Stockholders' Equity

9 Months Ended

Sep. 30, 2011

Stockholders' Equity

Stockholders' Equity

Note 11: Stockholders' Equity

The Equity Compensation Plan effective May 1, 2004, authorized the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and other stock awards.  A maximum of 8,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the Equity Plan of 2004.  Unless sooner terminated, the Equity Compensation Plan of 2004 will continue in effect for a period of 10 years from its effective date.  Prior to September 30, 2011, the Company effectively exhausted this plan by previously issuing an aggregate of 7,989,981 shares, stock options and warrants to vendors, Board Members, Directors and consultants under the 2004 Equity Compensation Plan.  The shares had prices ranging from $0.35 to $0.89 based on the NYSE Amex closing price.  The stock options had various exercise prices ranging from $1.30 to $6.00, had terms of five to ten years and vesting immediately to three years.

The Equity Incentive Plan of 2007, effective June 20, 2007, authorizes the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and other stock awards.  A maximum of 9,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the Equity Incentive Plan of 2007.  Unless sooner terminated, the Equity Incentive Plan of 2007 will continue in effect for a period of 10 years from its effective date.  The Company issued to vendors, Board Members, Directors and consultants, shares, stock options, warrants and "Incentive Rights" under the Employee Wages or Hours Reduction Program.  Prior to September 30, 2011, the Company effectively exhausted this plan by previously issuing an aggregate of 8,980,374 shares and shares issuable upon exercise/conversion of the foregoing securities.  The aggregate shares to vendors, Board Members, Directors and consultants had prices ranging from $0.32 to $2.54 based on the NYSE Amex closing price. The stock options had various exercise prices ranging from $0.72 to $3.05, terms of ten years and vesting over varying periods.

The Company utilized the Black-Scholes-Merton Pricing Model to arrive at the fair value of the stock options which had been issued during the nine months ended September 30, 2011 and accordingly recorded approximately $296,000 as equity based compensation for these issuances during this period.  The stock options are generally priced at a premium of 110% of the stock's NYSE Amex Closing Price on the effective date of issuance or contractual agreement with vesting immediate upon grant.

The Equity Incentive Plan of 2009, effective June 24, 2009, authorizes the grant of non-qualified and incentive stock options, stock appreciation rights, restricted stock and other stock awards.  A maximum of 15,000,000 shares of common stock is reserved for potential issuance pursuant to awards under the Equity Incentive Plan of 2009.  Unless sooner terminated, the Equity Incentive Plan of 2009 will continue in effect for a period of 10 years from its effective date.  As of September 30, 2011, the Company issued 4,696,777 securities to Directors and consultants consisting of an aggregate 817,906 shares of common stock and options to purchase 3,878,871 shares.  The shares issued to consultants had prices ranging from $0.37 to $0.68 based on the NYSE Amex closing price.

The aggregate stock options had various exercise prices ranging from $0.37 to $2.81, had terms of ten years and vested immediately upon grant.

Pursuant to a May 28, 2010 Equity Distribution Agreement (the "Agreement") with Maxim Group LLC ("Maxim"), the Company established an At-The-Market ("ATM") Equity Program pursuant to which the Company may sell up to 32,000,000 shares of its Common Stock from time to time through Maxim as its sales agent (the "Agent").  Under the Agreement, the Agent is entitled to a commission at a fixed commission rate of 4.0% of the gross sales price per Share sold, up to aggregate gross proceeds of $10,000,000, and, thereafter, at a fixed commission rate of 3.0% of the gross sales price per Share sold.  The Company has no obligation to sell any shares under this program, and may at any time terminate the Agreement.  During the nine months ended September 30, 2011, the Company sold no shares through this program and received no net cash proceeds.  As of September 30, 2011, the Company has sold an aggregate of 520,000 shares that resulted in net cash proceeds of approximately $293,000 and commissions paid to Maxim of approximately $12,000.

The proceeds from this financing have been used to fund infrastructure growth including manufacturing, regulatory compliance and market development.