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Stockholders' Equity
 9 Months Ended
Jun. 30, 2011
Stockholders' Equity  
Stockholders' Equity

13. STOCKHOLDERS' EQUITY

Summary

The following table summarizes changes in stockholders' equity components during the nine months ended June 30, 2011:

 

            Additional            Total  
     Common Stock      Paid-in      Accumulated     Stockholders'  
     Shares      Amount      Capital      Deficit     Equity  

Balances, September 30, 2010

      30,614,789       $ 306       $ 80,758,872       $ (70,421,488 )    $ 10,337,690   
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Issuance of common stock:

              

Upon exercise of stock options

      101,580       $ 1       $ 118,355       $ —        $ 118,356   

Upon exercise of warrants (net of offering costs of $2,164,773)

      1,627,945         16         2,181,824         —          2,181,840   

Issuance of warrants

      —           —           2,164,773         —          2,164,773   

Share-based compensation expense

      —           —           306,987         —          306,987   

Net income for the period

      —           —           —           4,665,061        4,665,061   
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

Balances, June 30, 2011

      32,344,314       $ 323       $ 85,530,811       $ (65,756,427 )    $ 19,774,707   
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

  

 

Stock Purchase Warrants

During the nine months ended June 30, 2011, 1,627,945 stock purchase warrants originally issued on August 7, 2006 (the "2006 Warrants") were exercised at a price of $2.67 for total proceeds of $4,346,613. The remaining 12,564 of the 2006 Warrants expired. On February 4, 2011, in consideration of the Warrant Holders exercising the 2006 Warrants at an exercise price above the then current market price of the Company's common stock, the Company issued to the Warrant Holders new warrants exercisable for an aggregate of 1,627,945 shares of common stock at an exercise price of $2.67 per share (the "2011 Warrants"). The 2011 Warrants are exercisable from August 4, 2011 through February 4, 2016. The fair value of the 2011 Warrants, which was recorded as an offset to the proceeds from the exercise of the 2006 Warrants, was estimated to be $2,164,773 using a Black-Scholes pricing model, assuming a 5.0 year expected life, a volatility of 88.5%, a risk-free interest rate of 2.26% and no expected forfeitures or dividend yield.

The Company entered into a Registration Rights Agreement with the holders of the 2011 Warrants ("Warrant Holders"). Under this agreement, the Company agreed to prepare and file, within 30 days following the issuance of the 2011 Warrants, a registration statement covering the resale of the shares of common stock issuable upon exercise of the 2011 Warrants. If the registration statement is not declared effective within 90 days following the date of issuance of the securities, or the Warrant Holders are otherwise unable to re-sell the shares purchased upon exercise of the 2011 Warrants, the Company will be obligated to pay liquidated damages to the purchasers in the amount of $0.01335 per day per applicable share until 180 days after the date the registration statement is required to be filed, and $0.0267 per day per applicable share thereafter, but not to exceed a total of $0.534 per applicable share or a maximum of $869,323. This obligation will be effective for the five year term of the Warrants, or until all 2011 Warrants have been exercised.

On March 2, 2011, the Company filed a registration statement on Form S-3, which satisfied its initial registration obligations under this agreement. On April 7, 2011, this registration statement became effective, which satisfied the initial 90 day effectiveness obligation.