Common Stock Warrants

6 Months Ended

Jun. 30, 2011

Common Stock Warrants

Common Stock Warrants

Note 13.  Common Stock Warrants

We have outstanding various series of warrants to purchase our common stock. Holders of the warrants are not entitled to receive dividends, vote, receive notice of any meetings of stockholders or otherwise have any right as stockholders with respect to their warrant shares. The following schedule shows warrants outstanding as of June 30, 2011:

Description	Grant  Date	Expiration Date	Exercise Price			Issued and Outstanding as of June 30, 2011
February 15, 2007 Shelf Issue	2/15/2007	2/15/2012	$	13.30		542,849
GFI Tyngsboro Lease	7/23/2007	7/22/2014	$	17.70		50,000
September 10, 2007 Shelf Issue (Investors)	9/10/2007	3/11/2013	$	19.90		442,245
September 10, 2007 Shelf Issue (Placement Agents)	9/10/2007	3/11/2013	$	19.90		15,307
October 31, 2007 Shelf Issue	10/31/2007	5/1/2013	$	29.70		543,182
June 30, 2007 Massachusetts Development Loan	6/30/2008	6/30/2015	$	18.90		17,196
October 15, 2008 Shelf Issue	10/15/2008	4/16/2014	$	1.40		435,000
December 24, 2008 Shelf Issue	12/24/2008	6/25/2014	$	7.40		546,600
December 24, 2008 Shelf Issue	12/24/2008	5/12/2013	$	1.60		350,000
Series W - December 9, 2009 Public Offering	12/9/2009	12/9/2014	$	7.00		1,905,000
Series Y - Supplier Warrants August19,2010	8/19/2010	6/15/2015	$	7.20		11,667
Series A - December 23, 2010 Common Stock Warrants	12/23/2010	12/23/2015	$	2.2470	*	3,116,238
Series A - December 23, 2010 Common Stock Warrants – Amended	12/23/2010	12/23/2015	$	1.0288	**	1,144,882
Total warrants outstanding						9,120,166

* On February 25, 2011, we completed a 1-for-10 stock split. In accordance with the terms of the Series A warrants, the exercise price of the warrants was adjusted from $2.5234 to $2.2895, effective March 18, 2011. The exercise price of the warrants was further adjusted during May 2011 as a result of stock issued in connection with amended warrant agreements (as described below), and upon the issuance of common stock in settlement of the June 1, 2011, preferred stock redemption.

** On May 24, 2011, we amended warrants held by two warrantholders to induce them to exercise their remaining preferred warrants.  As of June 30, 2011, the exercise price of the amended warrants was $1.0288.  See below for additional information.

The following shows changes to the warrants outstanding from December 31, 2010, through June 30, 2011:

	# Warrants
Warrants outstanding December 31, 2010	10,647,108.00
Adjustment to November 2005 warrants due to 12/23/2010 financing	267,269.80
November 2005 warrants expired	(908,725.00	)
Warrant exercises:
February 15, 2007 Shelf Issue	(83,333.40	)
September 10, 2007 Shelf Issue (Investors)	(170,000.00	)
Series A - December 23, 2010 Common Stock Warrants	(197,153.20	)
October 15, 2008 Shelf Issue	(435,000.00	)
Adjust for fractional shares	(0.20	)
Warrants outstanding as of June 30, 2011	9,120,166.00

Warrants with activity during the six months ended June 30, 2011, are described below:

November 2005 Financing Warrants

As part of a financing transaction in November 2005, we issued warrants to purchase an aggregate of 296,053 shares of our common stock to ten investors. The per-share exercise price for the warrant shares was $22.10. The terms of the warrants included anti-dilution provisions which required us to adjust the exercise price and the number of shares of our common stock to be issued upon exercise of the warrants under certain circumstances.  Each investor warrant was exercisable at any time until May 9, 2011. On May 9, 2011, 908,725 warrants with an adjusted exercise price of $7.20 expired.

