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Note 10 - Stockholders' Equity
 12 Months Ended
Dec. 31, 2011
Stockholders' Equity Note Disclosure [Text Block]
10. Stockholders’ Equity

Equity Investment-Convertible Preferred Stock and Warrants

On September 2, 2011, pursuant to the Investment Agreement, dated as of June 13, 2011 (the “Investment Agreement”), by and among Jacobs Private Equity, LLC (“JPE”), the other investors party thereto (collectively with JPE, the “Investors”) and XPO Logistics, Inc., a Delaware corporation, the Company issued to the Investors, for $75,000,000 in cash: (i) an aggregate of 75,000 shares of Series A Convertible Perpetual Preferred Stock of the Company (the “Series A Preferred Stock”), which are initially convertible into an aggregate of 10,714,286 shares of common stock, and (ii) warrants initially exercisable for an aggregate of 10,714,286 shares of common stock at an initial exercise price of $7.00 per common share (the “Warrants”).  The Company’s stockholders approved the issuance of the Series A Preferred Stock and the Warrants at the special meeting of the Company’s stockholders on September 1, 2011.  We refer to this investment as the “Equity Investment.”

The Series A Preferred Stock has an initial liquidation preference of $1,000 per share and is convertible at any time in whole or in part at the option of the holder thereof into shares of common stock at an initial conversion price of $7.00 per common share (subject to customary anti-dilution adjustments), for an effective initial aggregate conversion rate of 10,714,286 shares of common stock.  The Series A Preferred Stock pays and or accrues quarterly cash dividends equal to the greater of (i) the as-converted dividends on the underlying common stock for the relevant quarter and (ii) 4% of the then-applicable liquidation preference per annum.  Accrued and unpaid dividends for any quarter accrete to liquidation preference for all purposes.  As of December 31, 2011 there were $750,000 of arrearages in cumulative preferred dividends. The liquidation preference of the Series A Preferred Stock at December 31, 2011 was $75,000,000.  The Series A Preferred Stock votes together with the common stock on an as-converted basis on all matters, except as otherwise required by law, and separately as a class with respect to certain matters involving the rights of holders of the Series A Preferred Stock.

The Warrants are initially exercisable at any time in whole or in part until September 2, 2021 at the option of the holder thereof for one share of common stock per Warrant at an initial exercise price of $7.00 in cash per common share (subject to customary anti-dilution adjustments), for an effective initial aggregate number of shares of common stock subject to Warrants of 10,714,286.

After deducting $3,372,000 of direct incremental issuance costs, the Company received net proceeds of $71,628,000 for the Series A Preferred Stock and the Warrants, which was recorded in equity based on the relative fair values of the Series A Preferred Stock and the Warrants, resulting in $42,794,000 allocated to the Series A Preferred Stock and $28,834,000 allocated to the Warrants.

The conversion feature of the Series A Preferred Stock was determined to be a beneficial conversion feature (“BCF”) based on the effective initial conversion price and the market value of the Company’s common stock at the commitment date for the issuance of the Series A Preferred Stock.  ASC Topic 470, “Debt”, requires recognition of the BCF related to the Series A Preferred Stock as a discount on the Series A Preferred Stock and amortization of such amount as a deemed distribution through the earliest conversion date.  The calculated value of the BCF was in excess of the relative fair value of net proceeds allocated to the Series A Preferred Stock.  The Company therefore recorded a discount on the Series A Preferred Stock of $44,211,000 with immediate recognition of this amount as a deemed distribution because the Series A Preferred Stock is convertible at any time.

The authorized preferred stock of the Company consists of 10,000,000 shares at $.001 par value, of which 75,000 shares were issued and outstanding as of December 31, 2011.  No shares were issued and outstanding as of December 31, 2010 or 2009.

Reverse Stock Split

In connection with the closing of the Equity Investment, the Company effected a 4-for-1 reverse stock split on September 2, 2011.  The Company’s stockholders approved the amendment to the Company’s certificate of incorporation effecting the reverse stock split at the special meeting of the Company’s stockholders on September 1, 2011.  Unless otherwise noted, all share-related amounts herein reflect the reverse stock split.

In connection with the reverse stock split, stockholders received one new share of common stock for every four shares of common stock held at the effective time.  Proportional adjustments were made to the number of shares issuable upon the exercise of outstanding options to purchase shares of common stock and the per share exercise price of those options.

Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividend payments whenever funds are legally available and dividends are declared by our board of directors, subject to the prior rights of the holders of all classes of stock outstanding. The Company records stock as issued when the consideration is received or the obligation is incurred.

Treasury Stock

In 2005, the Company received 45,000 shares of its common stock from the holders thereof in settlement of certain loans and deposits between the Company and these stockholders. The shares were recorded at market price on the dates on which they were acquired by the Company.

Options and Restricted Stock Units

 The Company has in place stock-based compensation plans in which 1,900,000 shares of its common stock have been approved by the shareholders to be issued. Through the plans, the Company offers shares to assist in the recruitment and retention of qualified employees and non-employee directors. Outstanding options granted to employees and non-employee directors totaled 1,382,000 and 751,000 as of December 31, 2011 and 2010, respectively.  Restricted stock units granted to employees and non-employee directors totaled 695,000 and zero as of December 31, 2011 and 2010, respectively.

The following table summarizes the Company’s equity awards outstanding and exercisable as of December 31, 2011 and 2010:

   
Options
   
Restricted Stock Units
 
                                     
   
Options
   
Weighted
Average
Exercise Price
   
Exercise
Price Range
   
Weighted
Average
Remaining Term
   
Restricted
Stock Units
   
Weighted
Average
Grant Date
Fair Value
 
                                     
Outstanding at December 31, 2009
    785,750     $ 4.56       2.28 - 5.92       5.1              
Granted
    158,750       5.64       5.00 - 6.60                      
Expired
    (75,250 )     5.16       3.92 - 6.08                      
Exercised
    (118,000 )     4.76       3.92 - 5.00                      
Outstanding at December 31, 2010
    751,250     $ 4.72       2.28 - 6.60       6.2       -        
                                               
Vested & Exercisable at December 31, 2010
    582,595     $ 4.57       2.28 - 6.60       5.5       -       -  
                                                 
Outstanding at December 31, 2010
    751,250     $ 4.72       2.28 - 6.60       6.2       -          
Granted
    1,059,250       10.89       9.28 - 16.92               695,000       10.34  
Expired
    (190,716 )     10.83       2.28 - 16.92               -          
Exercised
    (237,826 )     5.14       2.28 - 10.56               -          
Outstanding at December 31, 2011
    1,381,958     $ 8.53       2.28 - 16.92       9.0       695,000       10.34  
                                                 
Vested & Exercisable at December 31, 2011
    471,653     $ 5.52       2.68 - 10.56       6.2       -          

     Of the 695,000 restricted stock units, 583,000 vest subject to service conditions and 112,000 vest subject to service and performance-based conditions.