3. Restatement and Revision of Consolidated Financial Statements

On May 8, 2013, the Company concluded, based on the recommendation of management, that the previously issued consolidated financial statements as of and for the years ended December 31, 2011 and 2010 included in the Company's most recently filed Form 10-K are no longer appropriate to rely upon because they failed to account for certain outstanding warrants to purchase common stock of the Company (the “Warrants”) as liabilities rather than equity and to account for non-cash charges resulting from the periodic “mark-to-market” adjustments of the Warrants. The Company has determined that the aforementioned financial statements should be restated to correct this error and reflect the aforementioned liabilities and non-cash charges.

The audited consolidated financial statements and related disclosures as of and for the year ended December 31, 2012 have also been revised to correct this error and conform with the restated financial statements referred to herein. The impact to the financial statements as of and for the year ended December 31, 2012 was not material.

The effects of the revision and restatement on the consolidated balance sheets are summarized in the following table:



	December 31, 2012									December 31, 2011
	As Originally Reported			Adjustments			Revised			As Originally Reported			Adjustments			Restated
ASSETS
Current assets
Cash and cash equivalents	$	32,017,490					$	32,017,490		$	49,256,930					$	49,256,930
Accounts receivable	970,288						970,288			2,637,103						2,637,103
Inventory	17,641,922						17,641,922			—						—
Prepaid expenses and other current assets	801,149						801,149			356,898						356,898
Deferred tax assets, net	33,515,327						33,515,327			727,772						727,772
Total current assets	84,946,176			—			84,946,176			52,978,703			—			52,978,703

Property, plant and equipment, net	987,869						987,869			818,992						818,992
Receivables from long-term contract	3,771,219						3,771,219			—						—
Deferred costs	2,841,534						2,841,534			250,072						250,072
Goodwill	898,334						898,334			898,334						898,334
Other assets	2,181,720						2,181,720			285,345						285,345
Deferred tax assets, net	10,209,278						10,209,278			35,149,031						35,149,031
Total assets	$	105,836,130		$	—		$	105,836,130		$	90,380,477		$	—		$	90,380,477
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	10,189,917					$	10,189,917		$	2,278,316					$	2,278,316
Accrued expenses and other current liabilities	4,283,849						4,283,849			4,644,461						4,644,461
Current common stock warrants	287,036			46,757			333,793			—			125,841			125,841
Current portion of long term debt	954,738						954,738			—						—
Total current liabilities	15,715,540			46,757			15,762,297			6,922,777			125,841			7,048,618

Deferred revenue	57,052,020						57,052,020			41,001,110						41,001,110
Common stock warrants	—			657,246			657,246			622,938			789,366			1,412,304
Long term debt	3,955,262						3,955,262			—						—
Other liabilities	166,303						166,303			147,586						147,586
Total liabilities	76,889,125			704,003			77,593,128			48,694,411			915,207			49,609,618
Stockholders' equity
Common stock	5,164						5,164			5,164						5,164
Additional paid-in capital	152,340,303			15,248,071			167,588,374			150,551,211			15,505,481			166,056,692
Accumulated deficit	(123,398,462		)	(15,952,074		)	(139,350,536		)	(108,870,309		)	(16,420,688		)	(125,290,997		)
Total stockholders' equity	28,947,005			(704,003		)	28,243,002			41,686,066			(915,207		)	40,770,859
Total liabilities and stockholders' equity	$	105,836,130		$	—		$	105,836,130		$	90,380,477		$	—		$	90,380,477

The effects of the revision and restatement on the consolidated statements of operations and comprehensive income/loss are summarized in the following tables:



	Year Ended December 31, 2012
	As Originally Reported			Adjustments		Revised
Revenues
Research and development	$	8,970,835				$	8,970,835
Operating expenses
Selling, general and administrative	11,410,131					11,410,131
Research and development	18,213,036					18,213,036
Patent preparation fees	1,883,405					1,883,405
Total operating expenses	31,506,572			—		31,506,572
Operating loss	(22,535,737		)	—		(22,535,737		)
Decrease (increase) in fair value of common stock warrants	335,902			468,614		804,516
Interest expense	(172,993		)			(172,993		)
Other income, net	522					522
Loss before benefit from income taxes	(22,372,306		)	468,614		(21,903,692		)
Benefit from income taxes	7,844,153					7,844,153
Net income (loss)	$	(14,528,153	)	$	468,614	$	(14,059,539	)
Basic earnings (loss) per share	$	(0.28	)	$	0.01	$	(0.27	)
Diluted earnings (loss) per share	$	(0.28	)	$	0.01	$	(0.27	)
Weighted average shares outstanding: basic	51,639,622			—		51,639,622
Weighted average shares outstanding: diluted	51,639,622			—		51,639,622



