0001171843-13-003428.txt : 20130816 0001171843-13-003428.hdr.sgml : 20130816 20130816140818 ACCESSION NUMBER: 0001171843-13-003428 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20130630 FILED AS OF DATE: 20130816 DATE AS OF CHANGE: 20130816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Znomics, Inc. CENTRAL INDEX KEY: 0001371473 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-136372 FILM NUMBER: 131044796 BUSINESS ADDRESS: STREET 1: 2611 SW THIRD AVE., SUITE 200 CITY: PORTLAND STATE: OR ZIP: 97201 BUSINESS PHONE: 503-827-5271 MAIL ADDRESS: STREET 1: 2611 SW THIRD AVE., SUITE 200 CITY: PORTLAND STATE: OR ZIP: 97201 FORMER COMPANY: FORMER CONFORMED NAME: Pacific Syndicated Resources, Inc. DATE OF NAME CHANGE: 20060803 10-Q 1 f10q_073113.htm FORM 10-Q f10q_073113.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X]
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
 
For the quarterly period ended June 30, 2013
 
Or
 
[  ]
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
 
 
For the transition period __________  to __________
 
Commission File Number:  333-136372
 
Znomics, Inc.
(Exact name of registrant as specified in its charter)

Nevada
52-2340974
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
301 Carlson Parkway, Suite 103
Minneapolis, MN  55305
(Address of principal executive offices, including zip code)
 
(952) 253-6032
(Registrant’s telephone number)
 
 
 
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
 
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [   ] Yes    [X] No

Indicate by check mark whether the registrant has submitted electronically and posted on its Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
[ ] Large accelerated filer                                                                                           [ ] Accelerated filer
[ ] Non-accelerated filer  (Do not check if a smaller reporting company)          [X] Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   [X ]   Yes [    ] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  Common shares outstanding of 55,145,892 as of July 31, 2013.
 
1

 
TABLE OF CONTENTS


 
   
Page
 
PART I – FINANCIAL INFORMATION
 
 
PART II – OTHER INFORMATION
 
 
                                                                                                                                                                                                                                           
 
2

 
PART I - FINANCIAL INFORMATION

 
Balance Sheets (in thousands except share data)
(Unaudited)
 
Assets
 
June 30,
2013
   
December 31,
2012
 
Current assets:
           
Cash
 
$
16
   
$
26
 
Prepaid expenses
   
6
     
4
 
                 
Total current assets
   
22
     
30
 
                 
                 
Total assets
 
$
22
   
$
30
 
                 
Liabilities and Stockholders' Deficit
               
Current liabilities:
               
Accounts payable
 
$
2
   
$
5
 
Accrued liabilities
   
59
     
41
 
Current maturities of secured promissory notes from certain stockholders     50       -  
                 
Total current liabilities
   
111
     
46
 
                 
                 
Secured promissory notes from certain stockholders
   
125
     
150
 
Warrant liability       16         33  
                 
Total liabilities
   
252
     
229
 
                 
Stockholders' deficit:
               
Common stock, $0.001 par value, 90,000,000 shares authorized, 52,519,896 shares issued and outstanding at June 30, 2013 and December 31, 2012
   
53
     
53
 
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none outstanding
   
-
     
-
 
Additional paid-in capital
   
6,403
     
6,403
 
                 
Accumulated deficit
   
(6,686
)
   
(6,655
)
                 
Total stockholders' deficit
   
(230
)
   
(199
)
                 
Total liabilities and stockholders' deficit
 
$
22
   
$
30
 
 
The accompanying notes are an integral part of these condensed financial statements.
 
3

 
Condensed Statements of Operations (in thousands except share data)
(Unaudited)
For the Three and Six Months Ended June 30, 2013 and 2012
 
   
Three months ended
   
Six months ended
 
   
June 30
   
June 30
 
   
2013
   
2012
   
2013
   
2012
 
                         
Revenue
 
$
-
   
$
-
   
$
-
   
$
-
 
                                 
General and administrative expense     37       12       44       26  
                                 
Loss from operations
   
(37
)
   
(12
)
   
(44
)
   
(26
)
                                 
Other income (expense):
                               
Interest expense
   
(2
)
   
(1
)
   
(4
)
   
(2
)
Gain on fair value adjustment of warrant liability
    -       -       17       -  
                                 
Total other income (expense)
   
(2
)
   
(1
)
   
13
 
   
(2
)
                                 
Loss before income taxes
   
(39
)
   
(13
)
   
(31
)
   
(28
)
Income taxes
   
-
     
-
     
-
     
-
 
                                 
Net loss
 
$
(39
)
 
$
(13
)
 
$
(31
)
 
$
(28
)
                                 
                                 
Net loss per share -- Basic and diluted
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
 
$
(0.00
)
                                 
Weighted average common shares outstanding:
                               
Basic and diluted
   
52,519,896
     
52,519,896
     
52,519,896
     
52,519,896
 
 
The accompanying notes are an integral part of these condensed financial statements.
 
4

 
Statements of Cash Flows (in thousands)
(Unaudited)
For the Six Months Ended June 30, 2013 and 2012
 
 
 
Six Months Ended
June 30
 
   
2013
   
2012
 
Cash flows from operating activities:
           
Net loss
 
$
(31
)
 
$
(28
)
Adjustments to reconcile net loss to net cash from operations:
               
Stock-based compensation charges
   
-
     
2
 
Gain on fair value adjustment of warrant liability     (17 )     -  
Changes in operating assets and liabilities:
               
Prepaid expenses
   
(2
)    
(8
)
Accounts payable
   
(3
)    
(2
)
Accrued liabilities
   
18
     
(7
)
                 
Net cash used in operating activities
   
(35
)
   
(43
)
                 
Cash flows from investing activities:
   
-
     
-
 
                 
Cash flows from financing activities:
               
Proceeds from issuance of debt
   
25
     
25
 
                 
Net cash provided by financing activities
   
25
     
25
 
                 
Net decrease in cash and cash equivalents
   
(10
)    
(18
)
                 
Cash at beginning of period
   
26
     
37
 
                 
Cash at end of period
 
$
16
   
$
19
 
                 
                 
                 
Supplemental disclosures:
               
Cash paid for interest
 
$
-
   
$
-
 
 
The accompanying notes are an integral part of these condensed financial statements.
 
5

 
Notes to Financial Statements

 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business
 
Znomics, Inc. ("the Company") was engaged in the business of drug discovery with a cutting-edge biotechnology platform that leveraged medicinal chemistry with the unique attributes of the zebrafish.  In April 2009, the Company terminated its operations. The Company subsequently disposed of this developmental stage business in 2009 and 2010 prior to it having generated any significant revenues. As the Company is no longer developing any specific business, it no longer refers to itself as a development stage company and accordingly, no longer presents cumulative financial information. The Company is now considered a public shell company with no current business activity.
 
The Company has now focused its efforts on seeking a new business opportunity. The Company is attempting to locate and negotiate with a business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a private company to become a reporting (“Public”) company whose securities are qualified for trading in the United States secondary market.
 
Basis of Presentation
 
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”).  However, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).  In the opinion of management, the financial statements include all adjustments consisting of normal, recurring adjustments necessary for the fair presentation of the results of the interim periods presented.  These condensed financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2012 as included in the Company’s 2012 Annual Report on Form 10-K, dated August 14, 2013.
 
Estimates
 
The preparation of financial statements in conformity with GAAP requires us to make certain estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.  We update these estimates, assumptions and judgments as appropriate, which in most cases is at least quarterly.  We use our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies.  While we believe the estimates, assumptions and judgments we use in preparing our financial statements are appropriate, they are subject to factors and uncertainties regarding their outcome and therefore, actual results may materially differ from these estimates.
 
Fair Value of Financial Instruments
 
The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued expenses and notes payable. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The Company considers the carrying values of its financial instruments in the financial statements to approximate fair value as interest rates on the notes payable approximate current rates and the current assets and liabilities are short-term in nature.
 
Derivative Financial Instruments

The Company has a derivative liability which is accounted for at fair value.  The fair value of the Company’s derivative liability is estimated at each balance sheet date and changes in fair value are reflected as a gain or loss in the statement of operations.  The Company utilizes a Black-Scholes option pricing model to estimate fair values of its derivative liability.

This derivative liability is also marked-to-market prior to any related exercises, modifications, or extinguishments with any necessary changes in fair value from the prior balance sheet date being reflected as a gain or loss in the statement of operations.  The carrying value of the liability is eliminated upon extinguishment, converted to equity upon an exercise, or adjusted as may be necessary in a modification.
 
