Quarterly report pursuant to Section 13 or 15(d)

Joint Development Agreement with CO2 Solutions

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Joint Development Agreement with CO2 Solutions
3 Months Ended
Mar. 31, 2013
Joint Development Agreement with CO2 Solutions [Abstract]  
Joint Development Agreement with CO2 Solutions
Joint Development Agreement with CO2 Solutions
On December 15, 2009, we entered into an exclusive joint development agreement with CO2 Solutions, a company based in Quebec City, Quebec, Canada, whose shares are publicly traded in Canada on TSX Venture Exchange. The joint development agreement expired in January 2011. Under the agreement, we obtained a research license to CO2 Solutions' intellectual property and agreed to conduct research and development activities jointly with CO2 Solutions with the goal of advancing the development of carbon management technology. We also purchased 10,000,000 common shares (approximately 16.6% of the total common shares outstanding at the time of investment) of CO2 Solutions in a private placement subject to a four-month statutory resale restriction. This restriction expired on April 15, 2010. In July 2012, Alan Shaw, our former Chief Executive Officer resigned from the board of directors of CO2 Solutions and we are currently considering potential replacements to this designated board seat.
In January 2011, we extended our joint development agreement with CO2 Solutions on essentially the same terms as the original agreement. The extended agreement expires nine months after the expiry of any third party collaborations. This agreement expired in February 2013.
We concluded that through March 31, 2013, we did not have the ability to exercise significant influence over CO2 Solutions' operating and financial policies. We consider our investment in CO2 Solutions' common shares as an investment in a marketable security that is available for sale, and carry it at fair value in non-current marketable securities. As discussed in Note 6, we recorded an impairment of $0.8 million in our condensed consolidated statement of operations as sales, general and administrative expense during the year ended December 31, 2012. Subsequent changes in fair value have been recognized in the condensed consolidated statement of comprehensive loss. The fair value of our CO2 Solution’s common shares as of March 31, 2013 was determined by trading on the TSX Venture Exchange. Accordingly, we have classified our investment in CO2 Solutions as a Level 1 investment as discussed in Note 6.