Warrants

6 Months Ended

Jun. 30, 2011

Warrants

Warrants

Note 6. Warrants

Warrants issued in connection with the Company's December 2007, January 2009, and August 2009 financings are classified as liabilities due to their settlement terms. These warrants are non-cash liabilities; the Company is not required to expend any cash to settle these liabilities.

The fair value of these warrants was recorded on the balance sheet at issuance and the warrants are marked to market at each financial reporting period, with changes in the fair value recorded as a gain or loss in the statement of operations. The fair value of the warrants is determined using the Black-Scholes option-pricing model, which requires the use of significant judgment and estimates for the inputs used in the model. The following reflects the weighted-average assumptions for each of the periods indicated:

	Three and Six Months Ended June 30,
	2011		2010
Risk-free interest rate		0.5%-1.3%		0.1%-2.6%
Expected dividend yield		0%		0%
Expected lives		1.5-3.4 years		0.1-4.4 years
Expected volatility		55.3%-88.5%		62.3%-95.8%
Shares underlying warrants classified as liabilities		28,948,962		29,717,546
Market value of stock at beginning of year	$	2.12	$	1.58
Market value of stock at end of period	$	1.43	$	1.61

The risk-free interest rate is estimated using an average of treasury bill interest rates at the valuation date that correlate to the prevailing interest rates over a period commensurate with the expected lives. The expected dividend yield is zero as the Company has not paid any dividends to date and does not expect to pay dividends in the future. The expected lives are based on the remaining contractual lives of the related warrants at the valuation date. The expected volatility is estimated using historical volatility of the Company's common stock, taking into account factors such as future events or circumstances that could impact volatility over a period commensurate with the expected lives. The amounts estimated according to the Black-Scholes option pricing model may not be indicative of the actual values realized upon the exercise of these warrants by the holders.

The Company also has warrants that are classified as permanent equity; the fair value of the warrants was recorded as additional paid-in capital at the time of issuance and no further adjustments are made. 255,895 shares were underlying such warrants for each of the three and six months ended June 30, 2011 and 2010.

A summary of the Company's warrant activity with respect to the six months ended June 30, 2011 is as follows:

Warrants	Shares			Weighted Average Exercisable Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2010		29,665,441		$	1.58
Granted		—			—
Exercised		(460,584	)	$	1.39
Canceled or expired		—			—
Outstanding at June 30, 2011		29,204,857		$	1.59		2.8