Note 6 - Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note Disclosure [Text Block]

6. Stockholders’ Equity

In October 2012, the Company completed a public offering of 7,500,000 units at a price of $2.00 per unit, with each unit consisting of one share of the Company’s common stock, par value $0.005 per share, and one warrant to purchase 0.5 of a share of Common Stock at an exercise price of $3.00 per whole share (the “2012 offering”). The shares of Common Stock and the Warrants issued in the Offering were issued separately. Under the terms of the Underwriting Agreement, the Company also granted the Underwriters an option, exercisable for 30 days, to purchase up to an additional 1,125,000 shares of Common Stock (with an over-allotment price of $1.995 per share) and/or additional Warrants to purchase up to 562,500 shares of Common Stock (with an over-allotment price of $0.0094 for each Warrant to purchase a whole share) to cover over-allotments, if any. The underwriter exercised their option in part by purchasing 1,025,000 shares and 562,500 warrants of the over-allotment option within 30 days of the closing.

Certain warrants issued during the 2012 offering contain provisions that could require the Company to settle the warrants in cash and, accordingly, were originally recorded as a liability in the amount of $4,521,681 determined by the Black-Scholes valuation model with the following assumptions:

Stock price	$	4.45
Exercise price	$	5.00
Term in years		2.50
Volatility		69.36	%
Annual rate of quarterly dividends		-
Discount rate- bond equivalent yield		0.53	%

The 2012 offering triggered a reduction in the exercise price of the Company’s warrants issued in March 2010 from $4.00 to $2.00 per share.

In June 2011, the Company issued 5,872,500 shares of its common stock and warrants to purchase a total of 2,936,250 shares of its common stock for gross proceeds of $23.5 million. The common stock and warrants were sold in units, at a price of $4.00 per unit, with each unit consisting of: (a) one share of common stock; (b) a warrant to purchase 0.25 of a share of common stock, with an exercise price of $4.50 per share; and (c) a warrant to purchase 0.25 of a share of common stock, with an exercise price of $5.00 per share. In addition, the placement agent and the financial advisor also collectively received warrants to purchase up to 176,175 shares of common stock. In the event of stock splits, stock dividends, combinations of shares and similar recapitalization transactions, the number of shares issuable and the exercise price associated with all warrants issued in this transaction may be adjusted. At December 31, 2011, all outstanding warrants were exercisable.

Certain warrants issued in June 2011 contain provisions that could require the Company to settle the warrants in cash, and accordingly, were originally recorded as a liability in the amount of $2,525,175 determined by the Black-Scholes valuation model with the following assumptions:

Stock price	$	2.48
Exercise price	$	3.00
Term in years		2.51
Volatility		79.70	%
Annual rate of quarterly dividends		-
Discount rate- bond equivalent yield		0.35	%

In December 2010, the Company issued 1,400,000shares of common stock to a single institutional accredited investor for an aggregate purchase price of $8,386,000. After related fees and expenses, the Company received net proceeds of approximately $7,730,000.

In March 2010, the Company issued 1,538,462shares of common stock and warrants to purchase an aggregate of 1,015,385shares of common stock, for an aggregate purchase price of $5,000,002. The placement agent also received warrants to purchase 123,077 shares of common stock. All of these warrants expire on March 2, 2015 and had an initial exercise price of $5.00, subject to adjustment.

The following table sets forth the changes in the number of warrants outstanding for the periods presented:

	Number of Warrants			Weighted Average Exercise Price			Number of Common Shares Exerciseable Into
Outstanding at December  31, 2010		7,530,689		$	3.71			9,450,633
Granted		3,112,425			4.76			3,112,425
Exercise Price Adjustment		-			(0.70	)		592,341
Exercised		(301,895	)		3.96			(371,206	)
Forfeited, Canceled		(220,000	)		8.09			(220,000	)
Outstanding at December  31, 2011		10,121,219			3.76			12,564,193
Granted		4,312,500			3.00			4,312,500
Exercise Price Adjustment		-			(0.18	)		-
Forfeited, Canceled		(4,055,724	)		5.07			(6,498,698	)
Outstanding at December  31, 2012		10,377,995		$	2.94			10,377,995

The following table sets forth the details of the outstanding warrants as of December 31, 2012:

Expiration Date	Current Exercise Price		Number of Warrants
3/2/2015	$	2.00		935,385
6/17/2015		5.00		176,175
2/12/2016		1.60		929,826
3/19/2016		1.60		1,921,795
3/26/2016		1.60		634,189
6/22/2016		5.00		1,468,125
10/24/2017		3.00		4,312,500
				10,377,995

Equity Incentive Plan

The following is a summary of option award activity under the Plan for the year ended December 31, 2012:

	Year Ended December 31, 2012
	Total Stock Options Outstanding			Weighted Average Exercise Price per Share		Nonvested Stock Options			Weighted Average Grant Date Fair Value per Share
December 31, 2011		4,117,979		$	5.21		356,100		$	3.38
Granted		1,132,383			1.89		1,132,383			1.32
Vested		-			-		(960,233	)		1.61
Exercised		(1,250	)		1.90		-			-
Forfeited, Canceled		(232,196	)		3.49		(123,750	)		1.73
December 31, 2012		5,016,916		$	4.54		404,500		$	2.30

The following is a summary of outstanding stock options under the Plan as of December 31, 2012:

	Stock Options Outstanding		Vested Stock Options
Quantity		5,016,916		4,612,416
Weighted-average exercise price	$	4.54	$	4.66
Weighted Average Remaining Contractual Term (in Years)		7.33		7.20
Intrinsic value	$	38,634	$	33,522

For the years ended December 31, 2012, 2011 and 2010, the Company granted 1,132,383, 1,459,393 and 1,175,930 stock options, respectively, with a weighted-average grant date fair value of $1.32, $4.04 and $2.66, respectively. For the years ended December 31, 2012, 2011 and 2010, the total fair value of options vested was $1,549,888, $5,381,855 and $3,222,417, respectively. The total intrinsic value of options exercised for the years ended December 31, 2012, 2011 and 2010 was $1,485, $818,723 and $921,258, respectively.

As of December 31, 2012, total compensation cost not yet recognized related to nonvested stock options was $396,672. The Company expects to recognize this cost over a weighted average period of 0.83 years.