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VRNG VRINGO INC false Smaller Reporting Company S-4 2011-12-31 0001410428

213000

<div> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> Note 11 — Stockholders’ Equity (Deficit)</h2> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> (a) Common Stock</h2> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> In June 2010, the Company completed an IPO of 2,392,000 units (see Note 1).</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On December 1, 2011, the Company completed an additional financing round, in which it issued 817,303 shares of common stock. In connection with the financing round the Convertible Notes were converted into equity (see Note 9), and 2,671,026 shares of common stock were issued to the Convertible Notes holders. In addition, pursuant to the commencement of the above mentioned financing round, the Company issued 208,159 shares of common stock to one of its consultants.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> Subsequent to the balance sheet date, between February 6 and February 14, 2012, 3,828,993 of the Company’s outstanding Special Bridge Warrants and Conversion Warrants were exercised. As a result, the Company issued 3,828,993 shares of common stock. See Note 17.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The following table summarizes information about the Company’s issued and outstanding common stock from inception through December 31, 2011, on a post-split basis:</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> </p> <div style="TEXT-ALIGN: center"> <table style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; FONT-VARIANT: normal; FONT-STYLE: normal; TEXT-INDENT: 0px; MARGIN: -24pt 0pt 0pt; PADDING-LEFT: 0pt; PADDING-RIGHT: 0pt; FONT-FAMILY: serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: normal; PADDING-TOP: 3pt" cellspacing="0" cellpadding="0" width="554"> <tr> <td></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Shares of common stock<br /> 0.01$ par value</td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of January 9, 2006 (inception)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock to two founders for a net amount of $5</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">83</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Stock dividend of 3,999 shares for each share of outstanding stock in their respective classes</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 333,250</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of December 31, 2006</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>333,333</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock in lieu of beneficial conversion terms contained in the convertible loan agreement</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 33,449</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of December 31, 2007</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>366,782</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of December 31, 2008</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>366,782</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of December 31, 2009</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>366,782</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock, in connection with IPO (see Note 1)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2,392,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exchange of series A convertible preferred stock for common stock<br /> (see Note 11 b)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 392,315</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Conversion of Bridge notes (see Note 1)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 864,332</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Stock dividend (see Note 11 b)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 311,451</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exchange of series B convertible preferred stock for common stock<br /> (see Note 11 b)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 765,466</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercise of charitable warrants</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 11,044</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercise of lead investor warrants (see Note 11 f)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 241,173</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercise of stock options</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 60,517</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of December 31, 2010</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>5,405,080</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercise of lead investor warrants (see Note 11 f)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 241,173</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercise of stock options</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 341,913</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock, in connection venture loan settlement (see Note 8)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 250,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercise of charitable warrants</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 19,862</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock, to consultants</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 208,159</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Conversion of convertible notes (see Note 9)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2,671,026</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Issuance of common stock, in connection with December 2011 financing</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 817,303</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Balance as of December 31, 2011</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>9,954,516</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> </table> </div> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> (b) Preferred Stock</h2> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On May 8, 2006, the Company issued 98 shares of series A convertible preferred stock (on a post-split basis) for a net amount of $2.35 million. On August 8, 2006, the Company declared a stock dividend of approximately 3,999 shares for each share of outstanding stock in their respective classes. The Company treated this transaction as a stock dividend with no adjustment to the par value per respective share due to legal restrictions. Upon the consummation of the IPO, the Series A convertible preferred stock were granted a 15% stock dividend, and then exchanged for shares of common stock and recorded as such (see table above).</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On July 30, 2007, the Company issued 765,466 shares of series B convertible preferred stock (on a post-split basis) which was categorized as temporary equity. Upon the consummation of the IPO, the Series B convertible preferred stock previously classified as temporary equity was granted a 33% stock dividend, and then exchanged for shares of common stock and recorded as such (see table above).</p> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> (c) Common stock reserved for issuance upon exercise of stock options</h2> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On October 30, 2006, the Company adopted the 2006 Stock Option Plan, pursuant to which 880 thousand shares of common stock were reserved for issuance. On July 30, 2007, the Company amended and restated the original plan in its entirety by adopting Amendment No. 1 to Stock Option Plan (the “Stock Option Plan”), which increased the number of common stock reserved for issuance to 2.79 million. In January 2010, the number of common stock reserved for issuance upon the exercise of options in the Stock Option Plan was increased to 14.14 million.</p> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> (d) Stock options</h2> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The Stock Option Plan provides for grants or sales of common stock options to employees, directors and consultants. Options granted in connection with the Company’s Stock Option Plan are exercisable for six years from the grant date. Options are generally forfeited, if not exercised, within ninety days of termination of employment or service to the Company.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> For the years ended December 31, 2011 and 2010 the Company recorded compensation expense of $1,769 thousand and $912 thousand, respectively. Cumulative from inception the Company has recorded compensation expense of $3,023 thousand, in respect of stock options granted.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On January 31, 2011, the Company’s Board of Directors (the “Board”) approved the granting of 216 thousand options to management, employees and consultants at an exercise price of $0.01 per share. These options will vest yearly over three and four year periods (according to the applicable schedule of each optionee). The Board also approved the granting of 264 thousand options at an exercise price of $5.50 to its management, employees and consultants. These options will vest over three and four years (according to the applicable schedule of each optionee).