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8. FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Assumptions used and related fair values for warrants

Significant assumptions used and related fair values for the warrants as of June 30, 2013 were as follows:

Original Issuance		Exercise Price				Volatility				Risk-Free Interest Rate				Term (years)				Discount for marketability restrictions				Warrants Outstanding				Fair Value
06/21/2013		$	7.80				60.3	%			0.36	%			1.74				30.5	%			1,051,200			$	689,300
03/28/2013		$	7.80				60.3	%			0.36	%			1.74				30.5	%			788,400				517,800
01/11/2013		$	7.41				65.0	%			1.41	%			4.54				46.5	%			1,708,700				2,286,200
09/26/2012		$	8.85				60.1	%			0.36	%			2.24				48.3	%			1,770,800				470,400
07/3/2012		$	7.12				64.0	%			1.04	%			4.01				44.8	%			1,812,400				2,315,600
07/3/2012		$	6.27				49.6	%			0.11	%			0.51				47.5	%			803,900				65,400
12/13/2011		$	10.28				60.4	%			1.04	%			3.46				40.0	%			305,700				372,700
																										$	6,717,400

Significant assumptions used and related fair values for the warrants as of December 31, 2012 were as follows:

Original Issuance		Exercise Price				Volatility				Risk-Free Interest Rate				Term (years)				Discount for marketability restrictions				Warrants Outstanding				Fair Value
09/26/2012		$	8.85				70.2	%			0.36	%			2.74				53.9	%			1,833,000			$	1,112,000
07/3/2012		$	7.50				76.1	%			0.72	%			4.51				55.5	%			1,867,000				2,756,000
07/3/2012		$	6.45				69.3	%			0.16	%			1.01				55.5	%			930,000				509,000
12/13/2011		$	12.45				74.4	%			0.54	%			3.95				52.3	%			330,000				480,000
10/6/2010		$	1.80				76.0	%			0.72	%			4.80				46.4	%			17,000				35,000
																										$	4,892,000

Assumptions used and related fair value for conversion feature

Instrument		Initial Conversion Price				Volatility				Risk-Free Interest Rate				Term (years)				Discount for marketability restrictions				Fair Value
Series A and B Notes		$	15.00				49.1	%			0.15	%			0.8				16.8	%		$	3,710,000

Summary of fair value measurements by level

The following table summarizes fair value measurements by level at June 30, 2013 (in thousands):

		Level 1				Level 2				Level 3				Total
Assets:
Commodity contracts⁽¹⁾		$	660			$	–			$	–			$	660
Total Assets		$	660			$	–			$	–			$	660

Liabilities:
Warrants⁽²⁾		$	–			$	–			$	6,717			$	6,717
Conversion feature⁽²⁾			–				–				3,710				3,710
Commodity contracts⁽³⁾			1,020				–				–				1,020
Total Liabilities		$	1,020			$	–			$	10,427			$	11,447

__________

(1) Included in other current assets in the consolidated balance sheets.

(2) Included in warrant liabilities and conversion features at fair value in the consolidated balance sheets.

(3) Included in accrued liabilities in the consolidated balance sheets.

The following table summarizes fair value measurements by level at December 31, 2012 (in thousands):

		Level 1				Level 2				Level 3				Total
Assets:
Commodity contracts⁽¹⁾		$	189			$	–			$	–			$	189
Total Assets		$	189			$	–			$	–			$	189

Liabilities:
Warrants		$	–			$	–			$	4,892			$	4,892
Commodity contracts⁽²⁾			167				–				–				167
Total Liabilities		$	167			$	–			$	4,892			$	5,059

__________

(1) Included in other current assets in the consolidated balance sheets.

(2) Included in accrued liabilities in the consolidated balance sheets.

Changes in fair value of Level 3 inputs

		Warrants				Conversion Features
Balance, December 31, 2012		$	4,892			$	–
Issuance of warrants in January offering			2,657				–
Issuance of notes and warrants on March 28, 2013			883				1,401
Issuance of notes and warrants on June 21, 2013			689				2,929
Conversions of notes			–				(1,234	)
Exercises of warrants			(260	)			–
Adjustments to fair value for the period			(2,144	)			614
Balance, June 30, 2013		$	6,717			$	3,710

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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