0.50

3.72

3.9

10800000

58245125

6000000

0.5504 0.6761 15200000

0.0001

3300000

15959838

5600000

0.01

0.4496 0.3239

15600000

6500000

9100000

5.06 31000000

1062

1725

407000

1836

5.00

P30D 250000000 P20D

10.00

P30D 500000000 P20D

20.00

P30D 1000000000 P20D

106000

1322756

-1372000

3555000

2500000

28000000

341000

103000

3.923

15051964

6889727

53000

3555000

48000

48359000

3555

5000000

3735000

2.35

8000

126000

0.01

3735000

3374000

15051964

953000

1552000

4268670

151000

0.01

3606000

3555000

101000

485000

121000

46836000

155000

4.02 1.07 1.76

1.65

3.33

3.40

1.21

0.96

0.01

15000000

20000000

0.0046

3200000

3555000

0.01

0.94

5.50

5.06

-48359000

151000

46836000

405000

3555000

851000

-1481000

24000

20000

2288000

-4020000

-6644000

24000

22000

2578000

-10970000

-13976000

24000

22000

2960000

-16378000

-20125000

24000

22000

3701000

-239000

1770

5407000

-30067000

54000

29774000

187000

-1165000

2337000

28000000

228000

67000

3.821

9954516

9096943

2172000

37546000

2172

5000000

25000

1895000

3.17

8000

341000

0.01

1895000

1190000

9954516

428000

723000

165000

2228400

100000

0.01

1718000

2172000

454000

144000

36281000

3.10

2172000

0.01

0.94

5.50

5.06

-37546000

100000

36281000

2172000

3710000

145000

-3336000

1034000

883000

18000

963000

-0.45

20000

104000

213000

38000

-2916000

-1059000

12000

18000

28000

-5000000

1306000

-179000

1355000

162000

4000

-2569000

979000

-1031000

227000

70000

98000

234000

24000

5654929

55000

129408

374000

151000

5784337

16000

-2613000

44000

6000

45000

3000 1031000 3.521

883000

VRNG VRINGO INC false Smaller Reporting Company Q2 2012 10-Q 2012-06-30 0001410428 --12-31

<div style="FONT: 10pt Times New Roman, Times, Serif"> (a) Basis of presentation   The accompanying consolidated financial statements include the accounts of the Parent and the two fully-owned Subsidiaries are presented in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). All significant intercompany balances and transactions have been eliminated in consolidation.   The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. GAAP and instructions to Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. These financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2011. The results of operations for the three and six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period. For subsequent to the balance sheet date changes related to the Merger see Note 8. </div>

4833000

-295000

<div style="FONT: 10pt Times New Roman, Times, Serif"> The table below presents the computation of basic and diluted net losses per common share:   <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 8pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.25in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Cumulative</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">from inception</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three months ended June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six months ended June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">to June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Numerator:</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="18">(in thousands, except share and per share data)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold" colspan="2">  </td> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold" colspan="2">  </td> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 40%">Net loss attributable to common stock shares (basic and diluted)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(5,169</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(1,504</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(10,813</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(2,613</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(48,359</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Denominator:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Weighted average number of common stock shares outstanding during the period (basic and diluted)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">14,145,406</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,756,345</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,159,407</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,654,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,678,643</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Weighted average number of penny stock options (basic and diluted)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 215,694</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 89,393</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 248,281</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 129,408</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 78,004</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Basic and diluted common stock share outstanding</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 14,361,100</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,845,738</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 13,407,668</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,784,337</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,756,647</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Basic and diluted net losses per common stock share</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.36</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.26</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.81</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.45</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17.54</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> </table> </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 5—Stockholders' Equity   Stock Options   In January 2012, the Company’s board of directors (the “Board”) approved a one year acceleration of option vesting for all option holders, except for the Company’s Chief Executive Officer (CEO) who will obtain 50% acceleration on all his unvested options, should the Company be subject to a change of control in a merger and/or acquisition transaction. In addition, in March 2012, the Board approved participation of all outstanding options, as of the consummation of the Merger with I/P, except for grants pursuant to separation arrangements, in future dividends, if any, as well as the acceleration of vesting of certain outstanding options, according to the following market conditions: should the target of a $5.00 price or $250 million market capitalization be reached for twenty of thirty consecutive trading days, a 50% acceleration of all granted would occur; should the target of a $10.00 price or $500 million market capitalization be reached for twenty of thirty consecutive trading days, a 75% acceleration of all granted would occur; should the target of a $20.00 price or $1,000 million market capitalization be reached for twenty of thirty consecutive trading days, a 100% acceleration of all granted would occur. In addition, upon a subsequent change of control, defined as a more than 50% change in shareholder ownership excluding the transaction with I/P, 75% of the then unvested options held by each grantee shall automatically vest. Moreover, all outstanding options granted to members of the Board shall fully vest if a Board member ceases to be a director at any time during the six-month period immediately following a change of control. For subsequent to the balance sheet date impact on the Company’s financial statements see Note 8.   For the three month periods ended June 30, 2012 and 2011, the Company recorded stock compensation expense of $333 thousand and $452 thousand, respectively. For the six month period ended June 30, 2012 and 2011 the Company recorded stock compensation expense of $1,197 and thousand $883 thousand, respectively. Cumulative from inception through June 30, 2012, the Company has recorded stock compensation expense of $5,659 thousand, in respect of stock options granted.   As of June 30, 2012, there was approximately $2.5 million of total unrecognized share-based payment cost related to non-vested share-based compensation arrangements granted under the incentive stock option plan. That cost is expected to be recognized over an estimated 4 year period. As of June 30, 2012, there were approximately 9.1 million shares of common stock available for grant under the incentive stock option plan. For subsequent events see also Note 8.   During the three month period ended June 30, 2012 and 2011, 1 thousand and 120 thousand stock options were forfeited, 67 thousand and 29 thousand stock options expired and 337 thousand and 20 thousand stock options were exercised, respectively. During the six month period ended June 30, 2011, 234 thousand stock options were forfeited, 104 thousand stock options expired and 20 thousand stock options were exercised. The following table summarizes information about option activity for the six month period endedsix month period ended June 30, 2012:   <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">No. of options</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted average exercise price</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise price range</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 55%">Outstanding at January 1, 2012</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">2,228,400</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3.17</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%"> 0.01 – 5.50</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Granted</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,576,800</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.49</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 3.40</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td>Exercised</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(363,943</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.10</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 1.65</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Expired</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(67,812</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">2.24</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.50 – 5.50</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt">Forfeited</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (104,775</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">4.99</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 5.50</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Outstanding at June 30, 2012</td> <td style="FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4,268,670</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">2.35</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 5.50</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Exercisable at June 30, 2012</td> <td style="FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,322,756</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> </table>   The following table summarizes the the option grants for the six month period ended June 30, 2012:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">No. of options to Employees, Management and Directors</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">No. of options to Consultants</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2"> Exercise  price </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Average fair value of granted option</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 48%">January 2012</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">599,500</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">5,000</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">0.96</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">0.50</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>January – February 2012</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">20,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">61,300</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.95 – $1.2</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td>February 2012</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">130,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.21</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.68</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>March 2012</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,600,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">100,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.65</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.99</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt">May – June 2012</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 16,000</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 45,000</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">3.33-$3.40</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">2.02 – $2.27</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">Total as of June 30, 2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,365,500</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 211,300</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table>   The following table summarizes information about warrant activity for the six month period ended June 30, 2012:   <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.25in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">No. of warrants</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted average exercise price</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise price range</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 0px; WIDTH: 55%">Outstanding at January 1, 2012</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">9,096,943</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3.10</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%" nowrap="nowrap"> 0.94 – $5.06</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 0px">Granted</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,672,756</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.76</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.76</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 0px">Exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (4,879,972</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.07</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.94 – $1.76</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">Outstanding at June 30, 2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 6,889,727</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">4.02</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.94 – $5.06</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> </div>

-4627000

<div style="FONT: 10pt Times New Roman, Times, Serif"> (e) Accounts receivables and allowance for doubtful accounts    Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The need for an allowance for doubtful accounts is based on the Company’s best estimate of the amount of credit loss in the Company’s existing receivables. The need for an allowance is determined on an individual account receivable basis. The Company considers customers’ historical payment patterns, general and industry specific economic factors in determining their customers’ probability of default. The Company reviews the need for an allowance for doubtful accounts on a monthly basis. From inception through June 30, 2012, no significant write-offs, or provision for doubtful accounts was created. The Company does not have any significant off-balance-sheet credit exposure related to its customers. </div>

