20. Fair Value Measurements

12 Months Ended

Mar. 31, 2014

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

20.                 Fair Value Measurements

FASB ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and prescribes disclosures about fair value measurements.

As defined in ASC 820, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy defined by ASC 820 are as follows:

Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities and listed equities.

Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options and collars.

Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

The valuation techniques that may be used to measure fair value are as follows:

Market approach — Uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities

Income approach — Uses valuation techniques to convert future amounts to a single present amount based on current market expectations about those future amounts, including present value techniques, option-pricing models and excess earnings method

Cost approach — Based on the amount that currently would be required to replace the service capacity of an asset (replacement cost)

The carrying value of the Company’s borrowings is a reasonable estimate of its fair value as borrowings under the Company’s credit facility have variable rates that reflect currently available terms and conditions for similar debt.

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of March 31, 2014 and March 31, 2013. As required by FASB ASC 820, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

March 31, 2014	Level I		Level II		Level III		Total
Warrant Liability	$	-	$	-	$	354,309	$	354,309
Total Liabilities	$	-	$	-	$	354,309	$	354,309

March 31, 2013	Level I		Level II		Level III		Total
Warrant Liability	$	-	$	-	$	198,330	$	198,330
Total Liabilities	$	-	$	-	$	198,330	$	198,330

The guidance in ASC 815, “Derivatives and Hedging”, requires that we mark the value of our warrant to market and recognize the change in valuation in our statement of operations each reporting period. Determining the warrant liability to be recorded requires us to develop estimates to be used in calculating the fair value of the warrant. The fair value of the warrant is calculated using the Black-Scholes valuation model.

The following table provides a summary of the changes in fair value of our Level 3 financial liabilities for the years ended March 31, 2014 and 2013 as well as the unrealized gains or losses included in income.

	March 31, 2014		March 31, 2013
Fair value, at beginning of period	$	198,330	$	355,290
New issuances		41,110		137,825
Change in fair value		114,869		(294,785	)
Fair value, at end of period	$	354,309	$	198,330

The common stock warrant was not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign corporation. The warrants do not qualify for hedge accounting, and, as such, all changes in the fair value of these warrants are recognized as other income/expense in the statement of operations until such time as the warrants are exercised or expire. Since these common stock warrants do not trade in an active securities market, the Company recognizes a warrant liability and estimates the fair value of these warrants using the Black-Scholes options model using the following assumptions:

Values at Inception

Date of Warrant		Expiration  Date		Number of Warrants	Exercise  Price		Fair Market Value Per Share		Expected Volatility			Remaining  Life in Years		Risk Free  Interest Rate			Warrant  Liability
	09-10-2010		09-10-2019	136,920	$	6.70	$	6.70		28.51	%		9		2.81	%	$	267,848
	09-10-2010		09-10-2015	10,416	$	6.70	$	6.70		28.51	%		5		1.59	%	$	13,808
	07-26-2012		09-10-2019	50,000	$	3.35	$	3.90		42.04	%		7		0.94	%	$	66,193
	07-26-2012		09-10-2019	20,000	$	3.35	$	3.90		42.04	%		7		0.94	%	$	26,477
	11-20-2012		09-10-2019	20,000	$	3.56	$	3.50		42.45	%		6.83		1.09	%	$	21,441
	02-14-2013		09-10-2019	20,000	$	3.58	$	3.80		41.72	%		6.58		1.43	%	$	23,714
	07-12-2013		09-10-2019	20,000	$	3.33	$	3.32		40.26	%		6.17		2.00	%	$	19,523
	08-12-2013		09-10-2019	20,000	$	3.69	$	3.69		40.20	%		6.08		2.01	%	$	21,587

Values at March 31, 2013

Date of  Warrant		Expiration Date		Number of Warrants	Exercise  Price		Fair Market Value Per Share		Expected Volatility			Remaining Life in Years		Risk Free Interest Rate			Warrant Liability
	09-10-2010		09-10-2019	136,920	$	6.70	$	3.50		41.45	%		6.45		1.24	%	$	81,080
	09-10-2010		09-10-2015	10,416	$	6.70	$	3.50		41.45	%		2.45		0.25	%	$	1,870
	07-26-2012		09-10-2019	50,000	$	3.35	$	3.50		41.45	%		6.45		1.24	%	$	53,269
	07-26-2012		09-10-2019	20,000	$	3.35	$	3.50		41.45	%		6.45		1.24	%	$	21,307
	11-20-2012		09-10-2019	20,000	$	3.56	$	3.50		41.45	%		6.45		1.24	%	$	20,664
	02-14-2013		09-10-2019	20,000	$	3.58	$	3.50		41.45	%		6.45		1.24	%		20,140

Values at March 31, 2014

Date of Warrant		Expiration  Date		Number of Warrants	Exercise  Price		Fair Market Value Per Share		Expected Volatility			Remaining  Life in Years		Risk Free  Interest Rate			Warrant  Liability
	09-10-2010		09-10-2019	136,920	$	6.70	$	4.42		43.35	%		5.45		1.73	%	$	123,564
	09-10-2010		09-10-2015	10,416	$	6.70	$	4.42		43.35	%		1.45		0.44	%	$	2,498
	07-26-2012		09-10-2019	50,000	$	3.35	$	4.42		43.35	%		5.45		1.73	%	$	77,626
	07-26-2012		09-10-2019	20,000	$	3.35	$	4.42		43.35	%		5.45		1.73	%	$	31,050
	11-20-2012		09-10-2019	20,000	$	3.56	$	4.42		43.35	%		5.45		1.73	%	$	29,892
	02-14-2013		09-10-2019	20,000	$	3.58	$	4.42		43.35	%		5.45		1.73	%	$	29,310
	07-12-2013		09-10-2019	20,000	$	3.33	$	4.42		43.35	%		5.45		1.73	%	$	31,163
	08/12/2013		09-10-2019	20,000	$	3.69	$	4.42		43.35	%		5.45		1.73	%	$	29,206

The volatility calculation was based on the 51 months of the Company’s stock price prior to the measurement date, utilizing January 1, 2010 as the initial period, as the Company believes that this is the best indicator of future performance. The source of the risk free interest rate is the US Treasury rate related to 7 year notes. The exercise price is per the agreement, the fair market value is the closing price of our stock on the date of measurement, and the expected life is based on management’s current estimate of when the warrants will be exercised. All inputs to the Black-Scholes options model are evaluated each reporting period.