Note 8 - Stockholders' Equity

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Note 8 - Stockholders' Equity	6 Months Ended
	Jun. 30, 2012
Stockholders' Equity Note Disclosure [Text Block]	8.   Stockholders’ Equity Preferred Stock In 2006, the Company issued 7,965,000 shares of Series A Convertible Preferred Stock. The holders of Series A Convertible Preferred Stock had the right to convert such shares, at any time, into shares of common stock at the then applicable conversion rate. In addition, the terms of the Series A Convertible Preferred Stock provided for automatic conversion into common stock at the then applicable conversion rate upon the closing of an initial public offering or the consent of holders of a majority of the outstanding shares of the Series A Convertible Preferred Stock. In connection with any of the foregoing conversion events, every four shares of Series A Convertible Preferred Stock would convert into one share of common stock, subject to adjustment for certain corporate events, including stock splits, stock dividends and recapitalizations. However, on December 15, 2011, the Company’s Board of Directors approved an amendment to the terms of the Series A Convertible Preferred Stock providing for the automatic conversion of all outstanding shares of Series A Convertible Preferred Stock into shares of common stock, on a 1-for-1 basis, on the effective date of a Form 10 filed by the Company with the SEC under the Exchange Act. That amendment was approved by the stockholders of the Company on February 10, 2012, and a Certificate of Amendment effecting the change to the terms of the Series A Convertible Preferred Stock was filed with the state of Delaware on that same day. Accordingly, upon the effectiveness of the Company’s Form 10 on February 27, 2012, the outstanding shares of Series A Convertible Preferred Stock converted into 7,965,000 shares of the Company’s common stock. On February 10, 2012, the stockholders of the Company also approved an Amended and Restated Certificate of Incorporation to be filed in connection with the effectiveness of the Company’s Form 10.  The Company filed the Amended and Restated Certificate of Incorporation with the state of Delaware on February 27, 2012, and it became effective upon filing.  Under such Amended and Restated Certificate of Incorporation, the Company has the authority to issue up to 25,000,000 shares of preferred stock, and the Board of Directors has the authority, without further action by the stockholders, to issue up to that number of shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences and privileges of the shares of each series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.  In June 2012, the Company’s Board of Directors (the “Board”) established the terms of a series of preferred stock known as “Series A Convertible Preferred Stock”.  The Board designated the Series A Convertible Preferred Stock solely to provide BSC a series of the Company’s preferred stock into which BSC could elect to convert the BSC Notes other than in connection with a qualified financing.  The Company has not issued any shares of the Series A Convertible Preferred Stock.  Likewise, the Company has not filed a Certificate of Designations with the Secretary of State of the State of Delaware to create the Series A Convertible Preferred Stock.  The Company does not intend to file such Certificate of Designations unless and until BSC elects to convert its BSC Notes into shares of the Series A Convertible Preferred Stock. Summary of Conversions to Common Stock Upon Effectiveness of the Form 10 The table below summarizes the impact to the Company’s balance sheet and to shares outstanding of the conversions to common stock that occurred upon the effectiveness of the Company’s Form 10, which occurred on February 27, 2012:     Impact to Balance Sheet     Increase in       Before     Impact of     After     Common Shares       Conversions     Conversions     Conversions     Outstanding                             Impact on assets                         Deferred costs   $ 799,123     $ (799,123 )   $ -       -                                     Impact on liabilities and equity                                 Accrued interest on converted notes   $ 974,311     $ (974,311 )   $ -       1,092,559   Summer 2011 Notes, net     904,397       (904,397 )     -       2,183,334   March 2010 Notes, net     4,057,500       (4,057,500 )     -       4,071,000   2011 Unit Offering