2.24

1197000

1.49

4.99

649000

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 2—Significant Accounting and Reporting Policies   (a) Basis of presentation   The accompanying consolidated financial statements include the accounts of the Parent and the two fully-owned Subsidiaries are presented in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). All significant intercompany balances and transactions have been eliminated in consolidation.   The accompanying unaudited consolidated financial statements were prepared in accordance with U.S. GAAP and instructions to Form 10-Q and, therefore, do not include all disclosures necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. These financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2011. The results of operations for the three and six month period ended June 30, 2012, are not necessarily indicative of the results that may be expected for the entire fiscal year or for any other interim period. For subsequent to the balance sheet date changes related to the Merger see Note 8.   (b) Development stage enterprise   The Company's principal activities to date have been the research and development of its products and the Company has not generated significant revenues from its planned, principal operations. Accordingly, the Company's financial statements are presented as those of a development stage enterprise.   (c) Translation into U.S. dollars   The currency of the primary economic environment in which the operations of the Company are conducted is the U.S. dollar ("dollar" or “U.S. $”). Therefore, the dollar has been determined to be the Company's functional currency.   Transactions in foreign currency (primarily in New Israeli Shekels or "NIS") are recorded at the exchange rate as of the transaction date. All exchange gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected as finance expense in the statement of operations, as they arise.   At June 30, 2012, the exchange rate was U.S. $1 = NIS 3.923 (December 31, 2011—U.S. $1 = NIS 3.821). The average exchange rate for the three and six months ended June 30, 2012 was U.S. $1 = NIS 3.824 and U.S. $1 = NIS 3.782, respectively (three and six months ended June 30, 2011— U.S. $1 = NIS 3.441 and US $1 = NIS 3.521, respectively).    (d) Use of estimates   The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results may differ from such estimates. Significant items subject to such estimates and assumptions include deferred tax assets and liabilities, valuation of warrants, valuation of common stock share-based compensation, income tax uncertainties and other contingencies. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.   (e) Accounts receivables and allowance for doubtful accounts    Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Amounts collected on trade accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows. The need for an allowance for doubtful accounts is based on the Company’s best estimate of the amount of credit loss in the Company’s existing receivables. The need for an allowance is determined on an individual account receivable basis. The Company considers customers’ historical payment patterns, general and industry specific economic factors in determining their customers’ probability of default. The Company reviews the need for an allowance for doubtful accounts on a monthly basis. From inception through June 30, 2012, no significant write-offs, or provision for doubtful accounts was created. The Company does not have any significant off-balance-sheet credit exposurerelated to its customers.   (f) Impact of recently implemented accounting standards   In April 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. This ASU amends current fair value measurement and disclosure guidance to include increased transparency around valuation input and investment categorization. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011, with early adoption not permitted. The adoption of ASU 2011-04 in 2012 did not have an impact on the Company’s financial position, results of operations, or cash flows.   In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In December 2011, the FASB issued ASU 2011-12 Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.”ASU 2011-12 deferred the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011 and must be applied retrospectively. The adoption of ASU 2011-05 in 2012 did not have an impact on the Company’s financial position, results of operations, or cash flows, because the Company does not have elements of other comprehensive income.   (g) Impact of recently issued accounting standards   In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities, which require companies to disclose information about financial instruments that have been offset and related arrangements to enable users of their financial statements to understand the effect of those arrangements on their financial position. Companies will be required to provide both net (offset amounts) and gross information in the notes to the financial statements for relevant assets and liabilities that are offset. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The Company does not expect the adoption of ASU 2011-11 in the first quarter of 2013 to have an impact on its financial position, results of operations, or cash flows.   (h) Net loss per share data   Basic net loss per share share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period. However, as the Company generated net losses in all periods presented, potentially dilutive securities, comprised mainly of warrants and stock options, are not reflected in diluted net loss per share because such shares are anti-dilutive.   The table below presents the computation of basic and diluted net losses per common share:   <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 8pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.25in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Cumulative</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">from inception</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three months ended June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six months ended June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">to June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Numerator:</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="18">(in thousands, except share and per share data)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold" colspan="2">  </td> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold" colspan="2">  </td> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 40%">Net loss attributable to common stock shares (basic and diluted)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(5,169</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(1,504</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(10,813</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(2,613</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(48,359</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Denominator:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Weighted average number of common stock shares outstanding during the period (basic and diluted)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">14,145,406</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,756,345</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,159,407</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,654,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,678,643</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Weighted average number of penny stock options (basic and diluted)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 215,694</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 89,393</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 248,281</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 129,408</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 78,004</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Basic and diluted common stock share outstanding</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 14,361,100</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,845,738</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 13,407,668</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,784,337</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,756,647</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Basic and diluted net losses per common stock share</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.36</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.26</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.81</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.45</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17.54</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> </table> </div>

