Shareholders' Equity

Equity Issuances

In September 2011, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) with Aspire Capital Fund, LLC, an Illinois limited liability company (“Aspire Capital”), which provides that, subject to certain terms and conditions, Aspire Capital is committed to purchase up to an aggregate of $20.0 million worth of shares of the Company’s common stock over the 24-month term of the Purchase Agreement. At the Company’s discretion, it may present Aspire Capital with purchase notices under the Purchase Agreement from time to time, to purchase the Company’s Common Stock, provided certain price and other requirements are met. The purchase price for the shares of stock will be based upon one of two formulas set forth in the Purchase Agreement depending on the type of purchase notice we submit to Aspire Capital from time to time, and will be based on market prices of the Company’s common stock (in the case of regular purchases) or a discount of 5% applied to volume weighted average prices (in the case of VWAP purchases), in each case as determined by parameters defined in the agreement. The Company and Aspire Capital shall not effect any sales under the Purchase Agreement on any date where the closing sales price is less than 75% of the closing sales price on the business day immediately preceding the date of the Purchase Agreement. The Company’s net proceeds will depend on the purchase price and the frequency of the Company’s sales of shares to Aspire Capital; provided, however, that the maximum aggregate proceeds from sales of shares is$20.0 million. The Company’s delivery of purchase notices will be made subject to market conditions, in light of the Company’s capital needs from time to time and under the limitations contained in the Purchase Agreement. As consideration for entering into the Purchase Agreement, effective September 30, 2011, we issued 990,099 shares of our Common Stock to Aspire Capital (the “Commitment Shares”). The issuance of shares of common stock to Aspire Capital pursuant to the Purchase Agreement, including the Commitment Shares, and the sale of those shares from time to time by Aspire Capital to the public, are covered by an effective shelf registration statement on Form S-3.

In August 2012, the Company and Aspire entered into an amendment to the Purchase Agreement dated September 28, 2011, providing for an extension of the 24-month term of the Purchase Agreement until September 30, 2015. Pursuant to the amendment, we agreed to issue to Aspire a five-year warrant to purchase up to 1,612,903 shares of our common stock at an exercise price of $0.60 per share (the closing price of our common stock on the date the amendment was executed).

In the first quarter of 2013, the Company issued 4.5 million shares of Common Stock under the provisions of its equity line of credit with Aspire for gross proceeds of approximately $2.8 million. As of March 31, 2013, the remaining amount available to the Company under the Purchase Agreement was $13.9 million.

Warrant Exercises

To raise capital on terms that we deemed favorable, during the three months ended March 31, 2013, the Board authorized certain inducements to warrant holders to exercise outstanding common stock purchase warrants significantly before their expiration dates. The Company determined in each instance that such inducements were modifications of equity instruments, and an incremental fair value of the inducement was determined using the Black-Scholes option pricing model.

During the three months ended ended March 31, 2013, warrant holders exercised an aggregate of 207,610 warrants at an exercise price of 0.51 per share for gross proceeds of approximately $0.1 million. As an inducement to exercise, we paid certain warrant holders $0.03 per share upon each exercise. The incremental fair value of the inducement recorded was $0.

Stock Options and Warrants

The following table summarizes the activity for stock options and warrants for the three months ended March 31, 2013:



	Stock Options			Warrants
	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2012	21,686,680		$1.29	55,287,611		$1.57

Changes during the Year:
Granted	4,860,331		0.62	50,545		0.83
Exercised	—		—	(207,610	)	0.51
Forfeited	(185,198	)	0.66	—		—
Expired	(50,000	)	1.28	(120,000	)	4.12
Outstanding at March 31, 2013	26,311,813		$1.17	55,010,546		$1.56

During the three months ended March 31, 2013 and 2012, the Company issued warrants for services as follows ($ in thousands, except share data):



	Three Months Ended March 31,
	2013		2012
Number of Common Stock Purchase Warrants Issued	39,128		125,000
Value of Common Stock Purchase Warrants Issued	$	14.9	$	50.6

Restricted Stock

During the three months ended March 31, 2013 and 2012, the Company issued restricted stock for services as follows ($ in thousands, except share data):



	Three Months Ended March 31,
	2013		2012
Number of Restricted Stock Issued	1,774,917		189,814
Value of Restricted Stock Issued	$	1,127.9	$	91.2

The weighted average estimated fair value of restricted stock issued for services in the three months ended March 31, 2013 and 2012 was $0.64 and $0.48 per share, respectively. The fair value of the restricted stock was determined using the Company’s closing stock price on the date of issuance. The vesting terms of restricted stock issuances are generally within one year.