Shareholders' Equity

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Attributable to Parent [Abstract]

SHAREHOLDERS’ EQUITY

SHAREHOLDERS’ EQUITY

Preferred Stock - Authorized Preferred Stock is 1,000,000 shares at a par value of 0.01 per share.

In August 1991, the Company completed a private placement of 150,000 shares of Series B Convertible Preferred Stock (“Series B Preferred Stock”). Each share of Series B Preferred Stock is convertible into 20 shares of Common Stock. At December 31, 2012, only 130 shares remain outstanding. Upon liquidation of the Company, the holders of the Series B Preferred Stock are entitled to $100 per share. The Series B Preferred Stock will be automatically converted into Common Stock upon the occurrence of certain events. Holders of the Series B Preferred Stock are entitled to one vote for each share of Common Stock into which the preferred stock is convertible.

On March 12, 2002, the Company adopted a Stockholder Rights Plan (the “Rights Plan”) designed to protect company stockholders in the event of takeover activity that would deny them the full value of their investment. The Rights Plan was not adopted in response to any specific takeover threat. In adopting the Rights Plan, the Board declared a dividend distribution of one preferred stock purchase right for each outstanding share of Common Stock of the Company, payable to stockholders of record at the close of business on March 22, 2002. The rights will become exercisable only in the event, with certain exceptions, a person or group of affiliated or associated persons acquires a specified amount (the "Specified Amount") (originally 15%) or more of the Company’s voting stock, or a person or group of affiliated or associated persons commences a tender or exchange offer which, if successfully consummated, would result in such person or group owning the Specified Amount or more of the Company’s voting stock. Each right, once exercisable, will entitle the holder (other than rights owned by an acquiring person or group) to buy one one-thousandth of a share of a series of the Company’s Series D Junior Participating Preferred Stock at a price of $30 per one-thousandth of a share, subject to adjustments. In addition, upon the occurrence of certain events, holders of the rights (other than rights owned by an acquiring person or group) would be entitled to purchase either the Company’s preferred stock or shares in an “acquiring entity” at approximately half of market value. Further, at any time after a person or group acquires the Specified Amount or more (but less than 50%) of the Company’s outstanding voting stock, subject to certain exceptions, the Board of Directors may, at its option, exchange part or all of the rights (other than rights held by an acquiring person or group) for shares of the Company's Common Stock having a fair market value on the date of such acquisition equal to the excess of (i) the fair market value of preferred stock issuable upon exercise of the rights over (ii) the exercise price of the rights. The Company generally will be entitled to redeem the rights at $0.01 per right at any time prior to the close of business on the tenth day after there has been a public announcement of the beneficial ownership by any person or group of the Specified Amount or more of the Company’s voting stock, subject to certain exceptions.

On November 29, 2010, the Board of Directors of the Company adopted an amendment and restatement (the "Amendment") of the Rights Agreement, dated as of March 13, 2002 (the "Original Rights Agreement"), between the Company and American Stock Transfer & Trust Company, LLC, as successor rights agent (as amended, the "Rights Plan"). In general, the Amendment leaves the Original Rights Agreement unchanged in all material respects, other than changing the trigger for the Rights becoming exercisable from 15% to 4.99% of the outstanding Voting Rights (as defined in the Rights Plan), expanding the concept of "beneficial ownership" to include shares owned (including those owned indirectly and constructively) under Section 382 of the Code and modifying the provisions relating to the exchange of Rights for Common Stock.

The Company adopted the Amendment to preserve the value of the Company's net operating loss carry forwards (the "Tax Benefits"), because its ability to fully use the Tax Benefits on an annual basis to offset future income may be substantially limited if the Company experiences an "ownership change" for purposes of Section 382 of the Internal Revenue Code of 1986 (the "Code"). Generally, the Company would experience an "ownership change" under Section 382 of the Code if a greater than 50 percentage point change in ownership of the Voting Stock (as defined in the Rights Plan and described below) by stockholders who beneficially own (or who are deemed to own) 5% or more of the Company's Voting Stock occurs over a rolling three year period.

On September 20, 2011, the Company and American Stock Transfer and Trust Company, LLC, as rights agent, further amended the Rights Plan to extend the expiration date of the rights from March 12, 2012 to July 3, 2013. On March 1, 2013, we further amended the Rights Plan to extend the expiration date from July 3, 2013, to July 3, 2016. Except for the extension of the expiration date, the Rights Plan otherwise remained unmodified. The extension was made to preserve the value of the Tax Benefits. As of January 27, 2012, the Company's cumulative change in ownership among stockholders with at least a 5% ownership interest (as determined under the rules of Section 382) was approximately 44% over the immediately preceding three-year period.

The Rights Plan is designed to reduce the likelihood that the Company will experience an ownership change by discouraging any person (together with such person's affiliates and associates), without the approval of the Board, (i) from acquiring 4.99% or more of the outstanding Voting Stock and (ii) that currently beneficially owns 4.99% or more of the outstanding Voting Stock from acquiring more shares of Voting Stock, other than by exercise or conversion of currently existing warrants, convertible securities or other equity-linked securities. There is no guarantee that the Rights Plan will prevent the Company from experiencing an ownership change.

