Derivative Instruments |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2011 | |||
| Derivative Instruments |
Certain
warrants to purchase our common stock are considered derivative
liabilities under current accounting 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 nine months of 2011, certain outside investors exercised
1,578,948 Series CC warrants, 1,578,948 Series DD warrants, 810,000
Series V warrants, and 60,000 Series Z warrants, resulting in
reclassification of $1.4 million in derivative liabilities related
to those warrants to additional paid-in capital during the first
nine months of 2011.
The
net effect of marking the Company’s derivative liabilities to
market during the three-month periods ended September 30, 2011 and
2010 resulted in net (decreases) increases in the estimated fair
values of the derivative liabilities of approximately ($7,000) and
$88,000, respectively, which were recorded as non-cash (income)
expense. The net effect of marking the Company’s
derivative liabilities to market during the nine-month periods
ended September 30, 2011 and 2010 resulted in net increases in the
estimated fair values of the derivative liabilities of
approximately $957,000 and $671,000, respectively, which were also
recorded as non-cash expense. The total estimated fair
value of the remaining derivative liabilities was $53,000 as of
September 30, 2011.
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