Fair Value on Financial Instruments

12 Months Ended

Dec. 31, 2012

Note 4. Fair Value on Financial Instruments

The fair values of certain of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2012 (in thousands):


	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds⁽¹⁾	$	10,268	$	10,268	$	0	$	0

Total financial assets	$	10,268	$	10,268	$	0	$	0

Warrant liability⁽²⁾	$	5,903	$	0	$	0	$	5,903

Total financial liabilities	$	5,903	$	0	$	0	$	5,903

(1)	Included in cash and cash equivalents on the Company’s consolidated balance sheets.

(2)	Included in current liabilities on the Company’s consolidated balance sheets.

The fair values of certain of the Company’s financial assets and liabilities were determined using the following inputs at December 31, 2011 (in thousands):


	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Money market funds⁽¹⁾	$	8,683	$	8,683	$	0	$	0
United States government agency securities⁽²⁾		287		0		287		0

Total financial assets	$	8,970	$	8,683	$	287	$	0

Warrant liability⁽³⁾	$	7,979	$	0	$	0	$	7,979

Total financial liabilities	$	7,979	$	0	$	0	$	7,979

(1)	Included in cash and cash equivalents on the Company’s consolidated balance sheets.

(2)	Included in short-term investments on the Company’s consolidated balance sheets.

(3)	Included in current liabilities on the Company’s consolidated balance sheets.

A reconciliation of the beginning and ending balances for warrant liability using significant unobservable inputs (Level 3) from December 31, 2010 to December 31, 2012 was as follows (in thousands):


Balance at December 31, 2010	$	8,465
Decrease in fair value of warrants		(486	)

Balance at December 31, 2011		7,979
Decrease in fair value of warrants		(2,059	)
Settlement of warrants exercised		(17	)

Balance at December 31, 2012	$	5,903

The Company did not have any transfers among fair value measurement levels during the years ended December 31, 2012 and 2011.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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+ Details