On May 10, 2005, the Company raised $6.9 million from the issuance and sale of 69,000 shares of Series E Convertible Preferred Stock (“Series E Preferred Stock”). The Series E Preferred Stock has a stated value of $100 per share. Each share of the Series E Preferred Stock may be converted by the holder into 50 shares of Common Stock, subject to adjustment, and will automatically be converted into Common Stock at that rate upon the date that the average of the daily market prices of the Company’s Common Stock for the 20 consecutive trading days preceding such date exceeds $6.00 per share. The Series E Preferred Stock pays no dividends and contains voting rights equal to the number of shares of Common Stock into which each share of Series E Preferred Stock is convertible. Upon liquidation of the Company, the holders of the Series E Preferred Stock are entitled to $100 per share. At December 31, 2012, 22,740 shares remain outstanding; during 2011, 36,260 shares of Series E Preferred Stock were converted into 1,339,800 shares of Common Stock.

On September 24, 2012, a holder of 50 shares of the Company's contingently redeemable Series C Convertible Preferred Stock redeemed those shares pursuant to Section 6.5 of the Certificate of Designations for the Series C Preferred (“Certificate of Designations”), which provides that following a “Triggering Event,” as defined therein, the holders of our shares of Series C Preferred have the right to require us to redeem their shares in cash plus all accrued and unpaid dividends thereon on the date such redemption is demanded. The Actavis Transactions were a Triggering Event. There is no deadline following a Triggering Event by which a holder is required to make a redemption request. As a result, the Company redeemed the 50 shares for $50,000 (the “Mandatory Redemption Price” as defined in the Certificate of Designations) plus accrued and unpaid dividends. Five hundred fifty (550) shares of Series C Convertible Preferred Stock remain outstanding.

Common Stock -

During the second quarter of 2012, the Company granted 176,468 shares of restricted stock to the Company's independent Directors.

For stock transactions (option exercise, warrant exercises) during 2011, the Company utilized the 3,462,124 shares of treasury stock at year-end 2010 to fulfill stock issuances. During the year ended December 31, 2011, the Company issued 1,685,014 shares of Common Stock for the exercise of stock options for proceeds of $2,641,950. At an exercise price of $1.52, 429,802 warrants were exercised for proceeds of $653,299. In cashless exercises, 50,000 warrants with an exercise price of $1.35 were exchanged for 20,796 shares of Common Stock and 3,726,743 warrants with an exercise price of $$1.52 were exchanged for 2,861,932 shares of Common Stock. Also in 2011, 36,260 shares of Series E Preferred Stock were converted into 1,813,000 shares of Common Stock. The Company granted 34,880 shares of restricted stock to the Company's independent Directors and redeemed 36,448 shares into treasury stock for payment of taxes.

During the third quarter of 2010, the Company issued 11,200,000 shares of Common Stock, valued at $11,760,000, as part of the Actavis Transactions and 7,407,407 shares of Common Stock, valued at $7,777,777, as part of the Note Purchase Agreement. Also during the third quarter of 2010, the Company entered into a Securities Purchase Agreement with Perry Partners International Inc. and Perry Partners, L.P. to repurchase, at $0.90 per share for an aggregate purchase price of approximately $3.0 million, 3,333,330 shares of Common Stock. The Company issued 59,375 shares of Common Stock out of treasury stock for the exercise of stock options for proceeds of $79,149. The Company granted 65,218 shares of restricted stock to the Company's independent Directors and redeemed 56,234 shares into Treasury Stock for payment of taxes.

Warrants -

As of December 31, 2012, the Company had warrants outstanding for the purchase shares of Common Stock. Information on outstanding warrants is as follows:

Weighted Average Exercise Price	Warrants	Expiration Date
$1.15	900,000	07/22/2014
1.35	4,023,257	07/02/2015
1.52	4,970,198	04/30/2015
1.42	9,893,455

During 2012, there were no warrants issued or exercised.

During 2011, 3,726,743 warrants with an exercise price of $1.35 were exercised through either an exchange of cash or a cashless exercise in exchange for 2,411,334 shares of Common Stock and 479,802 warrants were exercised with an exercise price of $1.52 through either an exchange of cash or a cashless exercise in exchange for 450,598 shares of Common Stock.

During 2010, warrants to purchase 7,750,000 shares of the Company’s Common Stock at an exercise price of $1.35 per share were issued as part of the Note Purchase Agreement which by their terms expire July 2, 2015. The fair value of the warrant liability at date of issuance was calculated using the Black-Scholes option pricing model and determined to be $5,509,893. It was increased as of December 31, 2010 by $7,961,939 to $13,471,832, adjusted to $16,193,037 on January 20, 2011.and reclassified to Capital in Excess of Par Value. These warrants will no longer be marked to market. (See Note 7)