Summaries of warrant and other debt-related liabilities as of December 31, 2011 and 2010 are as follows (in thousands):

	December 31, 2011		December 31, 2010

Short-term warrant liabilities:
Commercial Lender Put	$	—	$	628
Comvest Capital II fee warrants		2,548		—
Digital Domain Series B Preferred Stock put right		—		5,000
Digital Domain Bridge Warrants		3,914		3,612

Total short-term warrant liabilities		6,462		9,240

Long-term warrant liabilities:
Palm Beach Capital Fund 1 Series A Preferred Stock conversion warrant		—		21,423
Palm Beach Capital Fund 1 common stock conversion right		—		3,116
Palm Beach Capital Fund 2 Series A Preferred Stock conversion warrant		—		10,300
Palm Beach Capital Fund 2 common stock conversion right		—		1,992
Palm Beach Capital Fund 3 common stock conversion warrant		—		3,290
Palm Beach Capital Fund 3 common stock conversion features		—		372
Comvest Capital II conversion warrants		15,200		—
Comvest Capital II protective put		5,730		—

Total long-term warrant liabilities		20,930		40,493

Total warrant liabilities	$	27,392	$	49,733

The following table summarizes the warrant and other debt-related liabilities transactions from December 31, 2009 Date through December 31, 2011 (in thousands):

	Commercial Lender Put			Comvest Capital II Put			Palm Beach Capital Fund 1			Palm Beach Capital Fund 2			Palm Beach Capital Fund 3			Comvest Capital II			Digital Domain Series B Preferred Stock			Digital Domain Bridge Warrants			Total

Balance, December 31, 2009	$	—		$	—		$	—		$	—		$	—		$	—		$	5,000		$	4,796		$	9,796
Put liability recorded as debt discount		512			—			—			—			—			—			—			—			512
Preferred stock warrant issued recorded as deferred debt issue costs		—			—			917			—			—			—			—			—			917
Preferred stock warrant issued recorded as debt discount		—			—			9,715			6,000			2,200			—			—			—			17,915
Preferred stock warrant issued recorded as interest expense		—			—			6,327			2,154			1,090			—			—			—			9,571
Common stock conversion warrant issued recorded as interest expense		—			—			3,322			2,123			372			—			—			—			5,817
Changes in fair value of warrants		116			—			4,258			2,015			—			—			—			(1,184	)		5,205

Balance, December 31, 2010		628			—			24,539			12,292			3,662			—			5,000			3,612			49,733
Exercise of Series B Preferred Stock put		—			—			—			—			—			—			(5,000	)		—			(5,000	)
Common stock conversion warrant issued recorded as debt discount		—			—			—			—			2,000			7,259			—			—			9,259
Common stock conversion warrant issued recorded as interest expense		—			—			824			—			4,574			—			—			—			5,398
Common stock conversion warrant issued recorded as deferred debt issue costs		—			—			3,930			—			—			—			—			—			3,930
Common stock conversion warrant issued reduction in additional paid-in capital		—			—			—			—			—			16,364			—			—			16,364
Changes in fair value of warrants		(361	)		(267	)		19,154			11,436			303			(145	)		—			302			30,422
Purchase of Commercial Lender Put by Comvest Capital II		(267	)		267			—			—			—			—			—			—			—
Conversion of warrant liability to stockholders' equity		—			—			(48,447	)		(23,728	)		(10,539	)		—			—			—			(82,714	)

Balance, December 31, 2011	$	—		$	—		$	—		$	—		$	—		$	23,478		$	—		$	3,914		$	27,392

Stock Option Issued to Commercial Lender—As described in Note 16, the Lender Option was issued on September 30, 2009 to the Commercial Lender to purchase 2,157,549 shares of Common Stock, no par value. The Lender Option is subject to certain anti-dilution provisions. The purchase price for the shares of Common Stock subject to the Lender Option is ten dollars ($10). The Lender Option was exercisable beginning November 1, 2009 and expires November 1, 2014. The Lender Option was initially recorded at a value of $6.6 million as equity and as a discount from the $14.0 million face value of the Secured Promissory Note.

