Stockholders' Equity - Common and Preferred Shares

6 Months Ended

Jun. 30, 2013

Stockholders' Equity - Common and Preferred Shares [Abstract]

Stockholders' Equity - Common and Preferred Shares

2. Stockholders’ Equity — Common and Preferred Shares

Private Placement of Preferred Shares and Warrants

On April 16, 2013, the Company closed on an offering pursuant to the terms of a private placement agreement, in which the Company raised $5,000,000 in gross proceeds, before deducting placement agents’ fees and other offering expenses, in a private placement of 5,000 shares of the Company’s Series A Preferred Stock. The Series A Preferred Stock is not redeemable or contingently redeemable, does not have a dividend right, nor does it have any preferences over the common stock, including liquidation rights. Subject to certain ownership limitations, shares of Series A Preferred Stock are convertible, at the option of the holder thereof, into an aggregate of up to 1,377,412 shares of the Company’s common stock. Also included in the offering were warrants to purchase common stock, as follows:

(A) Series A Warrants to purchase 1,377,412 shares of the Company’s common stock, which are exercisable immediately after issuance, have a five-year term and a per share exercise price of $3.40; and

(B) Series B Warrants to purchase 1,377,412 shares of the Company’s common stock, which are exercisable immediately after issuance, have a two-year term and a per share exercise price of $3.40.

At the closing, the Company also issued to its placement agent and related persons Series A Warrants to purchase 82,645 shares of the Company’s common stock. The Company’s placement agent is also entitled to receive Series A Warrants to purchase up to an additional 82,645 shares of the Company’s common stock if the Series B Warrants are exercised for cash.

The preferred stock and warrants contain limitations that prevent the holders of the preferred stock and warrants from acquiring shares upon conversion of preferred stock or exercise of warrants that would result in the number of shares beneficially owned by it and its affiliates exceeding 9.99% of the total number of shares of the Company’s common stock then issued and outstanding.

During the three months ended June 30, 2013, the investor in the private placement converted 364 shares of Series A Preferred Stock into 100,276 shares of the Company’s common stock. In July 2013, the investor converted 1,282 shares of Series A Preferred Stock into 353,270 shares of the Company’s common stock.

Common Stock

At the 2013 Annual Meeting of Stockholders in July 2013, the stockholders approved a decrease in the Company’s authorized common stock from 100,000,000 to 70,000,000.

On July 21, 2010, the Company entered into an “at the market” equity offering sales agreement (the ATM Agreement) with MLV & Co. LLC, or MLV, pursuant to which the Company may issue and sell shares of its common stock from time to time through MLV acting as sales agent and underwriter. The Company is limited as to how many shares it can sell under the ATM Agreement due to SEC limitations on the number of shares issuable pursuant to a Form S-3 registration statement in a primary offering by smaller reporting companies such as the Company. As of July 31, 2013 the total dollar amount of common stock that the Company could sell under the ATM Agreement during the next twelve months is approximately $264,000 under the current registration statement. The Company may be able to sell more shares under this agreement over the next twelve months depending on several factors including the Company’s stock price, number of shares outstanding, and when the sales occur.

In connection with the ATM Agreement, the Company issued approximately 422,000 shares of common stock for proceeds of approximately $1,936,000 net of issuance costs, during the six months ended June 30, 2013. No shares were issued under this agreement during the six months ended June 30, 2012.

In November 2011, the Company entered into a purchase agreement, or the LPC Purchase Agreement, for the sale, from time to time, of up to $20,000,000 of its common stock to Lincoln Park Capital Fund, LLC, or LPC, over a 36 month term. The Company can only sell shares under this arrangement if it maintains a minimum stock price of $6.00 and maintains the effectiveness of a registration statement filed with the Securities and Exchange Commission. Subject to this restriction, if the Company’s stock price rises above $6.00 and the other conditions of the arrangement are met, the Company can generally control the timing and amount of any sales to LPC in accordance with the purchase agreement. LPC has no right to require the Company to sell any shares to LPC, but LPC is obligated to make purchases as the Company directs, subject to certain conditions including the minimum stock price of $6.00 and the continuing effectiveness of a registration statement filed with the Securities and Exchange Commission covering the resale of the shares that may be issued to LPC. There are no upper limits to the price LPC may pay to purchase the Company’s common stock and the purchase price of the shares related to any future sales will be based on the prevailing market prices of the Company’s shares immediately preceding the notice of sale to LPC without any fixed discount. The agreement may be terminated by the Company at any time, at its sole discretion, without any cost or penalty. Assuming that the purchase price per share is $6.00 or greater, the total dollar amount of common stock that the Company could sell under the LPC Purchase Agreement during the next twelve months is approximately $17,400,000, provided that the Company would be required to file and have declared effective an additional registration statement in order to sell more than an additional 66,862 shares of its common stock under the LPC Purchase Agreement.

