Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

FAIR VALUE OF FINANCIAL INSTRUMENTS [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS:

Effective January 1, 2008, the Company adopted FASB ASC 820-10-25, (“Fair Value Measurement and Disclosures." This standard establishes a framework for measuring fair value and expands disclosure about fair value measurements. The Company did not elect fair value accounting for any assets and liabilities allowed by FASB ASC 825, “Financial Instruments.”

FASB ASC 820-10 defines fair value as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820-10 describes the following three levels of inputs that may be used:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The fair value of the short term investments are determined based on quoted market prices on the balance sheet date and are classified as a level 1 investment.

The estimated fair value of the Common Stock warrant liability resulting from the October 2009 registered direct offering of 10,900,000 shares of Common Stock and warrants to purchase 5,450,000 shares of Common Stock is shown in the table below and is determined by using the Black-Scholes option pricing model based on the Company's stock price at the measurement date, exercise price of the warrant, risk-free rate and historical volatility, and are classified as a Level 2 measurement. During the nine months ended September 30, 2012, the Company recorded income as shown in the table below to adjust the value of the stock warrant liability to market as a result of the change in the stock price from December 31, 2011.

	September 30, 2012		December 31, 2011		Income (Expense) to adjust to market value
Common Stock Warrant Liability	$	2,769,277	$	8,168,846	$	5,399,569
	September 30, 2011		December 31, 2010		Income (Expense) to adjust to market value
Common Stock Warrant Liability	$	5,935,171	$	9,286,906	$	2,790,337

During the nine months ended September 30, 2011, the Company recorded the retirement of a warrant liability in the amount of $561,398.

The estimated fair value of the Company's contingent obligation to purchase the Warrants issued under the Note Purchase Agreements, if the Company issued shares of Common Stock (or equivalents) for a price less than $2.00 per share until 45 days (January 20, 2011) after the Company's public announcement of the results of the PREGNANT study, was determined under the Black-Scholes model and recorded as a liability at the closing of the Watson Transactions in the amount of $5,509,893 as of the close of business on July 1, 2010.  It was adjusted, as of December 31, 2010, to $13,471,832. The results of the PREGNANT study were announced in December 2010, and on January 20, 2011, when the contingent purchase rights on the Warrants expired, As shown in the table below, the Company recorded expense to adjust the value of the redeemable warrants to market on January 20, 2011 determined under the Black-Scholes option pricing model as a result of the change in the stock price from December 31, 2011 and reclassified to Capital in Excess of Par Value. These Warrants will no longer be marked to market.

The fair value of accounts receivable and accounts payable approximate their carrying amount.