 
6

 
ZNOMICS, INC.
Notes to Financial Statements
 
       Income Taxes
 
Income taxes are provided for using the liability method of accounting. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
 
We account for income taxes pursuant to Financial Accounting Standards Board guidance.  This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.  For those benefits to be recognized, a tax position must be more-likely-than not to be sustained upon examination by taxing authorities. We believe our income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties have been recorded at June 30, 2013 and December 31, 2012.  In accordance with the guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations.  The Company has three open years of tax returns subject to examination from 2009 and forward.
 
Stock-Based Compensation
 
The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards.  The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant.
 
The Company estimates the fair value of stock-based payment awards on the date of grant using an option pricing model. These option pricing models involve a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company's common stock and interest rates. The Company is using the Black-Scholes option pricing model to estimate the fair value of its options. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest.
 
7

 
ZNOMICS, INC.
Notes to Financial Statements
 
Net Income (Loss) Per Share
 
Basic net income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include options granted pursuant to the Company's stock option plan and stock warrants.
 
For the periods ended June 30, 2013 and 2012, options and warrants exercisable representing common stock equivalents were excluded from the calculation of the diluted net loss per share as their effect would have been anti-dilutive.
 
Comprehensive Income (Loss)
 
Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income (loss). Items defined as other comprehensive income (loss) include items such as foreign currency translation adjustments and unrealized gains and losses on certain marketable securities. For the three and six months ended June 30, 2013 and 2012, there were no adjustments to net loss to arrive at comprehensive loss.
 
Recent Accounting Pronouncements

         None that are applicable.

NOTE 2. GOING CONCERN
 
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.  We have incurred substantial losses since our inception. As of June 30, 2013, our accumulated deficit was approximately $6.7 million. Financial results for 2012 reflected a loss from operations of $109,000. We expect to continue to incur net losses as we incur expenses related to seeking a business opportunity and our ongoing costs of being a public reporting company.  Because we have no revenues, we plan to use our current cash reserves, which came from the cash received from advances under the Discretionary Notes (see Note 3), as well as potential future advances under the Discretionary Notes to fund our ongoing operating costs.
 
Our ability to continue as a going concern is dependent on our success at finding an acquisition candidate in a timely manner.  We believe our cash position at June 30, 2013 and advances expected under the Discretionary Notes and equity sales of our common stock, should allow us to fund operations for at least the next 12 months, and through the date a target company merges into the Company.
 
However, the current financing environment in the United States is challenging and we can provide no assurances that we could raise capital either to continue our operations or to finance an acquisition. The sale of our securities or the expectation that we will sell additional securities may have an adverse effect on the trading price of our common stock. Further, notwithstanding the Discretionary Notes, we cannot be certain that additional financing will be available when and as needed. If financing is available, it may be on terms that adversely affect the interests of our existing stockholders. If adequate financing is not available, we may need to reduce or eliminate our efforts to find an acquisition opportunity. These factors could significantly limit our ability to continue as a going concern and cause us to investigate other strategic options, including bankruptcy.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
NOTE 3. DISCRETIONARY ADVANCE SECURED PROMISSORY NOTES

On February 10, 2010, the Company executed Discretionary Advance Secured Promissory Notes (the “Discretionary Notes”) in favor of various stockholders of the Company who may make advances to the Company from time to time. The amounts due under the Discretionary Notes accrue interest at an annual rate of 5% and are due on the earlier to occur of a business combination between the Company and an operating business and three years from each loan advance, or upon the Company’s insolvency or a material breach of the Stock Purchase Agreement. The Discretionary Notes are secured by all of the Company’s assets.  Advances totaling $175,000 have been received under the Discretionary Notes and remain outstanding at June 30, 2013.  Accrued interest of $9,700 is also due as of June 30, 2013.
 
NOTE 4.  Warrant Liability

During 2012, the Company re-reviewed the provisions on all of its outstanding warrants issued originally in 2009 and amended in 2010 and determined that because such warrants could potentially be settled in cash upon a Fundamental Transaction (as defined in the applicable warrant agreement), they should have been accounted for as a derivative liability at fair value with changes in fair value reflected in operating results.  Cumulatively since the date of issuance to December 31, 2012, the fair value of these warrants decreased by $68,000 to a December 31, 2012 fair value of $33,000.  The Company recorded a fourth quarter 2012 adjustment for all of its prior accounting treatment for these warrants.  No periods since issuance through December 31, 2012 were materially impacted by the previous accounting.
 
 
8

 
ZNOMICS, INC.
Notes to Financial Statements
 
At issuance and each balance sheet date, the Company estimates the fair value of these warrants using the Black-Scholes option pricing model.  Changes in fair value are recorded as a non-cash valuation adjustment in the Company's statements of operations.  The Black-Scholes valuation model inputs for six months ended June 30, 2013 are as follows:
 
Risk free interest rates
   
0.95%
Expected dividend yield
   
0.0%
Expected stock volatility    
195.0%
Expected term of warrants in years
5.8 
-
6.1
 
Expected volatility is based upon the observed historical trades of the Company’s common stock. The expected term of the warrants is based on the remaining terms of the warrants. The risk-free rate of return is based on the U.S. Treasury security rates for maturities consistent with the expected term of the warrants.
 
Potential future increases in the estimated fair value of these warrants will result in losses being recognized in our statements of operations in future periods.  Conversely, potential future declines in the estimated fair value of these warrants will result in gains being recognized in our statement of operations in future periods.  Neither of these potential gains or losses will have any impact on our cash balance, liquidity or cash flows from operations.

The following table sets forth the changes in the Company's derivative warrant liability for the periods indicated:
 
Date
 
Description
 
Number of
Warrants
   
Warrant
Liability,
in thousands
 
                 
December 31, 2011
 
Balance of warrant liability at December 31, 2011
    -     $ -  
                     
   
Fair value of warrants reclassified to warrant liability during 2012
    1,686,510       101  
                     
   
Change in fair value of warrant liability for the year ended December 31, 2012
    -       (68 )
                     
December 31, 2012
 
Balance of warrant liability at December 31, 2012
    1,686,510       33  
                     
   
Change in fair value of warrant liability for the six months ended June 30, 2013
    -       (17 )
                     
June 30, 2013
 
Balance of warrant liability at June 30, 2013
    1,686,510     $ 16  
 
NOTE 5.  Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.  There are three levels of inputs that may be used to measure fair value:
 
 
Level 1
-
Inputs use quoted prices in active markets for identical assets or liabilities.
 
 
Level 2
-
Inputs use other inputs that are observable, either directly or indirectly, other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 
Level 3
-
Inputs are unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
 
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.  The Company’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.

 
9

 
ZNOMICS, INC.
Notes to Financial Statements
 
Level 3 Valuation Techniques
 
The warrant liability is classified as level 3 within the fair value hierarchy as its fair value is measured using the Black-Scholes option pricing model with several unobservable and estimated inputs, supported by little or no market activity.  The Black-Scholes valuation model inputs for the six months ended June 30, 2013 are as follows:
 
Risk free interest rates
   
0.95%
Expected dividend yield
   
0.0%
Expected stock volatility    
195.0%
Expected term of warrants in years
5.8
-
6.1
 
Expected volatility is based upon the observed historical trades of the Company’s common stock. The expected term of the warrants is based on the remaining terms of the warrants. The risk-free rate of return is based on the U.S. Treasury security rates for maturities consistent with the expected term of the warrants.
 
Significant increases (decreases) in any of those inputs in isolation could result in a significantly different fair value measurement. Generally a change in the assumption used for expected term is accompanied by a directionally similar change in the assumptions used for expected volatility and risk-free interest rate.
 
The valuation methods described above may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values.  Furthermore, while the Company believes its valuation method is appropriate and consistent with similar instruments, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
 
Liabilities measured at fair value on a recurring basis at June 30, 2013 are as follows, in thousands:
 
   
Quoted
Prices in
Active Markets
for Identical
Liabilities
(Level 1)
   
Significant
Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
   
Balance at
June 30,
2013
 
                         
Warrant liability
  $ -     $ -     $ 16     $ 16  
 
Liabilities measured at fair value on a recurring basis at December 31, 2012 are as follows, in thousands:
 
   
Quoted
Prices in
Active Markets
for Identical
Liabilities
(Level 1)
   
Significant
Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
   
Balance at
December 31,
2012
 
                         
Warrant liability
  $ -     $ -     $ 33     $ 33  
 
There were no warrants transfers between fair value levels during the six ended June 30, 2013.

