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Fair Value Measurement
 12 Months Ended
Dec. 31, 2011
Fair Value Measurement [Abstract]  
Fair Value Measurement

Note 3. Fair Value Measurement

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, We are required to apply a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. The three levels of the fair value hierarchy are:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 — Directly or indirectly observable inputs other than in Level 1, that include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 — Unobservable inputs which are supported by little or no market activity that reflects the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets measured at fair value as of December 31, 2011 and 2010 are classified below based on the three fair value hierarchy tiers described above. Our cash equivalents and marketable securities are classified within Level 1 or Level 2. This is because our cash equivalents and marketable securities are valued primarily using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The following table presents our financial assets and liabilities measured at fair value:

 

                                 
    Fair Value Measurement
at Reporting Date Using		     Unobservable
Inputs
(Level 3) 		       
    Quoted Prices
in Active Markets for
Identical Assets
(Level 1)		     Significant  Other
Observable Inputs
(Level 2)		       As of
December 31,
2011		  

Financial Assets

                                

Cash Equivalents:

                                

Money market funds

   $ 1,569,811     $ —       $ —       $ 1,569,811  

U.S. Treasury debt obligations

     11,450,357       —         —         11,450,357  

Marketable Securities:

                                

Debt securities

     3,280,591       —         —         3,280,591  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total financial assets

   $ 16,300,759     $ —       $ —       $ 16,300,759  
   

 

 

    

 

 

    

 

 

    

 

 

  

Financial Liabilities

                                

Bond obligation

   $ —       $ 522,500     $ —       $ 522,500  

Warrant liabilities

     —         31,195       6,011,120       6,042,315  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total financial liabilities

   $ —       $ 553,695     $ 6,011,120     $ 6,564,815  
   

 

 

    

 

 

    

 

 

    

 

 

  

Level 3 Reconciliation

The following table presents a rollforward for liabilities measured at fair value using significant unobservable inputs (Level 3) for 2011.

 

         

Balance at December 31, 2010

   $ —    

Warrant liability

     6,011,120  
   

 

 

  

Balance at December 31, 2011

   $ 6,011,120