In December 2010 (see Note 16), the Company and the Commercial Lender entered into the First Amendment to Stock Option Agreement (the "Option Amendment"). As part of the Option Amendment, the Commercial Lender was granted the right to purchase an additional 375,000 shares of authorized but unissued Common Stock of the Company. All other major provisions of the Lender Stock Option remained in force. The fair value of this right of $2.2 million was reflected in the accompanying consolidated statement of operations for the year ended December 31, 2010 as interest expense. The Company utilized the Black-Scholes-Merton option pricing model to determine the fair value of these warrants, which used the following assumptions: term of 4.63 years, risk-free rate of return of 2.28%, volatility of 45.0% and no dividends. Pursuant to the requirements of FASB ASC Subparagraph 470-50-40-13, the modification on December 30, 2010 was accounted for as a debt extinguishment since the present value of the future cash flows under the modified terms (the "fair value") of the loan varied in excess of 10% of the carrying amount of the loan (net of unamortized discount). The amortization of the unamortized debt discount of $4.2 million was accelerated, which was recorded as loss on debt extinguishment. A new discount for $4.2 million was established using the Company's estimated cost of capital of 34% to adjust the loan amount to fair value, which was recorded as a reduction of the loss on debt extinguishment. Therefore, there was no net gain or loss from the debt extinguishment. The discount was being amortized over the term of the Secured Promissory Note (including the optional extension periods as described above) using the effective interest method. As described in Note 16, the Company purchased these warrants on July 1, 2011.

Warrants Issued to Potential Lenders and Business Partners—In February of 2010, warrants were issued to two third parties to purchase an aggregate of 283,012 shares of the Company's Common Stock, $0.01 par value. The warrants are subject to anti-dilution provisions. The fair value of the warrants at date of issue was $1.6 million, which was recorded as interest expense and Additional paid in capital. The Company utilized the Black-Scholes-Merton option pricing model to determine the fair value of these warrants, which used the following assumptions: term of 4.63 years, risk-free rate of return of 2.28%, volatility of 45.0% and no dividends.

Under the terms of both the stock option to the Commercial Lender and the warrants issued to potential lenders: (1) the warrants are non-redeemable by the Company; (2) the warrants are exercisable for $10.00 each at any time and from time to time, in whole or in part, on a cash basis at any time prior to the expiration date; (3) the aggregate number of shares of Common Stock issuable upon exercise is subject to adjustment upon the occurrence of (a) an adjustment for payment of a stock dividend on the Common Stock, subdivisions, combinations and other issuances of Common Stock; (b) a merger or consolidation of the Company with or into another corporation when the Company is the surviving entity; (c) a dissolution, liquidation, merger or consolidation of the Company with or into another corporation when the Company is not the surviving entity; or (d) a change in the capital stock; (4) the warrants expire 5 years from their issuance date; and (5) the warrants are nontransferable except to affiliates of the original grantees and their respective owners, officers, directors, employees and consultants and with prior written consent from the Company.

Commercial Lender Put—As described in Note 16, in connection with an Amendment Agreement entered into on September 30, 2010 with the Commercial Lender, a provision was included which permits the Commercial Lender to call the loan upon the completion of an Initial Public Offering that results in market capitalization of at least $100.0 million and net proceeds of at least $40.0 million (the "Commercial Lender Put"). The initial fair value of the Commercial Lender Put as of September 30, 2010 was $0.5 million and was based on the difference between the fair value of the debt with and without the Commercial Lender Put. This amount was recorded as additional discount and a warrant and debt-related liability as of that date in anticipation of an initial public offering. These debt issuance costs are amortized to interest expense. This warrant liability is adjusted to fair value at each reporting date as described in Note 4. The Company recorded an additional $0.1 million of interest expense to adjust this liability to fair value as of December 31, 2010. As described in Note 16, the Commercial Lender Put Right was purchased by Comvest on July 1, 2011. This put right was eliminated upon the initial public offering. The Company recognized a reduction in interest expense of $0.6 million during 2011 related to this put right.