The following table details the activity of our warrant liability measured at fair value, whose fair values are determined by Level 3 inputs, in thousands:
 
Balance, December 31, 2011
  $ -  
Fair value of warrants reclassified to liability
    101  
Gain on change in fair value of warrant liability recorded in other income (expense)
    (68 )
Balance, December 31, 2012
    33  
Gain on change in fair value of warrant liability recorded in other income (expense)
    (17 )
Balance, June 30, 2013
  $ 16  
 
The gain recorded in other income, for level 3 liabilities still held at June 30, 2013 and December 31, 2012 was $68,000 and $17,000, respectively.
 
NOTE 6. SUBSEQUENT EVENTS
 
On July 1, 2013, subsequent to quarter end, the stockholders who have made the advances under the Discretionary Notes, contributed $50,000 in exchange for 2,625,996 shares of Znomics common stock.
 
 
10

 
 
Forward-Looking Statements
 
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will continue," "will likely result," and similar expressions. Our forward-looking statements in this report generally relate to: (i) our intent to locate and negotiate with an operating company that would merge into the Company; (ii) our expectations with respect to the costs of completing a merger; (iii) our current intent not to compensate management; (iv) our expectations with respect to results of operations in the 2013 fiscal year; (v) our intentions with respect to our internal controls; and (vi) our beliefs with respect to our cash requirements, expenses, and the adequacy of cash. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements, including but not limited to our ability to identify operating companies that show an interest in merging with a public shell, unexpected delays in negotiating an agreement with a merger candidate, unexpected cash requirements, and other factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.
  
Critical Accounting Policies and Estimates

In our Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2012, we identified critical accounting policies and estimates for our business that we are incorporating herein by reference.

Plan of Operation
 
Management’s current intention for the Company is to:  (i) consider industries in which we may have an interest; (ii) seek and investigate potential businesses within the industries we select; and (iii) commence such operations through the acquisition of a "going concern" engaged in any industry selected.
 
During the next 12 months, our only foreseeable cash requirements will relate to maintaining our good standing as a public company and the payment of expenses associated with legal fees, accounting fees and reviewing or investigating any potential business venture.
 
On February 10, 2010, the Company executed Discretionary Advance Secured Promissory Notes (“the Discretionary Notes”) in favor of various stockholders of the Company who may make advances to the Company from time to time. The amounts due under the Discretionary Notes accrue interest at an annual rate of 5% and are due on the earlier to occur of a business combination between the Company and an operating business and three years from each loan advance, or upon the Company’s insolvency or a material breach of the Stock Purchase Agreement. The Discretionary Notes are secured by all of the Company’s assets. We believe that the terms of the Discretionary Notes are no less favorable to us than would be available from a commercial lender in an arm’s length transaction. Because of the uncertainty associated with seeking a business opportunity, it is impossible to predict the amount of any such loans.  Advances totaling $175,000 are outstanding as of June 30, 2013. In addition, on July 1, 2013, the stockholders who have made the above noted advances contributed $50,000 in exchange for 2,625,996 shares of Znomics common stock.
 
When and if an acquisition will be made is presently unknown and will depend upon various factors, including but not limited to funding and its availability and if and when any potential acquisition may become available to us at terms acceptable to us. The estimated costs associated with reviewing and verifying information about a potential business venture would be mainly for due diligence and the legal process.
 
11

 
Results of Operations for the Three-Month Periods Ended June 30, 2013 and 2012

Revenue 

The Company had no revenue during the three months ended June 30, 2013 and 2012.

Operating Expenses
 
General and Administrative Expenses. Our operating expenses consist of general and administrative expenses. General and administrative expenses consist principally of professional fees for legal, consulting, and accounting services, primarily related to our public company status. Selling, general and administrative expenses were $37,000 and $12,000 for the three months ended June 30, 2013 and 2012, respectively. 

Results of Operations for the Six-Month Periods Ended June 30, 2013 and 2012
 
Operating Expenses
 
Revenue

The Company had no revenue during the six months ended June 30, 2013 and 2012.

Operating Expenses
 
General and Administrative Expenses. Our operating expenses consist of general and administrative expenses. General and administrative expenses consist principally of professional fees for legal, consulting, and accounting services, primarily related to our public company status and our due diligence efforts. General and administrative expenses were $44,000 and $26,000 for the six months ended June 30, 2013 and 2012, respectively.

Financing Activities

We have incurred substantial losses since our inception. As of June 30, 2013, our accumulated deficit was approximately $6.7 million. Financial results for the second quarter of 2013 reflect a loss from operations of $37,000. We expect to continue to incur net losses as we incur expenses related to seeking a business opportunity and our ongoing costs of being a public reporting company.  Because we have no revenues, we plan to use our current cash reserves, which came from the cash received from advances under the Discretionary Notes, as well as potential future advances under the Discretionary Notes and sales of common stock to fund our ongoing operating costs.
 
Our ability to continue as a going concern is dependent on our success at finding an acquisition candidate in a timely manner.  We believe our cash position at June 30, 2013 and equity contributions made subsequent to quarter end and advances expected under the Discretionary Notes, will allow us to fund operations for at least the next 12 months, and through the date a target company merges into the Company.
 
However, the current financing environment in the United States is challenging and we can provide no assurances that we could raise capital either to continue our operations or to finance an acquisition.  The sale of our securities or the expectation that we will sell additional securities may have an adverse effect on the trading price of our common stock.  Further, notwithstanding the Discretionary Notes, we cannot be certain that additional financing will be available when and as needed.  If financing is available, it may be on terms that adversely affect the interests of our existing stockholders.  These factors could significantly limit our ability to continue as a going concern and cause us to investigate other strategic options, including bankruptcy.

Liquidity and Capital Resources
 
As of June 30, 2013, the Company had total current assets equal to $22,000, comprised of cash and prepaid expenses.  This compares with total current assets of $30,000, as of December 31, 2012, comprised of cash and prepaid expenses.  As of June 30, 2013, the Company had total current liabilities equal to $111,000, comprised of  accounts payable, accrued liabilities and current maturities of secured promissory notes.  This compares to $46,000 in total current liabilities, as of December 31, 2012, comprised of accounts payable and accrued liabilities.  The Company can provide no assurance that it can continue to satisify its cash requirements for at least the next twelve months.
 
Cash Flows from Operating Activities
 
We used $35,000 of cash in operating activities for the six months ended June 30, 2013; a decrease of $8,000 compared to the six months ended June 30, 2012.  This decrease in cash used is primarily a result of an increase in accrued liabilities offset by a gain on fair value adjustment of warrant liability and changes in prepaid expenses and accounts payable.
 
Cash Flows from Investing Activities
 
We had no investing activities during the six months ended June 30, 2013 and 2012.
 
12

 
Cash Flows from Financing Activities
 
We received $25,000 of advances under the Discretionary Advance Secured Promissory Notes during the sixth month periods ended June 30, 2013 and 2012.
 
Liquidity
 
During the next 12 months, our only foreseeable cash requirements will relate to maintaining our good standing as a public company and/or the payment of expenses associated with legal fees, accounting fees and reviewing or investigating any potential business ventures, which may be advanced under the Discretionary Notes. The amounts due under the Discretionary Notes accrue interest at an annual rate of 5% and are due on the earlier to occur of a business combination between the Company and an operating business and three years from each loan advance, or upon the Company’s insolvency or a material breach of the Stock Purchase Agreement. The Discretionary Notes are secured by all of the Company’s assets. We believe the $25,000 of cash received in May, 2013 and the $50,000 received from the sale of common stock on July 1, 2013 and any potential future loans or equity contributions will be sufficient to meet our limited needs during the next twelve months. However, the stockholders are not obligated to make additional advances under the Discretionary Notes. If we require cash in addition to the amount currently on hand, there is no guarantee we will be able to obtain an adequate amount pursuant to the Discretionary Notes, and there is no guarantee we will be able to obtain alternative financing on favorable terms, if at all.

Off Balance Sheet Arrangements
 
As of June 30, 2013, we did not have any off balance sheet arrangements.
 
 
As a smaller reporting company, we are not required to provide the information required by this Part I Item 3.
 