In connection with the LPC Purchase Agreement, the Company issued 196,719 shares of common stock for proceeds of approximately $1,699,000, net of issuance costs, during the six months ended June 30, 2012, including 4,995 shares issued as a commitment fee. No shares were issued under this agreement during the six months ended June 30, 2013.

Warrants

Warrant Summary Information

The following is a summary of the Company’s outstanding common stock warrants as of June 30, 2013 and December 31, 2012:

					Number of Warrants outstanding as of:
	Date of				(In thousands)
Warrants Issued in Connection with:	Issuance		Exercise Price		June 30, 2013		December 31, 2012
Committed Equity Financing Facility		02/19/08	$	657.60		1		1
Direct Registration Series I Warrants		07/20/09	$	504.00		12		12
Private Placement Series A Warrants		04/16/13	$	3.40		1,460		—
Private Placement Series B Warrants		04/16/13	$	3.40		1,377		—
Total Warrants Outstanding						2,850		13

Effective with a warrant exchange, the Committed Equity Financing Facility warrants, issued by the Company on February 19, 2008, were reclassified as equity in January 2011. Previously they were recorded as a liability at their fair value in March 2010 and were last recorded as a liability on December 31, 2010. These warrants will expire on August 19, 2013.

The Direct Registration Series I warrants, issued by the Company on July 20, 2009, were recorded as a liability at their fair value as of the date of their issuance in July 2009 and are revalued at each subsequent reporting date. The value of these warrants recorded on the Company’s balance sheet was approximately $0 at both June 30, 2013 and December 31, 2012. These warrants will expire on July 20, 2014.

The Private Placement Series A warrants include warrants to purchase 1,377,412 shares of the Company’s common stock and warrants issued to the Company’s placement agent and related persons to purchase 82,645 shares of the Company’s common stock. The Series A warrants became exercisable immediately after issuance, have a five-year term and a per share exercise price of $3.40. The Company’s placement agent is also entitled to receive Series A Warrants to purchase up to an additional 82,645 shares of the Company’s common stock if the Series B Warrants are exercised for cash.

The Private Placement Series B Warrants to purchase 1,377,412 shares of the Company’s common stock became exercisable immediately after issuance, have a two-year term and a per share exercise price of $3.40.

Options

The Company’s 2005 Stock Plan, as amended at the 2013 Annual Meeting of Stockholders in July 2013 (the “2005 Plan”) provides for the award of options, restricted stock and stock appreciation rights to acquire up to 833,333 shares of the Company’s common stock in the aggregate. Currently, the 2005 Plan allows for awards of up to 200,000 shares that may be granted to any one participant in any fiscal year. For options subject to graded vesting, the Company elected the straight-line method of expensing these awards over the service period.

The following is a summary of the Company’s stock option activity under its 2005 Plan for the six months ended June 30, 2013:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
	(In thousands)					(Years)		(In thousands)
Options outstanding at December 31, 2012		143		$	19.73		8.64	$	—
Granted		77		$	4.38			$	—
Forfeited and expired		(42	)	$	17.66			$	—
Options outstanding at June 30, 2013		178		$	13.66		8.25	$	—
Options exercisable at June 30, 2013		73		$	21.98		6.74	$	—
Options vested or expected to vest at June 30, 2013		134		$	15.60		7.91	$	—

As of June 30, 2013 there was approximately $149,437 of unrecognized compensation cost related to stock option awards that is expected to be recognized as expense over a weighted average period of approximately 2.53 years.

The fair values for the stock options granted were estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the six months ended June 30, 2013:

Weighted Average Assumptions
Risk-free interest rate	0.77	%
Expected life (years)	4
Expected volatility	101	%
Dividend yield	0.00	%