WARRANTS

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

WARRANTS

The Company uses valuation methods and assumptions that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments.  The following assumptions were utilized by the Company:

	2015		2014
Risk-free interest rate %		1.26 - 1.75		1.57 - 1.77
Expected dividend yield		—		—
Expected term in years (contractual term)		5		5
Forfeiture rate %		—		—
Expected volatility %		89 - 99		78 - 102

Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the warrant.

In the year ended December 31, 2015 and 2014, the Company issued warrants with a relative fair value of $3,386,895 and $350,000, respectively in connection with private placements of the Company’s Preferred Stock, as well as in connection with the Reimbursement Agreement more fully described in Note 8.

The following table summarizes data about outstanding warrants at December 31, 2015:

Type of Warrant/ Range of Exercise Prices		Expirations	Number Outstanding		Weighted- Average Remaining Contractual Life (years)		Weighted- Average Exercise Price		Number Exercisable
Derivative :
$	7.50	8/31/17 to 11/6/17		700,000		1.72	$	7,70		700,000
Equity:
$	2.75 - $3.00	12/10/18 to 10/30/20		3,830,428		4.19	$	2.98		3,830,428
Total outstanding				4,530,428						4,530,428

A summary of warrant activity in the year ended December 31, 2015 is as follows:

Warrants	Shares			Weighted- Average Exercise Price
Outstanding at December 31, 2013		1,209,211		$	17.92
Granted		927,610		$	2.98
Forfeited or expired		(289,755	)	$	20.33
Outstanding at December 31, 2014		1,847,066		$	10.04
Granted		2,721,000		$	3.00
Forfeited or expired		(37,638	)	$	22.50
Outstanding at December 31, 2015		4,530,428		$	3.68

The derivative warrants to purchase 700,000 shares of our Common Stock, at exercise prices ranging from $20 to $22.70 and expiring in 2017, are included in the outstanding warrants at December 31, 2015 and 2014. On February 12, 2015, these warrants were re-priced to $7.50 to compensate PPVA in connection with the Reimbursement Agreement reached between the Company and PPVA. See Note 8.

During 2015 and 2014, there were no warrants exercised.