Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Assets and Liabilities Measured at Fair Value

The following table provides a summary of the recognized assets and liabilities that we measure at fair value on a recurring basis:

	Balance as of			Basis of Fair Value Measurements
	March 31, 2013			Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	8,645,000		$	8,645,000	$	—	$	—

Liabilities:
Put option liability	$	(2,500,000	)	$	—	$	—	$	(2,500,000	)
Warrant liability	$	(84,000	)	$	—	$	—	$	(84,000	)

	Balance as of			Basis of Fair Value Measurements
	December 31, 2012			Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	6,145,000		$	6,145,000	$	—	$	—

Liabilities:
Put option liability	$	(2,250,000	)	$	—	$	—	$	(2,250,000	)
Warrant liability	$	(418,000	)	$	—	$	—	$	(418,000	)

Level 3 Put Option Liability and Warrant Liability

The following table summarizes the change in our Level 3 put option liability value:

	Three months ended
Put option liability	March 31, 2013

Beginning balance	$	(2,250,000	)
Increase in fair value recognized in operating expenses		(250,000	)
Ending balance	$	(2,500,000	)

	Three months ended
Put option liability	March 31, 2012

Beginning balance	$	(1,910,000	)
Decrease in fair value recognized in operating expenses		270,000
Ending balance	$	(1,640,000	)

The following table summarizes the change in our Level 3 warrant liability value:

	Three months ended
Warrant liability	March 31, 2013

Beginning balance	$	(418,000	)
Decrease in fair value recognized in operating expenses		334,000
Ending balance	$	(84,000	)

	Three months ended
Warrant liability	March 31, 2012

Beginning balance	$	(627,000	)
Increase in fair value recognized in operating expenses		(130,000	)
Ending balance	$	(757,000	)

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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