Private Equity Preferred Stock Conversion Warrants—As described in Note 16, a total of $17.9 million was funded by three private equity funds (Palm Beach Capital Funds 1, 2 and 3) during the year ended December 31, 2010. As part of these financings, warrants were issued to these private equity funds to purchase shares of Series A Preferred Stock. These warrants, as amended, provide the right for the private equity funds to purchase an aggregate of 21.9% of the outstanding Common Stock on a diluted basis as of any point in time. The fair value of the warrants issued to the private equity funds aggregated $28.4 million, which were recorded as warrant liabilities. Of this amount, $17.9 million was recognized as debt discount (such amount limited to the amount of cash received under the financing transaction), $0.9 million was recognized as deferred debt issuance costs and the remaining $9.6 million was recognized as interest expense. These warrant liabilities are adjusted to fair value at each reporting date as described in Note 4. The Company recorded an additional $6.6 million of interest expense to adjust these warrant liabilities to fair value as of December 31, 2010. During 2011, the Company recorded $17.1 million of interest expense to adjust these warrants to fair value at the conversion to equity upon the initial public offering (see below).

The loan from Palm Beach Capital Fund 1 was guaranteed by the Company's Chairman and Chief Executive Officer, who was also granted a warrant to purchase 839,105 shares of the Company's Common Stock with a par value $0.01 per share pursuant to the 2010 Stock Plan (see Note 19) in exchange for this guarantee. The guarantee, valued at $3.8 million, was recorded as Deferred debt issuance costs and Additional paid-in-capital, and the asset is being amortized to interest expense over the remaining term of the Amended Agreement (including the optional extension period as described below) using the effective interest method. The Company utilized the Black-Scholes-Merton option pricing model to determine the fair value of these warrants, which used the following assumptions: term of 10 years, risk-free rate of return of 2.53%, volatility of 51.67% and no dividends. The related party transaction is disclosed in Note 22.

Under the terms of the warrant agreement: (1) the warrant is exercisable for $0.01 per share at any time and from time to time, in whole or in part, on a cash basis at any time prior to the expiration date; (2) the aggregate number of shares of Common Stock issuable upon exercise is subject to adjustment in accordance with the anti-dilution provisions set forth in the Plan; and (3) the warrant expires 10 years from the issuance date. The warrant is also subject to all of the other terms and conditions of the Plan.

During February and March 2011, this individual exercised the warrant and was issued 839,105 shares of the Company's Common Stock.

As described in Note 16, additional financing transactions were entered into on December 30, 2010 which provided Palm Beach Capital Fund 1, Palm Beach Capital Fund 2 and Palm Beach Capital Fund 3 warrants for the right to purchase an aggregate 963,473 of the Company's outstanding Common Stock.

The Company issued warrants to purchase 3.3 million shares of the Company's Common Stock, and purchased warrants to purchase 2.5 million shares of the Company's Common Stock, in connection with the Comvest transactions that occurred on July 1, 2011 described in Note 16.