February 2007 Shelf Warrants

In February 2007, we sold 1,181,469 units of the Company at a purchase price of $9.00 per unit. Each unit consisted of one share of our common stock, par value $0.01 per share, and a warrant to purchase 0.5 shares of common stock at an exercise price of $13.30 per share, for a total of 590,738 warrants. In addition, we issued 35,445 warrants to the placement agents at the same price per share. These warrants became exercisable as of August 16, 2007, and expire five years from date of issue. The units were issued pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with our registration statement on Form S-3 filed on September 1, 2006, which became effective on December 14, 2006.

On February 18, 2011, we entered into a warrant exercise agreement with one of our warrantholders in order to induce the warrantholder to exercise its out-of-the-money warrants. The agreement called for the exercise of 83,333 warrants at an exercise price of $13.30 per share, providing total gross proceeds to the company of $1,083,334. We agreed to pay to the holder $898,051 in consideration for its early exercise, resulting in net proceeds to us of $185,283.

September 2007 Shelf Warrants

In September 2007, we sold 510,204 units of the Company at a purchase price of $19.60 per unit. Each unit consisted of one share of our common stock, par value $0.01 per share, and a warrant to purchase 1.2 shares of common stock at an exercise price of $19.90 per share, for a total of 612,245 warrants. In addition, 15,307 warrants were issued to the placement agents at the same price per share. The warrants became exercisable as of March 10, 2008, and expire on March 11, 2013. The units were issued pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with our registration statement on Form S-3 filed on August 6, 2007, which became effective on August 15, 2007.

On February 16, 2011 we entered into a warrant exercise agreement with one of our warrantholders in order to induce the warrantholder to exercise its out-of-the-money warrants. The agreement called for the exercise of 170,000 warrants at an exercise price of $19.90 per share, providing total gross proceeds to the company of $3,383,000. We agreed to pay to the holder $2,954,022 in consideration for its early exercise, which resulted in net proceeds to us of $428,978.

October 2008 Shelf Warrants

On October 15, 2008, we sold 870,000 units of the Company at a purchase price of $9.10 per unit, for a total of approximately $7.2 million, net of expenses.  Each unit consisted of one share of our common stock, par value $0.01 per share, and a warrant to purchase one share of common stock at an exercise price of $12.00 per share, for a total of 870,000 warrants.   The warrants became exercisable six months and one day after their issuance, and expire April 16, 2014. The units were issued pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with a shelf takedown from our registration statement that became effective on July 29, 2008.

On May 31, 2011, we entered into an amendment with one of our warrantholders.  The amendment changed the expiration date of the warrants from April 16, 2014 to November 1, 2011, and changed the exercise price of the warrants from $12.00 to $1.40.  In connection with this amendment, the warrantholder exercised 435,000 warrants at the amended exercise price.  By taking these actions, we reduced the number of warrants outstanding and accelerated the receipt of proceeds from exercise of the warrants.  The proceeds from the initial exercise of 435,000 warrants were approximately $609,000 before expenses.

December 2008 Shelf Warrants

On December 24, 2008, we sold 896,600 units of the Company at a purchase price of $5.00 per unit, for a total of approximately $4.1 million, net of expenses.  Each unit consisted of one share of our common stock, par value $0.01 per share, and a warrant to purchase one share of common stock at an exercise price of $7.40 per share, for a total of 896,000 warrants. The warrants became exercisable six months and one day after their issuance and expire June 25, 2014. The units were issued pursuant to a prospectus supplement filed with the Securities and Exchange Commission in connection with a shelf takedown from our registration statement that became effective on July 29, 2008.

On May 12, 2011, we entered into a warrant amendment and exercise agreement with the holder of a December 2008 warrant to purchase 740,000 shares of common stock.  With respect to 350,000 of the 740,000 warrant shares subject to this warrant, the amendment changed the expiration date from June 25, 2014 to May 12, 2013, and changed the exercise price from $7.40 to $1.60.  This amendment did not affect the terms of the warrant with respect to the remaining 390,000 shares of common stock issuable upon exercise of such warrant.  In connection with this amendment, the warrantholder delivered an exercise notice relating to warrants to purchase an aggregate of 1,750 shares of our Series B convertible preferred stock, at the exercise price of $1,000 per share of preferred stock, originally issued December 23, 2010, and held by the holder (the “preferred warrants”).  By taking these actions, we accelerated the receipt of proceeds from exercise of the preferred warrants, and potentially accelerated the receipt of proceeds from exercise of a portion of the common warrants issued in December 2008.  Proceeds from the exercise of the preferred warrants were $1,750,000 before expenses.

