Note 8

Warrants:

The Company accounts for warrants that require net cash settlement upon change of control of the Company and warrants that have provisions that protect holders from a decline in the issue price of its common stock (or "down-round" provisions) as liabilities instead of equity.

The Company recognizes these liabilities at the fair value on each reporting date. The Company computed the value of the warrants using the binomial method. A summary of quantitative information with respect to the valuation methodology and significant unobservable inputs used for the Company's warrant liabilities that are categorized within Level 3 of the fair value hierarchy as of June 30, 2017 and December 31, 2016 is as follows:

	June 30, 2017			December 31, 2016

Number of shares underlying the warrants		403,090			403,090
Stock price	$	2.43		$	2.20
Volatility		47.30	%		47.00	%
Risk-free interest rate		1.38	%		1.22	%
Expected dividend yield		0	%		0	%
Expected warrant life	1.62 – 1.85 years			2.12 – 2.35 years

Recurring Level 3 Activity and Reconciliation

The tables below provide a reconciliation of the beginning and ending balances for the liability measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the six month periods ended June 30, 2017 and 2016, for all financial liabilities categorized as Level 3 as of June 30, 2017 and June 30, 2016, respectively.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

Issuance Date	December 31, 2016		Increase in Fair Value		June 30, 2017

10/31/2013	$	39	$	2	$	41
2/5/2014		66		2		68

Total	$	105	$	4	$	109

Issuance Date	December 31, 2015		Decrease in Fair Value			Reclassification to Equity			June 30, 2016

10/31/2013	$	379	$	(267	)	$	-		$	112
2/5/2014		715		(510	)		-			205
7/24/2014 Series A		2,415		(1,573	)		(842	)		-
7/24/2014 Series B		1,726		(1,713	)		(13	)		-
6/22/2015		1,807		(1,121	)		(686	)		-

Total	$	7,042	$	(5,184	)	$	(1,541	)	$	317

Number of Warrants Subject to Remeasurement:

Issuance Date	June 30, 2017

10/31/2013		137,143
2/5/2014		265,947

Total		403,090