-0.81

363943

1900000

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 3—Fair Value Measurements   The Company measures fair value in accordance with ASC 820-10, "Fair Value Measurements and Disclosures" (formerly SFAS 157, "Fair Value Measurements"). ASC 820-10 clarifies that fair value is 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, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:   Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.   Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.   Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. 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.   The Company measures its derivative liabilities at fair value. The Special Bridge Warrants, Conversion Warrants and Preferential Reload Warrants are classified within Level 3 because they are valued using the Black-Scholes-Merton and the Monte-Carlo models (as these warrants include a down-round protection clauses), which utilize significant inputs that are unobservable in the market such as the expected stock price volatility and the dividend yield, and the remaining period of time the warrants will be outstanding before they expire.   The following table presents the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, aggregated by the level in the fair-value hierarchy within which those measurements fall:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="10"> Fair value measurement at reporting date using</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">June 30, 2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Quoted prices in active markets for identical assets (Level 1)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant other observable inputs (Level 2)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant unobservable inputs (Level 3)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold"> Description</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="14">U.S.$ thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 10pt; FONT-WEIGHT: bold">Liabilities</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; PADDING-LEFT: 10pt; WIDTH: 52%"> Derivative liabilities on account of warrants</td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%; FONT-WEIGHT: bold"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%">  </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 10pt; FONT-WEIGHT: bold"> Total liabilities</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="10">Fair value measurement at reporting date using</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">December 31, 2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Quoted prices in active markets for identical assets (Level 1)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant other observable inputs (Level 2)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant unobservable inputs (Level 3)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold"> Description</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="14">U.S.$ thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 10pt; FONT-WEIGHT: bold">Liabilities</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 10pt; WIDTH: 52%"> Derivative liabilities on account of warrants</td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%; FONT-WEIGHT: bold"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%">  </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; PADDING-LEFT: 10pt; FONT-WEIGHT: bold"> Total liabilities</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table>   In addition to the above, the Company's financial instruments at June 30, 2012 and December 31, 2011 consisted of cash, accounts receivable, long-term deposits and accounts payable. The carrying amounts of all the aforementioned financial instruments approximate fair value.    The following table summarizes the changes in the Company's liabilities measured at fair value using significant unobservable inputs (Level 3) during the three and six month periods ended June 30, 2012 and 2011:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">Level 3</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 70%; FONT-WEIGHT: bold">Balance at January 1,</td> <td style="WIDTH: 1%; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="TEXT-ALIGN: right; WIDTH: 12%; FONT-WEIGHT: bold"> 2,172</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">1,770</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Issuance of Preferential Reload Warrants</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">1,476</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Fair value adjustment prior to exercise of warrants, included in statement of operations</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">270</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(708</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Exercise of derivative warrants</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">(2,223</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Fair value adjustment at end of period, included in statement of operations</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 141</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Balance at March 31,</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">1,836</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,062</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Fair value adjustment prior to exercise of warrants, included in statement of operations</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">750</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Exercise of derivative warrants</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">(1,367</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Fair value adjustment at end of period, included in statement of operations</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 2,336</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 663</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">Balance at June 30,</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,725</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table>   Valuation processes for Level 3 Fair Value Measurements   Fair value measurement of the derivative liability on account of Special Bridge Warrants, Conversion Warrants and Preferential Reload Warrants, which fall within Level 3 of the fair value hierarchy are determined and then reviewed within the Company’s accounting department, who reports to the Chief Financial Officer. The fair value measurements are compared to those of the prior reporting periods to ensure that changes are consistent with expectations of management based upon the sensitivity and nature of the inputs   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 36%"> </td> <td style="TEXT-ALIGN: center; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="TEXT-ALIGN: center; WIDTH: 20%; FONT-WEIGHT: bold"> Valuation</td> <td style="TEXT-ALIGN: center; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="TEXT-ALIGN: center; WIDTH: 25%; FONT-WEIGHT: bold"> Unobservable</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 15%"> </td> <td style="WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Description</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Technique</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Inputs</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Range</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; VERTICAL-ALIGN: middle" rowspan="5"> Special Bridge Warrants, Conversion Warrants and Preferential Reload Warrants</td> <td> </td> <td style="TEXT-ALIGN: left; VERTICAL-ALIGN: middle" rowspan="5"> Black-Scholes-Merton and the Monte-Carlo models</td> <td> </td> <td style="BACKGROUND-COLOR: rgb(204,255,204)">Volatility</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> 78.23% - 84.45</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> %</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td>Risk free interest rate</td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right">0.38% - 0.77</td> <td style="TEXT-ALIGN: right">%</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td style="BACKGROUND-COLOR: rgb(204,255,204)">Expected term, in years</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> 2.50 - 4.61</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td>Dividend yield</td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right">0.0</td> <td style="TEXT-ALIGN: right">%</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td style="BACKGROUND-COLOR: rgb(204,255,204)">Probability and timing of down-round triggering event</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> 15% occurrence in December 2012</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> </tr> </table>   Sensitivity of Level 3 measurements to changes in significant unobservable inputs   The inputs to estimate the fair value of the Company’s derivative warrant liability are the current market price of the Company’s common stock, the exercise price of the warrant, its remaining term, the volatility of the Company’s common stock market price, Company’s estimations regarding the probability and timing of a down-round protection triggering event and the risk-free interest rate. Significant changes in any of those inputs in the isolation can result in a significant change in the fair value measurement. Generally, a positive change in the market price of the Company’s common stock, and an increase in the volatility of the Company’s common stock, or an increase in the remaining term of the warrant, or an increase of a probability of a down-round triggering event would each result in a directionally similar change in the estimated fair value of the Company’s warrants and thus an increase in the associated liability and vice-versa. An increase in the risk-free interest rate or a decrease in the positive differential between the warrant’s exercise price and the market price of the Company’s common stock would result in a decrease in the estimated fair value measurement of the warrants and thus a decrease in the associated liability. The Company has not, nor plans to, declare dividends on its common stock, and thus, there is no change in the estimated fair value of the warrants due to the dividend assumption. </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 7—Risks and Uncertainties   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(a)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%"> Financial instruments which potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with various major financial institutions. These major financial institutions are located in Israel and the United States, and the Company’s policy is designed to limit exposure to any one institution. With respect to accounts receivable, the Company is subject to a concentration of credit risk, as a majority of its outstanding trade receivables relate to sales to a limited number of customers.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(b)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%">The Company's video ringtone data is hosted at a remote location. Although the Company has full alternative site data backed up, it does not have data hosting redundancy and are thus exposed to the business risk of significant service interruptions to its video ringtone service.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(c)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%">The Company’s subscription based video ringtone products are subject to regulation in the markets in which the service operates. Regulatory changes can adversely affect the Company’s ability to generate revenue from its products in that market.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(d)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.25in; WIDTH: 94%"> The Company’s Facetones® application creates an automated video slideshow using friends' photos from social media web sites, primarily from Facebook®, the world's leading social media site. In the event Facebook® prohibits or restricts the ability of the Company’s application to access photos on its site, the Company’s revenue from this application and projected growth could be harmed.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(e)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%">A significant portion of the Company's expenses are denominated in NIS. The Company expects this level of NIS expenses to continue for the foreseeable future. If the value of the U.S. dollar weakens against the value of NIS, there will be a negative impact on the Company's operating costs. In addition, to the extent the Company holds monetary assets and liabilities that are denominated in currencies other than the U.S. dollar, the Company will be subject to the risk of exchange rate fluctuations.</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify">(f)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">The wireless industry in which the Company conducts its business is characterized by rapid technological changes, frequent new product innovations, changes in customer requirements and expectations and evolving industry standards.</td> </tr> </table> </div>

67812

31000

-2531000

-8000

11000

32000

0.00

0.10

<div style="FONT: 10pt Times New Roman, Times, Serif"> The fair value measurements are compared to those of the prior reporting periods to ensure that changes are consistent with expectations of management based upon the sensitivity and nature of the inputs   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 36%"> </td> <td style="TEXT-ALIGN: center; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="TEXT-ALIGN: center; WIDTH: 20%; FONT-WEIGHT: bold"> Valuation</td> <td style="TEXT-ALIGN: center; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="TEXT-ALIGN: center; WIDTH: 25%; FONT-WEIGHT: bold"> Unobservable</td> <td style="WIDTH: 1%"> </td> <td style="WIDTH: 15%"> </td> <td style="WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Description</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Technique</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Inputs</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold"> Range</td> <td style="TEXT-ALIGN: center; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td> </td> <td> </td> <td> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: left; VERTICAL-ALIGN: middle" rowspan="5"> Special Bridge Warrants, Conversion Warrants and Preferential Reload Warrants</td> <td> </td> <td style="TEXT-ALIGN: left; VERTICAL-ALIGN: middle" rowspan="5"> Black-Scholes-Merton and the Monte-Carlo models</td> <td> </td> <td style="BACKGROUND-COLOR: rgb(204,255,204)">Volatility</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> 78.23% - 84.45</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> %</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td>Risk free interest rate</td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right">0.38% - 0.77</td> <td style="TEXT-ALIGN: right">%</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td style="BACKGROUND-COLOR: rgb(204,255,204)">Expected term, in years</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> 2.50 - 4.61</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td>Dividend yield</td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: right">0.0</td> <td style="TEXT-ALIGN: right">%</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td> </td> <td> </td> <td style="BACKGROUND-COLOR: rgb(204,255,204)">Probability and timing of down-round triggering event</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)"> 15% occurrence in December 2012</td> <td style="TEXT-ALIGN: right; BACKGROUND-COLOR: rgb(204,255,204)">  </td> </tr> </table> </div>