	Year Ended December 31, 2011
	As Originally Reported			Adjustments		Restated
Revenues
Research and development	$	12,725,792				$	12,725,792
Operating expenses
Selling, general and administrative	23,931,713					23,931,713
Research and development	18,367,348					18,367,348
Patent preparation fees	1,808,168					1,808,168
Total operating expenses	44,107,229			—		44,107,229
Operating loss	(31,381,437		)	—		(31,381,437		)
Decrease (increase) in fair value of common stock warrants	8,930,906			15,505,403		24,436,309
Other income, net	13,061					13,061
Loss before benefit from income taxes	(22,437,470		)	15,505,403		(6,932,067		)
Benefit from income taxes	36,031,646					36,031,646
Net income (loss)	$	13,594,176		$	15,505,403	$	29,099,579
Basic earnings (loss) per share	$	0.27		$	0.30	$	0.57
Diluted earnings (loss) per share	$	0.09		$	—	$	0.09
Weighted average shares outstanding: basic	50,929,491			—		50,929,491
Weighted average shares outstanding: diluted	54,061,650			—		54,061,650



	Year Ended December 31, 2010
	As Originally Reported			Adjustments			Restated
Revenues
Research and development	$	19,215,837					$	19,215,837
Operating expenses
Selling, general and administrative	8,130,669						8,130,669
Research and development	22,658,959						22,658,959
Patent preparation fees	1,148,597						1,148,597
Total operating expenses	31,938,225			—			31,938,225
Operating loss	(12,722,388		)	—			(12,722,388		)
Decrease (increase) in fair value of common stock warrants	(15,957,068		)	(22,152,962		)	(38,110,030		)
Other income, net	659,292						659,292
Loss before benefit from income taxes	(28,020,164		)	(22,152,962		)	(50,173,126		)
Benefit from income taxes	(175,175		)				(175,175		)
Net income (loss)	$	(28,195,339	)	$	(22,152,962	)	$	(50,348,301	)
Basic earnings (loss) per share	$	(0.62	)	$	(0.50	)	$	(1.12	)
Diluted earnings (loss) per share	$	(0.62	)	$	(0.50	)	$	(1.12	)
Weighted average shares outstanding: basic	45,151,774			—			45,151,774
Weighted average shares outstanding: diluted	45,151,774			—			45,151,774

The effects of the revision and restatement on the consolidated statements of cash flows are summarized in the following tables:



	December 31, 2012
	As Originally Reported			Adjustments			Revised
Cash flows from operating activities:
Net loss	$	(14,528,153	)	$	468,614		$	(14,059,539	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and other amortization	419,358						419,358
Increase in fair value of warrants	(335,902		)	(468,614		)	(804,516		)
Stock based compensation	1,779,515						1,779,515
Changes in assets and liabilities:
Accounts receivable	(2,104,404		)				(2,104,404		)
Inventory	(17,641,922		)				(17,641,922		)
Deferred costs	(2,591,462		)				(2,591,462		)
Prepaid expenses	(444,251		)				(444,251		)
Other assets	(548,419		)				(548,419		)
Deferred revenue	16,050,910						16,050,910
Accounts payable, accrued expenses and other current liabilities	7,550,989						7,550,989
Deferred income taxes, net	(7,847,802		)				(7,847,802		)
Other liabilities	18,717						18,717
Net cash used in operating activities	(20,222,826		)	—			(20,222,826		)
Cash flows from investing activities:
Capital expenditures	(588,235		)				(588,235		)
Collateral for surety bond	(1,347,956		)				(1,347,956		)
Net cash provided by (used in) investing activities	(1,936,191		)	—			(1,936,191		)
Cash flows from financing activities:
Net proceeds from exercise of warrants and options	9,577						9,577
Proceeds from issuance of debt	4,910,000						4,910,000
Net cash provided by financing activities	4,919,577			—			4,919,577
Net increase (decrease) in cash and cash equivalents	(17,239,440		)	—			(17,239,440		)
Cash and cash equivalents at beginning of period	49,256,930						49,256,930
Cash and cash equivalents at end of period	$	32,017,490		$	—		$	32,017,490

