Shareholders' Equity

9 Months Ended

Jun. 30, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 6. Shareholders’ Equity

Common Stock

The Company is authorized to issue up to 100,000,000 shares of common stock.

In connection with the acquisition of Turnpike, the Company committed to pay total earn-outs up to an additional 2,500,000 shares of common stock upon the achievement of certain performance goals for 2010, 2011 and 2012 fiscal years. The Company has determined that the 2010 performance goals were achieved and therefore in December 2010, 809,993 shares of common stock were issued to the former shareholders of Turnpike with the value of the remaining 23,340 shares being settled in cash of $70,000.

Preferred Stock

The Company has authorized an undesignated class of preferred stock of 50,000,000 shares. The Board of Directors can issue preferred stock in one or more series and fix the terms of such stock without shareholder approval. Preferred stock may include the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion and redemption rights and sinking fund provisions.

Series B

In December 2003, the Company’s Board of Directors authorized the sale of up to 1,700,000 shares of Series B Preferred Stock through a private placement. In December 2003, the Company sold 1,612,903 shares of Series B Preferred Stock for $4.1 million, or $2.54 per share. Each share of the Series B Preferred Stock is convertible into one share of the Company’s common stock. The Series B Preferred Stock pays a cumulative dividend of 4% of the original issue price per annum (payable semi-annually) on each outstanding share of Series B Preferred Stock. The dividend is payable in additional shares of Series B Preferred Stock rather than cash, at the option of the holders.

In fiscal 2011 and 2010 the Company issued 84,216 and 80,946 shares, respectively, of Series B Preferred Stock to Trident for payment of accrued dividends. Based on the market value of the Company’s common stock on the date of the dividend payment, the payment of the dividend in additional shares of Series B Preferred Stock resulted in a non-cash dividend of $0.2 million in each of fiscal 2011 and 2010. There were 2,168,733 shares and 2,084,577 shares issued and outstanding at June 30, 2011 and September 30, 2010, respectively.

Series C

In August 2005, the Company’s Board of Directors authorized the sale of up to 1,400,000 shares of Series C Preferred Stock through a private placement. In September 2005, the Company sold 1,269,036 shares of Series C Preferred Stock for $5.0 million, or $3.94 per share. Each share of the Series C Preferred Stock is convertible into one share of the Company’s common stock. At June 30, 2011 and September 30, 2010, respectively, there were 1,269,036 shares issued and outstanding.

Series D

In May 2007, the Company’s Board of Directors authorized the sale of up to 1,600,000 shares of Series D Preferred Stock through a private placement. In June 2007, the Company sold 1,566,580 shares of Series D Preferred Stock for $6.0 million, or $3.83 per share. Each share of the Series D Preferred Stock is convertible into one share of the Company’s common stock. There were 1,566,580 shares issued and outstanding at June 30, 2011 and September 30, 2011, respectively.

Series E and Series F

In February 2009, the Company sold 1,355,857 shares of Series E Preferred Stock for $3.0 million, or $2.22 per share. Each share of the Series E Preferred Stock was converted into one share of the Series F Preferred Stock in April 2009 and the Certificate of Designation for the Series E Preferred Stock was cancelled. Each share of Series F Preferred Stock is convertible into one share of the Company’s common stock. In February 2011, 2,252 shares of Series F Preferred Stock were converted to common stock. At June 30, 2011 and September 30, 2010, respectively, there were 1,353,605 shares and 1,355,857 shares issued and outstanding.

Series G

In December 2009 in connection with financing the acquisition of Turnpike, the Company issued convertible debt totaling $30.2 million. The convertible debt was converted into 10,066,663 shares of Series G preferred stock at $3.00 per share on February 19, 2010, subsequent to shareholder approval. Each share of Series G Preferred Stock is convertible into one share of the Company’s common stock. There were 10,066,663 shares issued and outstanding at June 30, 2011 and September 30, 2011, respectively.

In addition, as part of the debt conversion, the Company issued 7-year warrants to purchase 3,019,995 shares of its common stock at an exercise price of $3.00 per share. The aggregate fair value of the warrants was $3.9 million. The warrants permit “cashless exercise.”

Common Stock Warrants

The Company has issued warrants for the purchase of common stock to management, consultants and placement agents. Compensation expense associated with the warrants has not been material and has been recorded as expense at its fair value.

In fiscal 2010, the Company issued 3,020,000 warrants relating to the issuance of Series G Preferred Stock.

The following tables summarize information relating to stock warrants for fiscal 2010 and for the nine month period ended June 30, 2011 (number of warrants in thousands):

				Weighted		Weighted
				Average		Average
	Number of			Exercise		Remaining
	Warrants			Price		Life (years)
Warrants outstanding at September 30, 2009		1,941		$	3.34		4.0
Granted		3,020
Cancelled		(10	)
Warrants outstanding at September 30, 2010		4,951			3.13		5.1
Cancelled		(147	)
Warrants outstanding at June 30, 2011		4,804		$	3.14		4.5