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Warrants | 9 Months Ended
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Sep. 30, 2012
Warrants [Abstract] |
Warrants | 9. Warrants In connection with the sale of units in February 2012, the Company issued separable warrants exercisable for an aggregate of 21,562,500 shares of common stock which are exercisable at $2.40 per share and are exercisable any time prior to February 8, 2016. Warrants representing 60 shares of common stock have been exercised as of September 30, 2012. In the first quarter of 2012, of the 21,562,500 shares underlying the warrants, 16,145,833 shares were recorded as equity as they met the criteria for equity classification under ASC 815-40 Derivatives and Hedging, Contracts in an Entity’s Own Stock. During the first quarter of 2012, the Company had determined that the remaining warrants exercisable for an aggregate of 5,416,667 shares required liability classification in accordance with ASC 480, Distinguishing Liabilities from Equity, as the Company did not have sufficient registered shares available at the time of issuance. The fair value of these shares was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheet. The warrants would be reported as a liability until they are exercised, or at the time that the Company had sufficient registered shares available, at which time the warrants would be adjusted to fair value and reclassified from liabilities to stockholders’ equity. The warrants initially determined to require liability classification were recorded at fair value at issuance and adjusted to fair value at each reporting period until exercised or expiration. The fair value of the warrant liability at the date of issuance was $7.6 million and was estimated using the Black-Scholes option pricing model. As of March 31, 2012 and June 30, 2012, the fair value of the warrant liability was $7.9 million and 4.9 million, respectively and was estimated using the Black-Scholes option pricing model. The Company recognized a loss of $284,000 and a gain of $3.0 million to reflect the fair value adjustment of the warrant liability for the three months ended March 31, 2012 and June 30, 2012, respectively. During the course of preparing the financial statements as of and for the three months ended September 30, 2012, the Company determined that because the warrant contract contains a clause that explicitly states that the Company has no obligation to net cash settle the warrants if the Company is unable to issue and deliver the shares underlying the warrants, liability classification of the warrants was not appropriate at issuance, and the warrants initially determined to require liability classification should have been recorded as equity with no subsequent adjustments to the fair value of such instruments. Accordingly, as of and for the three months ended September 30, 2012, the Company recorded an adjustment to reverse the impact of applying liability classification for a portion of the warrants as of and for the three and six months ended March 31, 2012 and June 30, 2012. This out-of-period adjustment resulted in (i) a $2.7 million increase in other expense, which consisted of $0.3 million other expense recognized in the first quarter of 2012 and $3.0 million other income recognized in the second quarter of 2012, (ii) a $0.01 increase to Net loss per share applicable to common stockholders – basic and diluted , (iii) a $4.9 million decrease in warrant liability, and (iv) a $7.6 million increase to additional paid-in capital during the three months ended September 30, 2012. This adjustment was determined to be immaterial for all periods presented and for the periods ended March 31, 2012 and June 30, 2012.

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