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Subsequent Events
3 Months Ended
Mar. 31, 2012
Notes to Financial Statements  
Note 12. Subsequent Events

On April 23, 2012, the Company entered into a $6,600,000 purchase agreement (the “$6,600,000 Purchase Agreement”), together with a registration rights agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which the Company has the right to sell to Lincoln Park up to $6,600,000 in shares of the Company’s common stock, subject to certain limitations. In addition, on April 24, 2012, the Company entered into a purchase agreement (the “$3,400,000 Purchase Agreement” and, together with the $6,600,000 Purchase Agreement, the “Purchase Agreements”), pursuant to which the Company has the right to sell to Lincoln Park up to $3,400,000 in shares of the Company’s common stock, subject to certain limitations.

 

Under the terms and subject to the conditions of the $6,600,000 Purchase Agreement, Lincoln Park will be obligated to purchase up to $6,600,000 in shares of common stock (subject to certain limitations) from time to time over the 36-month period commencing on the date that a registration statement, which we agreed to file with the Securities and Exchange Commission (the “SEC”) is declared effective by the SEC and a final and complete prospectus in connection therewith is filed. The Company may direct Lincoln Park, from time to time, at its sole discretion and subject to certain conditions to purchase up to 200,000 shares of common stock, and in addition we may require additional purchases in accordance with the $6,600,000 Purchase Agreement. The purchase price of shares of common stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales without any fixed discount, and the Company will control the timing and amount of any sales of common stock to Lincoln Park. The Company’s sales of shares of common stock to Lincoln Park may be limited to the maximum number of shares of common stock under applicable rules of the NYSE Amex or we may be required to obtain stockholder approval under such rules. As consideration for its commitment to purchase shares of common stock pursuant to the $6,600,000 Purchase Agreement, the Company will issue to Lincoln Park up to 556,440 shares pro rata, when and if, Lincoln Park purchases at the Company’s discretion the $6,600,000 million funding.

 

Pursuant to the $3,400,000 Purchase Agreement, Lincoln Park initially purchased shares of common stock for gross proceeds of $250,000. Thereafter, the Company has the right, from time to time, at its sole discretion and subject to certain conditions to direct Lincoln Park to purchase up to 200,000 shares of common stock, which amount may be increased in accordance with the $3,400,000 Purchase Agreement. The purchase price of shares of common stock related to the future funding will be based on the prevailing market prices of such shares at the time of sales without any fixed discount, and the Company will control the timing and amount of any sales of common stock to Lincoln Park. Additionally, the $3,400,000 Purchase Agreement limits the Company’s sales of common stock to Lincoln Park to (i) the maximum number of shares of common stock that the Company may issue without breaching its obligations under applicable rules of the NYSE Amex or obtaining stockholder approval under such rules, and (ii) the maximum number of shares of Common Stock that the Company may issue without exceeding the limitations set forth in General Instruction I.B.6. of Form S-3 and the interpretive guidance of the SEC applicable to these transactions.

 

As consideration for its commitment to purchase common stock under the $3,400,000 Purchase Agreement, the Company issued to Lincoln Park 281,030 shares of common stock and agreed to issue up to 286,651 shares pro rata, when and if, Lincoln Park purchases at the Company’s discretion the $3,400,000 funding.