Assets and Liabilities Measured at Fair Value

9 Months Ended

Sep. 30, 2011

Assets and Liabilities Measured at Fair Value

Assets and Liabilities Measured at Fair Value

(11)   Assets and Liabilities Measured at Fair Value

Fair Value Measurements and Disclosures establish a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

· Level 1—inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2—inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3—inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to that asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2011

The following table presents information about our net liabilities measured at fair value on a recurring basis as of September 30, 2011, and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value.

	Fair Value Measurements Using
	FairValue		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring:
2007 Notes embedded derivatives	$	7	$	—	$	—	$	7
Put Warrant liability—October 2009 preferred stock transaction	63		—		—		63
Put Warrant liability—March 2010 preferred stock transaction	614		—		—		614
Put Warrant liability—January 2010 common stock offering	$	731	—		—		$	731

The following table represents the change in fair value for the nine months ended September 30, 2011

	Balance at December 31, 2010		Issuance		Unrealized LossGain		Realizedgain			Balance at September 30, 2011
	(in thousands)
2007 Notes embedded derivatives(1)	$	7	$	—	$	—	$	—		$	7
Put Warrant liability — October 2009 preferred stock transaction (1)	118		—		23		(78		)	63
Put Warrant liability —March 2010 preferred stock transaction (1)	395		—		219		—			614
Put Warrant liability —January 2010 common stock offering(1)	$	459	$	—	$	272	$	—		731

(1)We are required to make significant estimates and assumptions when fair valuing these derivatives including probabilities of change in control, probabilities of equity offerings, probabilities of stock option grants and probabilities of our future stock prices. We use a Monte-Carlo fair value model run with thousands of iterations to fair value our embedded derivative related to our 2007 Notes and 2009 Notes. In addition, we use Black Scholes models to value our embedded derivatives related to our put warrants. Our embedded derivatives are recorded in other long-term assets and other long-term liabilities with the fair value adjustment for the unrealized and realized gains/losses recorded in total other (expense)/ income on our consolidated balance sheet and our consolidated statements of operations, respectively.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets and liabilities are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.  We were required to test our GreenCert suite, for recoverability based on future cash flows. As a result of this recoverability test, we reduced the net book value of this module to zero by recording an impairment charge of $2.5 million for the nine months ended September 30, 2011. We estimated the fair value of the GreenCert suite based on a cash flow approach using significant unobservable inputs (Level 3).

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2010

The following table presents information about our net liabilities measured at fair value on a recurring basis as of September 30, 2010, and indicates the fair value hierarchy of the valuation techniques utilized by us to determine such fair value.

	Fair Value Measurements Using
	FairValue		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Recurring:
2007 Notes embedded derivatives	$	7	$	—	$	—	$	7
Put Warrant liability—October 2009 preferred stock transaction	341		—		—		341
Put Warrant liability—March 2010 preferred stock transaction	1,017		—		—		1,017
Put Warrant liability—January 2010 common stock offering	$	1,148	—		—		$	1,148

The following table represents the change in fair value for the nine months ended September 30, 2010.

	Balance at December 31, 2009		Issuance		Unrealized (Loss)Gain		Realizedgain		Balance at September 30, 2010
	(in thousands)
2007 Notes embedded derivatives(1)	$	7	$	—	$	—	$	—	$	7
Put Warrant liability — October 2009 preferred stock transaction (1)	1,265		—		924		—		341
Put Warrant liability —March 2010 preferred stock transaction (1)	—		1,853		836		—		1,017
Put Warrant liability —January 2010 common stock offering(1)	—		3,434		2,286		—		1,148
2009 Notes embedded derivatives	$	705	$	—	$	—	$	705	$	—

(1)We are required to make significant estimates and assumptions when fair valuing these derivatives including probabilities of change in control, probabilities of equity offerings, probabilities of stock option grants and probabilities of our future stock prices. We use a Monte-Carlo fair value model run with thousands of iterations to fair value our embedded derivative related to our 2007 Notes and 2009 Notes. In addition, we use Black Scholes models to value our embedded derivatives related to our put warrants. Our embedded derivatives are recorded in other long-term assets and other long-term liabilities with the fair value adjustment for the unrealized and realized gains/losses recorded in total other (expense)/ income on our consolidated balance sheet and our consolidated statements of operations, respectively.