Warrants

6 Months Ended

Jun. 30, 2011

Note 8—Warrants

Series D Preferred Stock Warrants and Placement Agent Warrants

In connection with the Series D Convertible Preferred Stock transaction, the Company issued 12,268,000 warrants at an exercise price of $0.50 per share and 981,440 placement agent warrants at an exercise price of $0.50 per share during the first quarter of 2011. The warrants are liability classified since they have “down-round” price protection and they are re-measured on the Company’s reporting dates. The weighted average fair market value of the warrants, at the date of issuance, granted to the accredited investors and placement agents, based on the Black-Scholes valuation model, is estimated to be $0.45 per warrant.

The fair market value of the warrants was computed using the Black-Scholes option-pricing model with the following key weighted average assumptions as of the dates indicated:


	June 30, 2011			December 31, 2010
Expected life (years)	4.2 years			4.7 years
Interest rate		1.4	%		1.8	%
Dividend yield		—			—
Volatility		62	%		63	%

The following table summarizes outstanding warrants to purchase Common Stock as of June 30, 2011:


				Warrant liability
	Number of			Balance as of June
	Warrants		Expiration Dates	30, 2011
Warrants and placement warrants issued in Series A Preferred Stock offering		3,256,492	Oct. 2014	$	1,665,711
Warrants and placement warrants issued in March 2010 offering		4,917,602	Mar. 2015		2,599,340
Warrants and placement warrants issued in Series B Preferred Stock offering		9,650,650	Jul.-Nov. 2015		5,239,641
Warrants and placement warrants issued in Series D Preferred Stock offering		16,302,640	Dec. 2015-Mar. 2016		9,126,591

Total		34,127,384		$	18,631,283

All warrants have an exercise price of $0.50 per share as a result of the December 2010 Series D Preferred Stock financing transaction. There were 3,946,731 warrants exercised for the three and six months ended June 30, 2011 which resulted in receipts of $1,973,366 and the issuance of 3,946,731 shares of common stock. In addition, there were 5,433,667 and 6,387,235 cashless warrants exercised for the three and six months ended June 30, 2011, respectively, which resulted in the issuance of 3,283,372 and 3,572,971 shares of common stock for the three and six months ended June 30, 2011, respectively.