Private Equity Fund Common Stock Conversion Right—As described in Note 16, the loans with the private equity funds (Palm Beach Capital Funds 1, 2 and 3) were issued through the sale of a convertible notes (the "Convertible Notes"). These funds have the right to convert all or a portion of the unpaid amount of the Convertible Notes into shares of Common Stock at any time prior to the termination date of the loans. If all or any portion of the loans with the private equity funds is prepaid (the "Prepaid Amount") and if the private equity funds have not exercised their conversion right as discussed above prior to the prepayment, the private equity funds receive an option to acquire that number of shares into which the prepaid portion of the loan would have been convertible with an exercise price equal to the Prepaid Amount. The Convertible Notes, the early prepayment features, the underlying debt agreements and Conversion Features were evaluated under the hierarchy of FASB ASC Subtopic 480-10, FASB ASC Paragraph 815-25-1 and FASB ASC Subparagraph 815-10-15-74, addressing embedded derivatives. As the conversion features survive any prepayment of debt until the end of the loan term in September 2012 and effectively would allow the holder to convert all debt, whether prepaid or not, at the holder's option, the arrangement was viewed as debt with a Conversion Feature akin to a warrant. Accordingly, the Conversion Features were bifurcated at inception and recorded at a fair value of $5.8 million. As the Convertible Notes were fully discounted, the entire amount was recorded as interest expense and classified as Warrant and other debt-related liabilities. The bifurcated instruments are adjusted to fair value at each reporting date as described in Note 4. The Company recorded a reduction of $0.3 million in interest expense to adjust these warrant liabilities to fair value as of December 31, 2010. During 2011, the Company recorded $18.3 million of interest expense to adjust these warrants to fair value at the conversion to equity upon the initial public offering (see below).

As discussed in Note 16, Palm Beach Capital Fund 1 was issued 130,000 warrants to purchase shares in the Company's common stock upon the modification of the thresholds triggering mandatory conversion of their debt into equity upon the initial public offering. These warrants were valued at the average of the first 10-day closing prices of the Company's common stock of $6.34 per share, or $0.8 million.

Private Placement Warrants and Options Issued—As further discussed in Note 16, during 2011, as part of a private placement of equity, the Company issued detachable warrants to purchase an aggregate of 1,012,502 shares of common stock of the Company. The warrants have a contractual life ranging from 2 to 5 years starting on the date of the original stock purchase agreements of February 2011 with an exercise price of $9.63 per share. The warrants shall expire if not exercised within 180 days after the date the Company achieves a listed, public status. The allocated relative fair value of the warrants of $1.4 million is recorded in additional paid-in-capital.

In connection with the private placement, the Company issued to unrelated third party placement agents stock options to purchase 202,500 shares of the Company common stock as compensation for professional placement services rendered. The exercise price of the option was $8.03 per share. The option was valued at $0.4 million and was recorded as part of a direct cost incurred for the above stock purchase agreement. As such, the Company recorded the amount as a reduction of net proceeds against additional paid-in-capital.

Conversion of warrant liabilities to equity—As discussed in Note 16, the loans with Palm Beach Capital Fund 1 and Palm Beach Capital Fund 2 were mandatorily converted into equity as of the date of the initial public offering. Therefore, the warrants for Palm Beach Capital Fund 1, Palm Beach Capital Fund 2 and Palm Beach Capital Fund 3 were exercised. As such, warrants with a fair value as of the date of $79.9 million were converted into 15,103 083 shares of the Company's common stock.

Comvest Capital II warrants—In connection with the three loans with Comvest Capital II "Comvest") initialed on July 1, 2011 described in Note 16, the Company issued various warrants to Comvest. The Comvest put right warrants are described above. Comvest received fee warrants that were initially valued at $3.9 million. The Company utilized the Black-Scholes-Merton option pricing model to determine the fair value of these warrants, which used the following assumptions: term of 9.75 years, risk-free rate of return of 1.92%, volatility of 64.30% and no dividends. The Company recognized a reduction of $1.4 million in interest expense after this date to adjust this warrant liability to fair value as of December 31, 2011.

Comvest also received a protective put right on July 1, 2011. This protective put feature gives Comvest the right and option, after the 18-month anniversary of the convertible loan, to cause the Company to purchase all or any portion of the shares of Common Stock issued upon the conversion of the convertible note with the purchase price of $4.00 per share before the two-year anniversary of $4.50 per share on or after the two-year anniversary. The Company initially recorded this warrant liability at fair value of $3.3 million. The Company utilized a Binomial Lattice Model to determine the fair value of these warrants, which used the following assumptions: term of 4.75 years, risk-free rate of return of 0.89%, volatility of 71.7% and no dividends. The Company recognized $2.4 million of interest expense to adjust this warrant liability to fair value as of December 31, 2011.