Supplemental disclosure of non-cash financing activities:
Reclass of common stock warrant liability to additional paid-in capital upon exercise	$	—					$	—



	December 31, 2011
	As Originally Reported			Adjustments			Restated
Cash flows from operating activities:
Net loss	$	13,594,176		$	15,505,403		$	29,099,579
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and other amortization	568,288						568,288
Increase in fair value of warrants	(8,930,906		)	(15,505,403		)	(24,436,309		)
Stock based compensation	12,463,772						12,463,772
Changes in assets and liabilities:
Accounts receivable	365,041						365,041
Deferred costs	(250,072		)				(250,072		)
Prepaid expenses	12,119						12,119
Other assets	(4,697		)				(4,697		)
Deferred revenue	41,001,110						41,001,110
Accounts payable, accrued expenses and other current liabilities	2,659,597						2,659,597
Deferred income taxes, net	(36,051,978		)				(36,051,978		)
Other liabilities	147,586						147,586
Net cash used in operating activities	25,574,036			—			25,574,036
Cash flows from investing activities:
Capital expenditures	(237,023		)				(237,023		)
Proceeds from maturity of short term investments	40,000,000						40,000,000
Purchases of short term investments	(25,004,717		)				(25,004,717		)
Net cash provided by (used in) investing activities	14,758,260			—			14,758,260
Cash flows from financing activities:
Net proceeds from exercise of warrants and options	3,946,237						3,946,237
Repurchase of common stock	(1,353,656		)				(1,353,656		)
Net cash provided by financing activities	2,592,581			—			2,592,581
Net increase (decrease) in cash and cash equivalents	42,924,877			—			42,924,877
Cash and cash equivalents at beginning of period	6,332,053						6,332,053
Cash and cash equivalents at end of period	$	49,256,930		$	—		$	49,256,930

Supplemental disclosure of non-cash financing activities:
Reclass of common stock warrant liability to additional paid-in capital upon exercise	$	970,816		$	8,561,095		$	9,531,911



	December 31, 2010
	As Originally Reported			Adjustments			Restated
Cash flows from operating activities:
Net loss	$	(28,195,339	)	$	(22,152,962	)	$	(50,348,301	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and other amortization	625,343						625,343
Increase in fair value of warrants	15,947,007			22,152,962			38,099,969
Stock based compensation	1,483,955						1,483,955
Changes in assets and liabilities:
Accounts receivable	(596,283		)				(596,283		)
Prepaid expenses	1,216,055						1,216,055
Other assets	24,103						24,103
Accounts payable, accrued expenses and other current liabilities	(125,929		)				(125,929		)
Deferred income taxes, net	175,175						175,175
Other liabilities	(1,379,471		)				(1,379,471		)
Net cash used in operating activities	(10,825,384		)	—			(10,825,384		)
Cash flows from investing activities:
Capital expenditures	(549,944		)				(549,944		)
Proceeds from maturity of short term investments	31,250,000						31,250,000
Purchases of short term investments	(41,235,922		)				(41,235,922		)
Net cash provided by (used in) investing activities	(10,535,866		)	—			(10,535,866		)
Cash flows from financing activities:
Net proceeds from exercise of warrants and options	13,196,990						13,196,990
Net cash provided by financing activities	13,196,990			—			13,196,990
Net increase (decrease) in cash and cash equivalents	(8,164,260		)	—			(8,164,260		)
Cash and cash equivalents at beginning of period	14,496,313						14,496,313
Cash and cash equivalents at end of period	$	6,332,053		$	—		$	6,332,053

Supplemental disclosure of non-cash financing activities:
Reclass of common stock warrant liability to additional paid-in capital upon exercise	$	18,426,278		$	12,129,567		$	30,555,845