 
Evaluation of Disclosure Controls and Procedures
 
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness, as of June 30, 2013, of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The purpose of this evaluation was to determine whether as of the evaluation date our disclosure controls and procedures were effective to provide reasonable assurance that the information we are required to disclose in our filings with the Securities and Exchange Commission, or SEC, under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. In performing the assessment for the quarter ended June 30, 2013, our management concluded that our disclosure controls and procedures were not effective to accomplish the foregoing, due to the material weakness in internal control over financial reporting that was first identified in 2009 and was most recently described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.  Specifically, a lack of segregation of duties in the financial reporting process.
 
Changes in Internal Controls
 
During the fiscal quarter ended June 30, 2013, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
13

 
PART II – OTHER INFORMATION


 
We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 
As a smaller reporting company, we are not required to provide the information required by this Part II Item 1A.

 
None.
 
 
None.


None.

 
None.
 

See “Exhibit Index” on page 14 of this Form 10-Q.
 
14

 
 
In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Znomics, Inc.
 
 
Date:   August 14, 2013
By:      /s/ David G. Latzke
            David G. Latzke
Title:   Chief Financial Officer
 
 
 
 
15

 
Znomics, Inc.
Form 10-Q
Three Months Ended June 30, 2013
 
 

 

Exhibit Number
 
Description of Exhibit
31.1
 
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2
 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1
 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
 
 
16

EX-31.1 2 exh_311.htm EXHIBIT 31.1 exh_311.htm
Exhibit 31.1
 
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Gordon F. Stofer, certify that;
 
(1)
I have reviewed this quarterly report on Form 10-Q of Znomics, Inc.;
 
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
(4)
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
(5)
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: August 14, 2013
 
/s/ Gordon F. Stofer
By: Gordon F. Stofer
Title: Chief Executive Officer
 
EX-31.2 3 exh_312.htm EXHIBIT 31.2 exh_312.htm
Exhibit 31.2
 
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, David G. Latzke, certify that;
 
(1)
I have reviewed this quarterly report on Form 10-Q of Znomics, Inc.;
 
(2)
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
(3)
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
(4)
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
 
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
 
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
 
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
(5)
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
 
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
Date: August 14, 2013
 
/s/ David G. Latzke
By: David G. Latzke
Title: Chief Financial Officer
EX-32.1 4 exh_321.htm EXHIBIT 32.1 exh_321.htm
Exhibit 32.1
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
 
In connection with the accompanying Quarterly Report on Form 10-Q of Znomics, Inc. for the quarter ended June 30, 2013, I certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
 
(1)
 
the Quarterly Report on Form 10-Q of Znomics, Inc. for the quarter ended June 30, 2013 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
(2)
 
the information contained in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, fairly presents in all material respects, the financial condition and results of operations of Znomics, Inc.
 

 
By:
/s/ Gordon F. Stofer
Name:
Gordon F. Stofer
Title:
Chief Executive Officer
Date:
August 14, 2013
   
   
   
