Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note [Abstract]

Stockholders' Equity

Stockholders’ Equity

Stock Incentive Plans

On October 27, 2011, our stockholders approved our 2011 Stock Incentive Plan (2011 Plan). The 2011 Plan replaced our 2002 Stock Incentive Plan (2002 Plan) and awards can no longer be issued under the 2002 Plan; however, awards issued under the 2002 Plan prior to its termination remain outstanding in accordance with their terms.

Both stock incentive plans provide that awards of stock options and shares of restricted stock may be granted to directors, employees and consultants. The terms of the award are established by the administrator of the plans, our Compensation Committee. Historically, options expire ten years after the date of grant or 30 days after termination of employment, vest ratably at the rate of 25% on each of the first four anniversaries of the grant date and have an exercise price at least equal to the market price of our stock at the date of grant. Restricted stock awards generally cliff vest on the third anniversary of the grant date.

The 2011 Plan provides for an aggregate of 3,100,000 shares that were initially reserved for issuance and available for grant, subject to adjustment in the event of a stock split, stock dividend, or other similar change in our common stock or our capital structure. The 2011 Plan contains an “evergreen” provision under which beginning on January 1, 2013, the number of shares available for grant under the 2011 Plan increase annually by an amount equal to the lesser of (x) 500,000 shares, (y) 3.0% of the number of shares outstanding as of such first day of each year or (z) a lesser number of shares determined by our Board of Directors. Effective January 1, 2013, an additional 500,000 shares were added to the Plan pursuant to the evergreen provision.

There were no awards made under the 2011 Plan during the first three months of 2013. As of March 31, 2013, after including the effects of forfeitures and the evergreen provision, we had 3,121,283 remaining shares available for issuance under the 2011 Plan.

Share-based Compensation

The share-based compensation expense related to stock options and restricted stock of continuing operations included in the accompanying condensed consolidated statements of operations and in the financial information by reportable business segment in Note 12 is:

	Fuel Storage & Vehicle Systems		Corporate		Total
Three Months Ended March 31, 2012:
Cost of product sales	$	8,483	$	—	$	8,483
Research and development	35,847		—		35,847
Selling, general and administrative	4,537		140,288		144,825
Total share-based compensation	$	48,867	$	140,288	$	189,155
Three Months Ended March 31, 2013:
Cost of product sales	$	5,466	$	—	$	5,466
Research and development	22,484		—		22,484
Selling, general and administrative	3,701		80,518		84,219
Total share-based compensation	$	31,651	$	80,518	$	112,169

Stock Options

Below is a summary of the options activity:

	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In Years)
Options outstanding at January 1, 2013	693,672
Granted	—
Forfeited	(23,100	)	$	7.93
Expired	(15,183	)	$	11.86
Options outstanding at March 31, 2013	655,389		$	6.05	7.9
Vested and expected to vest at March 31, 2013	615,320		$	6.31	7.9
Options exercisable at March 31, 2013	183,987		$	16.47	5.2

Warrants

Warrant activity and warrants outstanding, reportable in the equivalent number of shares of our common stock that can be purchased upon exercise of the warrants, is as follows:

Warrants outstanding at December 31, 2012	38,332,389
Issued—original number	1,545,000
Issued—additional number (1)	1,154,659
Warrants outstanding at March 31, 2013	41,032,048

(1) Associated with reset provisions contained within the October 27, 2006 warrant contracts.

Issuance of warrants in connection with January 2013 Bridge Notes

On January 24, 2013, in connection with the issuance of the January 2013 Bridge Notes (see Note 8), each investor received a warrant entitling the investor to purchase shares of our common stock equal in number to 100% of the purchase price for such investor's bridge note divided by $1.00. The aggregate number of shares underlying the warrants is 1,500,000. Each warrant has a term of 5.5 years, cannot be exercised for a period of six months following the date of issuance and entitles the investor to purchase one share of our common stock at an initial exercise price of $1.00 per share (the Initial Exercise Price), subject to customary anti-dilution adjustments. If the January 2013 Bridge Notes have not been repaid in full by July 2, 2013, then a full-ratchet anti-dilution provision (price only) applies for the remaining term of the warrants, subject, however, to a floor price of $0.71 (the Floor Price). If the January 2013 Bridge Notes are repaid in full before July 2, 2013 and on the date of such repayment the closing price for a share of our common stock is less than the Initial Exercise Price, then the exercise price will be adjusted to the greater of (i) the Floor Price and (ii) $0.01 above the consolidated closing bid price on the date the January 2013 Bridge Notes are repaid in full. The warrants permit a cashless exercise if at the time of exercise the underlying shares are not covered by an effective registration statement.

