CAPITAL STOCK

12 Months Ended

Dec. 31, 2012

CAPITAL STOCK

CAPITAL STOCK

13. CAPITAL STOCK

        Our authorized capital stock consists of 2,000,000 preferred shares, none of which were issued or outstanding at December 31, 2012, 2011 and 2010, 1,416,664 shares of 8.5% non-voting cumulative redeemable Series A Preferred Shares, $1.00 par value, of which none were issued outstanding at December 31, 2012, 2011 and 2010, and 40,000,000 common shares, no par value per share, of which the following shares were outstanding:

	2012		2011		2010
Shares outstanding as of December 31,		21,494,696		18,710,002		17,513,608
Summary of Share Issuances:
Shares Issuances related to Equity Compensation:
Shares issued upon exercise of stock options by employees		216,477		397,054		78,166
Proceeds realized from stock option exercises	$	132,026	$	719,484	$	90,448
Average exercise price of options exercised	$	0.61	$	1.81	$	1.16
Restricted Stock Grants		235,000		—		235,000
Share issuances related to Warrant Exercises
Shares issued upon the exercise of warrants		288,217		799,340
Proceeds realized from warrant exercises	$	1,978,729	$	3,877,276
Share issuances related to Equity Offerings
Shares issued pursuant to equity offerings		1,845,000
Proceeds realized from equity offerings	$	16,120,669
Share issuances in Exchange for Services
Share issuances in Exchange for Services		200,000
Value of Shares issued in Exchange for Services	$	1,854,000

Common Shares

        Holders of the common shares are entitled to one vote per share on all matters submitted to a vote of our shareholders and are to receive dividends when and if declared by the Board of Directors. The Board is authorized to issue additional common shares within the limits of the Company's Articles of Incorporation without further shareholder action, subject to applicable stock exchange rules.

Warrants

        We had 2,233,240 common share purchase warrants outstanding at December 31, 2012, of which 2,133,240 were exercisable as of December 31, 2012. During 2012, we agreed to extend the term of 1,079,169 common share purchase warrants until January 28, 2013 and incurred an expense of $280,600 related to the extension of these warrants. Subsequent to year end, we agreed to extend the term of 1,008,336 common share purchase warrants until July 31, 2013. We, also, extended the term of 80,000 common share purchase warrants until November 28, 2013 and incurred an expense of $33,600 related to the extension of the term of these warrants.

        We had 2,607,440 common share purchase warrants outstanding at December 31, 2011 of which 2,507,440 were exercisable as of December 31, 2011. During 2011, we issued 100,000 warrants with an exercise price of $10.25 related to a supply agreement with a major customer and we recognized a reduction in revenue of $134,501 in 2011 related to those warrants. Those warrants are exercisable after December 31, 2013 and expire March 31, 2014. Also, during 2011, we agreed to extend the term of 245,000 warrants issued in November 2008 in consideration for services. The term was extended from November 5, 2011 to May 4, 2012 and 200,000 remained outstanding as of December 31, 2011. We recognized an expense of $165,850 related to the extension of the term of these warrants.

        We had 3,338,569 common share purchase warrants outstanding at December 31, 2010 of which 3,318,569 were exercisable as of December 31, 2010. During 2010, we issued 5,000 warrants with an exercise price of $8.00 in exchange for services and incurred an expense of $4,000 in 2010. These warrants are exercisable on or after September 1, 2011 and expire on May 28, 2013. Also, pursuant to an agreement executed on March 8, 2010, we issued 15,000 warrants in exchange for services and incurred an expense of $46,600 in 2010 related to these warrants. These warrants are exercisable on or after March 8, 2011, have an exercise price of $6.14 and expire on March 8, 2013. Also during 2010, we agreed to extend the term and revise the exercise price of 100,000 warrants, issued in May 2008, in consideration for services. The exercise price of these warrants was lowered to $8.00 from $9.00 and their term extended by one year to May 28, 2013. We recognized an expense of $102,000 in 2010 related to the change in terms in for these warrants.

        Warrants were valued using the Black Scholes model. In 2012, 2011 and 2010 we recognized $464,426, $312,000 and $640,000 in expense related to services and consideration provided in exchange for warrants. At December 31, 2012, the amount of unrecorded expense for warrants attributable to future periods was approximately $154,527 which is expected to be amortized to expense on a straight line basis in 2013.

        Outstanding warrants by exercise price consisted of the following as of December 31, 2012, 2011 and 2010:

Exercise Price	Expiration Date	2012		2011		2010
$9.55	10/5/2014		883,071		883,071		1,079,200
$7.18	1/28/2013		1,059,169		1,079,169		1,079,169
$1.99	11/5/2011		—		—		300,000
$4.54	5/4/2012		—		—		200,000
$7.00	5/4/2012		—		200,000		200,000
$10.25	3/31/2014		100,000		100,000		—
$8.00	5/28/2013		104,000		105,000		105,000
$7.00	10/3/2011		—		—		90,000
$9.55	10/5/2012		—		85,200		85,200
$10.00	11/28/2013		80,000		80,000		80,000
$7.50	10/3/2011		—		—		45,000
$6.14	3/8/2013		7,000		15,000		15,000
$6.50	9/30/2012		—		60,000		60,000
Total			2,233,240		2,607,440		3,338,569