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Derivative Instruments
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9 Months Ended |
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Sep. 30, 2013
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
| Derivative Instruments |
Derivative Instruments
Certain embedded features of our convertible securities and notes payable, as well as warrants to purchase our common stock, may be treated as derivative liabilities. The estimated fair values of the derivative liabilities are recorded as non-current liabilities on the consolidated balance sheet. Changes in the estimated fair values of the derivative liabilities are recorded in the consolidated statement of operations as non-cash income (expense). We do not use derivative instruments for hedging of market risks or for trading or speculative purposes.
In September 2013, we entered into a Securities Purchase Agreement with Crede for a registered direct public offering. The Series JJ warrants issued in connection with the Securities Purchase Agreement are not considered to be indexed to the Company's stock due to certain features within the warrant, and as such, the warrants are required to be classified as liabilities. As a result, the Company recorded derivative liabilities with an estimated fair value of $7.7 million on the date the warrants were issued.
During the first nine months of 2012, an outside investor exercised 20,000 Series V warrants, resulting in reclassification of $52,000 in derivative liabilities related to those warrants to additional paid-in capital.
The net effect of marking the Company's derivative liabilities to market during the three-month periods ended September 30, 2013 and 2012 resulted in net decreases in the estimated fair values of the derivative liabilities of approximately $11,000 and $284,000, respectively, which were recorded as a non-cash change in the fair value of financial instruments. The net effect of marking the Company’s derivative liabilities to market during the nine-month periods ended September 30, 2013 and 2012 resulted in net decreases in the estimated fair values of the derivative liabilities of approximately $11,000 and $7,000, respectively, which were recorded as a non-cash change in fair value of financial instruments. The total estimated fair value of our derivative liabilities was $7.7 million as of September 30, 2013.
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