7.	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. 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 the exercise price of the warrants, as well as the fair market value of its common stock, to determine the fair value of its warrants. The exercise price for warrants issued in conjunction with the 2011 private placement ranged between $0.20 and $0.26, per share, and was $0.26 per share for the warrants issued to ipCapital. The fair market value of the Company's common stock was $0.37 and $0.18 per share as of December 31, 2012 and 2011, respectively.

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

For the Year Ended December 31, 2012
Warrants	Estimated Volatility			Annualized Forfeiture Rate		Expected Option Term (Years)		Estimated Exercise Factor		Risk-Free Interest Rate			Dividends
2011 Private Placement		159% - 202	%		—		3.67 – 4.42		10		0.47% - 1.04	%		—
ipCapital		163%-201	%		—		3.80 – 4.54		10		0.47% - 1.04	%		—

For the Year Ended December 31, 2011
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, 2012:

December 31, 2011 fair value of the warrants liability	$	3.696.600
Change in fair value of warrant liability recorded in other income		3,616,600
Accretion of warrant liability recorded in general and administrative expense		76,900
December 31, 2012 fair value of the warrants liability	$	7,390,100