XML 14 R25.htm IDEA: XBRL DOCUMENT

Convertible Notes and Warrant Liabilities (Tables)

6 Months Ended

Jun. 30, 2012

Convertible Notes and Warrant Liabilities

Summary of Warrants outstanding

		Warrants		Exercise Price
Beginning balance		40,000,000		$	0.15
Add: Adjustments (pursuant to warrants agreement)		—		n/a
Less: Exercised (prior to 3/31/2011)		—		n/a
Ending balance		40,000,000		$	0.15

Summary of assets and liabilities measured at fair value

					Fair Value Measurements at Reporting Date Using:
					Quoted Prices
					in Active			Significant
					Markets for			Other			Significant
		Balance as of			Identical			Observable			Unobservable
		June 30,			Assets			Inputs			Inputs
Description		2012			(Level 1)			(Level 2)			(Level 3)

Liabilities
Convertible notes		$	8,920,000		$	—		$	—		$	8,920,000
Warrant liabilities		$	4,000,000		$	—		$	—		$	4,000,000

Total Liabilities		$	12,920,000		$	—		$	—		$	12,920,000

Schedule of changes in the Convertible Notes and Investor Warrants

		Fair Value of Convertible Notes			Fair Value of Warrant Liabilities			Total
Allocation of initial proceeds		$	3,208,000		$	792,000		$	4,000,000
Initial fair value adjustment		$	469,000		$	116,000		$	585,000
February 22, 2011		$	3,677,000		$	908,000		$	4,585,000
Amortization of debt discount		$	91,000		$	—		$	91,000
Fair value adjustment		$	1,747,000		$	988,000		$	2,735,000
Balance June 30, 2011		$	5,515,000		$	1,896,000		$	7,411,000
Balance December 31, 2011		$	5,327,000		$	1,600,000		$	6,927,000
Amortization of debt discount		$	132,000		$	—		$	132,000
Fair value adjustment		$	3,461,000		$	2,400,000		$	5,861,000
Balance June 30, 2012		$	8,920,000		$	4,000,000		$	12,920,000

Warrant Liabilities

Convertible Notes and Warrant Liabilities

Schedule of key inputs required to estimate fair value

Input		February 22, 2011			June 30, 2011			December 31, 2011			June 30, 2012
Stock Price		$	0.0755		$	0.12		$	0.1075		$	0.20
Exercise Price		$	0.15		$	0.15		$	0.15		$	0.15
Expected Life (in years)		5.00			4.65			4.15			3.65
Stock Volatility		90		%	95		%	95		%	105		%
Risk-Free Rate		2.16		%	1.59		%	0.63		%	0.51		%
Dividend Rate		0		%	0		%	0		%	0		%
Outstanding Shares of Common Stock		30,351,092			30,351,092			30,351,092			30,976,092

Convertible Notes

Convertible Notes and Warrant Liabilities

Schedule of key inputs required to estimate fair value

Input		February 22, 2011			June 30, 2011			December 31, 2011			June 30, 2012
Stock Price		$	0.0755		$	0.1200		$	0.1075		$	0.20
Exercise Price		$	0.10		$	0.10		$	0.10		$	0.10
Expected remaining term (in years)		3.00			2.65			2.15			1.65
Stock Volatility		95		%	100		%	100		%	110		%
Risk-Free Rate		1.22		%	0.68		%	0.27		%	0.29		%
Dividend Rate		0		%	0		%	0		%	0		%
Outstanding Shares of Common Stock		30,351,092			30,351,092			30,351,092			30,976,092
Effective discount rate		20.3		%	16.6		%	13.2		%	8.3		%
Probability of forced redemption		20		%	20		%	20		%	20		%

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring and/or nonrecurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

+ References+ Details

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

+ References+ Details