Warrant

9 Months Ended

Sep. 30, 2011

Warrant

Warrant

8.              Warrant

At December 31, 2010, we had an outstanding warrant, held by Peter Friedli, the chairman of our Board of Directors, to purchase 1,000,000 shares of our common stock at an exercise price of $11.00 per share, as described in Note 9 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.  This warrant then had an expiration date of May 24, 2011.

As detailed in Note 9 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, our Board approved the extension of the expiration date of the warrant until May 24, 2015, subject to stockholder approval of the extension. Our shareholders approved the extension of the warrant at our 2011 Annual Meeting of Stockholders, on May 26, 2011.

Upon approval by the stockholders, we incurred a non cash charge against earnings on account of the extension of the warrant expiration date, based on its increase in fair value of approximately $1.7 million.  This amount was recorded within general and administrative expenses.  The increase in value was computed using the Black-Scholes option pricing model with a risk free interest rate of 1.50%, a 4 year increase in the expected life of the warrant, and a historical volatility of approximately 51%.