As of December 31, 2011, Comvest has 2,771,245 warrants to purchase shares of the Company's common stock. In accordance with ASC 815-40-35-9, the Company recognized a charge to additional paid in capital of $16.4 million for existing warrants that became a liability upon the Company becoming a public company. The Company utilized a Binomial Lattice Model to determine the fair value of these warrants, which used the following assumptions: term of 4.62 years, risk-free rate of return of 0.84%, volatility of 74.26% and no dividends. In accordance with ASC 470-20-35-19, this amount was charged to additional paid in capital. The Company recognized a reduction in interest expense of $1.2 million to adjust this warrant liability to fair value as of December 31, 2011.

During fiscal years 2006 and 2007, Digital Domain issued warrants to an investor, placement agents and legal advisors in connection with financing and other transactions. The holders of the warrants are entitled to purchase, in aggregate, 390,631 shares of Digital Domain Common Stock, par value $0.0001 per share, at an exercise price of $6.00 per share. The warrants were fully vested upon issuance, and are exercisable in whole or in part at any time prior to their respective expiration dates. Of these warrant issuances, warrants for 290,632 shares of Digital Domain Common Stock were issued in 2006 in connection with the sale of Digital Domain's Common Stock and were charged to equity, warrants for 66,666 shares of Digital Domain Common Stock were issued in 2006 in connection with a financing transaction and were accounted for as a cost of the related financing and as equity, and warrants for 33,333 shares of Digital Domain Common Stock were issued to a firm that provided legal services to Digital Domain and were reflected as Additional paid in capital and Selling, general and administrative expenses.

Under the terms of each of the respective warrant agreements: (1) the warrants are exercisable in whole or in part at any time prior to the expiration date; (2) at any time after an initial public offering, the warrant may be exercised on a cashless basis; (3) the exercise price and aggregate number of shares of Digital Domain Common Stock issuable upon exercise is subject to adjustment upon the occurrence of (a) adjustment for subdivisions, combinations and other issuances of Digital Domain Common Stock; (b) merger of Digital Domain with or into another corporation when Digital Domain is not the surviving entity; or (c) change in the Digital Domain capital stock; (4) the warrants expire 5 years from their issuance date; (5) the warrants are nontransferable except to officers, directors and employees of the placement agent or law firm; and (6) contained "piggy-back" registration rights provisions whereby the holder of the warrant was entitled to participate in one "piggy-back" registration during the period ending on or about May 31, 2008.

Digital Domain also issued a warrant during 2006 to purchase shares of Digital Domain Common Stock to a firm that provided investment banking services to Digital Domain in connection with a financing transaction. The holder of the warrant is entitled to purchase 168,750 shares of Digital Domain Common Stock, par value $0.0001 per share, at an exercise price of $4.62 per share. The warrants were fully vested upon issuance, and are exercisable in whole or in part at any time prior to the expiration date. The fair value of the warrant of $611,000 was accounted for as a cost of the notes payable and related financing transaction and as equity.

Under the terms of the warrant agreement, the warrants will: (1) be non-redeemable by Digital Domain; (2) be exercisable for $4.62 per share at any time and from time to time, in whole or in part, on a cash or cashless basis during the period beginning on the date of issuance, July 21, 2006, and terminating 5 years following the issue date; (3) contain anti-dilution provisions; (4) contain "piggy-back" registration rights provisions; (5) be non-transferable except to affiliates of the investment banking firm and their respective owners, employees and consultants; and (6) be converted into Digital Domain Common Stock immediately prior to the completion of an initial public offering of Digital Domain's Common Stock if required for marketing purposes by the lead managing underwriter in such initial public offering.

