FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2012

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 5. FAIR VALUE MEASUREMENTS

Certain assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2012 are measured in accordance with FASB ASC Topic 820-10-05, Fair Value Measurements.  FASB ASC Topic 820-10-05 defines fair value, establishes a framework for measuring fair value and expands the disclosure requirements regarding fair value measurements for financial assets and liabilities as well as for non-financial assets and liabilities that are recognized or disclosed at fair value on a recurring basis in the financial statements.

The statement requires fair value measurement be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following table summarizes our financial instruments measured at fair value as of September 30, 2012 (in thousands):

	September 30, 2012 Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Cash and equivalents – United States	$	4,488	$	4,488	$	–	$	–
Total assets	$	4,488	$	4,488	$	–	$	–
Liabilities:
Warrant liability (1)	$	213	$	–	$	–	$	213
Total liabilities	$	213	$	–	$	–	$	213

The following table summarizes our financial instruments measured at fair value as of December 31, 2011 (in thousands):

	December 31, 2011 Fair Value Measurements
	Total		Level 1		Level 2		Level 3
Assets:
Cash and equivalents – United States	$	4,870	$	4,870	$	–	$	–
Cash and equivalents - Foreign currency		10		10		–		–
Total assets	$	4,880	$	4,880	$	–	$	–
Liabilities:
Warrant liability (1)	$	105	$	–	$	–	$	105
Total liabilities	$	105	$	–	$	–	$	105

(1) Refer to Warrants and Stockholders' Equity (Note 6) for valuation assumptions.

Activity in our Level 3 Assets was as follows (in thousands):

Description	September 30, 2012		December 31, 2011
Beginning balance	$	105	$	504
Purchases, issuances, and settlements (Note 6)		--		--
Reduced Lican liability from settlement		--		(111	)
Total loss (gain) included in earnings (2)		108		(288	)
Ending Balance	$	213	$	105

(2) Gains and losses for the periods related to the revaluation of equity based liabilities. These gains or losses are included in our consolidated statements of operations.