</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The fair value of options granted in 2011 to employees and directors at an exercise price of $0.01 was calculated using the Black-Scholes-Merton model, which takes into consideration the share price at the date of grant, the exercise price of the option, the expected life of the option, risk free interest rates, expected dividend, and the expected volatility. The following assumptions were used: an expected life of 4 – 4.25 years, a risk-free interest rate of 1.44% – 1.55% and an expected volatility of 52.21% – 47.89% and no dividend yield. The fair value of the common stock used for this calculation was $1.68.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The fair value of options, granted in 2011, to employees and directors at an exercise price of $5.50 was calculated using the Lattice model, which takes into consideration the share price at the date of grant, the exercise price of the option, the expected life of the option, risk free interest rates, expected dividend, and the expected volatility. The Company uses the Lattice option pricing model for the valuation of options to employees and directors that are not plain vanilla. The following assumptions were used: an expected life of 6 years, a risk-free interest rate of 2.38% and an expected volatility of 56.41% and no dividend yield. The fair value of the common stock used for this calculation was $1.68.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> In 2011, the fair value of options granted to consultants was calculated using the Black-Scholes-Merton model. The following assumptions were used: expected life of 2 – 6 years, a risk free interest rate of 0.29% – 2.38% and an expected volatility of 45.71% – 59.69% and no dividend yield. The fair value of the common stock used for this calculation was $0.99 – $1.70.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> As of December 31, 2011, there were approximately 11.5 million shares of common stock available for future grants.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On March 17, 2010, the Board approved the granting of options to management, directors and consultants. The Board approved the granting of 1,392,000 options at an exercise price of $0.01. These options vest yearly over three and four year periods, according to the applicable schedule of each optionee. The Board also approved the granting of 1,420,000 options at an exercise price of $5.50 to its employees, directors and consultants. These options vest over four years. Vesting of options granted during 2010 commenced in June through December 2010, according to the applicable schedule of each optionee, and when the terms were communicated.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The fair value of the options to employees and directors granted in 2010 was calculated using the Lattice model which takes into consideration the share price at the date of grant, the exercise price of the option, the expected life of the option, risk free interest rates, expected dividend, and the expected volatility. The Company uses the Lattice option pricing model for the valuation of options to employees and directors that are not plain vanilla. The following assumptions were used: an expected life of 5.2 – 6 years, a risk-free interest rate of 2.11% – 2.83% and an expected volatility of 56.11% – 64.3% and no dividend yield. The fair value of the common stock used for this calculation was $2.49 – $2.62. The fair value of options to non-employees is calculated using the following assumptions: expected life of 3 – 5.5 years, a risk free interest rate of 0.71% – 2.64% and an expected volatility of 46% – 64% and no dividend yield.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> In January and February 2012 the Board of Directors approved the granting of 70,000, fully vested options to management and consultants at an exercise price of $0.01 per share. The Board also approved the granting of 734,500 options at an exercise price of $0.96 to its management, employees and consultants. These options will vest over four years (according to the applicable schedule of each optionee). The fair value of options granted in January and February 2012 was calculated using the Black-Scholes-Merton model. The following assumptions were used: an expected life of 4.25 – 6 years, a risk-free interest rate of 0.71% – 1.19% and an expected volatility of 67.26% – 75.78% and no dividend yield. The fair value of the common stock used for this calculation was $0.96 – $1.21 and no dividend yield. The Company expects that the total value of the options granted will be approximately $467 thousand.</p> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> (e) Stock option activity</h2> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The following table summarizes information about stock option activity for the year ended December 31, 2011:</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> </p> <div style="TEXT-ALIGN: center"> <table style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; FONT-VARIANT: normal; FONT-STYLE: normal; TEXT-INDENT: 0px; MARGIN: -24pt 0pt 0pt; PADDING-LEFT: 0pt; PADDING-RIGHT: 0pt; FONT-FAMILY: serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: normal; PADDING-TOP: 3pt" cellspacing="0" cellpadding="0" width="554"> <tr> <td></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">No. of shares Employees</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">No. of shares Non-Employees</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Weighted<br /> average exercise price U.S.$</td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 20pt; VERTICAL-ALIGN: text-bottom"> Outstanding at January 1, 2011</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2,378,908</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 128,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.76</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 20pt; VERTICAL-ALIGN: text-bottom"> Granted</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 496,500</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 73,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 3.04</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 20pt; VERTICAL-ALIGN: text-bottom"> Exercised</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (302,413</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (39,500</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 0.01</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 20pt; VERTICAL-ALIGN: text-bottom"> Expired</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (169,759</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (18,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 3.46</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 20pt; VERTICAL-ALIGN: text-bottom"> Forfeited</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (318,336</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 3.23</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Outstanding at December 31, 2011</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>2,084,900</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>143,500</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Exercisable at December 31, 2011</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>690,121</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>50,074</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> </table> </div> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The following table summarizes information about stock option activity for the year ended December 31, 2010:</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> </p> <div style="TEXT-ALIGN: center"> <table style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; FONT-VARIANT: normal; FONT-STYLE: normal; TEXT-INDENT: 0px; MARGIN: -24pt 0pt 0pt; PADDING-LEFT: 0pt; PADDING-RIGHT: 0pt; FONT-FAMILY: serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: normal; PADDING-TOP: 3pt" cellspacing="0" cellpadding="0" width="554"> <tr> <td></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">No. of shares Employees</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">No. of shares Non-Employees</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Weighted average exercise price U.S.