XML 59 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
Shareholders' Equity
 12 Months Ended
Dec. 31, 2011
Shareholders' Equity [Abstract]  
Shareholders' Equity
  12. Shareholders’ Equity

Warrants

On August 11, 2011, the Company entered into a Letter of Credit Agreement (“LOC”) with Mark Plush for $0.3 million. As an incentive to enter into the LOC, the Company issued five-year, detached warrants to purchase 125,000 shares of the Company’s common stock at an exercise price of $0.01 per share. The warrants have an expiration date of August 11, 2016. The LOC plan was approved by the Company’s shareholders at the Annual Meeting on June 16, 2010.

On March 30, 2010, the Company entered into an agreement with EF Energy under which it sold to EF Energy a Secured Subordinated Promissory Note (“Note”) for the principal amount of $1.2 million. As an incentive to enter into the Note, the company issued five-year, detached warrants to purchase 230,000 shares of the Company’s common stock at an exercise price of $0.01 per shares. The warrants have an expiration date of March 30, 2015.

On March 17, 2010, the Company entered into a purchase agreement with Lincoln Park Capital Fund, LLC (“LPC”), an Illinois limited liability company, whereby LPC agreed to purchase 350,000 shares of the Company’s common stock together with a warrant to purchase an equivalent amount of shares, subject to a registration statement being filed and declared effective with the SEC, for total consideration of $0.4 million. The warrant has a five-year term, an exercise price of $1.20, and may not be exercised until 6 months after issuance. The warrant has an expiration date of March 17, 2015. There were no penalties or liquidated damages associated with the company’s registration obligations. LPC also agreed to purchase up to an additional 3,650,000 shares of common stock, at the Company’s option, over a 25 month period. The purchase price of these shares will be based on the market prices of the Company’s common stock at the time of the sale without any fixed discount. The company may suspend purchases by LPC at any time, and may also, in its sole discretion, accelerate or reduce purchases under certain conditions. LPC cannot purchase shares of the Company’s common stock on any business day that the price of the common stock is below $1.00. The common stock purchase agreement may be terminated by the Company, at any time, at its discretion without any cost to it. The proceeds to be received by the Company under the agreement will be used for working capital and general corporate purposes. LPC has agreed not to engage in any shorting or hedging in any manner whatsoever. On July 14, 2010, the Company received a Notice of Effectiveness from the SEC relating to the Registration Statement.

On December 31, 2009, the Company entered into LOC’s with John Davenport and with Quercus for $0.3 million and $0.3 million, respectively. As an incentive to enter into the LOC’s, the Company issued five-year, detached warrants to purchase 125,000 and 150,000 shares, respectively, of the Company’s common stock at an exercise price of $0.01 per share. The warrants have an expiration date of December 31, 2014. The LOC plan was approved by the Company’s shareholders at the Annual Meeting on June 16, 2010.

On December 31, 2009, the Company entered into a strategic alliance with Woodstone Energy LLC (“Woodstone”), a commercial and industrial energy services company serving Fortune 100 companies throughout the United States. This strategic alliance creates a path for contracts totaling not less than $15.0 million to be issued by Woodstone to SRC. In return for this Woodstone commitment, the Company issued 600,000 warrants. 400,000 warrants are exercisable by Woodstone upon the written commitment of $10.0 million in specific secured contracts with the remaining 200,000 warrants being exercisable by Woodstone upon the written commitment of an additional $5.0 million in specific secured contracts. These warrants will expire on December 31, 2014.

 

The Company issued 3,566,440 warrants on March 14, 2008 at $3.08 per share as part of a private placement equity financing. As of December 31, 2011 2,006,378 warrants remain outstanding. The warrants are fully exercisable and will expire on March 14, 2013.

There have been no warrants issued to employees, directors, or consultants for compensation purposes. All warrants, except as noted otherwise, are fully vested and exercisable.

