value of approximately $39,500.

Preferred Stock

The following summarizes Lucas’ preferred shares activity for each of the two years ended March 31, 2012:

	Preferred Shares
	Issued
	Shares		Amount
Balance at March 31, 2011		-	$	-
Issuances for Property Acquisitions:
Series A convertible		2,000		3,095,600
Series B convertible		2,824		5,166,754
Balance at March 31, 2012		4,824	$	8,262,354

Preferred stock issuances for property acquisitions are recorded at the fair value of the shares on the date of issuance.  Each share of the Series A and Series B Convertible Preferred Stock shares are convertible into an aggregate of 1,000 shares of the Company’s common stock and have no liquidation preference and no maturity date.  The Series B Preferred Stock has dividends rights when and if declared by the Company on an “if converted” basis.

Treasury Stock

Lucas did not repurchase any shares of its common stock during the two years ended March 31, 2012.  The shares previously purchased are held by Lucas’ transfer agent as Treasury Stock, and the shares are treated as issued, but not outstanding, at March 31, 2012 and 2011.  The shares are recorded at a cost of $49,159.

Warrant

The following summarizes Lucas’ warrant activity for each of the two years ended March 31, 2012:

	2012					2011
				Weighted					Weighted
				Average					Average
	Number of			Exercise		Number of			Exercise
	Warrants			Price		Warrants			Price
Outstanding at Beginning of Year		5,476,642		$	2.67		3,360,549		$	7.27
Issued		-			-		5,171,642			2.75
Expired		-			-		(3,010,549	)		8.00
Exercised		(2,510,506	)		2.51		(45,000	)		1.00
Outstanding at End of Year		2,966,136		$	2.67		5,476,642		$	2.65

During the year ended March 31, 2012, the Company did not issue any warrants, and none of the Company’s outstanding warrants expired.During the year ended March 31, 2011, warrant holders exercised warrants to purchase 45,000 shares of common stock at $1.00 per share.  The warrants were originally issued to the warrant holders in connection with the purchase of units in a private equity placement in September 2009.  These warrants have an expiration date of August 31, 2012.  At March 31, 2012, all of the September 2009 warrants had been exercised.

In July 2011, in an effort to secure the funding for the capital expenditure program for the current fiscal year and to avoid the unpredictable nature of the financial market, the Company incentivized the institutional investors who purchased securities in the Company's December 2010 offering to exercise the Series C Warrants they purchased as part of the offering by entering into an amendment to the original Series C Warrant Agreement on July 18, 2011 (the Amendment Agreement). The expiration date for the Series C Warrants was August 3, 2011.  Without changing the expiration date, the Amendment Agreement required the investors to immediately exercise 25% of the Series C Warrants they held and the Company to lower the exercise price of the Series C Warrants to $2.48 per share from the original exercise price of $2.62 per share.  Pursuant to the Series C Warrant Agreement, as amended, the investors were required to exercise all of their remaining Series C Warrants if the closing bid price of the Company's stock was higher than the amended exercise price on August 3, 2011.  Since the closing bid price on that date for the Company's stock was $2.51, all remaining Series C Warrants were exercised.  Net proceeds to the Company from exercises of all of the 2,510,506 Series C Warrants were approximately $5.8 million after deducting commissions paid to the placement agent.  The Company used the net proceeds for general corporate purposes, including the funding of capital expenditures.   Based on the Black Scholes option pricing model, the change in the exercise price resulted in an increase of $293,275 in the aggregate value of the Series C Warrants.  Pursuant to the Stock Compensation Topic of the Financial Accounting Standards Board Accounting Standards Codification (ASC Topic 718), the Company recorded the increase as a non-operating expense in Other Income (Expense) in the Condensed Consolidated Statements of Operations and recorded the same amount in Additional Paid in Capital in the Condensed Consolidated Balance Sheets.

At March 31, 2012, the outstanding warrants had an intrinsic value of approximately $451,400.