Warrants

3 Months Ended

Mar. 31, 2013

Warrants Disclosures [Text Block]

10. Warrants 

        From time to time, the Company issues warrants to purchase its common stock. These warrants have been issued for consulting services, in connection with the Company’s issuance of debt and sales of its common stock.

        Warrant activity is summarized as follows: 

	Shares	Weighted Average Exercise Price	Range of Exercise Prices
Outstanding at December 31, 2012	923,090	$ 7.77	$2.09 - $48.90
Warrants issued	─
Warrants expired/forfeited	─
Outstanding at March 31, 2013	923,090	$ 7.77	$2.09 - $48.90
Warrants exercisable at March 31, 2013	863,090	$ 7.92	$2.09 - $48.90

Warrant Liability

        The Company evaluates warrants on issuance and at each reporting date to determine proper classification as equity or as a liability. The Company has 379,678 outstanding warrants that it is required to physically settle by delivering registered shares. In addition, while the relevant warrant agreement does not require cash settlement if the Company fails to maintain registration of the warrant shares, it does not specifically preclude cash settlement. Accordingly, the Company’s agreement to deliver registered shares without express terms for settlement in the absence of continuous effective registration is presumed to create a liability to settle these warrants in cash, requiring liability classification. The contracts for the remaining warrants allow for settlement in unregistered shares and do not contain any other characteristics that would result in liability classification. Accordingly, these instruments have been classified in stockholders’ equity in the accompanying condensed consolidated balance sheets and are only valued on the issuance date and not subsequently revalued. The Company evaluated the balance sheet classification of all warrants at March 31, 2013 and noted no changes.

        The liability-classified warrants are considered Level 3 in the fair value hierarchy because they are valued based on unobservable inputs. The Company determined the fair value of its liability-classified warrants using a Monte Carlo simulation model, which utilizes multiple input variables to estimate the probability that market conditions will be achieved. The liability, included in accrued expenses and other current liabilities in the accompanying condensed consolidated balance sheets, is remeasured at the end of each reporting period with changes in fair value recognized in other income (expense) in the condensed consolidated statements of operations and comprehensive loss.

        The following is a reconciliation of the warrant liability measured at fair value using Level 3 inputs (in thousands):

	Three Months Ended March 31,
	2013	2012
Balance at beginning of period	$ 10	$    100
Remeasurement of common stock warrants	(3)	141
Balance at end of period	$   7	$    241