Note 6 - Stockholders’ Equity

12 Months Ended

Mar. 31, 2012

Stockholders' Equity Note Disclosure [Text Block]

6.             Stockholders’ Equity

Series A Preferred Stock

The Company designated 100,000 shares of its preferred stock as Series A, cumulative, voting preferred stock with a per share par value of $.01 and a per share liquidation value equal to the greater of $100 or 100 times the per share liquidation value of common stock.  Each share of Series A preferred stock has voting rights equal to 100 shares of common stock.  Upon issuance, the Series A preferred stock bears a cumulative quarterly dividend equal to the greater of $1.00 or 100 times the amount of any quarterly declared dividend on common stock.  No shares of Series A preferred stock have been issued.

Series B Preferred Stock

The Company has 5,000,000 authorized shares of Series B preferred stock, with a per share par value of $.01.  The Company previously issued 500,000 shares to Mr. Myhre for $625,000.  Each share of Series B preferred stock is entitled to the same voting rights as common stock and bears a cumulative annual dividend of $.06 per share and has liquidation rights over common stock at $1.25 per share plus any cumulative dividends.  At March 31, 2012 and 2011, cumulative preferred stock dividends in arrears were $30,000.  Each share of Series B preferred stock is convertible into one share of common stock at any time.

Stock Options

There were no stock options granted, exercised or expired during the years ended March 31, 2012 and 2011, and no options were outstanding as of March 31, 2012 or 2011.

Warrants

Detachable warrants for 1,000,000 shares of common stock were included with the Series B preferred stock issuance noted above.  The warrants were issued with an exercise price of $1.25 per share and appraised value of approximately $.20 per warrant.  On March 30, 2012, Mr. Myhre exercised his right to purchase 650,000 shares of common stock at an exercise price of $1.25 per share, for a total cash payment of $812,500.  The exercise converted all remaining warrants outstanding, as there were 650,000 warrants outstanding and 650,000 shares of common stock reserved for such conversion at March 31, 2011.

Equity Incentive Plan

The Company has an Equity Incentive Plan that permits the granting of stock options, restricted stock awards, restricted stock units, performance share awards, performance unit awards and stock appreciation rights to certain employees, consultants, affiliates and advisors of the Company. Of the 1,000,000 shares of the Company’s common stock that were initially available for issuance pursuant to the Plan, 740,000 and 820,000 shares were available for issuance at March 31, 2012 and 2011.

Restricted Stock Awards

On June 15, 2011, the Company’s Board of Directors (the “Board”) approved a compensation arrangement for the Board’s directors for the 2012 and 2013 fiscal years.  Under the arrangement applicable for those two fiscal years, the Board granted each of the Company’s five directors a two-year restricted stock award for 16,000 shares of common stock under the Equity Incentive Plan.  These shares were valued at $1.28 per share, which was the closing price of the Company’s common stock on the grant date.  Each award vests at a rate of 2,000 shares per quarter beginning with the Company’s quarter ending June 30, 2011.

If any director ceases to serve on the Company’s Board for any reason during the award’s vesting period, such director’s restricted stock award will cease vesting, and all unvested shares pursuant to such award will be forfeited to the Company without payment of any consideration therefore to the director.  Future expense related to these awards is expected to be $51,200.  Stock compensation expense for directors was $51,200 for the year ended March 31, 2012.  Stock compensation expense for directors under a previous compensation arrangement was $130,000 for the year ended March 31, 2011.

Other Stock-Based Compensation

On June 15, 2011, the Board awarded stock bonuses to the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) in the amount of 20,000 and 10,000 shares of common stock, respectively.  The shares were valued at $1.28 per share, which was the closing price of the Company’s common stock on the grant date.  The stock bonuses are not subject to forfeiture or any vesting requirements and were not made pursuant to the Equity Incentive Plan.  The Company recognized expense of $38,400 related to these awards for year ended March 31, 2012.  Stock compensation expense for officers under a previous award was $70,500 for the year ended March 31, 2011.