$</td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Outstanding at January 1, 2010</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 237,677</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 45,250</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.58</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Granted</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2,708,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 104,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.74</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Exercised</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (60,517</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 0.21</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Forfeited</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (506,252</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (21,250</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.87</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Outstanding at December 31, 2010</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>2,378,908</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>128,000</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Exercisable at December 31, 2010</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>128,804</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>32,150</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> </table> </div> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> For cumulative period ended December 31, 2011, the Company granted a total of 3,595 thousand stock options to its employees, directors and consultants at an average exercise price of $2.82. For the cumulative period ended December 31, 2011, 402 thousand stock options were exercised.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The following table summarizes information about employee and non-employee stock options outstanding as of December 31, 2011:</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> </p> <div style="TEXT-ALIGN: center"> <table style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; FONT-VARIANT: normal; FONT-STYLE: normal; TEXT-INDENT: 0px; MARGIN: -24pt 0pt 0pt; PADDING-LEFT: 0pt; PADDING-RIGHT: 0pt; FONT-FAMILY: serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: normal; PADDING-TOP: 3pt" cellspacing="0" cellpadding="0" width="608"> <tr> <td></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="11">Options outstanding</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="11">Options exercisable</td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Number<br /> Outstanding</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Weighted average<br /> remaining<br /> contractual life<br /> (years)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Weighted average exercise price</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Number Outstanding</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Weighted average remaining contractual life (years)</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">Weighted<br /> average exercise<br /> price</td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 1,218,563</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 4.38</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">5.5</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 472,355</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 4.35</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">5.5</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 40,001</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.28</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">4.5</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 35,897</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.26</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">4.5</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 25,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 1.67</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">3.0</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 25,000</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 1.67</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">3.0</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 56,584</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 2.08</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">1.5</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 48,274</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 1.84</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">1.5</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">      888,252</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 4.37</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 0.01</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">      158,669</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 4.36</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom"> $</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 0.01</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>2,228,400</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>740,195</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> </table> </div> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> As of December 31, 2011, the total aggregate intrinsic value of options outstanding was $593 thousand, of options exercisable $107 thousand and of options exercised $816 thousand. As of December 31, 2010, the total aggregate intrinsic value of both the options outstanding and options exercisable was $0 thousand, the total intrinsic value of options exercised was $134 thousand. The total fair value of stock options that vested in the years ended December 31, 2011, 2010 and cumulative from inception till December 31, 2011 amounts to $1,761 thousand, $206 thousand and $3,015 respectively. The weighted average grant date fair value of options granted during the years ended December 31, 2011, 2010 and cumulative from inception till December 31, 2011 was $0.91, $1.69 and $1.57, respectively.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The following table represents respective annual amortization of unrecognized share based compensation expense:</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> </p> <div style="TEXT-ALIGN: center"> <table style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; FONT-VARIANT: normal; FONT-STYLE: normal; TEXT-INDENT: 0px; MARGIN: -24pt 0pt 0pt; PADDING-LEFT: 0pt; PADDING-RIGHT: 0pt; FONT-FAMILY: serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: normal; PADDING-TOP: 3pt" cellspacing="0" cellpadding="0" width="554"> <tr> <td></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> </tr> <tr> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> Year ending December 31,</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">U.S.$ thousands</td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> 2012</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 1,015</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> 2013</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">679</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> 2014</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> 158</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>1,852</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> </tr> </table> </div> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> (f) Warrants</h2> <h3 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold italic 10pt/12pt serif; PADDING-TOP: 5pt"> Conversion Warrants, Special Bridge Warrants and Reload Warrants</h3> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On December 29, 2009, the Company consummated a Bridge Financing pursuant to which it issued 5% subordinated convertible promissory notes, (“Bridge Notes”), in the aggregate amount of $2.98 million in a private placement, as well as warrants to purchase 795,200 shares of common stock (the “Special Bridge Warrants”) (together the “Bridge Financing”). Proceeds from the Bridge Financing were first allocated to the Special Bridge Warrants, which were classified as a derivative liability and recorded at fair value, with the residual amount allocated to the Bridge Notes. The Special Bridge Warrants have down-round protection clauses and their fair value is calculated using the Black-Scholes-Merton model at every reporting period. Upon the consummation of the IPO, the Company issued a further 69,132 Special Bridge Warrants to the holders of the Bridge Notes to reflect the final offering price of the IPO units. These warrants were valued on the date of the IPO by using the Black-Scholes-Merton model.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> Upon the consummation of the IPO, the Bridge Notes were automatically converted into 864,332 shares of common stock and 1,728,664 warrants (the “Conversion Warrants”). The Conversion Warrants granted to the Bridge Note holders were classified as a derivative long-term liability. Also see Note 10.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> On December 1, 2011, the Company entered into Subscription Agreements with certain accredited investors pursuant to which the Company issued 817,303 shares of common stock at $1.04 per share, a 20% discount to the closing price of the Company’s common stock on November 30, 2011. Upon the closing of the Financing, the Company’s outstanding Convertible Notes in the aggregate principal amount of $2.5 million automatically converted into 2,671,026 shares of common stock at $0.94 per share, a 10% discount to the purchase price in the Financing. The foregoing issuances triggered down-round and anti-dilution provisions in outstanding Special Bridge and Conversion Warrants. As a result, the number of shares issuable to the holders of the Special Bridge Warrants was adjusted to 2,528,615 and the exercise price for both Special Bridge and Conversion Warrants adjusted to $0.94.