Annual report pursuant to Section 13 and 15(d)

Shareholders' Equity

Shareholders' Equity
12 Months Ended
Dec. 31, 2011
Stockholders' Equity [Abstract]  
Stockholders' Equity

9. Shareholders' Equity

Common Stock

At our 2010 annual meeting our proposal to amend the Company's articles of incorporation to consummate a reverse stock split of our authorized and outstanding shares of common stock was approved and thereafter our Board of Directors authorized a 1 for 20 reverse stock split of our authorized and outstanding shares of common stock and the Company filed an amendment to its articles of incorporation with the Florida Department of State to effect the reverse stock split.

Restricted Stock Issuance

The Company issued 120,000 restricted shares of common stock to its former Chief Scientific Officer and founder, Dr. Jeffrey Hillman in connection with his retirement from full time services to the Company effective October 31, 2011. The restricted shares are subject to performance conditions as well as time based vesting. The performance based vesting relates to the completion of certain work-in-process concerning Company intellectual property and the time vesting is equal over a three year period with restricted shares being subject to earlier vesting upon a change of control. Dr. Hillman's outstanding stock option agreements were amended to (a) vest any unvested options and (b) extend the exercise period of such options for one year post separation of employment until October 31, 2012. The Company recorded compensation expense of $40,227 for the year ended December 31, 2011 for these restricted shares. At December 31, 2011, 120,000 shares of restricted common stock are non-vested. At December 31, 2011, there was $169,773 of total unrecognized compensation expense related to non-vested restricted common stock that is expected to be recognized over a period of three months.

January 2010 Private Placement

In January 2010, we completed a second closing of a $3,000,000 private placement of common stock that commenced in December 2009 (when the initial closing occurred) pursuant to a common stock Purchase Agreement with accredited investors. In January 2010 the Company issued an additional 100,000 shares of its common stock at a price per share of $5.00 to the additional participating investors. The additional investment amount in January 2010 was $500,000, of which $250,000 was made by the Koski Family Limited Partnership.

July 2010 Financing Transaction

In July 2010, we issued 250,000 shares of our common stock to the KFLP at a price of $8.00 per share in connection with a common stock purchase agreement (the "July 2010 Financing Transaction") we entered into with the KFLP. The $2,000,000 aggregate consideration paid by the KFLP for the shares consisted of (i) $1,000,000 cash and (ii) the exchange and cancellation of the outstanding May 2010 Note issued to the KFLP on May 28, 2010. Accrued interest on the May 2010 Note through closing was waived by the KFLP.

Concurrent with the July 2010 Financing Transaction and as part thereof, the Company entered into the Credit Facility with the KFLP (see Note 8).

Other Share Issuances

In June 2010, we issued 6,000 shares to Athorn Clark partners ("Athorn") at a price per share of $12.50 (based on the value of the services required to be provided by Athorn) in connection with an agreement for Athorn to provide media related services to us.



The Company's outstanding and exercisable warrants as of December 31, 2011 are presented below:


Shares Underlying
Warrant  Outstanding
     Exercise Price      Expiration Date  
  127,888       $ 26.00         5/30/2013   
  161,000         15.00         5/30/2013   
  5,000         10.00         4/15/2014   
  12,500         6.00         9/14/2012   







As of December 31, 2011 there are 306,388 warrants and 725,173 stock options outstanding. If all warrants and stock options were exercised, the total number of outstanding common shares would be approximately 6,925,737 as of December 31, 2011.

Treasury Stock

During 2011, the board of directors authorized and the Company repurchased 2,500 shares of the Company's common stock at an aggregate cost of $3,751. In 2011, we retired all shares of treasury stock. These shares remain as authorized stock; however, they are now considered unissued.