Annual report pursuant to Section 13 and 15(d)

Fair Value Hierarchy (Tables)

Fair Value Hierarchy (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of Financial Liabilities Measured at Fair Value

The following table sets forth, by level, financial liabilities measured at fair value on a recurring basis:



Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2013
	Quoted Prices in Active Markets for Identical Assets and Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs (a)(b)		Balance as of December 31,
Description	(Level 1)		(Level 2)		(Level 3)		2013
Platinum notes payable	$	—	$	—	$	4,268,062	$	4,268,062
Derivative liabilities related to warrants	$	—	$	7,692,087	$	—	$	7,692,087

There were no financial assets or liabilities measured at fair value on a recurring basis as of December 31, 2012.

Valuation Processes-Level 3 Measurements: Depending on the instrument, the Company utilizes discounted cash flows, option pricing models, or third-party valuation services to estimate the value of their financial assets and liabilities. Valuations using discounted cash flow methods and certain option pricing models such as Black-Scholes are generally conducted by the Company. Valuations using complex models such as Monte Carlo simulation are generally provided to the Company by third-party valuation experts. Each reporting period, the Company provides significant unobservable inputs to the third-party valuation experts based on current internal estimates and forecasts.

Sensitivity Analysis-Level 3 Measurements: Changes in the Company’s current internal estimates and forecasts are likely to cause material changes in the fair value of the liabilities. The significant unobservable inputs used in the fair value measurement of the liabilities are the amount and timing of future draws expected to be taken under the Platinum Loan Agreement based on current internal forecasts, management’s estimate of the likelihood of actually making those draws as opposed to obtaining other sources of financing, and management’s estimate of the likelihood of those draws ultimately resulting in Platinum exercising their conversion option under the Platinum Loan Agreement. Significant increases (decreases) in any of the significant unobservable inputs would result in a higher (lower) fair value measurement. A change in one of the inputs would not necessarily result in a directionally similar change in the others.