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> As of December 31, 2011, the Special Bridge Warrants were revalued using the Black-Scholes-Merton and the Monte-Carlo models. As the terms of these warrants include a special down-round protection clause, i.e. in a new issuance of common stock at a lower price than the current exercise price, the current exercise price will be lowered to the new issuance price and the number of warrants granted will increase so that the total exercise amount remains as under the original terms (approximately $2.4 million). We estimate 50% probability of such protection being activated in April, 2012. We have estimated the value of the down-round protection using a Monte-Carlo simulation. The following assumptions were used: 70.2% expected volatility, a risk-free interest rate of 0.38%, estimated life of 3.00 years and no dividend yield. The fair value of the common stock was $0.99. Also see Note 10.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> At December 31, 2011, the Conversion Warrants were revalued using the Black-Scholes-Merton and the Monte-Carlo models. As the terms of these warrants include a down-round protection clause, i.e. in a new issuance of common shares at a lower price than the current exercise price, the current exercise price will be adjusted to the new issuance price. We estimate 50% probability of such protection being activated in April, 2012. We have estimated the value of the down-round protection using a Monte-Carlo simulation. The following assumptions were used: 70.98% expected volatility, a risk-free interest rate of 0.52%, estimated life of 3.47 years and no dividend yield. The fair value of the common stock was $0.99. Also see Note 10.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> Subsequent to the balance sheet date, between February 6 and February 14, 2012, the Company entered into agreements with Holders, pursuant to which the Holders exercised 2,274,235 Special Bridge and 1,554,758 Conversion Warrants to purchase an aggregate of 3,828,993 shares of the Company’s common stock for aggregate proceeds to the Company of $3.6 million. In addition, the Company issued new warrants to purchase an aggregate of 2,660,922 shares of common stock at an exercise price of $1.76 per share in consideration for the immediate exercise of the warrants (“Reload Warrants”). A portion of the Reload warrants bear down-round protection clauses as a result, they will be classified as a long-term derivative liability and recorded at fair value. See also Note 17.</p> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> Had we made different assumptions about the fair value of the stock price (before it was publicly traded), risk-free interest rate, volatility, the impact of the down-round provision, or the estimated time that the abovementioned warrants will be outstanding before they are ultimately exercised, the recorded expense, our net loss and net loss per share amounts could have been significantly different.</p> <h3 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold italic 10pt/12pt serif; PADDING-TOP: 5pt"> Senior Lenders Warrants</h3> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> As discussed in Note 8, the senior lenders of the Company’s venture loan received Senior Lenders Warrants to purchase 250,000 shares of common stock, at an exercise price of $2.75 per share, in exchange for granting the Company a six month moratorium on principal payments and an additional year for the repayment of the venture loan. The Senior Lender Warrants were exercisable at any time before the tenth anniversary of the date they were issued. On June 8, 2011, the Company entered into a Settlement Agreement with the lenders of the venture loan, pursuant to which the Lenders agreed to accept less than the full amount owed to them by the Company. As part of the Settlement Agreement the Company issued the Lenders 250,000 shares of its common stock, in exchange for 250,000 Senior Lender Warrants, which were cancelled.</p> <h3 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold italic 10pt/12pt serif; PADDING-TOP: 5pt"> Lead Investor Warrants</h3> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> The lead investors of the Bridge Financing received warrants (“Lead Investor Warrants”) to purchase 482,346 shares of common stock at $0.01 exercise price per share. The Lead Investor Warrants (i) were exercisable 65 days subsequent to the consummation of the IPO, (ii) expire four years after issuance and (iii) Were subject to a lock-up agreement for six months subsequent to exercise. Upon the consummation of the IPO, Lead Investor Warrants were recorded at their fair value using the Black-Scholes-Merton model, as a result, an additional interest expense in the total amount of $1,342 thousand, was recognized. The assumptions used in this calculation were 52.6% expected volatility, risk-free interest rate of 1.68%, estimated life of 4 years and no dividend yield. The fair value of the common stock was estimated at $2.79. In October 2010, 241,173 of the Lead Investor Warrants were exercised, and in February 2011, the remaining 241,173 Lead Investor Warrants were exercised.</p> <h3 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold italic 10pt/12pt serif; PADDING-TOP: 5pt"> Placement Agent Warrants</h3> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> For their role in helping to facilitate the Bridge Financing, the Placement Agent for the offering received warrants equal to 7% of the total amount of securities sold in the Bridge Financing (“Placement Agent Warrants”). Based on the amount raised, the Company issued 55,664 Placement Agent Warrants. The Placement Agent Warrants were non-exercisable for three months after the date of the closing of the Bridge Financing and subsequently exercisable until five years after the closing of the Bridge Financing. The Placement Agent Warrants were exercisable at $3.795 per share. The December 2011 financing triggered the anti-dilution provision in the Placement Agent Warrants, resulting in a reduction of the exercise price to $0.94. On February 2, 2012, the Placement Agent Warrants were exercised.</p> <h3 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold italic 10pt/12pt serif; PADDING-TOP: 5pt"> IPO warrants</h3> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> In June 2010, upon completion of the IPO, 2,392,000 units, each containing one share of common stock and two warrants, at an issue price of $4.60 per unit, were issued. Each warrant in the IPO unit is exercisable for five years after the IPO at an exercise price of $5.06. On July 27, 2010, the unit was separated into its components and the shares and warrants began to trade separately. Upon separation of the units into shares and warrants, the units ceased trading. As of December 31, 2011, all of these warrants are outstanding.</p> <h3 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold italic 10pt/12pt serif; PADDING-TOP: 5pt"> Charitable warrants</h3> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 20px; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> Upon the consummation of the IPO, the Company recognized a charitable donation of a warrant to purchase 20,000 shares of common stock at an exercise price of $1.50 granted in 2006. The fair value of the donation was calculated using the Black-Scholes-Merton model with an expected life of 6.33 years, a risk-free interest rate of 2.7%, an expected volatility of 56.1% and no dividend yield. The expenses for these options in the amount of $37 thousand were recorded upon the consummation of the IPO. During September 2010, the foregoing warrant was exercised on a cashless basis, resulting in the issuance by the Company of 11,044 shares of common stock. In addition, the Company granted warrants to purchase 40 thousand shares of common stock as a charitable donation. 20 thousand of these warrants were granted at an exercise price of $5.50 per share and the remaining 20 thousand at an exercise price of $0.01 per share. The total fair value of approximately $43 thousand was calculated using the Black-Scholes-Merton model, using the following assumptions: stock price of $1.68, expected life of 6 years, risk-free interest rate of 2.38%, expected volatility of 56.41% and no dividend yield. The total fair value of the grant was recorded as an additional share-based payment expense in year ended December 31, 2011. In April 2011, the Company issued 19,862 shares of common stock upon exercise of 20 thousand charitable warrants with an exercise price of $0.01 per share.</p> </div>

