6. Restatements

Subsequent to filing its Quarterly Report on Form 10-Q for the three months ended March 31, 2013 with the SEC on May 10, 2013, the Company determined that it should have used derivative liability accounting to account for the fair value of the warrants issued in the Company’s July 2012 Financing Transaction in recording the net proceeds received, due to the down round provision associated with the exercise price of the warrants. The Company previously recorded all of the net proceeds from the July 2012 Financing Transaction as equity. In addition, in accounting for the warrants issued in the January Financing Transaction, the Company did apply derivative liability accounting; however, the valuation model used to determine the fair value of the warrants only considered the net cash settlement feature which gives the warrant holder the right to net cash settlement in the event certain transactions occur. The Company also should have included other scenarios that do not result in application of the net cash settlement feature and should have considered the down round provision in determining the fair value of the warrants.

The Company has calculated the fair value of the warrants issued in both the July 2012 Financing Transaction and the January Financing Transaction as of the transaction date and for each relevant reporting period using the Monte Carlo simulation valuation method. The Company has restated its previously issued financial statements as of and for the three months ended March 31, 2013, to correct the non-cash errors related to derivative liability accounting for the warrants issued in the July 2012 Financing Transaction and the January Financing Transaction.

The impact of the restatements is reflected below for the periods indicated:

Certain amounts in the related statements of cash flows have been corrected, but those changes did not impact the net cash provided from or used in operating, investing or financing activities.