Derivative Financial Instruments

6 Months Ended

Jun. 30, 2014

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Financial Instruments

8. Derivative Financial Instruments:

The Company generally does not use derivative instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of its financial instruments. However, certain other financial instruments, such as warrants and embedded conversion features that are indexed to the Company’s Common Stock, are classified as liabilities when either: (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within the control of the Company. In such instances, net-cash settlement is assumed for financial accounting and reporting, even when the terms of the underlying contracts do not provide for net-cash settlement. Such financial instruments are initially recorded at fair value estimated on the settlement date using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate, and then adjusted to fair value at the close of each reporting period.

The following table summarizes assets and liabilities measured at fair value on a recurring basis at June 30, 2014 and December 31, 2013, respectively:

	June 30, 2014								December 31, 2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Fair Value
Measurements Using:
Liabilities
Derivative liabilities- free standing warrants	$	—	$	10,761,692	$	—	$	10,761,692	$	—	$	4,315,183	$	—	$	4,315,183

The table below provides a reconciliation of the beginning and ending balances for the liabilities measured at fair value using observable inputs (Level 2). The table reflects net gains and losses for all financial liabilities categorized as Level 2 as of June 30, 2014 and December 31, 2013.

	$			Number of Warrants
Liabilities:
Warrant liability as of December 31, 2013	$	4,315,183			1,999,436
Decrease due to exercise of warrants		(2,499,273	)		(798,871	)
Increase in fair value of warrants		8,945,782			—
Warrant liability as of June 30, 2014	$	10,761,692			1,200,565

The derivative (loss) gain recognized in the condensed consolidated statements of operations reflects the change in fair value of these warrant liabilities.