   
By:
/s/ David G. Latzke
Name:
David G. Latzke
Title
Chief Financial Officer
Date:
August 14, 2013
EX-101.INS 5 znom-20130630.xml XBRL INSTANCE DOCUMENT 0001371473 2013-06-30 0001371473 2012-12-31 0001371473 2013-04-01 2013-06-30 0001371473 2012-04-01 2012-06-30 0001371473 2013-01-01 2013-06-30 0001371473 2012-01-01 2012-06-30 0001371473 2011-12-31 0001371473 2012-06-30 0001371473 2013-07-31 0001371473 2012-01-01 2012-12-31 0001371473 znom:AdvancesMember 2013-06-30 0001371473 us-gaap:MinimumMember 2013-01-01 2013-06-30 0001371473 us-gaap:FairValueInputsLevel3Member 2013-06-30 0001371473 us-gaap:FairValueInputsLevel3Member 2012-12-31 0001371473 us-gaap:SubsequentEventMember 2013-07-01 2013-07-31 iso4217:USD iso4217:USD xbrli:shares xbrli:shares xbrli:pure 16000 26000 6000 4000 22000 30000 22000 30000 2000 5000 59000 41000 50000 111000 46000 125000 150000 16000 33000 252000 229000 53000 53000 0 0 6403000 6403000 6686000 6655000 -230000 -199000 22000 30000 0.001 0.001 90000000 90000000 52519896 52519896 52519896 52519896 0.001 0.001 10000000 10000000 0 0 37000 12000 44000 26000 -37000 -12000 -44000 -26000 2000 1000 4000 2000 17000 -2000 -1000 13000 -2000 -39000 -13000 -31000 -28000 0 0 -39000 -13000 -31000 -28000 0.00 0.00 0.00 0.00 52519896 52519896 52519896 52519896 -31000 -28000 2000 -17000 2000 8000 -3000 -2000 18000 -7000 -35000 -43000 25000 25000 25000 25000 -10000 -18000 37000 19000 Znomics, Inc. 10-Q --12-31 55145892 false 0001371473 Yes No Smaller Reporting Company No 2013 Q2 2013-06-30 <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Nature of Business</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Znomics, Inc. ("the Company") was engaged in the business of drug discovery with a cutting-edge biotechnology platform that leveraged medicinal chemistry with the unique attributes of the zebrafish.&#160;&#160;In April 2009, the Company terminated its operations. The Company subsequently disposed of this developmental stage business in 2009 and 2010 prior to it having generated any significant revenues. As the Company is no longer developing any specific business, it no longer refers to itself as a development stage company and accordingly, no longer presents cumulative financial information. The Company is now considered a public shell company with no current business activity.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company has now focused its efforts on seeking a new business opportunity. The Company is attempting to locate and negotiate with a business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a private company to become a reporting (&#8220;Public&#8221;) company whose securities are qualified for trading in the United States secondary market.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Basis of Presentation</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (&#8220;GAAP&#8221;).&#160;&#160;However, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;).&#160;&#160;In the opinion of management, the financial statements include all adjustments consisting of normal, recurring adjustments necessary for the fair presentation of the results of the interim periods presented.&#160;&#160;These condensed financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2012 as included in the Company&#8217;s 2012 Annual Report on Form 10-K,&#160;dated August 14, 2013.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Estimates</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The preparation of financial statements in conformity with GAAP requires us to make certain estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.&#160;&#160;We update these estimates, assumptions and judgments as appropriate, which in most cases is at least quarterly.&#160;&#160;We use our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies.&#160;&#160;While we believe the estimates, assumptions and judgments we use in preparing our financial statements are appropriate, they are subject to factors and uncertainties regarding their outcome and therefore, actual results may materially differ from these estimates.</font> </div><br/><div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Fair Value of Financial Instruments</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued expenses and notes payable. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The Company considers the carrying values of its financial instruments in the financial statements to approximate fair value as interest rates on the notes payable approximate current rates and the current assets and liabilities are short-term in nature.</font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Derivative Financial Instruments</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company has a derivative liability which is accounted for at fair value.&#160;&#160;The fair value of the Company&#8217;s derivative liability is estimated at each balance sheet date and changes in fair value are reflected as a gain or loss in the statement of operations.&#160;&#160;The Company utilizes a Black-Scholes option pricing model to estimate fair values of its derivative liability.</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This derivative liability is also marked-to-market prior to any related exercises, modifications, or extinguishments with any necessary changes in fair value from the prior balance sheet date being reflected as a gain or loss in the statement of operations.&#160;&#160;The carrying value of the liability is eliminated upon extinguishment, converted to equity upon an exercise, or adjusted as may be necessary in a modification.</font></font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Income Taxes</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Income taxes are provided for using the liability method of accounting. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting.&#160;&#160;Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.&#160;&#160;Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.&#160;&#160;Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We account for income taxes pursuant to Financial Accounting Standards Board guidance.&#160;&#160;This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.&#160;&#160;For those benefits to be recognized, a tax position must be more-likely-than not to be sustained upon examination by taxing authorities. We believe our income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties have been recorded at June 30, 2013 and December 31, 2012.&#160;&#160;In accordance with the guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations.&#160; The Company has three open years of tax returns subject to examination from 2009 and forward.</font> </div><br/><div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Stock-Based Compensation</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards.&#160;&#160;The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company estimates the fair value of stock-based payment awards on the date of grant using an option pricing model. These option pricing models involve a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company's common stock and interest rates. The Company is using the Black-Scholes option pricing model to estimate the fair value of its options. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest.</font> </div><br/><div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Net Income (Loss) Per Share</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Basic net income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include options granted pursuant to the Company's stock option plan and stock warrants.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For the periods ended June 30, 2013 and 2012, options and warrants exercisable representing common stock equivalents were excluded from the calculation of the diluted net loss per share as their effect would have been anti-dilutive.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="2" style="FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Comprehensive Income (Loss)</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="2" style="FONT-STYLE: normal; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income (loss). Items defined as other comprehensive income (loss) include items such as foreign currency translation adjustments and unrealized gains and losses on certain marketable securities. For the&#160;three and six months&#160;ended&#160;June 30, 2013 and 2012, there were no adjustments to net loss to arrive at comprehensive loss.</font></font></font></font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Recent Accounting Pronouncements</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;None that are applicable.</font> </div><br/> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Nature of Business</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Znomics, Inc. ("the Company") was engaged in the business of drug discovery with a cutting-edge biotechnology platform that leveraged medicinal chemistry with the unique attributes of the zebrafish.&#160;&#160;In April 2009, the Company terminated its operations. The Company subsequently disposed of this developmental stage business in 2009 and 2010 prior to it having generated any significant revenues. As the Company is no longer developing any specific business, it no longer refers to itself as a development stage company and accordingly, no longer presents cumulative financial information. The Company is now considered a public shell company with no current business activity.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company has now focused its efforts on seeking a new business opportunity. The Company is attempting to locate and negotiate with a business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a private company to become a reporting (&#8220;Public&#8221;) company whose securities are qualified for trading in the United States secondary market.</font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font size="2"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Basis of Presentation</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (&#8220;GAAP&#8221;).&#160;&#160;However, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;).&#160;&#160;In the opinion of management, the financial statements include all adjustments consisting of normal, recurring adjustments necessary for the fair presentation of the results of the interim periods presented.&#160;&#160;These condensed financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2012 as included in the Company&#8217;s 2012 Annual Report on Form 10-K,&#160;dated August 14, 2013.</font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Estimates</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The preparation of financial statements in conformity with GAAP requires us to make certain estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.&#160;&#160;We update these estimates, assumptions and judgments as appropriate, which in most cases is at least quarterly.&#160;&#160;We use our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies.&#160;&#160;While we believe the estimates, assumptions and judgments we use in preparing our financial statements are appropriate, they are subject to factors and uncertainties regarding their outcome and therefore, actual results may materially differ from these estimates.</font></div> <div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Fair Value of Financial Instruments</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued expenses and notes payable. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The Company considers the carrying values of its financial instruments in the financial statements to approximate fair value as interest rates on the notes payable approximate current rates and the current assets and liabilities are short-term in nature.</font></div> <div style="TEXT-ALIGN: left; TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"><font size="2"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Derivative Financial Instruments</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company has a derivative liability which is accounted for at fair value.&#160;&#160;The fair value of the Company&#8217;s derivative liability is estimated at each balance sheet date and changes in fair value are reflected as a gain or loss in the statement of operations.&#160;&#160;The Company utilizes a Black-Scholes option pricing model to estimate fair values of its derivative liability.</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This derivative liability is also marked-to-market prior to any related exercises, modifications, or extinguishments with any necessary changes in fair value from the prior balance sheet date being reflected as a gain or loss in the statement of operations.&#160;&#160;The carrying value of the liability is eliminated upon extinguishment, converted to equity upon an exercise, or adjusted as may be necessary in a modification.</font></font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Income Taxes</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Income taxes are provided for using the liability method of accounting. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting.&#160;&#160;Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.&#160;&#160;Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.&#160;&#160;Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We account for income taxes pursuant to Financial Accounting Standards Board guidance.&#160;&#160;This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.&#160;&#160;For those benefits to be recognized, a tax position must be more-likely-than not to be sustained upon examination by taxing authorities. We believe our income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties have been recorded at June 30, 2013 and December 31, 2012.&#160;&#160;In accordance with the guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations.&#160; The Company has three open years of tax returns subject to examination from 2009 and forward.</font></div> <div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Stock-Based Compensation</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards.&#160;&#160;The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant.</font></div> <div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Net Income (Loss) Per Share</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Basic net income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include options granted pursuant to the Company's stock option plan and stock warrants.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For the periods ended June 30, 2013 and 2012, options and warrants exercisable representing common stock equivalents were excluded from the calculation of the diluted net loss per share as their effect would have been anti-dilutive.</font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="2" style="FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Comprehensive Income (Loss)</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="2" style="FONT-STYLE: normal; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income (loss). Items defined as other comprehensive income (loss) include items such as foreign currency translation adjustments and unrealized gains and losses on certain marketable securities. For the&#160;three and six months&#160;ended&#160;June 30, 2013 and 2012, there were no adjustments to net loss to arrive at comprehensive loss.</font></font></font></font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Recent Accounting Pronouncements</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;None that are applicable.</font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">NOTE 2. GOING CONCERN</font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business.