-6000

718000

7142000

-5380000

1280000

14000

53000

-7389000

1769000

1525000

-141000

-1000

24000

<div> <h2 style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: bold; text-transform: none; padding-top: 5pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> Note 17 — Subsequent Events</h2> <table cellspacing="0" cellpadding="0" width="100%" style="text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr style="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left"> <td style="width: 21px"></td> <td style="width: 20px; text-align: left">(a)</td> <td style="text-align: left">In January and February 2012, the Company’s Board of Directors (the “Board”) approved the granting of 70,000, fully vested options to management and consultants at an exercise price of $0.01 per share. The Board also approved the granting of 734,500 options at an exercise price of $0.96 to its management, employees and consultants. These options will vest over four years (according to the applicable schedule of each optionee). The Company expects that the total value of the options granted will be approximately $467 thousand. Also refer to Note 11.</td> </tr> </table> <table cellspacing="0" cellpadding="0" width="100%" style="text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr style="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left"> <td style="width: 21px"></td> <td style="width: 20px; text-align: left">(b)</td> <td style="text-align: left">In January 2012, the Board approved a one year acceleration of option vesting for all option holders, except for the Company’s new Chief Executive Officer 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 in future dividends, as well as, acceleration of vesting if certain market conditions are met. 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. The Company is currently evaluating the effect of this decision and estimates that the effect on its financials might be material.</td> </tr> </table> <table cellspacing="0" cellpadding="0" width="100%" style="text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr style="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left"> <td style="width: 21px"></td> <td style="width: 20px; text-align: left">(c)</td> <td style="text-align: left">Between February 6 and February 14, 2012, the Company entered into agreements with holders of certain of its outstanding warrants (the “Holders”), pursuant to which the Holders exercised warrants to purchase 3,828,993 shares of the Company’s common stock for aggregate proceeds to the Company of $3.6 million. In addition, the Company issued new warrants to purchase an aggregate of 2,660,922 shares of common stock at an exercise price of $1.76 per share in consideration for the immediate exercise of the warrants. The Company is currently evaluating the effect of this warrant issuance. The Company believes that the impact on its financial statements will be material.</td> </tr> </table> <table cellspacing="0" cellpadding="0" width="100%" style="text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr style="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left"> <td style="width: 21px"></td> <td style="width: 20px; text-align: left">(d)</td> <td style="text-align: left">On March 12, 2012, the Company entered into a Merger Agreement pursuant to which I/P will merge with and into Merger Sub, a wholly owned subsidiary of the Company, with Merger Sub being the surviving corporation through an exchange of capital stock of I/P for capital stock of the Company. Under the terms of the Merger Agreement, the Company will issue I/P stockholders 16,972,977 shares of the Company’s common stock and 21,026,637 Series A Preferred Stock, convertible into 21,026,637 of the Company’s shares of common stock. In addition, the Company will issue I/P stockholders warrants to purchase 15,959,838 shares of common stock at an exercise price of $1.76 per share. In addition, all outstanding warrants to purchase I/P’s common stock that are outstanding and unexercised immediately prior to the completion of the Merger Agreement, shall be exchanged for 250,000 shares of Vringo common stock and 850,000 warrants to purchase 850,000 shares of the Company’s common stock with an exercise price of $1.76 per share. Immediately following the completion of the Merger, former stockholders of I/P are expected to own approximately 55.41% of the outstanding common stock of the combined company, and current stockholders of Vringo are expected to own approximately 44.59% of the outstanding common stock of the combined company (without taking into account the possible exercise of any other type of outstanding equity interest issued). The Company has expended significant effort and management attention on the proposed transaction. There is no assurance that the transaction will be consummated, including failure to obtain stockholders approval. If the transaction is not consummated for any reason, the Company’s business and operations, as well as the market price of its stock and warrants may be adversely affected. For accounting purposes, based on the Company’s preliminary assessment, I/P was identified as the “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 currently evaluating the effect of this on its financial statements and believes such effect will be material.</td> </tr> </table> <table cellspacing="0" cellpadding="0" width="100%" style="text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr style="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left"> <td style="width: 21px"></td> <td style="width: 20px; text-align: left">(e)</td> <td style="text-align: left">In March 2012, the Company signed a separation agreement with its former CEO, Jonathan Medved. According to the terms of the separation agreement, and consistent with Mr. Medved’s employment agreement and amendment hereto, Mr. Medved will be entitled to receive salary and benefits during a ninety day notice period and a nine month severance period, and continue to vest stock options after his termination. In addition, options previously granted to Mr. Medved at $0.01 will fully vest as of June 21, 2012 and the expiration date for exercising all options vested on or before June 21, 2013 is extended to September 21, 2013. Furthermore, the Company granted Mr. Medved with an additional 100,000 options at market value, as part of the grant described in Note 17 f below. Although the Company has a previous provision for its former CEO’s severance obligations (see Note 7) and although, the total effect of the aforementioned was not yet fully estimated, the Company believes that the overall financial impact of the above will be material.</td> </tr> </table> <table cellspacing="0" cellpadding="0" width="100%" style="text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr style="font-weight: normal; font-style: normal; line-height: 12pt; font-size: 10pt; vertical-align: top; text-align: left"> <td style="width: 21px"></td> <td style="width: 20px; text-align: left">(f)</td> <td style="text-align: left">In March 2012, the Company’s Board approved the granting of 1,700,000 options to Board and management (including the 100,000 options granted to its former CEO, see Note 17 e) at an exercise price of $1.65 per share. These options will vest quarterly over three years. Although the Company did not yet determine the fair value of this option grant, it believes the overall financial impact to be material.</td> </tr> </table> </div>

