6. Liability Attributable to Warrants

The exercise price of the warrants issued by the Company in conjunction with the private placement of its common stock (the “2011 private placement”) and the warrants issued to ipCapital Group, an intellectual property consulting firm hired by the Company, could, in certain circumstances, be reset to below-market value. Accordingly, the Company has concluded that such warrants are not indexed to the Company's common stock; therefore, the warrants were recorded as a liability (See Notes 7 and 14). Changes in the fair value of the 2011 private placement warrants liability are recognized in other expense and changes in the fair value of the warrants issued to ipCapital are recognized as a component of general and administrative expense in the consolidated statement of operations (See Note 14).

The Company used a binomial pricing model to determine the fair value of its warrants as set forth in the following table:

Warrants	Estimated Volatility			Annualized Forfeiture Rate		Expected Option Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate			Dividends
2011 Private Placement		198% - 199	%		-		4.67 – 5.00		10		0.83% - 0.96	%		-
ipCapital		199	%		-		4.79 – 5.00		10		0.83% - 1.14	%		-

The following table is a reconciliation of the warrants liability measured at fair value using significant unobservable inputs (Level 3) for the year ended December 31, 2011:

Aggregate fair value of the warrants liability associated with the 2011 private placement at issuance	$	3,900,700
Change in fair value of warrant liability recorded in other income		(222,700	)
Accretion of warrant liability recorded in general and administrative expense		18,600
December 31, 2011 fair value of the warrants liability	$	3,696,600

The Company had no outstanding warrants during the year ended December 31, 2010.