As of March 31, 2012, the Company reported a common stock warrant liability of $10.3 million, of which $9.3 million is related to five-year warrants issued in February 2011. These warrants contain anti-dilution provisions that adjust the exercise price of the warrants in certain circumstances and, therefore, have been classified as derivative liabilities in accordance with generally accepted accounting principles. The remaining balance of $1.0 million is related to warrants issued in May 2009 and February 2010. Although these warrants state that the warrants may be exercised on a cashless basis if a registration statement or an exemption from registration is not available for the issuance or resale of the warrant shares upon exercise of the warrants, these warrants have been classified as derivative liabilities in accordance with generally accepted accounting principles because they do not expressly state that there is no circumstance in which the Company shall be required to settle the warrants in cash. In classifying these warrants as liabilities, the accounting literature does not permit us to take into account the remoteness of any potential cash settlement.Readers are referred to, and encouraged to read in their entirety, the Forms 8-K regarding the matters referred to herein, including any exhibits attached thereto, and the Company's Quarterly R
|SOURCE Discovery Laboratories, Inc.|
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