8000

2184000

1099000

-6000

2742000

20000

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 8—Subsequent Events   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(a)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%">On July 19, 2012, the Company consummated the Merger with I/P, as also discussed in Note 1. The purpose of the Merger is to increase the Company's intellectual property portfolio, which it intends to monetize, together with additional intellectual property, acquired both internally and through acquisition, including a potential successful outcome of I/P's litigation against online search companies. The Merger is also intended to add expertise in technological innovation in order to increase revenue generation. Upon completion of the Merger (i) 6,169,661 shares common stock of I/P, par value $0.0001 per share were exchanged for 18,617,569, shares of the Company’s common stock, par value $0.01, per share and (ii) all outstanding shares of Series A Convertible Preferred Stock of I/P, par value $0.0001 per share were exchanged for 6,673 shares of the Company’s Series A Convertible Preferred Stock, which shares are convertible into 20,136,445 shares of common stock of the Company. In addition, the Company issued to the holders of I/P capital stock, an aggregate of 15,959,838 warrants to purchase an aggregate of 15,959,838 shares of the Company’s common stock with an exercise price of $1.76 per share. In addition, each outstanding and unexercised option to purchase I/P common stock, whether vested or unvested was converted into 41,178 options to purchase the Company’s common stock. Immediately following the completion of the Merger, the former stockholders of I/P own approximately 55.04% of the outstanding common stock of the combined company, and the Company’s stockholders prior to the Merger own approximately 44.96% of the outstanding common stock of the combined company. On a fully diluted basis, the former stockholders of I/P own approximately 67.61% of the outstanding common stock of the combined company, and the Company’s stockholders prior to the Merger own approximately 32.39% of the outstanding common stock of the combined company. For accounting purposes, I/P was identified as the accounting “Acquirer”, as it is defined in FASB Topic ASC 805. As a result, in the post-combination consolidated financial statements, I/P’s assets and liabilities will be presented at its pre-combination amounts, and the Company’s assets and liabilities will be recognized and measured in accordance with the guidance for business combinations in ASC 805. The Company is in the process of evaluating the accounting treatment of the Merger. In particular, the value of the consideration transferred is determined based on the outstanding equity interests in the Company as of transaction date, the value of which has not yet been determined. Such equity interests include approximately 15.2 million of the Company’s outstanding shares of common stock, approximately 5.6 million warrants, classified as equity, as well as approximately 3.3 million vested stock options granted to employees, management and consultants.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(b)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%"> Upon the consummation of the Merger, subsequent to the balance sheet date, the Company entered into an Amended and Restated Pledge and Security Agreement and an Amended and Restated Guaranty with each of its subsidiaries to guaranty the obligations of I/P under certain Amended and Restated Senior Secured Promissory Note (the “Secured Note”), dated July 19, 2012, by and between I/P and Hudson Bay, an investor in I/P. As of June 30, 2012, the outstanding balance under the Secured Note was $3.2 million. The Secured Note accrues interest at 0.46% per annum and matures on June 22, 2013. From and after the date upon which (i) the Company and its subsidiaries have more than $15 million in the aggregate of cash and cash equivalents, Hudson Bay may require the Company to redeem up to 50% of the outstanding principal amount of the Secured Note, (ii) the Company has more than $20 million in the aggregate of cash and cash equivalents, Hudson Bay may require the Company to redeem up to 100% of the outstanding principal of the Secured Note, and (iii) the Company receive proceeds in excess of $500 thousand in the aggregate from the issuance of any equity or indebtedness, Hudson Bay may require the Company to redeem the outstanding principal under the note in an amount equal to up to 20% of the proceeds of the issuance of any such equity or indebtedness. In addition, the Secured Note provides that in the event of a change of control, Hudson Bay may require the Company to redeem all or any portion of the Secured Note at a price in cash equal to 125% of the amount redeemed. I/P has granted Hudson Bay a security interest in all of its tangible and intangible personal property (including the Lycos’s patents) to secure its obligations under the Secured Note. In connection with the Merger, the Company assumed the Secured Note and guaranteed the obligations thereunder.</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify">(c)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">Effective upon the consummation of the Merger and subsequent to the balance sheet date, Hudson Bay committed on June 1, 2012, that, at any time within 18 months following the closing of the Merger it shall provide, upon request, debt financing to the combined company, in the aggregate principal amount of up to $6 million. Hudson Bay’s commitment shall be reduced, on a dollar for dollar basis, by (i) any cash or capital raised by the Company, including, without limitation, through the issuance of any debt, equity and/or securities convertible, exercisable or exchangeable into equity of the Company or the incurrence of indebtedness of the Company and (ii) any cash received by the Company in connection with the exercise of any of its outstanding warrants. Following the fund raised in a registered direct offering, as it is described in Note 8(i) below, the commitment was rescinded, as per the agreement.</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify">(d)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">In July 2012, the Company signed a rental agreement for its new headquarters in New York. According to the new agreement, the Company shall pay an annual fee of approximately $137 thousand (subject to certain adjustments). The term of the lease agreement is 3 years and 1 month.</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify"> </td> <td style="TEXT-ALIGN: justify">(e)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">The Company estimates that the total additional compensation cost, which may also include costs to be absorbed due to option-related tax matters, to be recorded in connection with the impact of acceleration of vesting triggered by the Merger is approximately $1.9 million. The additional cost is to be recognized as a part of the value of consideration transferred in the Merger, as it is described in Note 8 (a). Currently, the Company does not expect to account for any dividend payouts. Moreover, the Company estimates that the effect of acceleration under the new market conditions terms to be immaterial, due to low probability of occurrence. Refer also to Note 5.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: justify; WIDTH: 3%"> </td> <td style="TEXT-ALIGN: justify; WIDTH: 3%">(f)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%">On July 19, 2012, the Company’s stockholders approved the 2012 Employee, Director and Consultant Equity Incentive Plan (“2012 Plan”), replacing the existing 2006 Stock Option Plan, which was terminated with the remaining 9.1 million authorized shares thereunder cancelled. The 2012 Plan was replaced in order to ensure full compliance with legal and tax requirements under U.S. law. The number of shares subject to the 2012 Plan is the sum of: (i) 15.6 million shares of common stock, which constitutes 6.5 million new shares and 9.1 million previously authorized but unissued shares under the 2006 Stock Option Plan and (ii) any shares of common stock that are represented by awards granted under Vringo's 2006 Stock Option Plan that are forfeited, expire or are cancelled without delivery of shares of common stock or which result in the forfeiture of shares of common stock back to the Company, or the equivalent of such number of shares after the administrator, in its sole discretion, has interpreted the effect of any stock split, stock dividend, combination, recapitalization or similar transaction in accordance with the 2012 Plan; provided, however, that no more than 3.2 million shares shall be added to the 2012 Plan.</td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: center"> </td> <td> </td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in"> </td> </tr> <tr style="VERTICAL-ALIGN: top"> <td style="TEXT-ALIGN: center"> </td> <td>(g)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">On July 26, 2012, the Board approved a new grant of 5.5 million options, at an exercise price range of $3.72-$3.9, and 3.2 million restricted stock unit awards to the Company’s directors, management, employees and consultants to be granted under the recently adopted 2012 Plan (see Note 8 (f) above). These options and restricted stock unit awards will vest over a three to four year period (according to the applicable schedule of each recipient). In addition, the Board approved an acceleration of vesting, in respect of certain grants, upon future change of control. The full impact of these events on the Company’s financial statements has not yet been determined, however, the Company believes that such effect will be material.</td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="WIDTH: 3%"></td> <td style="TEXT-ALIGN: left; WIDTH: 3%">(h)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in; WIDTH: 94%">In July 2012, following the consummation of the Merger, 3,592 of the Company’s Series A Preferred stock shares were converted into approximately 10.8 million of its shares of common stock.</td> </tr> </table>   <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"></td> <td style="TEXT-ALIGN: left; WIDTH: 0.25in">(i)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">On August 9, 2012, the Company entered into subscription agreements for the sale of 9.6 million shares of its common stock in a registered direct offering at a price of $3.25 per share, for gross proceeds of approximately $31.2 million. The Company intends to use the proceeds of the offering to acquire a portfolio of intellectual property from Nokia Corporation, as further described in Note 8 (j) below, to repay all outstanding indebtedness and for its ongoing operational needs.</td> </tr> </table>   <table style="MARGIN-TOP: 0px; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0"> <tr style="TEXT-ALIGN: justify; VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"></td> <td style="TEXT-ALIGN: left; WIDTH: 0.25in">(j)</td> <td style="TEXT-ALIGN: justify; TEXT-INDENT: 0.5in">On August 9, 2012, the Company announced that it had entered into a patent purchase agreement with Nokia Corporation, pursuant to which Nokia agreed to sell it a portfolio consisting of various patents and patent applications worldwide. The purchase price for the portfolio is $22 million, plus to the extent that the gross revenue generated by such portfolio exceeds $22 million, a royalty of 35% of such excess. The portfolio encompasses a broad range of technologies relating to cellular infrastructure, including communication management, data and signal transmission, mobility management, radio resources management and services.</td> </tr> </table> </div>

P4Y

<div style="FONT: 10pt Times New Roman, Times, Serif"> The following table summarizes information about option activity for the six month period ended June 30, 2012:   <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">No. of options</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted average exercise price</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise price range</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 55%">Outstanding at January 1, 2012</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">2,228,400</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3.17</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%"> 0.01 – 5.50</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Granted</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,576,800</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.49</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 3.40</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td>Exercised</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(363,943</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.10</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 1.65</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Expired</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(67,812</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">2.24</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.50 – 5.50</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt">Forfeited</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (104,775</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">4.99</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 5.50</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Outstanding at June 30, 2012</td> <td style="FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 4,268,670</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">2.35</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01 – 5.50</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Exercisable at June 30, 2012</td> <td style="FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,322,756</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> </table> </div>

