Note 11

Warrants:

The Company accounts for warrants that require net cash settlement upon change of control of the Company as liabilities instead of equity. Currently there are 403,090 of such warrants with an exercise price of $3.75 per share and they expire between February 5, 2019 and April 30, 2019.

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 December 31, 2017 and December 31, 2016 is as follows:

	December 31, 2017			December 31, 2016

Number of shares underlying the warrants		403,090			403,090
Stock price	$	1.23		$	2.20
Volatility		48.60	%		47.00	%
Risk-free interest rate		1.76	%		1.22	%
Expected dividend yield		0	%		0	%
Expected warrant life	1.12 – 1.35 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).

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

Issuance Date	December 31, 2016		Decrease in Fair Value			December 31, 2017

10/31/2013	$	39	$	(37	)	$	2
2/5/2014		66		( 65	)		1

Total	$	105	$	(102	)	$	3

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

10/31/2013	$	379	$	(340	)	$	-		$	39
2/5/2014		715		(649	)		-			66
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	$	(5,396	)	$	(1,541	)	$	105

Number of Warrants Subject to Remeasurement:

	Issuance Date	December 31, 2017

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

	Total	403,090