STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2011

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 9. STOCKHOLDERS' EQUITY

Shares Authorized and Reserved

        In June 2010, our shareholders voted to amend our articles of incorporation to increase the number of authorized shares of common stock from 14,500,000 shares to 29,000,000 shares and to increase the number of authorized shares of preferred stock from 500,000 shares to 1,000,000 shares. The amendments were effective in the second quarter of 2010.

        At December 31, 2011, the Company had reserved approximately 8.0 million shares of its authorized but unissued common stock for possible future issuance in connection with the following approximate number of shares:

Exercise and future grants of stock options under plans	1,350,000
Exercise of outstanding stock warrants—employee	1,700,000
Exercise of outstanding stock warrants—non-employee	1,150,000
Convertible debt shares issuable	3,800,000
Total authorized shares reserved	8,000,000

Stock Dividends

        On August 31, 2011, the Company's Board of Directors declared a 5% stock dividend issued on October 14, 2011 to stockholders of record at the close of business on September 30, 2011. As a result of the stock dividend, the number of outstanding shares of common stock increased by 579,516 shares in 2011.

        On August 11, 2010, the Company's Board of Directors declared a 5% stock dividend to be issued on October 15, 2010 based on the shareholders of record at the close of business on September 30, 2010. As a result of the stock dividend, the number of outstanding shares of common stock increased by 379,193 shares in 2010.

        As the Company was in a deficit position for both 2011 and 2010, there was no recorded impact to the reported amounts of stockholders' equity in the accompanying consolidated balance sheet. All references to the number of common shares and per-share amounts included in these consolidated financial statements are restated based on the increased number of shares giving retroactive effect to the stock dividend to prior year amounts.

2011 Warrant Call

        In August 2011, the Company called for redemption the outstanding warrants to purchase shares of common stock sold in the Company's initial public offering and private placement offering. Each warrant exercised in response to the call was exercised for 1.05 shares of common stock at a price of $2.38 per share as adjusted for the 2010 stock dividend. Any warrants not exercised expired on the last day of the exercise period and were redeemed at $.10 per underlying share of common stock. In connection with the warrant call, the Company issued 2,897,149 shares of common stock. The Company received aggregate net proceeds of $6.3 million upon such exercises including issuance costs of approximately $0.6 million. The remaining unexercised warrants expired requiring the Company to pay the aggregate call amount of approximately $3,000.

2010 Public Stock Offering

        In June 2010, the Company closed a public stock offering of 1,714,286 shares of common stock at a gross price of $3.50 per share. The Company received net proceeds of approximately $5.4 million after deducting underwriting discounts, and other offering-related expenses of approximately $0.6 million. In August 2010, the underwriter exercised their overallotment option to purchase an additional 225,400 shares of common stock at a discounted price of $3.255 per share, resulting in net proceeds to the Company of approximately $0.7 million.