On May 24, 2010, Digital Domain issued an option to its former Co-Chairman to purchase 2,100,000 shares of Digital Domain's Common Stock with an exercise price of $1.43 per share. The warrants were valued at $3.5 million using the Black-Scholes-Merton option pricing model, which used the following assumptions: a term of 9.9 years, a risk-free rate of 2.95%, volatility of 51.67% and no dividends. The warrants vest immediately, may be exercised at any time during the period commencing on May 24, 2010 and ending on the tenth anniversary of such date, and were issued in recognition of the individual's consulting services and support. Concurrently, the Company purchased 2,100,000 shares of Digital Domain's Common Stock from this individual for $1.43 per share, and paid for those shares with cash of $1.0 million and a note payable for $2.0 million. Due to the timing and nature of the transactions the warrants issued by Digital Domain and the Digital Domain Common Stock purchased by the Company have been accounted for as a single transaction. The total amount paid to this individual related to the transaction, including cash, note and the value of the warrants, was $6.5 million. The Company recorded the excess of the total consideration paid over the fair value of the Digital Domain Common Stock acquired as compensation in the amount of $1.7 million, which is included in selling, general and administrative expenses in the accompanying statements of operations. The fair value of the Digital Domain Common Stock acquired was recorded as a reduction in Non-controlling interests and Additional paid-in capital pursuant to the requirements of FASB ASC Paragraph 810-10-45.

Predecessor Put Warrants—On July 21, 2006, Digital Domain issued a warrant to purchase 1,220,512 shares of Digital Domain Common Stock in connection with a financing transaction with Falcon (See Note 16). On May 16, 2007, Digital Domain issued a warrant to purchase 416,666 shares of Digital Domain Common Stock in connection with another financing transaction with Falcon (see Note 16).

In January 2009, these warrants were exchanged for new warrants (the "Series B Warrants"). The new warrants are for an identical number of warrant shares as the original warrants and have the same terms (as defined below) as the original warrants except (i) they are exercisable into the Digital Domain Series B Preferred Stock described in Note 18 rather than Digital Domain Common Stock, and (ii) the put option price is equal to the liquidation value of the Series B Preferred Stock ($4.50 per share as of December 31, 2010).

Under the terms of the Series B Warrant certificates (1) the warrants are exercisable in whole or in part at any time prior to July 21, 2016; (2) the exercise price and aggregate number of shares of Digital Domain Series B Preferred Stock issuable upon exercise is subject to adjustment upon the occurrence of (a) change in capital stock, (b) adjustment for certain issuances of Digital Domain Common Stock, and (c) adjustment for other distributions; (3) the warrants have a put option that becomes exercisable on July 21, 2011 and expires on the earlier of July 21, 2016 or an initial public offering that raises gross proceeds to Digital Domain of not less than $25.0 million, whereby Digital Domain is required to purchase the warrant at the greater of the then current fair market value of the underlying Digital Domain Common Stock or the liquidation preference of the Digital Domain Series B Preferred Stock, less the exercise price ($0.0006 per warrant share); and (4) the warrants expire on July 21, 2016.

Due to the put feature, the Series B warrants were recorded as a liability and adjusted to fair value at each reporting date during the Predecessor periods. For the 2009 Predecessor Period, interest expense in the amount of $8.3 million was recorded to adjust the carrying value of the warrants to their fair value. During the year ended December 31, 2008, Digital Domain recorded a gain of $12.8 million to adjust the carrying value of the warrants to their fair value.

The Company received a put right in connection with its purchase of the Series C Preferred Stock from Digital Domain (see Note 2). The put right allows the Company, within 25 business days of Falcon's election to exercise its put rights under the Digital Domain Series B warrants, to sell to Digital Domain all of its outstanding shares of Digital Domain Series C Preferred Stock and/or common stock if previously converted. The put right option price is equal to the liquidation value of the Digital Domain Series C Preferred Stock ($3.10 and $3.04 per share as of December 31, 2010 and 2009, respectively) or the current market price (as defined) of the Digital Domain common stock if previously converted. The Digital Domain Series C Preferred Stock put right is senior to Falcon's Put Warrants, whereby Digital Domain must pay the put right option price to the holders of the Digital Domain Series C Preferred Stock or common stock, if converted, prior to any payments to Falcon relating to Falcon's Put Warrants.