The activity relating to previously issued warrants is as follows:

 

                             
    Warrants
Outstanding
Commitments		     Warrants
Outstanding
Exercise Price		   Warrants
Exerciseable		     Fair
Value of
Warrants		  

Balance, December 31, 2008

     3,837,639     $3.08 - 4.50     3,837,639     $ 12,205  

Warrants issued

     600,000     0.65     —         —    
   

 

 

    

 

  

 

 

    

 

 

  

Balance, December 31, 2009

     4,437,639     $0.01 - 4.50     3,837,639     $ 12,205  

Warrants issued

     855,000     0.01 - 1.20     855,000       474,700  

Warrants exercised

     (1,730,062 )    0.01     (1,730,062 )      (1,626,258 ) 

Warrants cancelled

     (271,199 )    4.50     (271,199 )      —    
   

 

 

    

 

  

 

 

    

 

 

  

Balance, December 31, 2010

     3,291,378     $0.01 - 3.08     2,691,378     $ 494,900  

Warrants issued

     125,000     0.01     125,000       23,750  

Warrants exercised

     (160,000 )    0.01     (160,000 )      (30,400 ) 
   

 

 

    

 

  

 

 

    

 

 

  

Balance, December 31, 2011

     3,256,378     $0.01 - 3.08     2,656,378     $ 57,000  
   

 

 

    

 

  

 

 

    

 

 

  

In the Company’s subscription rights offering that expired on October 30, 2009, an investor inadvertently purchased 1,000,000 shares of its common stock at $0.75 per share. The Company agreed to facilitate the sale of these shares to another shareholder or investor or to purchase them directly. After contacting selected shareholders and investors, the Company introduced the investor to Quercus, the Company’s largest shareholder. David Gelbaum, a member of the Company’s Board of Directors at the time of the transaction, and his spouse are co-trustees of Quercus. The Company was informed on December 30, 2009, by the investor and Quercus that Quercus had agreed to purchase those shares at $0.80 per share. At that time, the closing market price of a share of the Company’s common stock was approximately $0.65 per share.

On March 14, 2008, in a private placement to nineteen investors of 3,184,321 shares of common stock and an equal number of five-year warrants to purchase common stock, Quercus had acquired 1,560,062 warrants. To facilitate the purchase of the 1,000,000 shares discussed above, on December 30, 2009 the Company’s Board of Directors agreed with Quercus to reduce the exercise price of the warrants issued to Quercus to $0.01 per share upon the execution of the purchase of all 1,000,000 shares, which was completed on February 20, 2010. The Company’s shareholders subsequently approved the reduction in the exercise price of the above mentioned warrants at its Annual Meeting on June 16, 2010.

2004 Stock Incentive Plan

On May 19, 2004, the shareholders approved the 2004 Stock Incentive Plan (the “2004 Plan”). The stated purpose of the 2004 Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging employees, outside directors, and consultants to focus on critical long-range objectives; (b) encouraging the attraction and retention of employees, outside directors, and consultants with exceptional qualifications; and (c) linking employees, outside directors, and consultants directly to stockholder interests through increased stock ownership. The 2004 Plan seeks to achieve this purpose by providing for awards in the form of restricted shares, stock units, options (which may constitute incentive stock options or non-statutory stock options), or stock appreciation rights. An aggregate of 500,000 shares of the Company’s common stock was reserved for issuance under the 2004 Plan on May 19, 2004. On June 15, 2006, the shareholders reserved an additional 500,000 shares of the Company’s common stock for issuance under the 2004 Plan.

2008 Stock Incentive Plan

On September 30, 2008, the Company’s shareholders approved its 2008 Incentive Stock Plan. Under the Plan, the maximum aggregate number of stock options awarded shall not exceed 1,000,000 shares, plus any shares remaining available for grant under existing plans. Under existing plans, only a limited number of shares remain available for grant. At the 2010 Annual Meeting of Shareholders held on June 16, 2010, the shareholders approved an increase in the total number of shares of common stock that may be awarded under the 2008 Incentive Stock Plan from 1,000,000 shares to 3,000,000 shares.

 

Options outstanding under all plans have a contractual life between five and ten years, and vesting periods between one and four years. Option activity under all plans comprised (except per share data):

 

                         
    Options
Available
for Grant		     Number of
Options
Outstanding		     Weighted
Average
Exercise Price
Per Share		  

Balance, December 31, 2008

     828,498       1,491,187     $ 5.29  

Granted

     (1,195,630 )      1,195,630       0.70  

Cancelled

     519,438       (519,438 )      3.35  

Exercised

     —         (397,630 )      0.66  
   

 

 

    

 

 

    

 

 

  

Balance, December 31, 2009

     152,306       1,769,749     $ 3.63  

Granted

     (1,115,000 )      1,115,000       1.08  

Cancelled

     993,583       (993,583 )      1.68  

Exercised

     —         (13,750 )      0.60  

Restricted Shares Granted

     (601,564 )      —         —    

Additional shares reserved

     2,000,000       —         —    
   

 

 

    

 

 

    

 

 

  