&#160;</font> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We have incurred substantial losses since our inception. As of June 30, 2013, our accumulated deficit was approximately $6.7 million. Financial results for 2012 reflected a loss from operations of $109,000. We expect to continue to incur net losses as we incur expenses related to seeking a business opportunity and our ongoing costs of being a public reporting company.&#160;&#160;Because we have no revenues, we plan to use our current cash reserves, which came from the cash received from advances under the Discretionary Notes (see Note 3), as well as potential future advances under the Discretionary Notes to fund our ongoing operating costs.</font></font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Our ability to continue as a going concern is dependent on our success at finding an acquisition candidate in a timely manner.&#160;&#160;We believe our cash position at June 30, 2013 and advances expected under the Discretionary Notes and equity sales of our common stock,&#160;should allow us to fund operations for at least the next 12 months, and through the date a target company merges into the Company.</font></font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">However, the current financing environment in the United States is challenging and we can provide no assurances that we could raise capital either to continue our operations or to finance an acquisition. The sale of our securities or the expectation that we will sell additional securities may have an adverse effect on the trading price of our common stock. Further, notwithstanding the Discretionary Notes, we cannot be certain that additional financing will be available when and as needed. If financing is available, it may be on terms that adversely affect the interests of our existing stockholders. If adequate financing is not available, we may need to reduce or eliminate our efforts to find an acquisition opportunity. These factors could significantly limit our ability to continue as a going concern and cause us to investigate other strategic options, including bankruptcy.&#160;</font></font> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</font> </div><br/> 6700000 109000 <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">NOTE 3. DISCRETIONARY ADVANCE SECURED PROMISSORY NOTES</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On February 10, 2010, the Company executed Discretionary Advance Secured Promissory Notes (the &#8220;Discretionary Notes&#8221;) in favor of various stockholders of the Company who may make advances to the Company from time to time. The amounts due under the Discretionary Notes accrue interest at an annual rate of 5% and are due on the earlier to occur of a business combination between the Company and an operating business and three years from each loan advance, or upon the Company&#8217;s insolvency or a material breach of the Stock Purchase Agreement. The Discretionary Notes are secured by all of the Company&#8217;s assets.&#160;&#160;Advances totaling $175,000 have been received under the Discretionary Notes and remain outstanding at June 30, 2013.&#160; Accrued interest of $9,700 is also due as of June 30, 2013.</font> </div><br/> 0.05 175000 9700 <div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">NOTE 4.&#160;&#160;Warrant Liability</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">During 2012, the Company re-reviewed the provisions on all of its outstanding warrants issued originally in 2009 and amended in 2010 and determined that because such warrants could potentially be settled in cash upon a Fundamental Transaction (as defined in the applicable warrant agreement), they should have been accounted for as a derivative liability at fair value with changes in fair value reflected in operating results.&#160; Cumulatively since the date of issuance to December 31, 2012, the fair value of these warrants decreased by $68,000 to a December 31, 2012 fair value of $33,000.&#160; The Company recorded a fourth quarter 2012 adjustment for all of its prior accounting treatment for these warrants.&#160; No periods since issuance through December 31, 2012 were materially impacted by the previous accounting.</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">At issuance and each balance sheet date, the Company estimates the fair value of these warrants using the Black-Scholes option pricing model.&#160;&#160;Changes in fair value are recorded as a non-cash valuation adjustment in the Company's statements of operations.&#160;&#160;The Black-Scholes valuation model inputs for six months ended June 30, 2013 are as follows:</font></font> </div><br/><table bgcolor="white" cellpadding="0" cellspacing="0" width="85%" style=""> <tr style="background-color: #CCEEFF;"> <td width="52%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Risk free interest rates</font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.95%</font></font> </div> </td> </tr> <tr> <td width="52%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected dividend yield</font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.0%</font></font> </div> </td> </tr> <tr style="background-color: #CCEEFF;"> <td width="52%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected stock volatility</font></font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">195.0%</font></font> </div> </td> </tr> <tr> <td width="52%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected term of warrants in years</font></font> </div> </td> <td nowrap="nowrap" width="2%" style="TEXT-ALIGN: right"> <div style="TEXT-ALIGN: right; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5.8&#160;</font></font> </div> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">6.1</font></font> </div> </td> </tr> </table><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Expected volatility is based upon the observed historical trades of the Company&#8217;s common stock. The expected term of the warrants is based on the remaining terms of the warrants. The risk-free rate of return is based on the U.S. Treasury security rates for maturities consistent with the expected term of the warrants.</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Potential future increases in the estimated fair value of these warrants will result in losses being recognized in our statements of operations in future periods.&#160;&#160;Conversely, potential future declines in the estimated fair value of these warrants will result in gains being recognized in our statement of operations in future periods.&#160;&#160;Neither of these potential gains or losses will have any impact on our cash balance, liquidity or cash flows from operations.</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The following table sets forth the changes in the Company's derivative warrant liability for the periods indicated:</font></font> </div><br/><table cellpadding="0" cellspacing="0" width="100%" style=""> <tr> <td align="left" valign="bottom" width="29%" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Date</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Description</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: center"> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Number of</font> </div> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrants</font> </div> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: center"> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrant</font> </div> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Liability,</font> </div> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">in thousands</font> </div> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="29%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">December 31, 2011</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td align="left" valign="bottom" width="51%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance of warrant liability at December 31, 2011</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td align="left" valign="bottom" width="51%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fair value of warrants reclassified to warrant liability during 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,686,510</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">101</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td valign="bottom" width="29%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Change in fair value of warrant liability for the year ended December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(68</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="29%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td align="left" valign="bottom" width="51%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance of warrant liability at December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,686,510</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td valign="bottom" width="29%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Change in fair value of warrant liability for the six months ended June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(17</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="29%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance of warrant liability at June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,686,510</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> &#160; </td> </tr> </table><br/> 68000 33000 <table bgcolor="white" cellpadding="0" cellspacing="0" width="85%" style=""> <tr style="background-color: #CCEEFF;"> <td width="52%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Risk free interest rates</font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.95%</font></font> </div> </td> </tr> <tr> <td width="52%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected dividend yield</font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.0%</font></font> </div> </td> </tr> <tr style="background-color: #CCEEFF;"> <td width="52%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected stock volatility</font></font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">195.0%</font></font> </div> </td> </tr> <tr> <td width="52%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected term of warrants in years</font></font> </div> </td> <td nowrap="nowrap" width="2%" style="TEXT-ALIGN: right"> <div style="TEXT-ALIGN: right; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5.8&#160;</font></font> </div> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">6.1</font></font> </div> </td> </tr> </table> 0.0095 0.000 1.950 P5Y292D P6Y36D <table cellpadding="0" cellspacing="0" width="100%" style=""> <tr> <td align="left" valign="bottom" width="29%" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Date</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Description</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: center"> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Number of</font> </div> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrants</font> </div> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: center"> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrant</font> </div> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Liability,</font> </div> <div style="TEXT-ALIGN: center; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">in thousands</font> </div> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom" width="8%"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="29%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">December 31, 2011</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td align="left" valign="bottom" width="51%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance of warrant liability at December 31, 2011</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td align="left" valign="bottom" width="51%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fair value of warrants reclassified to warrant liability during 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,686,510</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">101</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td valign="bottom" width="29%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Change in fair value of warrant liability for the year ended December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(68</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="29%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td align="left" valign="bottom" width="51%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance of warrant liability at December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,686,510</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td valign="bottom" width="29%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Change in fair value of warrant liability for the six months ended June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(17</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td valign="bottom" width="29%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="51%"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="1%"> &#160; </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> &#160; </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="29%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> &#160; </td> <td align="left" valign="bottom" width="51%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance of warrant liability at June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> &#160; </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">1,686,510</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> &#160; </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> &#160; </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> &#160; </td> </tr> </table> 1686510 101000 -68000 1686510 33000 -17000 1686510 16000 <div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">NOTE 5.&#160;&#160;Fair Value Measurements</font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.&#160;&#160;Entities are required to use a fair value hierarchy which maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.&#160;&#160;There are three levels of inputs that may be used to measure fair value:</font></font></font> </div><br/><table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style=""> <tr valign="top"> <td style="WIDTH: 13.5pt"> &#160; </td> <td style="WIDTH: 72pt"> <div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Level 1</font> </div> </td> <td style="WIDTH: 36pt"> <div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">-</font> </div> </td> <td> <div align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Inputs use quoted prices in active markets for identical assets or liabilities.</font> </div> </td> </tr> </table><br/><table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent-0" width="100%" style=""> <tr valign="top"> <td style="WIDTH: 13.5pt"> <div> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font> </div> </td> <td style="WIDTH: 72pt"> <div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Level 2</font> </div> </td> <td style="WIDTH: 36pt"> <div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">-</font> </div> </td> <td> <div align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Inputs use other inputs that are observable, either directly or indirectly, other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.</font> </div> </td> </tr> </table><br/><table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent-1" width="100%" style=""> <tr valign="top"> <td style="WIDTH: 13.5pt"> <div> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;</font> </div> </td> <td style="WIDTH: 72pt"> <div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Level 3</font> </div> </td> <td style="WIDTH: 36pt"> <div style="TEXT-INDENT: 0pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">-</font> </div> </td> <td> <div align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Inputs are unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.