35000

13000

-10710000

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 1—General   Vringo, Inc. (a Development Stage Company) (the "Parent") was incorporated in Delaware on January 9, 2006 and commenced operations during the first quarter of 2006. In March 2006, the Parent formed a wholly-owned subsidiary, Vringo (Israel) Ltd., primarily for the purpose of providing research and development services, as detailed in the intercompany service agreement. On March 13, 2012, the Company entered into a Merger Agreement (“Merger Agreement”) with Innovate/Protect, Inc. (“I/P”). For the purpose of the Merger Agreement, the Company formed a wholly owned subsidiary VIP Merger Sub, Inc. (“Merger Sub”), incorporated in Delaware on March 8, 2012. Merger Sub has not carried on any activities to date, except for activities incidental to its formation and activities undertaken in connection with the transactions contemplated by the Merger Agreement. On July 19, 2012, pursuant to the Merger Agreement, I/P merged with and into Merger Sub, with Merger Sub being the surviving corporation through an exchange of capital stock of I/P for capital stock of the Company (the “Merger”). Merger Sub changed its name to Innovate/Protect, Inc. I/P was a holding company, incorporated under the laws of Delaware on June 8, 2011, as Labrador Search Corporation, which holds two wholly-owned subsidiaries: I/P Engine Inc. (“I/P Engine”), formed under the laws of Virginia on June 14, 2011, as Smart Search Labs Inc., which operates for the purpose of realizing economic benefits, and I/P Labs (“I/P Labs”), incorporated in Delaware on June 8, 2011 as Scottish Terrier Capital Inc., which operates to acquire and develop other patented technologies or intellectual property. Except as described in Note 8 “Subsequent Events” or otherwise indicated, the accompanying unaudited condensed financial statements do not give effect to the Merger. The Merger will be accounted for as a “reverse acquisition”. See also Note 8. The Parent and its two Subsidiaries are collectively referred to herein as the "Company".   Prior to the Merger, the Company has been engaged in developing software platforms and applications for mobile phones. The Company develops and provides a wide variety of mobile video services, including a comprehensive platform that allows users to create, download and share video ringtones. The Company's proprietary ringtone platform includes social networking capability and integration with web systems. Pursuant to the consummation of the Merger Agreement, the combined company will also pursue the realization of economic benefits of intellectual property, and will operate to acquire and develop other patented technologies and intellectual property.   The Company is still in the development stage. There is no certainty regarding the Company's ability to complete the development of its products, nor its ability to ensure the success of its marketing. The continuation of the stages of development and the realization of assets related to the planned activities will depend on future events, including future financings, timing and amount of any recovery, if any, resulting from patent litigation, as well as from achieving operational profitability.   In June 2010, the Company completed an initial public offering (the "IPO") of 2,392,000 units, each containing one share of common stock and two warrants, at an issue price of $4.60 per unit. Each warrant in the IPO unit is exercisable for five years after the IPO at an exercise price of $5.06. Gross proceeds of the IPO totaled approximately $11 million, of which the Company received approximately $9.3 million in net proceeds after deducting underwriting discounts, commissions and other offering costs. Immediately prior to the closing of the IPO, the Company's outstanding shares of preferred stock were exchanged for shares of common stock and the Company effected a 1 for 6 reverse stock split of its common stock. The Company issued a stock dividend to holders of the preferred stock prior to the split and exchange. Pursuant to the IPO, all share and per-share information in these consolidated financial statements have been adjusted to give effect to the reverse stock split. On July 27, 2010, the units were separated into their components and the shares and warrants began to trade separately. Upon separation of the units into shares and warrants, the units ceased trading.   Despite the foregoing, there is still substantial doubt as to the ability of the Company to continue operating as a "going concern". The Company has incurred significant losses since its inception, and expects that it will continue to operate at a net loss in the foreseeable future. For the three and six month periods ended June 30, 2012 and for the cumulative period from inception (January 9, 2006) until June 30, 2012, the Company incurred net losses of $5.2 million, $10.8 million and $48.4 million, respectively. Based on current operating plans, the current resources of the combined company, after taking into account the $31.2 million received in a private registered direct offering, offset by $22 million paid for the acquisition of patent assets, as described in Note 8, are expected to be sufficient for at least the next twelve months from the balance sheet date. The Company may need to raise additional funds in connection with any acquisition of patent portfolios or other intellectual property assets that it may pursue. Moreover, a significant portion of the Company’s issued and outstanding warrants are currently “in the money” and the shares of common stock underlying such warrants will become freely tradable upon exercise after registration, with the potential of up to $31 million of incoming funds. There can be no assurance, however, that any such opportunities will materialize, moreover, any such financing would likely be dilutive to the Company’s current stockholders.   These financial statements were prepared using principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business for the foreseeable future, and do not include any adjustments to reflect the possible effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result should the Company not be able to continue as a going concern.   As of June 30, 2012, approximately $405 thousand of the Company's net assets were located outside of the United States. </div>

930000

4728000

62000

104775

<div style="FONT: 10pt Times New Roman, Times, Serif"> The following table summarizes information about warrant activity for the six month period ended June 30, 2012:   <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.25in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">No. of warrants</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted average exercise price</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Exercise price range</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 0px; WIDTH: 55%">Outstanding at January 1, 2012</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">9,096,943</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3.10</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%" nowrap="nowrap"> 0.94 – $5.06</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 0px">Granted</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,672,756</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.76</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.76</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 0px">Exercised</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (4,879,972</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.07</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.94 – $1.76</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">Outstanding at June 30, 2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 6,889,727</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">4.02</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.94 – $5.06</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> The following table presents the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2012 and December 31, 2011, aggregated by the level in the fair-value hierarchy within which those measurements fall:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="10"> Fair value measurement at reporting date using</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">June 30, 2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Quoted prices in active markets for identical assets (Level 1)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant other observable inputs (Level 2)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant unobservable inputs (Level 3)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold"> Description</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="14">U.S.$ thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> <td> </td> <td colspan="2"> </td> <td> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 10pt; FONT-WEIGHT: bold">Liabilities</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; PADDING-LEFT: 10pt; WIDTH: 52%"> Derivative liabilities on account of warrants</td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%; FONT-WEIGHT: bold"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 2.5pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; WIDTH: 9%"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; WIDTH: 1%">  </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 10pt; FONT-WEIGHT: bold"> Total liabilities</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> </table>   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="10">Fair value measurement at reporting date using</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">December 31, 2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Quoted prices in active markets for identical assets (Level 1)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant other observable inputs (Level 2)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Significant unobservable inputs (Level 3)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="BORDER-BOTTOM: black 1pt solid; FONT-WEIGHT: bold"> Description</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="14">U.S.$ thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 10pt; FONT-WEIGHT: bold">Liabilities</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; PADDING-LEFT: 10pt; WIDTH: 52%"> Derivative liabilities on account of warrants</td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%; FONT-WEIGHT: bold"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%">  </td> <td style="PADDING-BOTTOM: 1pt; WIDTH: 1%"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 1%">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; WIDTH: 9%"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; WIDTH: 1%">  </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; PADDING-LEFT: 10pt; FONT-WEIGHT: bold"> Total liabilities</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,172</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> </div>

8000

13159407

66000

<div style="FONT: 10pt Times New Roman, Times, Serif"> The following table summarizes the changes in the Company's liabilities measured at fair value using significant unobservable inputs (Level 3) during the three and six month periods ended June 30, 2012 and 2011:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6">Level 3</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 70%; FONT-WEIGHT: bold">Balance at January 1,</td> <td style="WIDTH: 1%; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="TEXT-ALIGN: right; WIDTH: 12%; FONT-WEIGHT: bold"> 2,172</td> <td style="TEXT-ALIGN: left; WIDTH: 1%; FONT-WEIGHT: bold">  </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">1,770</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Issuance of Preferential Reload Warrants</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">1,476</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Fair value adjustment prior to exercise of warrants, included in statement of operations</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">270</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(708</td> <td style="TEXT-ALIGN: left">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Exercise of derivative warrants</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">(2,223</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Fair value adjustment at end of period, included in statement of operations</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 141</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> —</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Balance at March 31,</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">1,836</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,062</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Fair value adjustment prior to exercise of warrants, included in statement of operations</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">750</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>Exercise of derivative warrants</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">(1,367</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Fair value adjustment at end of period, included in statement of operations</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 2,336</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 663</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">Balance at June 30,</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 3,555</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">  </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,725</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> </div>

248281

31200000

206000

<div style="FONT: 10pt Times New Roman, Times, Serif"> Note 6—Commitments and Contingencies    Future minimum lease payments under non-cancelable operating leases for office space and cars, as of June 30, 2012, are as follows (see Note 8 for subsequent events):    <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2"> U.S.$</td> <td style="FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Year ending December 31,</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="WIDTH: 85%">2012 (six months ending December 31, 2012)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">48</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">2013</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 53</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 101</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table>   Rental expense for operating leases for both office space and cars for the six months ended June 30, 2012 and 2011 was $66 thousand and $55 thousand, respectively. Rental expense for operating leases for both office space and cars for the three months ended June 30, 2012 and 2011 was $32 thousand and $22 thousand, respectively. </div>

22000000

13407668

60000

<div style="FONT: 10pt Times New Roman, Times, Serif"> Future minimum lease payments under non-cancelable operating leases for office space and cars, as of June 30, 2012, are as follows (see Note 8 for subsequent events):    <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2"> U.S.$</td> <td style="FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">thousands</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Year ending December 31,</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="WIDTH: 85%">2012 (six months ending December 31, 2012)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 12%">48</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">2013</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 53</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 101</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> </div>

