FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Measurements and Financial Instruments [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis Using Significant Observable Inputs (Level 2)

Assets and liabilities measured at fair value on a recurring basis using significant observable inputs (Level 2) from January 1, 2012 to September 30, 2012 are summarized as follows:

	Warrant liability (Level 2)
Balance at January 1, 2012	$	615,000
Change in fair value included in earnings		23,000
Exercise of warrants		(385,000	)
Balance at September 30, 2012	$	253,000

Fair Value of Warrants Using Black-Scholes Option Pricing Model

The Company estimates the fair value of its warrants as of September 30, 2012 using the Black-Scholes option pricing model using the following assumptions:

	September 30, 2012			December 31, 2011
Series A and B Warrants
Market price of common stock:	$	3.56		$	4.76
Exercise price:	$	3.50		$	3.50
Remaining contractual life (years):		1.08			1.83
Dividend yield:		-			–
Expected volatility:		60.52	%		39.58	%
Risk-free interest rate:		0.16	%		0.22	%
Fair value – Series A and B Warrants	$	229,000		$	586,000
Underwriter Warrants
Market price of common stock:	$	3.56		$	4.76
Exercise price:	$	4.80		$	4.80
Remaining contractual life (years):		1.93			2.68
Dividend yield:		-			–
Expected volatility:		60.63	%		36.39	%
Risk-free interest rate:		0.22	%		0.32	%
Fair value – Underwriter Warrants	$	24,000		$	29,000
Fair value – Total	$	253,000		$	615,000

Warrant Exercises

In accordance with ASC 470-50-40, “Debt – Modification and Extinguishments – Derecognition”, an aggregate gain of $73,291 was recognized.  For details, please refer to the following table.

Exercise date:		February 7, 2012
Market price of common stock:	$	6.44
Exercise warrants:		125,000
Exercise price:	$	3.50
Remaining contractual life (years):		1.73
Dividend yield:		-
Expected volatility:		39.43	%
Risk-free interest rate:		0.21	%
Fair values:	$	3.08
Gain on extinguishment of warrant liabilities	$	73,291