Warrants

9 Months Ended

Sep. 30, 2012

Warrants [Abstract]

WARRANTS

5. WARRANTS

Warrants issued in connection with the Company’s December 2007, January 2009, and August 2009 common stock offerings are classified as liabilities as opposed to equity due to their settlement terms which require settlement in registered shares. These warrants are non-cash liabilities and the Company is not required to expend any cash to settle these liabilities. All other warrants issued by the Company were recorded as additional paid-in-capital and no further adjustments are made.

The fair value of the warrants classified as liabilities was recorded on the balance sheet at issuance and is adjusted to fair value 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 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 Nine Months Ended September 30,
	2012			2011
Risk-free interest rate		0.1%-0.3	%		0.1%-1.3	%
Expected dividend yield		0	%		0	%
Expected lives		0.2-1.9 years			1.2-3.4 years
Expected volatility		100.7%-209.1	%		55.3%-88.5%
Shares underlying warrants classified as liabilities		4,784,519			4,824,827
Market value of stock at beginning of year	$	4.50		$	12.72
Market value of stock at end of period	$	15.53		$	6.72

A reconciliation of the change in value of the Company’s warrant liability for the three and nine months ended September 30, 2012 is as follows:

	Three Months Ended September 30, 2012			Nine Months Ended September 30, 2012
	(in thousands)			(in thousands)
Balance at beginning of period	$	2,884		$	5,446
Increase (Decrease) in value of warrants		42,716			40,154
Reclassification to shareholders’ equity upon exercise of warrants		(391	)		(391	)
Balance at September 30, 2012	$	45,209		$	45,209

For the three months and nine months ended September 30, 2012, 80,014 warrants were exercised at a weighted average exercise price of $4.08, generating proceeds of $0.3 million. The following table summarizes information about warrants outstanding at September 30, 2012.

Exercise Price	Outstanding Warrants at September 30, 2012	Expiration Date	Weighted Average Remaining Contractual Life (Years)	Exercisable Warrants
$0.0018	2,778	No expiration date	No expiration date	2,778
6.84	167	No expiration date	No expiration date	167
6.96	2,317,281	7/30/2014	2.0	2,317,281
8.70	7,468	1/30/2014	1.0	7,468
10.68	1,568,385	8/31/2014	2.0	1,568,385
14.70	891,385	12/18/2012	0.2	891,385
21.66	34,626	11/13/2012	0.1	34,626
	4,822,090			4,822,090

Subsequent to September 30, 2012, and through October 31, 2012, 531,913 warrants were exercised at a weighted average exercise price of $10.56 generating proceeds of $5.6 million.