4. Warrants Liability

The exercise price of the warrants we issued in September 2011 in conjunction with the private placement of our common stock (the "2011 private placement") and the warrants we issued in October 2011 in connection with our engagement of an intellectual property firm (ipCapital Group) could, in certain circumstances, be reset to below-market value. Accordingly, we have concluded that such warrants are not indexed to our common stock; therefore, the fair value of the warrants was recorded as a liability upon their issuance. Changes in 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 condensed consolidated statement of operations.

We used a binomial pricing model to determine the fair value of our warrants as of March 31, 2012, the balance sheet date, using the following assumptions:

	Estimated Volatility			Annualized Forfeiture Rate		Expected Option Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate			Dividends
2011 Private Placement		202	%		-		4.42		10		1.04	%		-
ipCapital		201	%		-		4.54		10		1.04	%		-

The following table is a reconciliation of the warrants liability measured at fair value using significant unobservable inputs (Level 3) for the three months ended March 31, 2012:

Warrants liability - December 31, 2011 fair value	$	3,696,600
Change in fair value of warrant liability recorded in other income		58,600
Accretion of warrant liability recorded in general and administrative expense		18,700
Warrants liability - March 31, 2012 fair value	$	3,773,900

We had no outstanding warrants during the three months ended March 31, 2011.