December 2010 Common Stock Warrant Liability (Issued in Conjunction with Redeemable Preferred Stock)

On December 23, 2010, we sold 10,000 units of the Company at a purchase price of $1,000 per unit. Each unit consisted of (i) one share of the Company’s Series B mandatorily redeemable convertible preferred stock, par value $0.01 per share (the “preferred stock”), (ii) a warrant to purchase 0.5 of a share of preferred stock (the “preferred warrant”) and (iii) a warrant to purchase 445.827 shares of common stock, together with any associated rights (the “common warrant”), at a price to the public of $1,000 per unit, less issuance costs. The shares of preferred stock, the preferred warrants and the common warrants were immediately exercisable and were issued separately.

The common warrants had an initial exercise price of $2.5234 per share of common stock, subject to adjustment, and will expire on December 23, 2015. The common warrants cover an aggregate of 4,458,271 shares of common stock. The exercise price of the common warrants is subject to adjustment, among other circumstances, (i) in connection with a subdivision or combination of our common stock, or (ii) if we sell or issue our common stock, or are deemed to sell or issue our common stock through the sale or issuance of securities convertible or exercisable for our common stock, at a price less than the exercise price of the warrants then in effect.  In addition, under the terms of the common warrants, between June 1, 2011 and the date on which the preferred warrants have been exercised in full (or, if they were not exercised, 91 days after the maturity date of the preferred stock), up to $1 million in aggregate exercise price of the warrants could be exercised at a price equal to (a) 85% of the arithmetic average of the six lowest daily volume weighted average prices (VWAP) per share during the twenty consecutive trading days immediately prior to the exercise date, if such arithmetic average is below $1.00 per share, or (b) 90% of the arithmetic average of the six lowest VWAPs during such period in any other case. The exercise price of the common warrants was adjusted downward to $2.2895, effective March 18, 2011, as a result of our reverse stock split effective February 25, 2011, to reflect the relative market prices (adjusted for the split ratio) of our common stock over the fifteen trading days before and after the reverse split. The exercise price of the warrants was further adjusted during May 2011 as a result of stock issued in connection with amended warrant agreements (as described elsewhere in this Note), and upon the issuance of common stock in settlement of the June 1, 2011, preferred stock redemption.  The adjusted exercise price as of June 30, 2011, for these warrants is $2.2470.

On May 24, 2011, we entered into warrant amendment and exercise agreements with each of two holders (the “Holders”) of certain of these common warrants relating to the right to purchase an aggregate of 1,337,482 shares of our common stock (the amended warrants).  Following the amendment, the amended warrants will be exercisable for the lesser of (i) the then current exercise price, subject to adjustment, or (ii) beginning on June 1, 2011, and ending January 31, 2012, 85% of the applicable average VWAP Price; provided, that the aggregate exercise price of the common stock warrants of either Holder utilizing the average VWAP price cannot exceed $150,000 in any calendar month (which was each Holder’s pro rata portion of the original $1 million limitation).

In connection with this amendment, the Holders delivered exercise notices relating to preferred stock warrants to purchase an aggregate of 35 shares of our mandatorily redeemable convertible preferred stock, at the exercise price of $1,000 per share of preferred stock.  With this exercise, no further preferred stock warrants remain outstanding. By taking these actions, we accelerated the receipt of proceeds from exercise of the preferred warrants, and limited the number of common warrants that can be exercised at the alternate exercise price.  Proceeds from the exercise of the preferred warrants were $35,000 before expenses.

During the six months ended June 30, 2011, 197,153 common warrants were exercised, resulting in gross proceeds to us of approximately $194,000.