1269000

3000

2095000

<div> <h2 style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: bold; text-transform: none; padding-top: 5pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> Note 3 — Cash and Cash Equivalents</h2> <p style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> </p> <div style="text-align: center"> <table cellspacing="0" cellpadding="0" width="608" style="vertical-align: text-bottom; text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: -24pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr> <td></td> <td style="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom: none">  </td> <td colspan="3"></td> <td style="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom: none">  </td> <td colspan="3"></td> </tr> <tr> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left" rowspan="1" colspan="1"></td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: 1pt solid black" rowspan="1" colspan="7">As of December 31,</td> </tr> <tr> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left" rowspan="1" colspan="1">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: 1pt solid black" rowspan="1" colspan="3">2011</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: 1pt solid black" rowspan="1" colspan="3">2010</td> </tr> <tr> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left" rowspan="1" colspan="1">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center" rowspan="1" colspan="3"><font style="font-weight: normal">U.S.$ thousands</font></td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center" rowspan="1" colspan="3"><font style="font-weight: normal">U.S.$ thousands</font></td> </tr> <tr style="background-color: #CCFFCC"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom" rowspan="1" colspan="1">Cash</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right" rowspan="1" colspan="1"><b>779</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right" rowspan="1" colspan="1">597</td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left">  </td> </tr> <tr style="background-color: white"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom" rowspan="1" colspan="1">Cash equivalents (money market funds)</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right" rowspan="1" colspan="1"><b>—</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right" rowspan="1" colspan="1">4,542</td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left">  </td> </tr> <tr style="background-color: #CCFFCC"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: 1pt solid white" rowspan="1" colspan="1">In currency other than U.S. dollars</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 1pt solid white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 1pt solid black" rowspan="1" colspan="1"><b>411</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid white">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 1pt solid white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 1pt solid black" rowspan="1" colspan="1">268</td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid white">  </td> </tr> <tr style="background-color: white"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: 3pt double white" rowspan="1" colspan="1">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 3pt double white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 3pt double black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 3pt double black" rowspan="1" colspan="1"><b>1,190</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: 3pt double white">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 3pt double white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 3pt double black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 3pt double black" rowspan="1" colspan="1">5,407</td> </tr> </table> </div> </div>

