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Derivative Instruments
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3 Months Ended | |||
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Mar. 31, 2012
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| Derivative Instruments |
Certain warrants to purchase our common stock are considered derivative liabilities under current accounting standards. Navidea’s Series V and Series GG warrants are considered derivative liabilities under these standards. We do not use derivative instruments for hedging of market risks or for trading or speculative purposes.
In January 2011, certain Series V warrants were modified to remove the language that had previously required them to be classified as derivative liabilities. As a result of the modification of the Series V warrants, we reclassified $1.4 million in derivative liabilities related to those warrants to additional paid-in capital during the first quarter of 2011. Also in January 2011, certain Series CC and Series DD warrants were modified to remove the language that had previously required them to be classified as derivative liabilities. As a result of the modification of the Series CC and Series DD warrants, we reclassified $549,000 in derivative liabilities related to those warrants to additional paid-in capital during the first quarter of 2011.
During the first quarter of 2011, certain outside investors exercised 1,578,948 Series CC warrants, 799,474 Series DD warrants, and 60,000 Series Z warrants, resulting in reclassification of $1.3 million in derivative liabilities related to those warrants to additional paid-in capital during the first quarter of 2011.
The net effect of marking the Company’s derivative liabilities to market during the three-month periods ended March 31, 2012 and 2011 resulted in net increases in the estimated fair values of the derivative liabilities of approximately $184,000 and $954,000, respectively, which were recorded as non-cash expense. The total estimated fair value of the remaining derivative liabilities was $753,000 and $569,000 as of March 31, 2012 and December 31, 2011, respectively. |