Notes, net     4,367,482       (4,367,482 )     -       9,050,834   Total impact on liabilities     10,303,690       (10,303,690 )     -       16,397,727   Series A convertible preferred stock     7,965,000       (7,965,000 )     -       7,965,000   Additional paid-in capital and common stock     -       19,345,209       19,345,209       -   Accumulated deficit     -       (1,875,642 )     (1,875,642 )     -   Total impact on equity     7,965,000       9,504,567       17,469,567       7,965,000   Total impact on liabilities and equity   $ 18,268,690     $ (799,123 )   $ 17,469,567       24,362,727   The impact to accumulated deficit relates to the write-off of unamortized debt discounts and deferred financing costs. Stock Options At June 30, 2012, the Company had five share-based compensation plans (a “1998 Plan,” a “2007 Plan,” two “2010 Plans,” and a “2012 Plan,” which are referred to collectively herein as the “Plans”). The Plans provide for the granting of share-based awards, such as incentive and non-qualified stock options, to employees, directors, consultants and advisors. One of the 2010 Plans and the 2012 Plan also provide for cash-based awards. Awards may be subject to a vesting schedule as set forth in each individual award agreement. The Company terminated the 1998 Plan, effective June 24, 2008, with respect to future grants such that no new options may be awarded under the 1998 Plan on or after June 24, 2008. Upon adoption of the 2010 Plans, the Company also ceased making awards under its 2007 Plan. In February 2012, the stockholders of the Company approved the creation of the 2012 Plan. A total of 3,000,000 shares of the Company’s common stock have been reserved for issuance under the 2012 Plan, of which 2,746,400 awards have been issued at June 30, 2012. With the adoption of the 2012 Plan, no additional grants under the 2010 Plans have been or will be made subsequent to December 31, 2011. Activity under the Plans is summarized below:     Shares     Weighted - Average Exercise Price   Outstanding, January 1, 2012     3,679,977     $ 2.05   Granted     2,746,400       1.00   Forfeited     (315,250 )     2.16   Outstanding, June 30, 2012     6,111,127       1.57   The estimated grant date fair values of options granted under the 2012 Plan during the six months ended June 30, 2012 were calculated using the Black-Scholes valuation model, based on the following assumptions: Dividend yield   0%   Expected Volatility   45.2%   Risk free Interest rates 0.93% - 1.13% Expected lives (years)   6.0   The Company records share-based compensation expense on a straight-line basis over the vesting period. For the periods indicated below, employee share-based compensation expense was: Three Months Ended June 30,     Six Months Ended June 30,   2012     2011     2012     2011   $ 313,707     $ 253,917     $ 543,562     $ 508,660    As of June 30, 2012, there was unrecognized compensation expense of $2,307,204 related to outstanding stock options which is expected to be recognized over a weighted average period of approximately 2.1 years. Warrants In May 2012, the Company issued an aggregate of 1,250,000 warrants to two non-employee directors in recognition of their long-standing support of the Company.  The warrants were immediately vested and exercisable upon issuance, have an exercise price of $1.00 per share, and have a term of five years.  The fair value of the 1,250,000 warrants issued of $514,250, computed using the Black-Scholes valuation model. In addition, during the six months ended June 30, 2012, the Company issued 241,666 warrants to third parties with an exercise price of $1.00 and a fair of $79,749. The fair value of the warrants, mentioned above of $593,999, was recorded as a selling, general, and administrative expense during the six months ended June 30, 2012. Warrants have generally been issued for terms of up to five years. Common stock warrants issued and outstanding during the six months ended June 30, 2012 are as follows:     Shares     Weighted - Average Exercise Price   Outstanding, January 1, 2012     1,922,944     $ 0.43   Warrants issued     4,335,704       0.80   Outstanding, June 30, 2012     6,258,648       0.69   The assumptions used in calculating the fair value of warrants issued during the six months ended June 30, 2012, utilizing the Black-Scholes valuation model are as follows: Dividend yield   0%   Expected Volatility 42.1% - 49.0% Risk free Interest rates 0.30% - 0.93% Expected lives (years) 1.9 - 5.0