-7479000

2017000

963000

-29000

155000

213000

27000

<div> <h2 style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: bold; text-transform: none; padding-top: 5pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> Note 1 — General</h2> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> 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. The Parent formed a wholly-owned subsidiary, Vringo (Israel) Ltd. (the “Subsidiary”) in March 2006, primarily for the purpose of providing research and development services, as detailed in the intercompany service agreement. The Parent and the Subsidiary are collectively referred to herein as the “Company”.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> The Company is 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.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> The Company is still in the development stage. There is no certainty regarding the Company’s ability to complete the development of its products and ensure the success of its marketing. The continuation of the stages of development and the realization of assets related to the planned activities depend on future events, including future financings and achieving operational profitability.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> The high-tech industry in which the Company operates is highly competitive and is characterized by the risks of rapidly changing technologies. Penetration into global markets requires investment of considerable resources and continuous development efforts. The Company’s future success depends upon several factors including the technological quality, price and performance of its product relative to those of its competitors.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> 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 and other offering costs. Immediately prior to the closing of the offering, 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. 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.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> Despite the foregoing, there is still significant 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 year ended December 31, 2011 and for the cumulative period from inception until December 31, 2011, the Company incurred net losses of $7.5 million and $37.4 million, respectively.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> In July 2011, the Company raised an aggregate amount of $2.5 million through the issuance of convertible notes (“Convertible Notes”) in a private placement. On December 1, 2011, the Company raised additional $0.85 million through the issuance of 817,303 additional shares of common stock (“December 2011 financing”). In connection with the December 2011 financing, all Convertible Notes (and accrued interest) were converted into 2,671,026 shares of common stock. In February 2012, the Company entered into agreements with holders (the “Holders”) of certain of its outstanding Special Bridge and Conversion Warrants, pursuant to which the Holders exercised warrants to purchase 3,828,993 shares of our common stock for aggregate proceeds of $3.6 million (“February 2012 warrant exercise”). In addition, certain Holders were granted additional warrants to purchase 2,660,922 shares of common stock of the Company, at an exercise price of $1.76 per share. The total issuance costs were $65 thousand. See also Note 17.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> The Company believes that following the February 2012 warrant exercise, its current cash levels will be sufficient to support its activity into the fourth quarter of 2012. On March 13, 2012, the Company entered into an agreement and Plan of Merger Agreement (“Merger Agreement”), pursuant to which Innovate/Protect, Inc. (“I/P”) will merge with and into VIP Merger Sub, Inc., a wholly owned subsidiary of the Company (“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 consummation of the Merger Agreement is subject to stockholder approval and other closing conditions. In addition, the Company is exploring further opportunities, including merger and acquisitions and/or additional financing necessary to ensure that the Company will continue to operate as a going concern. There can be no assurance, however, that any such opportunities will materialize. See description in Note 17.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> 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.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> As of December 31, 2011, approximately $303 thousand of the Company’s net assets were located outside of the United States.</p> </div>