In the event that the January 2013 Bridge Notes are not repaid in full prior to July 2, 2013, then each investor shall receive an additional warrant (collectively, the Additional Warrants) entitling such investor to purchase shares of our common stock equal in number to one-third of the number of shares underlying the initial warrant issued to such investor. If the Additional Warrants are issued, the maximum number of shares underlying the Additional Warrants would be 500,000. The Additional Warrants would have terms substantially the same as the initial warrants, except that the initial exercise price would be the greater of (i) the Floor Price and (ii) $0.01 above the consolidated closing bid price for a share of our common stock on July 1, 2013, subject to customary anti-dilution adjustments. The Additional Warrants would also have a full-ratchet anti-dilution provision (price only), provided that, the exercise price cannot be reduced below the Floor Price.

We issued the placement agent a warrant to purchase 45,000 shares of our common stock, with terms substantially the same as the investor warrants described above, in partial consideration for the placement agent's services in connection with the transaction.

In certain circumstances, investors and placement agent have piggyback registration rights with respect to the shares of common stock underlying the warrants.

As a result of the contingent price resets, the number of shares underlying the warrant contracts and the contractual provisions that could potentially require us to net-cash settle the value of the remaining outstanding warrants in the event of a change in control or other fundamental change, we classify the warrant contracts as derivative instruments (see Note 9).

A summary of our outstanding warrants as of March 31, 2013 is as follows:

Issue Date	Expiration Date	Shares Subject to Outstanding Warrants	Exercise Price at End of Period		Exercise Price Reset Provision
October 27, 2006	April 27, 2014	4,563,640	$	0.62	(2)
June 22, 2007	December 22, 2014	257,583	$	41.80	(1)
August 25, 2008	August 25, 2015	1,398,964	$	38.60	(3)
August 3, 2009	August 3, 2014	32,005	$	17.00	(1)
September 4, 2009	September 4, 2014	83,476	$	17.00	(1)
April 30, 2010 through July 1, 2010	April 30, 2015 through July 1, 2015	222,217	$	18.20	(1)
July 22, 2010	July 22, 2013	96,859	$	18.20	(1)
October 13, 2010 and October 19, 2010	October 13, 2015 and October 19, 2015	36,197	$	13.40	(1)
January 3, 2011	February 18, 2014	277,777	$	9.00	(1)
January 12, 2011	January 12, 2014	131,892	$	9.20	(1)
February 18, 2011	February 18, 2016	759,370	$	6.57	(1)
February 18, 2011; Series “B”	February 18, 2016	393,933	$	6.00	(1)
May 9, 2011	May 8, 2014	78,455	$	2.92	(1)
May 20, 2011	May 19, 2014	90,313	$	2.92	(1)
June 15, 2011	June 15, 2016	1,445,862	$	3.85	(1)
June 15, 2011	June 15, 2018	45,000	$	3.12	(1)
June 15, 2011	June 15, 2018	120,271	$	3.85	(1)
June 20, 2011	June 20, 2016	57,079	$	3.90	(1)
June 20, 2011	June 20, 2018	132	$	3.90	(1)
July 6, 2011	July 6, 2016	419,729	$	3.85	(1)
August 23, 2011	August 23, 2016	115,000	$	3.85	(1)
September 29, 2011	September 29, 2016	550,703	$	0.83	(3)
October 12, 2011	October 12, 2016	564,348	$	0.83	(3)
October 17, 2011 through October 21, 2011	October 17, 2016 through October 21, 2016	76,555	$	2.64	(1)
November 2, 2011	November 2, 2014	540,000	$	2.12	(1)
December 21, 2011	December 21, 2016	6,315,789	$	1.22	(1)
January 19, 2012	January 19, 2017	132,750	$	1.22	(1)
March 20, 2012; Series “B”	March 20, 2017	5,244,000	$	1.02	(1)
March 21, 2012; Series “B”	March 21, 2017	6,624,000	$	1.02	(1)
May 3, 2012; Series “B”	May 3, 2017	110,450	$	1.02	(1)
June 4, 2012; Series “B”	June 4, 2017	204,450	$	1.02	(1)
May 7, 2012	May 7, 2013	917,839	$	2.12	(1)
May 7, 2012	May 7, 2019	555,556	$	0.90	(1)
May 8, 2012	May 8, 2019	200,000	$	0.90	(1)
June 22, 2012	June 22, 2017	4,029,851	$	0.85	(1)
June 28, 2012	June 28, 2017	719,178	$	0.85	(1)
July 25, 2012	July 25, 2017	2,075,825	$	0.89	(1)
January 24, 2013	July 25, 2018	1,545,000	$	1.00	(4)
Total warrants outstanding at March 31, 2013		41,032,048

(1) No; contract does not provide for an exercise price reset provision.

(2) Yes; contract provides for reset of exercise price along with increase in number of shares in connection with sales of future equity below current exercise price

(3) Yes; contract provides for a price reset provision; however, provision is no longer applicable.

(4) Yes; contract provides for reset of exercise price under certain conditions, subject to a floor of $0.71; contract also provides for the issuance of additional warrants to purchase up to 500,000 shares of common stock if the remaining principal on the January 2013 Bridge Notes is not paid in full on or before July 1, 2013.