Balance, December 31, 2010

     1,429,325       1,877,416     $ 3.36  

Granted

     (1,040,000 )      1,040,000       0.84  

Cancelled

     591,418       (591,418 )      2.99  

Exercised

     —         (7,500 )      0.60  

Restricted Shares Granted

     (114,543 )      —         —    
   

 

 

    

 

 

    

 

 

  

Balance, December 31, 2011

     866,200       2,318,498     $ 2.28  
   

 

 

    

 

 

    

 

 

  

At December 31, 2011, options to purchase 1,137,920 shares of common stock were exercisable at a weighted-average fair value of $2.10 with an intrinsic value of $0. At December 31, 2011, options to purchase 2,318,498 shares were outstanding, with a weighted-average fair value of $1.34 with an intrinsic value of $0.

At December 31, 2010, options to purchase 1,124,433 shares of common stock were exercisable at a weighted-average fair value of $2.28 with an intrinsic value of $47 thousand. At December 31, 2010, options to purchase 1,827,416 shares were outstanding, with a weighted-average fair value of $1.90 with an intrinsic value of $0.1 million.

At December 31, 2009, options to purchase 921,645 shares of common stock were exercisable at a weighted-average fair value of $2.81 with an intrinsic value of $2 thousand. At December 31, 2009, options to purchase 1,719,749 shares were outstanding, with a weighted-average fair value of $2.00 with an intrinsic value of $4 thousand.

 

                                                 
OPTIONS OUTSTANDING     OPTIONS CURRENTLY EXERCISABLE  
Range of
Exercise
Prices		   Number
of Shares
Outstanding		     Weighted
Average
Remaining
Contactual
Life		     Weighted
Average
Exercise
Price		     Number
Exercisable		     Weighted
Average
Remaining
Contactual
Life		     Weighted
Average
Exercise
Price		  
          (in years)                 (in years)        
$0.50 - $4.80     1,935,498       7.8     $ 1.27       735,441       6.0     $ 1.81  
$4.91 - $7.19     262,000       5.1     $ 6.45       261,479       5.1     $ 6.45  
$7.23 - $9.60     89,000       3.4     $ 8.81       109,000       3.1     $ 8.52  
$10.64 - $12.00     32,000       3.5     $ 10.86       32,000       3.5     $ 10.86  
   

 

 

                    

 

 

                  
      2,318,498                       1,137,920                  
   

 

 

                    

 

 

                  

 

1994 Employee Stock Purchase Plan

A total of 400,000 shares of common stock had been reserved for issuance under the 1994 Employee Stock Purchase Plan. The plan permits eligible employees to purchase common stock through payroll deductions at a price equal to the lower of 85% of the fair market value of the Company’s common stock at the beginning or end of the offering period. Employees may end their participation at any time during the offering period, and participation ends automatically on termination of employment with the Company. On June 15, 2006 and June 15, 2011, the shareholders reserved an additional 50,000 shares and 250,000 shares, respectively, of the Company’s common stock for issuance under the 1994 Employee Stock Purchase Plan. At December 31, 2011, 2010, and 2009, 291,000 shares, 134,000 shares, and 114,000 shares had been issued under this plan since inception, respectively.

Shareholder Rights Plan

On September 12, 2001, the Board of Directors declared a dividend distribution of one “Right” for each outstanding share of common stock of the Company to shareholders of record at the close of business on September 26, 2002. One Right also will attach to each share of common stock issued by the Company subsequent to such date and prior to the distribution date defined below. With certain exceptions, each Right, when exercisable, entitles the registered holder to purchase from the Company one one-thousandth of a share of a new series of preferred stock, designated as Series A Participating Preferred Stock, at a price of $30.00 per one one-thousandth of a share, subject to adjustment. The Rights were distributed as a non-taxable dividend and expire ten years from the date of the Rights Plan. In general, the Rights will become exercisable and trade independently from the common stock on a distribution date that will occur on the earlier of (i) the public announcement of the acquisition by a person or group of 15% or more of the common stock or (ii) 10 days after commencement of a tender or exchange offer for the common stock that would result in the acquisition of 15% or more of the common stock. Upon the occurrence of certain other events related to changes in ownership of the common stock, each holder of a Right would be entitled to purchase shares of common stock, or an acquiring corporation’s common stock, having a market value of twice the exercise price. Under certain conditions, the Rights may be redeemed at $0.001 per Right by the Board of Directors.

The description and terms of the Rights are set forth in a Rights Agreement dated as of September 20, 2002, between the Company and Mellon Investor Services LLC, as rights agent as amended.