283000

61000

-6424000

13000

785000

90000

-4217000

-29000

2193000

151000

98000

-402000

-177000

2777000

1198000

-1.17

3000 8000 295000 6372659 <div> <h2 style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: bold 10pt/12pt serif; PADDING-TOP: 5pt"> Note 13 — Interest and Amortization of Debt Discount Expense</h2> <p style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; TEXT-INDENT: 0pt; MARGIN: 0pt; PADDING-LEFT: 4px; PADDING-RIGHT: 0pt; FONT: 10pt/12pt serif; PADDING-TOP: 3pt"> </p> <div style="TEXT-ALIGN: center"> <table style="TEXT-ALIGN: left; PADDING-BOTTOM: 3pt; TEXT-TRANSFORM: none; FONT-VARIANT: normal; FONT-STYLE: normal; TEXT-INDENT: 0px; MARGIN: -24pt 0pt 0pt; PADDING-LEFT: 0pt; PADDING-RIGHT: 0pt; FONT-FAMILY: serif; FONT-SIZE: 10pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: normal; PADDING-TOP: 3pt" cellspacing="0" cellpadding="0" width="608"> <tr> <td></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> <td style="BORDER-BOTTOM: medium none; TEXT-ALIGN: center; WIDTH: 12px; VERTICAL-ALIGN: text-bottom">  </td> <td colspan="3"></td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="7"><br />   <br /> For the year ended December 31,</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom" rowspan="2"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" rowspan="2" colspan="3">Cumulative from inception to December 31,<br /> 2011</td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">2011</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3">2010</td> </tr> <tr> <td style="TEXT-ALIGN: left; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold">   </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3"><font style="FONT-WEIGHT: normal">U.S.$ thousands</font></td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3"><font style="FONT-WEIGHT: normal">U.S.$ thousands</font></td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; LINE-HEIGHT: normal; FONT-SIZE: 8pt; VERTICAL-ALIGN: text-bottom; FONT-WEIGHT: bold" colspan="3"><font style="FONT-WEIGHT: normal">U.S.$ thousands</font></td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Interest and discount amortization expense from<br /> venture loan</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>(245)</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (604</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,614</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Interest expense from Bridge Notes</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>—</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (161</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (170</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Lead Investor warrants recorded at fair value</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>—</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,342</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,342</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Amortization of discount of Bridge Notes</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>—</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,070</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,070</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Beneficial conversion feature in connection with<br /> Bridge Notes</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>—</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,127</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,127</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Interest expense from Series B convertible loan</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>—</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">(54</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Interest expense from Convertible Notes</td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>(11)</b></td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom">(11</td> <td style="TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: white"> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom"> Amortization of discount of Convertible Notes (beneficial conversion feature)</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>(1,269)</b></td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> —</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (1,269</td> <td style="BORDER-BOTTOM: white 1pt solid; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> </tr> <tr style="BACKGROUND-COLOR: #ccffcc"> <td style="BORDER-BOTTOM: white 3pt double; TEXT-INDENT: -10pt; PADDING-LEFT: 10pt; VERTICAL-ALIGN: text-bottom">   </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> <b>(1,525)</b></td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (4,304</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> ) </td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: center; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: left; WIDTH: 6px; VERTICAL-ALIGN: text-bottom">  </td> <td style="BORDER-BOTTOM: black 3pt double; TEXT-ALIGN: right; VERTICAL-ALIGN: text-bottom"> (6,657</td> <td style="BORDER-BOTTOM: white 3pt double; TEXT-ALIGN: left; WHITE-SPACE: nowrap; VERTICAL-ALIGN: text-bottom"> )</td> </tr> </table> </div> </div> <div> <h2 style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: bold; text-transform: none; padding-top: 5pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> Note 4 — Prepaid Expenses and Other Current Assets</h2> <p style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> </p> <div style="text-align: center"> <table cellspacing="0" cellpadding="0" width="608" style="vertical-align: text-bottom; text-indent:0px; text-align: left; font-family: serif; font-size: 10pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 0pt; padding-bottom: 3pt; margin-top: -24pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> <tr> <td></td> <td style="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom: none">  </td> <td colspan="3"></td> <td style="width: 12px; vertical-align: text-bottom; text-align: center; border-bottom: none">  </td> <td colspan="3"></td> </tr> <tr> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left" rowspan="1" colspan="1"></td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: 1pt solid black" rowspan="1" colspan="7">As of December 31,</td> </tr> <tr> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left" rowspan="1" colspan="1">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: 1pt solid black" rowspan="1" colspan="3">2011</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center; border-bottom: 1pt solid black" rowspan="1" colspan="3">2010</td> </tr> <tr> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: left" rowspan="1" colspan="1">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center" rowspan="1" colspan="3"><font style="font-weight: normal">U.S.$ thousands</font></td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="line-height: normal; vertical-align: text-bottom; font-weight: bold; font-size: 8pt; text-align: center" rowspan="1" colspan="3"><font style="font-weight: normal">U.S.$ thousands</font></td> </tr> <tr style="background-color: #CCFFCC"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom" rowspan="1" colspan="1">Government institutions</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right" rowspan="1" colspan="1"><b>  6</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right" rowspan="1" colspan="1">  30</td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left">  </td> </tr> <tr style="background-color: white"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: 1pt solid white" rowspan="1" colspan="1">Prepaid expenses and others</td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 1pt solid white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 1pt solid black" rowspan="1" colspan="1"><b>181</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid white">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 1pt solid white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 1pt solid black" rowspan="1" colspan="1">138</td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: 1pt solid white">  </td> </tr> <tr style="background-color: #CCFFCC"> <td style="padding-left: 10pt; text-indent: -10pt; vertical-align: text-bottom; border-bottom: 3pt double white" rowspan="1" colspan="1">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 3pt double white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 3pt double black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 3pt double black" rowspan="1" colspan="1"><b> 187</b></td> <td style="white-space: nowrap; vertical-align: text-bottom; text-align: left; border-bottom: 3pt double white">  </td> <td style="width: 6px; vertical-align: text-bottom; text-align: center; border-bottom: 3pt double white" rowspan="1"> </td> <td style="width: 6px; vertical-align: text-bottom; text-align: left; border-bottom: 3pt double black" rowspan="1"> </td> <td style="vertical-align: text-bottom; text-align: right; border-bottom: 3pt double black" rowspan="1" colspan="1">168</td> </tr> </table> </div> </div> 1269000 -20000 <div> <h2 style="text-indent:0pt; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: bold; text-transform: none; padding-top: 5pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> Note 9 — Convertible Notes</h2> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> In July, 2011, the Company entered into agreements (“Securities Purchase Agreements”) with selected accredited investors (the “Purchasers”) to sell and issue Convertible Notes in the aggregate amount of $2.5 million. The Convertible Notes were to mature on January 1, 2012 (the “Maturity Date”) unless earlier converted, and bear interest at a rate of 1.25% per annum. Interest on the Convertible Notes is due on the Maturity Date unless earlier converted. The Company’s obligations under the Convertible Notes were secured by a security interest in all of the Company’s assets, including a pledge over the shares of its wholly-owned subsidiary, pursuant to the Security Purchase Agreements.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> The Convertible Notes were convertible into shares of common stock at a conversion price equal to the lower of (i) the closing price of the Company’s common stock on the announcement date of the note offering, (ii) the closing price of the Company’s common stock on the closing date of the note offering and (iii) a ten percent (10%) discount to the price at which the securities are sold in the new stock offering. Consummation of a future stock offering, would automatically trigger conversion of the Convertible Notes and any accrued interest into the same securities and contain the same terms (other than the conversion price, which is set forth above) as in the subsequent stock offering.</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> On December 1, 2011, the Company raised an additional $0.85 million through the issuance of 817,303 additional shares of common stock in a private placement. Pursuant to the December 2011 financing, all Convertible Notes (and accrued interest) were converted into 2,671,026 shares of common stock. The conversion of the Convertible Notes triggered anti-dilution provisions in certain of our outstanding warrants (see Note 11).</p> <p style="text-indent:20px; text-align: left; font-family: serif; font-size: 10pt; line-height: 12pt; font-style: normal; font-variant: normal; font-weight: normal; text-transform: none; padding-top: 3pt; padding-right: 0pt; padding-left: 4px; padding-bottom: 3pt; margin-top: 0pt; margin-right: 0pt; margin-left: 0pt; margin-bottom: 0pt"> As of the date of the issuance of the Convertible Notes, an amount of $89 thousand was initially allocated to additional paid-in capital in respect of the beneficial conversion feature, with a corresponding discount to the Convertible Notes, to be amortized as interest expense over the repayment period of the Convertible Notes. The December 2011 financing determined the actual conversion price at $0.94. As a result the amount allocated to discount and the beneficial conversion feature was adjusted to $1,269 thousand. The discount was fully amortized to interest expense at conversion; as a result, $1,269 thousand was recorded in the statement of operations, as interest expense.</p> </div> 43000 43000

1300000

131000

2511000 27000 2484000

3000

3000 2000

8000

1269000

210000

293000

777000

-7479000

2511000

65000

785000

2500000

-7000

-7332000

360000

18000

11000

-7000

360000

-7332000

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