Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Financial assets and liabilities carried at fair value

The following tables set forth the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and 2011 are classified as follows (in thousands):

	Fair Value Measurements at December 31, 2012 Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds (1)		37,461		-		-		37,461
U.S. treasury securities		39,987		-		-		39,987
Foreign exchange options		-		488		-		488
Total	$	77,448	$	488	$	-	$	77,936

Liabilities:
Contingent warrant liabilities	$	-	$	-	$	15,001	$	15,001

	Fair Value Measurements at December 31, 2011 Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds (1)	$	27,222	$	-	$	-	$	27,222
Foreign exchange options		-		1,202		-		1,202
Total	$	27,222	$	1,202	$	-	$	28,424

Liabilities:
Contingent warrant liabilities	$	-	$	-	$	379	$	379

(1)

Included in cash and cash equivalents

Warrant liabilities fair value assumptions

The fair value of the contingent warrant liabilities was estimated using the following range of assumptions at December 31, 2012 and 2011:

	December 31, 2012			December 31, 2011
Expected volatility		40	%		102.1 - 103.2	%
Risk-free interest rate		0.3% - 0.7	%		0.4	%
Expected term	1.9 - 4.2 years			2.9 - 3.1 years

Summary of changes in fair value of Level 3 financial liabilities

The following table provides a summary of changes in the fair value of the Company's Level 3 financial liabilities for the years ended December 31, 2012 and 2011 (in thousands):

	Warrant Liabilities
Balance at December 31, 2010	$	4,245
Net decrease in fair value of contingent warrant liabilities upon revaluation		(3,866	)
Balance at December 31, 2011		379
Initial fair value of warrants issued in March 2012		6,390
Reclassification of contingent warrant liability to equity upon exercise of warrants		(940	)
Net increase in fair value of contingent warrant liabilities upon revaluation		9,172
Balance at December 31, 2012	$	15,001

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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