-10813000

<div style="FONT: 10pt Times New Roman, Times, Serif"> (c) Translation into U.S. dollars   The currency of the primary economic environment in which the operations of the Company are conducted is the U.S. dollar ("dollar" or “U.S. $”). Therefore, the dollar has been determined to be the Company's functional currency.   Transactions in foreign currency (primarily in New Israeli Shekels or "NIS") are recorded at the exchange rate as of the transaction date. All exchange gains and losses from re-measurement of monetary balance sheet items denominated in non-dollar currencies are reflected as finance expense in the statement of operations, as they arise.   At June 30, 2012, the exchange rate was U.S. $1 = NIS 3.923 (December 31, 2011—U.S. $1 = NIS 3.821). The average exchange rate for the three and six months ended June 30, 2012 was U.S. $1 = NIS 3.824 and U.S. $1 = NIS 3.782, respectively (three and six months ended June 30, 2011— U.S. $1 = NIS 3.441 and US $1 = NIS 3.521, respectively). </div>

2576800

103000

-5000

<div style="FONT: 10pt Times New Roman, Times, Serif"> (d) Use of estimates   The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results may differ from such estimates. Significant items subject to such estimates and assumptions include deferred tax assets and liabilities, valuation of warrants, valuation of common stock share-based compensation, income tax uncertainties and other contingencies. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions. </div>

<div style="FONT: 10pt Times New Roman, Times, Serif"> (h) Net loss per share data   Basic net loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period. However, as the Company generated net losses in all periods presented, potentially dilutive securities, comprised mainly of warrants and stock options, are not reflected in diluted net loss per share because such shares are anti-dilutive.   The table below presents the computation of basic and diluted net losses per common share:   <table style="WIDTH: 90%; BORDER-COLLAPSE: collapse; FONT: 8pt Times New Roman, Times, Serif; MARGIN-LEFT: 0.25in" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Cumulative</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td colspan="6" nowrap="nowrap"> </td> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">from inception</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Three months ended June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="6" nowrap="nowrap">Six months ended June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">to June 30,</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap">  </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Numerator:</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="18">(in thousands, except share and per share data)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold" colspan="2">  </td> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold" colspan="2">  </td> <td style="FONT-WEIGHT: bold"> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> <td> </td> <td style="TEXT-ALIGN: right" colspan="2"> </td> <td> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 40%">Net loss attributable to common stock shares (basic and diluted)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(5,169</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(1,504</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(10,813</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(2,613</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 9%">(48,359</td> <td style="TEXT-ALIGN: left; WIDTH: 1%">)</td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold">Denominator:</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Weighted average number of common stock shares outstanding during the period (basic and diluted)</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">14,145,406</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,756,345</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">13,159,407</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">5,654,929</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">2,678,643</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Weighted average number of penny stock options (basic and diluted)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 215,694</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 89,393</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 248,281</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 129,408</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 78,004</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Basic and diluted common stock share outstanding</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 14,361,100</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,845,738</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 13,407,668</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 5,784,337</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 2,756,647</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold">Basic and diluted net losses per common stock share</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.36</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.26</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.81</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (0.45</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (17.54</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> </table> </div>

-3497000

4728000 8283000 3590000 2672756 4879972 2 <div style="FONT: 10pt Times New Roman, Times, Serif"> (f) Impact of recently implemented accounting standards   In April 2011, the Financial Accounting Standards Board (FASB) issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. This ASU amends current fair value measurement and disclosure guidance to include increased transparency around valuation input and investment categorization. ASU 2011-04 is effective for fiscal years and interim periods beginning after December 15, 2011, with early adoption not permitted. The adoption of ASU 2011-04 in 2012 did not have an impact on the Company’s financial position, results of operations, or cash flows.   In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In December 2011, the FASB issued ASU 2011-12 Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.”ASU 2011-12 deferred the effective date of the specific requirement to present items that are reclassified out of accumulated other comprehensive income to net income alongside their respective components of net income and other comprehensive income. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. ASU 2011-05 is effective for fiscal years and interim periods beginning after December 15, 2011 and must be applied retrospectively. The adoption of ASU 2011-05 in 2012 did not have an impact on the Company’s financial position, results of operations, or cash flows, because the Company does not have elements of other comprehensive income. </div> <div style="FONT: 10pt Times New Roman, Times, Serif"> Note 4 - Accrued Severance Pay   Under Israeli law, the subsidiary in Israel is required to make severance payments to dismissed employees, and employees leaving employment in certain other circumstances. All of the Israeli subsidiary’s employees signed agreements, limiting the subsidiary in Israel’s severance liability to actual deposits in the insurance policies, as per Section 14 of the Severance Payment Law of 1963.   In March 2012, the Company signed a separation agreement with its former CEO. According to the terms of the separation agreement and consistent with the employment agreement and amendment hereto, the former CEO will be entitled to receive salary and benefits during a ninety day notice period and a nine month severance period, until February 2013, and stock options granted to him will become exercisable over a certain period after his termination. As a result of the above mentioned termination, during the three month period ended March 31, 2012, the accrued severance provision was reclassified to a short-term liability, an additional severance expense in the total amount of $68 thousand and an additional share-based compensation expense of approximately $526 thousand were recorded.   There are no statutory or agreed-upon severance arrangements with U.S. employees, other than with the current CEO, should there be a merger subsequent to the Merger with I/P (as described in Note 1) and it is not accrued for, as it is not probable. </div> <div style="FONT: 10pt Times New Roman, Times, Serif"> (b) Development stage enterprise   The Company's principal activities to date have been the research and development of its products and the Company has not generated significant revenues from its planned, principal operations. Accordingly, the Company's financial statements are presented as those of a development stage enterprise. </div> <div style="FONT: 10pt Times New Roman, Times, Serif"> The following table summarizes the option grants for the six month period ended June 30, 2012:   <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">No. of options to Employees, Management and Directors</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">No. of options to Consultants</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center" colspan="2"> Exercise  price </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">Average fair value of granted option</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td colspan="2"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">U.S.$</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 48%">January 2012</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">599,500</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">5,000</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">0.96</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">0.50</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>January – February 2012</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">20,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">61,300</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.01</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.95 – $1.2</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td>February 2012</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">130,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">—</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.21</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.68</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td>March 2012</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">1,600,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">100,000</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">1.65</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.99</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt">May – June 2012</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 16,000</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 45,000</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">3.33-$3.40</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">2.02 – $2.27</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold">Total as of June 30, 2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,365,500</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left">  </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 211,300</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> </div> 1091000 1476000 3.782 9100000 <div style="FONT: 10pt Times New Roman, Times, Serif"> (g) Impact of recently issued accounting standards   In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities, which require companies to disclose information about financial instruments that have been offset and related arrangements to enable users of their financial statements to understand the effect of those arrangements on their financial position. Companies will be required to provide both net (offset amounts) and gross information in the notes to the financial statements for relevant assets and liabilities that are offset. ASU 2011-11 is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. The Company does not expect the adoption of ASU 2011-11 in the first quarter of 2013 to have an impact on its financial position, results of operations, or cash flows. </div> 0.15 2012-12

0.99

100000

1600000

2.02

2.27

45000

16000

0.68

130000

0.50

5000

599500

0.95

1.20

61300

20000

0.50 1.00

500000

0.20 1.25 2013-06-22

0.0038

1.50

0.01

0.7823

P2Y6M

0.94 1.76

0.0077

5.50

3.40

5.50

1.65

0.8445

P4Y7M6D

1.76 1.76

-10813000

4000

47000

31000

8236000 1091000

1017000

180000

1197000

211300

2365500

1017000

180000

38050000

-321000

237000

-36895000

3651000

5659000

1282000

963000

-17.54

213000

485000

-31834000

-614000

51000

206000

12195000

5659000

606000

3374000

12310000

144000

11011000

5000000

1123000

1070000

493000

-48137000

14301000

35888000

6657000

428000

2855000

-73000

2678643

78004

1155000

8000

1137000

2756647

112000

1280000

-48359000

222000

-66000

-2947000

4750000 10048000 21000 1269000 2545000 43000 1964000 3590000 1091000 1476000 2511000 24000

