Stockholders' Equity

3 Months Ended

Jun. 30, 2013

Stockholders' Equity

Stockholders' Equity

Note 12 — Stockholders’ Equity

Common Stock

The Company is authorized to issue 300,000,000 shares of common stock, with a par value of $0.001 per share, under the terms of the Company’s Amended and Restated Articles of Incorporation. As of June 30, 2013, there were 115,119,415 shares of our common stock issued and outstanding.

Preferred Stock

The Company is authorized to issue 100,000,000 shares of preferred stock, with a par value of $0.001 per share, under the terms of the Company’s Amended and Restated Articles of Incorporation. As of June 30, 2013, no shares of preferred stock had been issued.  On July 10, 2013, 5.5 million shares of a newly created senior mandatorily convertible preferred stock were issued to the Very Hungry Parties in exchange for the Very Hungry Notes.  On August 14, 2013, we compensated Buffalo for a revenue interest reduction by issuing Buffalo 15.0 million shares of our newly created redeemable preferred stock.  Refer to Note 17 — Subsequent Events for further details.

Investor Warrants

As part of its fundraising efforts, the Company has issued warrants from time to time to various investors to purchase shares of its common stock. As of June 30, 2013, a total of 61,492,785 investor warrants had been issued and remained outstanding. The exercise price and remaining exercise period of these warrants ranged from $0.12 to $4.25 and from 0.1 to 5.9 years, respectively.  With the completion of our capital raise on June 26, 2013 and the issuance of the warrants therewith we no longer met the criteria for equity accounting for our warrants and therefore began accounting for all warrants as liabilities.  This accounting change was triggered by the full ratchet anti-dilution provisions contained in these warrants.

The $5 million of gross proceeds from the June 26, 2013 public offering, less underwriters’ commissions of $0.9 million, were allocated based on the relative fair value of the common stock and warrants issued with $2.1 million being allocated to common stock and $2.0 million being allocated to the warrants.

Non-Controlling Interest

The Company included The Karlsson Group’s initial $11.0 million contribution of mineral interests to AWP in non-controlling interest on the balance sheet, net of its share of losses. Through this contribution, The Karlsson Group earned its 50% interest in AWP. The Company earned its initial 50% interest in AWP through its cash contributions of $11.0 million.

Prior to the closing of The Karlsson Group Acquisition on August 1, 2012, Prospect was the 50% owner of AWP, operated and controlled AWP, and accordingly historically provided consolidated financial statements for Prospect and AWP. As such, the remaining 50% interest in AWP owned by The Karlsson Group was considered a non-controlling interest through the August 1, 2012 acquisition date.

With the completion of The Karlsson Group Acquisition on August 1, 2012 and in accordance with GAAP that calls for any change in a parent’s ownership of a non-controlling interest to be accounted for as an equity transaction, The Karlsson Group Acquisition was treated as a distribution through equity and accordingly no step-up in basis of the assets acquired occurred.