Quarterly report pursuant to Section 13 or 15(d)

Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants

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Note 15 - Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants
9 Months Ended
Dec. 27, 2014
Disclosure Text Block Supplement [Abstract]  
Preferred Stock [Text Block]

(15)      Series B, C, D Convertible Voting Perpetual Preferred Stock and Warrants


On November 10, 2011, the Company received $2,199,000 in cash proceeds from Alara Capital AVI II, LLC, a Delaware limited liability company (the “Investor”), an investment vehicle sponsored by Active Value Investors, LLC, under a Securities Purchase Agreement entered into on October 31, 2011. Under the terms of the Securities Purchase Agreement, the Company issued 9,997 shares of its Series B Convertible Voting Perpetual Preferred Stock (“Series B Preferred Stock”) to the Investor at a price of $220 per share. The Company has recorded $2.0 million as Series B Preferred Stock on the consolidated balance sheet. This amount is net of stock offering costs of approximately $202,000 and represents the value attributable to both the convertible preferred stock and warrants issued to the Investor. After considering the value of the warrants, the effective conversion price of the preferred stock was greater than the common stock price on date of issue and therefore no beneficial conversion feature was present.


On February 19, 2013, the Company entered into a Securities Purchase Agreement (the “SPA”) pursuant to which it agreed to sell 3,424.65 shares of its Series C Convertible Voting Perpetual Preferred Stock (“Series C Preferred Stock”) to the Investor, for aggregate consideration of $500,000, which is approximately $146.00 per share. The Company has recorded $457,000 as Series C Preferred Stock on the consolidated balance sheet, which is net of stock offering costs of approximately $43,000. After considering the reduction in the value of the warrant, the effective conversion price of the preferred stock was greater than the common stock price on the date of issue and therefore no beneficial conversion feature was present.


On July 8, 2013 the Company received $817,000 in net cash proceeds from the Investor under a Securities Purchase Agreement. The Company sold to the Investor 5,111.86 shares of its Series D Convertible Voting Perpetual Preferred Stock (Series D Preferred Stock) and a warrant to purchase up to 511,186 additional shares of common stock at the price of $1.43 per share. The allocation of the $858,000 in gross proceeds from issuance of Series D Preferred Stock based on the relative fair values resulted in an allocation of $498,000 (which was recorded net of $41,000 of issuance costs) to Series D Preferred Stock and $360,000 to Common Stock.  In addition, because the effective conversion rate based on the $498,000 allocated to Series D Preferred Stock was $0.97 per common share which was less than the Company’s stock price on the date of issuance, a beneficial conversion feature was present at the issuance date.  The beneficial conversion feature totaled $238,000 and was recorded as a reduction of common stock and an increase to accumulated deficit.


Each share of Series B, Series C and Series D Preferred Stock is convertible into one share of the Company’s common stock. The investor also holds warrants to purchase 1,017,405 shares at an exercise price of $1.43 per share.


The table below presents information for the periods ended December 27, 2014 and March 29, 2014


Preferred Stock            


As of December 27, 2014 and March 29,2014        


   

 

               

Liquidation

 
   

Designated

Shares

   

Shares

Issued

   

Shares

Outstanding

   

Preference

(in thousands)

 

Series B

    10,000.00       9,997.00       9,997.00     $ 2,309  

Series C

    3,500.00       3,424.65       3,424.65       500  

Series D

    6,000.00       5,111.86       5,111.86       731  

Total

    19,500.00       18,533.51       18,533.51     $ 3,540