Common Stock Warrants

6 Months Ended

Jun. 30, 2012

Common Stock Warrants

5. Common Stock Warrants

The following table summarizes the common stock warrant activity from December 31, 2011 through June 30, 2012:

	Shares			Weighted Average Exercise Price
Outstanding, December 31, 2011		6,673,405		$	3.95
Granted		1,379,739			5.63
Exercised		(12,177	)		3.18
Forfeited/cancelled		(616,726	)		10.62
Outstanding, June 30, 2012		7,424,241		$	3.71

Consultant Warrants

In April 2009, the Company entered into agreements with consultants that provided for the grant of warrants for the purchase of 33,333 shares of common stock at an exercise price of $3.00 per share which will vest upon the achievement of certain milestones. The Company valued these warrants at $10,000 as of June 30, 2012 using the following assumptions: expected life of 0.79 years, volatility of 78%, risk free interest rates of 0.21% and zero dividends. The Company recognized a reversal of previously recognized expense related to the 33,333 warrants of $45,000 and $88,000 for the three and six months ended June 30, 2012, respectively, and an expense of $12,000 and $20,000 for the three and six months ended June 30, 2011, respectively.

In May 2010, the Company entered into an agreement with a consultant that provided for the grant of warrants for the purchase of 12,000 shares of common stock at an exercise price of $15.00 per share. The following assumptions were used to value the warrants for the six months ended June 30, 2011: an expected life of 2.99 to 3.32 years, volatility of 128% to 130%, risk free interest rate of 0.79% to 1.29% and zero dividends. At June 30, 2011, 45,000 warrants were vested and 27,000 were forfeited upon cancellation of the agreement. The company recognized an expense of $5,000 and $12,000 related to these warrants during the three and six months ended June 30, 2011, respectively.

In June 2010, the Company entered into an agreement with a consultant, who was also a board member, which provided for the grant of warrants for 100,000 shares of common stock at an exercise price of $4.26 per share. Of the 100,000 warrants, 25,000 vested immediately on signing of the agreement, 25,000 were to vest at the end of one year and the remaining 50,000 warrants were to vest based on the achievement of certain milestones. The following assumptions were used to value the warrants on March 7, 2011 at the date the consultant effectively became an employee of the Company: an expected life of 4.28 years, volatility of 135%, risk free interest rate of 1.705% and zero dividends. Pursuant to an employment agreement entered into in May 2011, all remaining unvested warrants were immediately vested. The Company recognized the total remaining expense of $127,000 related to these warrants during the six months ended June 30, 2011.