6476000

1564000 11971000 334000 P18M

1 for 6

11000000

9300000 1 2 2392000 P5Y 4.60

6169661

18617569

6673

20136445 15959838 1.76

3200000

137000

P3Y1M 3592

3200000

5500000

41178 9100000 0.50 0.75 1.00 0.50 0.75

31200000

9600000

3.25

22000000

0.35

22000000

-1481000

24000

20000

-44000

2321000

7000

4000

33000

2321000

7000

4000

-4000

-5163000

43000

-5163000

2000

-4000

43000

138000

98000

15000

140000

98000

15000

60000

-7000

-6149000

500000

-6149000

60000

-7000

500000

178000

10000

178000

10000

1000

-3000

-9942000

2000 2545000

-9942000

-24000

93000

1000

19000

2000 9000

24000

46000

24000

-93000

-3000

-19000

2536000

11925000

9239000

1342000 11000 37000

883000

29000

11971000

9263000

1768000

1342000 11000 37000

883000

29000

785000

3000

65000

-7479000

213000

2511000

3000 1269000 295000

-7479000

8000

3000

27000

3000 2000

777000

210000

2484000

1269000 293000 43000

1300000

131000

43000

1300000

131000

360000

-7000

-7332000

360000

-7000

18000

11000

18000

11000

-708

1880000

-1653000

963000

-0.26

20000

29000

7000

685000

690000

31000

663

-1478000

460000

118000

45000

120000

5756345

22000

89393

227000

5845738

-1504000

26000

-663000

3.441

452000

141

1476

526000

68000

2223

270

2071000

-1971000

-0.36

337000

67000

29000

340000

1282000

2336

-5086000

418000

31000

1000

14145406

32000

215694

100000

14361100

-5169000

83000

-3086000

3.824 1367

333000

750

0001410428 vrng:ExerciseOfWarrantsMember 2012-04-01 2012-06-30 0001410428 vrng:ConsultantMember 2012-04-01 2012-06-30 0001410428 2012-04-01 2012-06-30 0001410428 vrng:ExerciseOfWarrantsMember 2012-01-01 2012-03-31 0001410428 2012-01-01 2012-03-31 0001410428 vrng:ConsultantMember 2011-04-01 2011-06-30 0001410428 2011-04-01 2011-06-30 0001410428 vrng:ExerciseOfWarrantsMember 2011-01-01 2011-03-31 0001410428 vrng:NonEmployeeMember 2008-01-01 2008-12-31 0001410428 vrng:EmployeeMember 2008-01-01 2008-12-31 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2008-01-01 2008-12-31 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2008-01-01 2008-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2008-01-01 2008-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2008-01-01 2008-12-31 0001410428 2008-01-01 2008-12-31 0001410428 vrng:NonEmployeeMember 2011-01-01 2011-12-31 0001410428 vrng:EmployeeMember 2011-01-01 2011-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMember 2011-01-01 2011-12-31 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2011-01-01 2011-12-31 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2011-01-01 2011-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:AdditionalPaidInCapitalMember 2011-01-01 2011-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2011-01-01 2011-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:CommonStockMember 2011-01-01 2011-12-31 0001410428 us-gaap:CommonStockMember 2011-01-01 2011-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2011-01-01 2011-12-31 0001410428 2011-01-01 2011-12-31 0001410428 vrng:NonEmployeeMember 2010-01-01 2010-12-31 0001410428 vrng:EmployeeMember 2010-01-01 2010-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMember 2010-01-01 2010-12-31 0001410428 us-gaap:InvestorMember 2010-01-01 2010-12-31 0001410428 vrng:CommonStockSharesMember 2010-01-01 2010-12-31 0001410428 us-gaap:SeriesBPreferredStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:WarrantsNotSettleableInCashMember 2010-01-01 2010-12-31 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001410428 us-gaap:InvestorMemberus-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMembervrng:CommonStockSharesMember 2010-01-01 2010-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMemberus-gaap:SeriesBPreferredStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:AdditionalPaidInCapitalMemberus-gaap:WarrantsNotSettleableInCashMember 2010-01-01 2010-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2010-01-01 2010-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:CommonStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:CommonStockMembervrng:CommonStockSharesMember 2010-01-01 2010-12-31 0001410428 us-gaap:CommonStockMemberus-gaap:SeriesBPreferredStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:ContributionOfNonmonetaryAssetsToCharitableOrganizationMemberus-gaap:CommonStockMemberus-gaap:WarrantsNotSettleableInCashMember 2010-01-01 2010-12-31 0001410428 us-gaap:CommonStockMemberus-gaap:SeriesAPreferredStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:CommonStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember 2010-01-01 2010-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2010-01-01 2010-12-31 0001410428 2010-01-01 2010-12-31 0001410428 vrng:NonEmployeeMember 2009-01-01 2009-12-31 0001410428 vrng:EmployeeMember 2009-01-01 2009-12-31 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2009-01-01 2009-12-31 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2009-01-01 2009-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2009-01-01 2009-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2009-01-01 2009-12-31 0001410428 2009-01-01 2009-12-31 0001410428 vrng:NonEmployeeMember 2007-01-01 2007-12-31 0001410428 vrng:EmployeeMember 2007-01-01 2007-12-31 0001410428 us-gaap:ConvertibleNotesPayableMembervrng:CommonStockSharesMember 2007-01-01 2007-12-31 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2007-01-01 2007-12-31 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2007-01-01 2007-12-31 0001410428 us-gaap:ConvertibleNotesPayableMemberus-gaap:AdditionalPaidInCapitalMembervrng:CommonStockSharesMember 2007-01-01 2007-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2007-01-01 2007-12-31 0001410428 us-gaap:ConvertibleNotesPayableMemberus-gaap:CommonStockMembervrng:CommonStockSharesMember 2007-01-01 2007-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2007-01-01 2007-12-31 0001410428 2007-01-01 2007-12-31 0001410428 vrng:NonEmployeeMember 2006-01-09 2006-12-31 0001410428 vrng:EmployeeMember 2006-01-09 2006-12-31 0001410428 vrng:CommonStockSharesMember 2006-01-09 2006-12-31 0001410428 us-gaap:SeriesAPreferredStockMember 2006-01-09 2006-12-31 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2006-01-09 2006-12-31 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2006-01-09 2006-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMemberus-gaap:SeriesAPreferredStockMember 2006-01-09 2006-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2006-01-09 2006-12-31 0001410428 us-gaap:CommonStockMembervrng:CommonStockSharesMember 2006-01-09 2006-12-31 0001410428 us-gaap:CommonStockMember 2006-01-09 2006-12-31 0001410428 us-gaap:PreferredStockMemberus-gaap:SeriesAPreferredStockMember 2006-01-09 2006-12-31 0001410428 us-gaap:PreferredStockMember 2006-01-09 2006-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2006-01-09 2006-12-31 0001410428 2006-01-09 2006-12-31 0001410428 vrng:BusinessAcquisitionMember 2012-08-01 2012-08-31 0001410428 vrng:EarnOutPaymentMember 2012-08-01 2012-08-31 0001410428 us-gaap:IssuanceOfEquityMember 2012-08-01 2012-08-31 0001410428 vrng:ScenarioFourMember 2012-03-01 2012-03-31 0001410428 vrng:ScenarioThreeMember 2012-03-01 2012-03-31 0001410428 vrng:ScenarioTwoMember 2012-03-01 2012-03-31 0001410428 vrng:ScenarioOneMember 2012-03-01 2012-03-31 0001410428 vrng:EmployeeShareOptionPlanTwentyZeroSixMember 2012-07-01 2012-07-31 0001410428 vrng:MergerOneMember 2012-07-01 2012-07-31 0001410428 us-gaap:SubsequentEventMember 2012-07-01 2012-07-31 0001410428 us-gaap:IssuanceOfEquityMember 2012-07-01 2012-07-31 0001410428 us-gaap:LeaseAgreementsMember 2012-07-01 2012-07-31 0001410428 us-gaap:MaximumMembervrng:EmployeeStockPlanTwentyTwelveMember 