This put feature issued to holders of Digital Domain Series C Preferred Stock was evaluated pursuant to guidelines under FASB ASC 815, Derivatives and Hedging, and FASB 480, Distinguishing Liabilities from Equity, and Digital Domain concluded that it does not have to be bifurcated and accounted for as an equity instrument or as a liability.

In addition to the put rights, the Company received a right to purchase Falcon's Digital Domain Series B Preferred Stock warrants for $5.0 million through April 15, 2011. Due to this right, The Series B warrants were recorded at $5.0 million as of the Acquisition Date and at December 31, 2009 and December 31, 2010. On April 15, 2011, the Company exercised its right and purchased Falcon's Series B Preferred Warrants for $5.0 million in cash.

On August 6, 2009 and August 13, 2009, respectively, Digital Domain issued Series C and Series D Notes to Falcon (see Note 16). In connection with these financing transactions, Digital Domain issued two separate warrants (the "Series C and Series D Warrants") to purchase, in aggregate, the greater of 800,000 shares of Digital Domain Common Stock or the number of shares of Digital Domain Common Stock equal at the time of exercise of such warrants (or at the time that Digital Domain consummates an issuance of Digital Domain Common Stock or alternative equity generating gross proceeds of at least $10.0 million) to 5.0% of the fully diluted number of shares of Digital Domain Common Stock, assuming full conversion or exercise of all outstanding rights, warrants or options outstanding. Notwithstanding the preceding, the aggregate number of shares of Digital Domain Common Stock issuable upon exercise of the warrants was subject to significant increases if the Series C and Series D Notes were not fully repaid by certain quarterly dates within the first twelve months of issuance of the Series C and Series D Notes. These Series C and Series D Notes were paid in full on October 15, 2009.

Under the terms of each of the Series C and Series D Warrant certificates (1) the warrants are exercisable in whole or in part at any time prior to August 6, 2019; (2) the exercise price and aggregate number of shares of Digital Domain Common Stock issuable upon exercise is subject to adjustment upon the occurrence of (a) change in capital stock, (b) adjustment for certain issuances of Digital Domain Common Stock, and (c) adjustment for other distributions; (3) the warrants have a put option that becomes exercisable on July 21, 2011 and expires on the earlier of August 6, 2019 or an initial public offering that raises gross proceeds to Digital Domain of not less than $25.0 million, whereby Digital Domain is required to purchase the warrant at the then current fair market value of the underlying Digital Domain Common Stock, less the exercise price ($0.0001 per warrant share); and (4) the warrants expire on August 6, 2019.

Due to the put feature of the Series C and Series D Warrants, they were recorded as a liability and are adjusted to fair value at each reporting date as described in Note 4. The fair value of these warrants on December 31, 2011, 2010 and 2009 were $3.9 million, $3.6 million and $4.4 million, respectively.

Summaries of Digital Domain's outstanding warrants as of December 31, 2011 and 2010 are as follows:

	December 31, 2011						December 31, 2010

Convertible into Digital Domain:	Number of Shares		Exercise Price per Share		Expiration Date		Number of Shares		Exercise Price per Share		Expiration Date
Common Stock		—		—				290,632	$	6.00		June 2011
Common Stock		—		—				66,666		6.00		July 2011
Common Stock		—		—				168,750		4.62		July 2011
Series B Preferred Stock(a)		1,637,178		—		July 2016		1,637,178		—		July 2016
Common Stock		33,333		6.00		February 2012		33,333		6.00		February 2012
Common Stock		800,000		—		August 2019		800,000		—		August 2019
Common Stock		2,100,000		1.43		May 2020		2,100,000		1.43		May 2020

Total warrants outstanding		4,570,511						5,096,559

Weighted-average exercise price per share			$	0.70					$	1.20
Common Stock Equivalents		9,001,453						9,110,839