We evaluate the warrants we issue in accordance with applicable accounting guidance and we have concluded that liability classification is appropriate for the warrants issued on October 27, 2006, June 22, 2007, August 25, 2008, August 3, 2009, September 4, 2009, February 18, 2011 (Series “B”) and January 24, 2013. Although we mark to market all the warrants classified as liabilities each period (see Note 9), the fair values of the warrants issued on June 22, 2007, August 25, 2008 August 3, 2009 and September 4, 2009, were zero for the periods reported. We have further concluded that equity classification is appropriate for all other warrants that were outstanding during the periods presented due to the fact that these warrants are considered to be indexed to our own stock, are required to be physically settled in shares of our common stock and there are no provisions that could require net-cash settlement.

The proceeds we received from the transactions that gave rise to the issuance of the warrants have been allocated to the common stock or debt issued, as applicable, and the warrants based on their fair values or relative fair values, depending on the circumstances. For those transactions in which proceeds were received in connection with the sale of common stock, we aggregate the values of those warrants that we do not classify as liabilities with the fair value of the stock issued as both of these types of instruments have been classified as permanent equity.

The classification as equity for certain of the warrants could change as a result of either future modifications to the existing terms of settlement or the issuance of new financial instruments by us that could be converted into an increased or unlimited number of shares. If a change in classification of certain warrants is required in the future, the warrants would be treated as derivatives, reclassified as liabilities on the balance sheet at their fair value, and marked to market each period, with the changes in fair values being recognized in the respective period’s statement of operations.

The warrants issued on October 27, 2006, February 18, 2011 (Series “B”) and January 24, 2013 contain contractual provisions that could potentially require us to net-cash settle the value of the remaining outstanding warrants in the event of a change in control or other fundamental change. Since the contractual provisions that could require us to net-cash settle the warrants are deemed not to be within our control under applicable accounting guidance, equity classification is precluded. As such, we consider these warrants to be derivative instruments that are classified as current liabilities, recorded at fair value and marked to market each period, with the changes in fair values being recognized in the respective period's statement of operations.

The fair values of the derivative liabilities associated with warrant contracts on the dates of the condensed consolidated balance sheets presented and a summary of the changes in the fair values of those derivative instruments during the periods presented on the condensed consolidated statements of operations are disclosed in Note 9.

The warrants issued on October 27, 2006 contain contractual provisions which, subject to certain exceptions, reset the exercise price of such warrants if at any time while such warrants are outstanding, we sell or issue shares of our common stock or rights, warrants, options or other securities or debt convertible, exercisable or exchangeable for shares of our common stock. Since the initial issuance of these warrants, we have completed capital raising transactions that resulted in the reset of the exercise price of the warrants to $0.62 through March 31, 2013 and to $0.51 through the date of this report.

The warrants issued on October 27, 2006 also contain a provision that increases the number of shares of common stock subject to such warrants if and when the exercise price is reset so that the aggregate purchase price payable applicable to the exercise of the warrants after the reset of the exercise price is the same as the aggregate purchase price payable immediately prior to the reset. As a result of the exercise price resets, the remaining number of shares subject to the warrants issued on October 27, 2006 increased to 4,563,639 as of March 31, 2013 and to 5,602,879 as of the date of this report. Any resets to the exercise price of the warrants issued on October 27, 2006 in the future will have an additional dilutive effect on our existing shareholders.

Shares Available

The number of authorized shares available for future issuance as of March 31, 2013 is as follows:

	Common Stock		Series B Common Stock		Preferred Stock
Shares Authorized	149,900,000		100,000		20,000,000
Less shares issued and outstanding at March 31, 2013	(49,799,198	)	(49,998	)
Less shares designated as of March 31, 2013 for issuance under:
Stock options (1)	(3,776,672	)
Warrants outstanding	(41,032,047	)
Undesignated shares available	55,292,083		50,002		20,000,000

(1) Includes all of the options outstanding plus 3,121,283 shares remaining that are available for issuance under the 2011 Plan.

Stockholders’ Equity Roll-forward

The following table provides a condensed roll-forward of stockholders’ equity for the three months ended March 31, 2013:

	Common Stock Shares Outstanding	Total Equity
Balance at January 1, 2013	47,761,119	$	14,222,681
Share-based compensation	—	128,010
Issuance of common stock to investors	2,038,079	1,332,251
Foreign currency translation	—	(155,791		)
Net loss attributable to stockholders	—	(6,903,920		)
Balance at March 31, 2013	49,799,198	$	8,623,231

During the first quarter of 2013, we raised gross proceeds of $1,407,606 and issued 2,038,079 shares of common stock in connection with transactions made under an At The Market Offering Agreement (ATM) through a sales agent. Sales agent commissions of 3.0% and other transaction costs amounted to $75,355 in connection with the transactions.