2012-07-01 2012-07-31 0001410428 us-gaap:WarrantMembervrng:MergerOneMember 2012-07-01 2012-07-31 0001410428 us-gaap:ConvertiblePreferredStockMembervrng:MergerOneMember 2012-07-01 2012-07-31 0001410428 us-gaap:CommonStockMembervrng:MergerOneMember 2012-07-01 2012-07-31 0001410428 2010-06-01 2010-06-30 0001410428 2012-06-02 2012-06-30 0001410428 us-gaap:NoteWarrantMember 2006-01-09 2012-06-30 0001410428 us-gaap:SeriesBPreferredStockMember 2006-01-09 2012-06-30 0001410428 us-gaap:WarrantMember 2006-01-09 2012-06-30 0001410428 us-gaap:LoansMember 2006-01-09 2012-06-30 0001410428 us-gaap:SeriesAPreferredStockMember 2006-01-09 2012-06-30 0001410428 2006-01-09 2012-06-30 0001410428 vrng:NonEmployeeMember 2012-01-01 2012-06-30 0001410428 vrng:EmployeeMember 2012-01-01 2012-06-30 0001410428 vrng:EmployeesDirectorsAndConsultantsMember 2012-01-01 2012-06-30 0001410428 vrng:ConsultantMember 2012-01-01 2012-06-30 0001410428 vrng:NonEmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2012-01-01 2012-06-30 0001410428 vrng:EmployeeMemberus-gaap:AdditionalPaidInCapitalMember 2012-01-01 2012-06-30 0001410428 us-gaap:AdditionalPaidInCapitalMember 2012-01-01 2012-06-30 0001410428 us-gaap:CommonStockMember 2012-01-01 2012-06-30 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2012-01-01 2012-06-30 0001410428 us-gaap:MaximumMember 2012-01-01 2012-06-30 0001410428 us-gaap:MinimumMember 2012-01-01 2012-06-30 0001410428 vrng:SecuredPromissoryNoteMember 2012-01-01 2012-06-30 0001410428 vrng:ScenarioAmendedContractualTermsMembervrng:ScenarioSevenMember 2012-01-01 2012-06-30 0001410428 vrng:ScenarioAmendedContractualTermsMembervrng:ScenarioSixMember 2012-01-01 2012-06-30 0001410428 vrng:ScenarioAmendedContractualTermsMembervrng:ScenarioFiveMember 2012-01-01 2012-06-30 0001410428 vrng:EmployeesDirectorsAndConsultantsMembervrng:Scenario2Member 2012-01-01 2012-06-30 0001410428 vrng:ConsultantMembervrng:Scenario2Member 2012-01-01 2012-06-30 0001410428 us-gaap:MaximumMembervrng:Scenario2Member 2012-01-01 2012-06-30 0001410428 us-gaap:MinimumMembervrng:Scenario2Member 2012-01-01 2012-06-30 0001410428 vrng:EmployeesDirectorsAndConsultantsMembervrng:Scenario1Member 2012-01-01 2012-06-30 0001410428 vrng:ConsultantMembervrng:Scenario1Member 2012-01-01 2012-06-30 0001410428 vrng:Scenario1Member 2012-01-01 2012-06-30 0001410428 vrng:EmployeesDirectorsAndConsultantsMembervrng:ScenarioSixMember 2012-01-01 2012-06-30 0001410428 vrng:ScenarioSixMember 2012-01-01 2012-06-30 0001410428 vrng:EmployeesDirectorsAndConsultantsMembervrng:ScenarioFiveMember 2012-01-01 2012-06-30 0001410428 vrng:ConsultantMembervrng:ScenarioFiveMember 2012-01-01 2012-06-30 0001410428 us-gaap:MaximumMembervrng:ScenarioFiveMember 2012-01-01 2012-06-30 0001410428 us-gaap:MinimumMembervrng:ScenarioFiveMember 2012-01-01 2012-06-30 0001410428 vrng:EmployeesDirectorsAndConsultantsMembervrng:ScenarioFourMember 2012-01-01 2012-06-30 0001410428 vrng:ConsultantMembervrng:ScenarioFourMember 2012-01-01 2012-06-30 0001410428 vrng:ScenarioFourMember 2012-01-01 2012-06-30 0001410428 2012-01-01 2012-06-30 0001410428 vrng:ConsultantMember 2011-01-01 2011-06-30 0001410428 2011-01-01 2011-06-30 0001410428 us-gaap:FairValueInputsLevel3Member 2011-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2011-12-31 0001410428 us-gaap:CommonStockMember 2011-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2011-12-31 0001410428 us-gaap:MaximumMember 2011-12-31 0001410428 us-gaap:MinimumMember 2011-12-31 0001410428 us-gaap:WarrantMemberus-gaap:FairValueInputsLevel3Member 2011-12-31 0001410428 us-gaap:WarrantMember 2011-12-31 0001410428 2011-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2010-12-31 0001410428 us-gaap:CommonStockMember 2010-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2010-12-31 0001410428 2010-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2009-12-31 0001410428 us-gaap:CommonStockMember 2009-12-31 0001410428 us-gaap:PreferredStockMember 2009-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2009-12-31 0001410428 2009-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2008-12-31 0001410428 us-gaap:CommonStockMember 2008-12-31 0001410428 us-gaap:PreferredStockMember 2008-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2008-12-31 0001410428 2008-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2007-12-31 0001410428 us-gaap:CommonStockMember 2007-12-31 0001410428 us-gaap:PreferredStockMember 2007-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2007-12-31 0001410428 2007-12-31 0001410428 us-gaap:AdditionalPaidInCapitalMember 2006-12-31 0001410428 us-gaap:CommonStockMember 2006-12-31 0001410428 us-gaap:PreferredStockMember 2006-12-31 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2006-12-31 0001410428 2006-12-31 0001410428 us-gaap:FairValueInputsLevel3Member 2012-06-30 0001410428 us-gaap:ForeignCountryMember 2012-06-30 0001410428 us-gaap:AdditionalPaidInCapitalMember 2012-06-30 0001410428 us-gaap:CommonStockMember 2012-06-30 0001410428 us-gaap:AccumulatedDeficitDuringDevelopmentStageMember 2012-06-30 0001410428 us-gaap:MaximumMember 2012-06-30 0001410428 us-gaap:MinimumMember 2012-06-30 0001410428 us-gaap:WarrantMemberus-gaap:FairValueInputsLevel3Member 2012-06-30 0001410428 us-gaap:WarrantMember 2012-06-30 0001410428 vrng:SecuredPromissoryNoteMember 2012-06-30 0001410428 vrng:ScenarioAmendedContractualTermsMembervrng:ScenarioSixMember 2012-06-30 0001410428 vrng:ScenarioAmendedContractualTermsMembervrng:ScenarioFiveMember 2012-06-30 0001410428 vrng:Scenario2Member 2012-06-30 0001410428 vrng:Scenario1Member 2012-06-30 0001410428 vrng:ScenarioSixMember 2012-06-30 0001410428 us-gaap:MaximumMembervrng:ScenarioFiveMember 2012-06-30 0001410428 us-gaap:MinimumMembervrng:ScenarioFiveMember 2012-06-30 0001410428 vrng:ScenarioFourMember 2012-06-30 0001410428 2012-06-30 0001410428 vrng:MarketCapitalizationMembervrng:ScenarioThreeMember 2012-03-31 0001410428 vrng:ScenarioThreeMember 2012-03-31 0001410428 vrng:MarketCapitalizationMembervrng:ScenarioTwoMember 2012-03-31 0001410428 vrng:ScenarioTwoMember 2012-03-31 0001410428 vrng:MarketCapitalizationMembervrng:ScenarioOneMember 2012-03-31 0001410428 vrng:ScenarioOneMember 2012-03-31 0001410428 2012-03-31 0001410428 2011-06-30 0001410428 2011-03-31 0001410428 2010-06-30 0001410428 vrng:PreviouslyAuthorizedButUnissuedMembervrng:EmployeeShareOptionPlanTwentyZeroSixMember 2012-07-19 0001410428 vrng:NewlyAuthorizedMembervrng:EmployeeStockPlanTwentyTwelveMember 2012-07-19 0001410428 vrng:EmployeeStockPlanTwentyTwelveMember 2012-07-19 0001410428 vrng:MergerOneMember 2012-07-19 0001410428 vrng:WarrantsClassifiedAsEquityMember 2012-07-19 0001410428 us-gaap:WarrantMembervrng:MergerOneMember 2012-07-19 0001410428 us-gaap:StockOptionMember 2012-07-19 0001410428 us-gaap:ConvertiblePreferredStockMembervrng:MergerOneMember 2012-07-19 0001410428 us-gaap:CommonStockMembervrng:MergerOneMember 2012-07-19 0001410428 us-gaap:CommonStockMember 2012-07-19 0001410428 vrng:InnovateProtectIncorporatedMembervrng:MergerOneMember 2012-07-19 0001410428 vrng:RegisteredDirectPublicOfferingMember 2012-06-01 0001410428 2012-06-01 0001410428 2012-08-14 0001410428 us-gaap:IssuanceOfEquityMember 2012-07-31 0001410428 us-gaap:StockOptionMemberus-gaap:MaximumMemberus-gaap:SubsequentEventMember 2012-07-31 0001410428 us-gaap:StockOptionMemberus-gaap:MinimumMemberus-gaap:SubsequentEventMember 2012-07-31 0001410428 us-gaap:ChiefExecutiveOfficerMembervrng:ChangeInControlOfCompanyMember 2012-01-31 pure iso4217:USD shares shares iso4217:USD iso4217:USD vrng:Right Consideration for less than $1. The amount recorded for the three and six months ending June 30, 2012 and 2011 and the cumulative period from inception include $0, $31, $20, $162 and $1,123, respectively, to related parties.