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Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Derivative Financial Instruments

Schedule of changes in derivative financial instruments liability balance

Date		Description		Warrants		Derivative Instrument Liability
12/31/2010		Balance of derivative financial instruments liability		728,469		$	3,487,959
3/31/2011		Fair value of new warrants issued during the quarter		210,000		$	1,312,673
3/31/2011		Change in fair value of warrants during the quarter recognized as other expense in the statement of operations		—		$	338,715
3/31/2011		Balance of derivative financial instruments liability		938,469		$	5,139,347
6/30/2011		Fair value of new warrants issued during the quarter		611,207		$	2,607,827
6/30/2011		Exercise of warrants during the quarter		(80,000	)	$	(486,328	)
6/30/2011		Change in fair value of warrants during the quarter recognized as other expense in the statement of operations		—		$	697,660
6/30/2011		Balance of derivative financial instruments liability		1,469,676		$	7,958,506
9/30/2011		Fair value of new warrants issued during the quarter		40,458		$	285,128
9/30/2011		Change in fair value of warrants during the quarter recognized as other income in the statement of operations		—		$	(4,382,796	)
9/30/2011		Balance of derivative financial instruments liability		1,510,134		$	3,860,838
12/31/2011		Fair value of new warrants issued during the quarter		1,810,294		$	3,082,203
12/31/2011		Reclass of derivative liability to equity during the quarter		(1,055,268	)	$	(1,707,317	)
12/31/2011		Change in fair value of warrants during the quarter recognized as other income in the statement of operations		—		$	(1,910,610	)
12/31/2011		Balance of derivative financial instruments liability		2,265,160		$	3,325,114

3/31/2012		Fair value of new warrants issued during the quarter		—		—
3/31/2012		Change in fair value of warrants during the quarter		—		(7,946		)

3/31/2012		Balance of derivative financial instruments liability		2,265,160		$	3,317,168
6/30/2012		Warrants classified to derivative liability during quarter		112,500		169,202
6/30/2012		Change in fair value of warrants during the quarter		—		1,317,347
6/30/2012		Balance of derivative financial instruments liability		2,377,660		$	4,803,717
9/30/2012		Fair value of new warrants issued during the quarter		—		—
9/30/2012		Change in fair value of warrants during the quarter		—		(140,322		)

9/30/2012		Balance of derivative financial instruments liability		2,377,660		$	4,663,395

Schedule of liabilities that are measured and recognized at fair value on a recurring basis

Description		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Balance as of December 31, 2011			Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Balance as of September 30, 2012
Derivative liabilities related to Warrants		$	—		$	—		$	3,325,114		$	3,325,114		$	—		$	—		$	4,663,395		$	4,663,395

Summary of changes in the fair value of Level 3 liabilities

Description		Balance at December 31, 2011			Fair Value of Warrants classified to derivative liability			Unrealized (gains) or losses			Balance as of September 30, 2012
Derivative liabilities related to Warrants		$	3,325,114		$	169,203		$	1,169,078		$	4,663,395

Derivative instrument liability | Warrants | Black-Scholes option pricing model

Derivative Financial Instruments

Schedule of range of assumptions used to determine the fair value of the warrants

		Nine Months Ended September 30,
		2012		2011
Fair value of Synergy common stock		$4.05 - $4.78		$2.12 - $4.14(*)
Expected warrant term		5-7 years		5-7 years
Risk-free interest rate		0.23%-1.33%		0.69-1.43%
Expected volatility		60%		90%
Dividend yield		—		—

(*) Restated for 1:2 reverse stock split effective November 30, 2011.

Derivative instrument liability | Warrants | Binomial model

Derivative Financial Instruments

Schedule of range of assumptions used to determine the fair value of the warrants

		Nine Months Ended September 30,
		2012		2011
Estimated fair value of Synergy common stock		$3.28-$4.53		$2.72 - $3.78(*)
Expected warrant term		4.13-4.63 years		6.59 years -7 years
Risk-free interest rate		0.62%-1.04%		1.43%
Expected volatility		60%		90%
Dividend yield		—		—

(*) Restated for 1:2 reverse stock split effective November 30, 2011.

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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