</font> </div> </td> </tr> </table><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.&#160;&#160;The Company&#8217;s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset or liability.</font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-WEIGHT: normal; TEXT-DECORATION: underline">Level 3 Valuation Techniques</font></font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">The warrant liability is classified as level 3 within the fair value hierarchy as its fair value is measured using the Black-Scholes option pricing model with several unobservable and estimated inputs, supported by little or no market activity.&#160;&#160;The Black-Scholes valuation model inputs for the six months ended June 30, 2013 are as follows:</font></font></font> </div><br/><table bgcolor="white" cellpadding="0" cellspacing="0" width="85%" style=""> <tr style="background-color: #CCEEFF;"> <td width="50%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Risk free interest rates</font></font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.95%</font></font></font> </div> </td> </tr> <tr> <td width="50%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected dividend yield</font></font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.0%</font></font></font> </div> </td> </tr> <tr style="background-color: #CCEEFF;"> <td width="50%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected stock volatility</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">195.0%</font></font></font> </div> </td> </tr> <tr> <td width="50%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected term of warrants in years</font></font> </div> </td> <td width="2%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5.8</font></font> </div> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">6.1</font></font> </div> </td> </tr> </table><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold"><font size="2"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Expected volatility is based upon the observed historical trades of the Company&#8217;s common stock. The expected term of the warrants is based on the remaining terms of the warrants. The risk-free rate of return is based on the U.S. Treasury security rates for maturities consistent with the expected term of the warrants.</font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold"><font size="2"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Significant increases (decreases) in any of those inputs in isolation could result in a significantly different fair value measurement. Generally a change in the assumption used for expected term is accompanied by a directionally similar change in the assumptions used for expected volatility and risk-free interest rate.</font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold"><font size="2"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">The valuation methods described above may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values.&#160;&#160;Furthermore, while the Company believes its valuation method is appropriate and consistent with similar instruments, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.</font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold"><font size="2"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Liabilities measured at fair value on a recurring basis at June 30, 2013 are as follows, in thousands:</font></font></font> </div><br/><table cellpadding="0" cellspacing="0" width="100%" style=""> <tr> <td valign="bottom" style="TEXT-ALIGN: left; PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Quoted</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Prices in</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Active Markets</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">for Identical</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Liabilities</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 1)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Other</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Observable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 2)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Unobservable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 3)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance at</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">June 30,</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">2013</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr> <td valign="bottom"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrant liability</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> </table><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Liabilities measured at fair value on a recurring basis at December 31, 2012 are as follows, in thousands:</font></font></font> </div><br/><table cellpadding="0" cellspacing="0" width="100%" style=""> <tr> <td valign="bottom" style="TEXT-ALIGN: left; PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Quoted</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Prices in</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Active Markets</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">for Identical</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Liabilities</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 1)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Other</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Observable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 2)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Unobservable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 3)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance at</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">December&#160;31,</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">2012</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr> <td valign="bottom"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrant liability</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> </table><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">There were no warrants transfers between fair value levels during the six ended June 30, 2013.</font></font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The following table details the activity of our warrant liability measured at fair value, whose fair values are determined by Level 3 inputs, in thousands:</font></font></font> </div><br/><table cellpadding="0" cellspacing="0" width="100%" style=""> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="90%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance, December 31, 2011</font> </div> </td> <td align="left" valign="bottom" width="1%"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr> <td align="left" valign="bottom" width="90%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fair value of warrants reclassified to liability</font> </div> </td> <td align="left" valign="bottom" width="1%"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">101</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="90%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Gain on change in fair value of warrant liability recorded in other income (expense)</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(68</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td align="left" valign="bottom" width="90%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance, December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="90%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Gain on change in fair value of warrant liability recorded in other income (expense)</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(17</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td align="left" valign="bottom" width="90%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance, June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> </table><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-WEIGHT: bold"><font size="2"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">The gain recorded in other income, for level 3 liabilities still held at June 30, 2013 and December 31, 2012 was $68,000 and $17,000, respectively.</font></font></font> </div><br/> 68000 17000 <table bgcolor="white" cellpadding="0" cellspacing="0" width="85%" style=""> <tr style="background-color: #CCEEFF;"> <td width="50%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Risk free interest rates</font></font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.95%</font></font></font> </div> </td> </tr> <tr> <td width="50%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected dividend yield</font></font></font> </div> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">0.0%</font></font></font> </div> </td> </tr> <tr style="background-color: #CCEEFF;"> <td width="50%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected stock volatility</font> </td> <td width="2%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td width="44%"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"></font> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">195.0%</font></font></font> </div> </td> </tr> <tr> <td width="50%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Expected term of warrants in years</font></font> </div> </td> <td width="2%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">5.8</font></font> </div> </td> <td width="2%" style="TEXT-ALIGN: center"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td width="44%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="FONT-FAMILY: times new roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">6.1</font></font> </div> </td> </tr> </table> <table cellpadding="0" cellspacing="0" width="100%" style=""> <tr> <td valign="bottom" style="TEXT-ALIGN: left; PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Quoted</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Prices in</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Active Markets</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">for Identical</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Liabilities</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 1)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Other</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Observable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 2)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Unobservable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 3)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance at</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">June 30,</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">2013</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr> <td valign="bottom"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrant liability</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> </table><table cellpadding="0" cellspacing="0" width="100%" style=""> <tr> <td valign="bottom" style="TEXT-ALIGN: left; PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Quoted</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Prices in</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Active Markets</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">for Identical</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Liabilities</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 1)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Other</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Observable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 2)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Significant</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Unobservable</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Inputs</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(Level 3)</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td colspan="2" nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance at</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">December&#160;31,</font> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="center"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">2012</font> </div> </td> <td nowrap="nowrap" valign="bottom" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr> <td valign="bottom"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> <td valign="bottom"> &#160; </td> <td colspan="2" nowrap="nowrap" valign="bottom"> &#160; </td> <td nowrap="nowrap" valign="bottom" style="TEXT-ALIGN: left"> &#160; </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Warrant liability</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> </table> 16000 16000 33000 <table cellpadding="0" cellspacing="0" width="100%" style=""> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="90%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance, December 31, 2011</font> </div> </td> <td align="left" valign="bottom" width="1%"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">-</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr> <td align="left" valign="bottom" width="90%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Fair value of warrants reclassified to liability</font> </div> </td> <td align="left" valign="bottom" width="1%"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">101</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="90%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Gain on change in fair value of warrant liability recorded in other income (expense)</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(68</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td align="left" valign="bottom" width="90%"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance, December 31, 2012</font> </div> </td> <td align="left" valign="bottom" width="1%"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">33</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> <tr style="background-color: #CCEEFF;"> <td align="left" valign="bottom" width="90%" style="PADDING-BOTTOM: 0.75pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Gain on change in fair value of warrant liability recorded in other income (expense)</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 0.75pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">(17</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 0.75pt solid; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">)</font> </td> </tr> <tr> <td align="left" valign="bottom" width="90%" style="PADDING-BOTTOM: 2.25pt"> <div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">Balance, June 30, 2013</font> </div> </td> <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2.25pt"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> <td valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">$</font> </td> <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: right"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">16</font> </td> <td nowrap="nowrap" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2.25pt double; TEXT-ALIGN: left"> <font style="DISPLAY: inline; FONT-FAMILY: times new roman; FONT-SIZE: 10pt">&#160;</font> </td> </tr> </table> 101000 -68000 33000 -17000 16000 <div style="TEXT-ALIGN: left; TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">NOTE 6. SUBSEQUENT EVENTS</font></font> </div><br/><div style="TEXT-ALIGN: justify; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">On July 1, 2013, subsequent to quarter end, the stockholders who have made the advances under the Discretionary Notes,&#160;contributed $50,000 in exchange for 2,625,996 shares of Znomics common stock.