Stockholder's Equity

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Note 11 - Stockholder's Equity

Stock Split

On December 10, 2010, we undertook a 1 for 10 reverse stock split of our common stock.  As a result, we reduced the number of our authorized shares of common stock from 200,000,000 shares to 20,000,000 shares and reduced the number of authorized shares of “blank check” preferred stock from 5,000,000 shares to 500,000 shares.

Treasury Stock

At December 31, 2010, we had 551,696 shares of stock in our treasury at a combined total value of approximately $2.1 million. The cost method was used in recording the purchase of the treasury stock.  During 2011, we retired 164,869 shares of our common stock held in treasury valued at approximately $627,000. 

Sale of Common Stock

On June 20, 2011, we entered into Subscription Agreements with 17 institutional and accredited investors, several of which are affiliated entities, for the sale of 1,350,000 shares of our common stock, together with immediately exercisable five year warrants to purchase up to an aggregate of 675,000 shares of common stock, resulting in gross proceeds to us of $2,700,000. Each warrant entitles the investor to purchase 0.50 shares of our common stock for every share of common stock purchased by such investor in the offering. The purchase price for each share of common stock and the related warrants was $2.00. Each warrant has an exercise price of $2.20 per share which is subject to adjustments in the case of stock splits, stock dividends, combinations of shares and similar recapitalization transactions.  This offering was priced at the close of market on June 20, 2011 and was conducted as a takedown from our shelf registration statement which was declared effective by the SEC in April 2011.   A portion of the proceeds from the sale the common stock were used to repay the $1 million non-formula revolving line of credit secured by a board member.

Warrants Outstanding

As of December 31, 2011, we had outstanding warrants for the potential issuance of 767,000 shares of common stock. Exercise price ranges from $1.50 to $32.80 as of December 31, 2011. These warrants were primarily issued in connection with private placements.  All of these warrants are exercisable for five years from the date of grant.

The following table summarizes information about stock warrants outstanding as of December 31, 2011:

Range of Exercise Price		Shares		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$	1.50 - $15.00		765,000		4.38	$	2.47
$	15.01 - $32.80		2,000		0.07		32.80
Total			767,000		4.38	$	2.55
Exercisable			767,000		4.38	$	2.55