</font></font> </div><br/> 50000 2625996 EX-101.SCH 6 znom-20130630.xsd XBRL TAXONOMY EXTENSION SCHEMA 001 - Statement - A Development Stage Company - Balance Sheets (Unaudited) link:presentationLink link:definitionLink link:calculationLink 002 - Statement - A Development Stage Company - Balance Sheets (Unaudited) (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 003 - Statement - A Development Stage Company - Statements of Operations (Unaudited) link:presentationLink link:definitionLink link:calculationLink 004 - Statement - A Development Stage Company - Statements of Cash Flows (Unaudited) link:presentationLink link:definitionLink link:calculationLink 005 - Disclosure - Note 1 - Summary of Significant Accounting Policies link:presentationLink link:definitionLink link:calculationLink 006 - Disclosure - Note 2 - Going Concern link:presentationLink link:definitionLink link:calculationLink 007 - Disclosure - Note 3 - Discretionary Advance Secured Promissory Notes link:presentationLink link:definitionLink link:calculationLink 008 - Disclosure - Note 4 - Warrant Liability link:presentationLink link:definitionLink link:calculationLink 009 - Disclosure - Note 5 - Fair Value Measurements link:presentationLink link:definitionLink link:calculationLink 010 - Disclosure - Note 6 - Subsequent Events link:presentationLink link:definitionLink link:calculationLink 011 - Disclosure - Accounting Policies, by Policy (Policies) link:presentationLink link:definitionLink link:calculationLink 012 - Disclosure - Note 4 - Warrant Liability (Tables) link:presentationLink link:definitionLink link:calculationLink 013 - Disclosure - Note 5 - Fair Value Measurements (Tables) link:presentationLink link:definitionLink link:calculationLink 014 - Disclosure - Note 1 - Summary of Significant Accounting Policies (Details) link:presentationLink link:definitionLink link:calculationLink 015 - Disclosure - Note 2 - Going Concern (Details) link:presentationLink link:definitionLink link:calculationLink 016 - Disclosure - Note 3 - Discretionary Advance Secured Promissory Notes (Details) link:presentationLink link:definitionLink link:calculationLink 017 - Disclosure - Note 4 - Warrant Liability (Details) link:presentationLink link:definitionLink link:calculationLink 018 - Disclosure - Note 4 - Warrant Liability (Details) - Warrant valuation inputs: link:presentationLink link:definitionLink link:calculationLink 019 - Disclosure - Note 4 - Warrant Liability (Details) - Changes in derivative warrant liability: link:presentationLink link:definitionLink link:calculationLink 020 - Disclosure - Note 5 - Fair Value Measurements (Details) link:presentationLink link:definitionLink link:calculationLink 021 - Disclosure - Note 5 - Fair Value Measurements (Details) - Black-Scholes valuation model inputs link:presentationLink link:definitionLink link:calculationLink 022 - Disclosure - Note 5 - Fair Value Measurements (Details) - Liabilities measured at fair value on a recurring basis link:presentationLink link:definitionLink link:calculationLink 023 - Disclosure - Note 5 - Fair Value Measurements (Details) - Warrant liability measured at fair value link:presentationLink link:definitionLink link:calculationLink 024 - Disclosure - Note 6 - Subsequent Events (Details) link:presentationLink link:definitionLink link:calculationLink 000 - Disclosure - Document And Entity Information link:presentationLink link:definitionLink link:calculationLink EX-101.CAL 7 znom-20130630_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.DEF 8 znom-20130630_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE EX-101.LAB 9 znom-20130630_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-101.PRE 10 znom-20130630_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 11 R8.xml IDEA: Note 3 - Discretionary Advance Secured Promissory Notes 2.4.0.8007 - Disclosure - Note 3 - Discretionary Advance Secured Promissory Notestruefalsefalse1false falsefalsec4_From1Jan2013To30Jun2013http://www.sec.gov/CIK0001371473duration2013-01-01T00:00:002013-06-30T00:00:001true 1us-gaap_DebtDisclosureAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_DebtDisclosureTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">NOTE 3. DISCRETIONARY ADVANCE SECURED PROMISSORY NOTES</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">On February 10, 2010, the Company executed Discretionary Advance Secured Promissory Notes (the &#8220;Discretionary Notes&#8221;) in favor of various stockholders of the Company who may make advances to the Company from time to time. The amounts due under the Discretionary Notes accrue interest at an annual rate of 5% and are due on the earlier to occur of a business combination between the Company and an operating business and three years from each loan advance, or upon the Company&#8217;s insolvency or a material breach of the Stock Purchase Agreement. The Discretionary Notes are secured by all of the Company&#8217;s assets.&#160;&#160;Advances totaling $175,000 have been received under the Discretionary Notes and remain outstanding at June 30, 2013.&#160; Accrued interest of $9,700 is also due as of June 30, 2013.</font> </div><br/>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 false0falseNote 3 - Discretionary Advance Secured Promissory NotesUnKnownUnKnownUnKnownUnKnowntruefalsefalseNoteshttp://www.znomics.com/role/Note3DiscretionaryAdvanceSecuredPromissoryNotes12 XML 12 R6.xml IDEA: Note 1 - Summary of Significant Accounting Policies 2.4.0.8005 - Disclosure - Note 1 - Summary of Significant Accounting Policiestruefalsefalse1false falsefalsec4_From1Jan2013To30Jun2013http://www.sec.gov/CIK0001371473duration2013-01-01T00:00:002013-06-30T00:00:001true 1us-gaap_AccountingPoliciesAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse02false 2us-gaap_SignificantAccountingPoliciesTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalseterseLabel1falsefalsefalse00<div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</font></font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Nature of Business</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Znomics, Inc. ("the Company") was engaged in the business of drug discovery with a cutting-edge biotechnology platform that leveraged medicinal chemistry with the unique attributes of the zebrafish.&#160;&#160;In April 2009, the Company terminated its operations. The Company subsequently disposed of this developmental stage business in 2009 and 2010 prior to it having generated any significant revenues. As the Company is no longer developing any specific business, it no longer refers to itself as a development stage company and accordingly, no longer presents cumulative financial information. The Company is now considered a public shell company with no current business activity.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company has now focused its efforts on seeking a new business opportunity. The Company is attempting to locate and negotiate with a business entity for the merger of that target company into the Company. In certain instances, a target company may wish to become a subsidiary of the Company or may wish to contribute assets to the Company rather than merge. No assurances can be given that the Company will be successful in locating or negotiating with any target company. The Company will provide a method for a private company to become a reporting (&#8220;Public&#8221;) company whose securities are qualified for trading in the United States secondary market.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Basis of Presentation</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States (&#8220;GAAP&#8221;).&#160;&#160;However, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;).&#160;&#160;In the opinion of management, the financial statements include all adjustments consisting of normal, recurring adjustments necessary for the fair presentation of the results of the interim periods presented.&#160;&#160;These condensed financial statements should be read in conjunction with the audited financial statements of the Company for the fiscal year ended December 31, 2012 as included in the Company&#8217;s 2012 Annual Report on Form 10-K,&#160;dated August 14, 2013.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Estimates</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The preparation of financial statements in conformity with GAAP requires us to make certain estimates, assumptions and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period.&#160;&#160;We update these estimates, assumptions and judgments as appropriate, which in most cases is at least quarterly.&#160;&#160;We use our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies.&#160;&#160;While we believe the estimates, assumptions and judgments we use in preparing our financial statements are appropriate, they are subject to factors and uncertainties regarding their outcome and therefore, actual results may materially differ from these estimates.</font> </div><br/><div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Fair Value of Financial Instruments</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued expenses and notes payable. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The Company considers the carrying values of its financial instruments in the financial statements to approximate fair value as interest rates on the notes payable approximate current rates and the current assets and liabilities are short-term in nature.</font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Derivative Financial Instruments</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company has a derivative liability which is accounted for at fair value.&#160;&#160;The fair value of the Company&#8217;s derivative liability is estimated at each balance sheet date and changes in fair value are reflected as a gain or loss in the statement of operations.&#160;&#160;The Company utilizes a Black-Scholes option pricing model to estimate fair values of its derivative liability.</font></font> </div><br/><div style="TEXT-ALIGN: left; TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt"> <font size="2"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">This derivative liability is also marked-to-market prior to any related exercises, modifications, or extinguishments with any necessary changes in fair value from the prior balance sheet date being reflected as a gain or loss in the statement of operations.&#160;&#160;The carrying value of the liability is eliminated upon extinguishment, converted to equity upon an exercise, or adjusted as may be necessary in a modification.</font></font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Income Taxes</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Income taxes are provided for using the liability method of accounting. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting.&#160;&#160;Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis.&#160;&#160;Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.&#160;&#160;Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">We account for income taxes pursuant to Financial Accounting Standards Board guidance.&#160;&#160;This guidance prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.&#160;&#160;For those benefits to be recognized, a tax position must be more-likely-than not to be sustained upon examination by taxing authorities. We believe our income tax filing positions and deductions will be sustained upon examination and, accordingly, no reserves, or related accruals for interest and penalties have been recorded at June 30, 2013 and December 31, 2012.&#160;&#160;In accordance with the guidance, the Company has adopted a policy under which, if required to be recognized in the future, interest related to the underpayment of income taxes will be classified as a component of interest expense and any related penalties will be classified in operating expenses in the statements of operations.&#160; The Company has three open years of tax returns subject to examination from 2009 and forward.</font> </div><br/><div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Stock-Based Compensation</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company recognizes the cost of stock-based compensation plans and awards in operations on a straight-line basis over the respective vesting period of the awards.&#160;&#160;The Company measures and recognizes compensation expense for all stock-based payment awards made to employees and directors. The compensation expense for the Company's stock-based payments is based on estimated fair values at the time of the grant.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">The Company estimates the fair value of stock-based payment awards on the date of grant using an option pricing model. These option pricing models involve a number of assumptions, including the expected lives of stock options, the volatility of the public market price for the Company's common stock and interest rates. The Company is using the Black-Scholes option pricing model to estimate the fair value of its options. Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that are ultimately expected to vest.</font> </div><br/><div style="TEXT-INDENT: 18pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Net Income (Loss) Per Share</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">Basic net income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is calculated by dividing net income (loss) for the period by the weighted-average number of common shares outstanding during the period, increased by potentially dilutive common shares ("dilutive securities") that were outstanding during the period. Dilutive securities include options granted pursuant to the Company's stock option plan and stock warrants.</font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">For the periods ended June 30, 2013 and 2012, options and warrants exercisable representing common stock equivalents were excluded from the calculation of the diluted net loss per share as their effect would have been anti-dilutive.</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="2" style="FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Comprehensive Income (Loss)</font></font> </div><br/><div style="TEXT-INDENT: 36pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="justify"> <font size="2" style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold"><font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt"><font size="2" style="FONT-STYLE: normal; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: normal">Comprehensive income (loss) includes net income (loss) and items defined as other comprehensive income (loss). Items defined as other comprehensive income (loss) include items such as foreign currency translation adjustments and unrealized gains and losses on certain marketable securities. For the&#160;three and six months&#160;ended&#160;June 30, 2013 and 2012, there were no adjustments to net loss to arrive at comprehensive loss.</font></font></font></font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 18pt; MARGIN-RIGHT: 0pt" align="justify"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold">Recent Accounting Pronouncements</font> </div><br/><div style="TEXT-INDENT: 0pt; DISPLAY: block; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt" align="left"> <font style="DISPLAY: inline; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;None that are applicable.</font> </div><br/>falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for all significant accounting policies of the reporting entity.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18780-107790 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18726-107790 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18861-107790 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18743-107790 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6367646&loc=d3e18854-107790 false0falseNote 1 - Summary of Significant Accounting PoliciesUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://www.znomics.com/role/Note1SummaryofSignificantAccountingPolicies12 XML 13 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 4 - Warrant Liability (Details) (USD $)
12 Months Ended
Dec. 31, 2012
Jun. 30, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]    
Increase (Decrease) in Derivative Liabilities $ 68,000  
Derivative Liability, Fair Value, Amount Not Offset Against Collateral $ 33,000 $ 16,000