Warrant

Liabilities

Pursuant to FASB ASC

815,

the Company is required to report the value of certain warrants as a liability at fair value and record the changes in the fair value of the warrant liabilities as a gain or loss in its consolidated statements of operations and comprehensive loss due to the price-based anti-dilution rights of warrants.

During

June 2012,

the Company issued warrants to purchase a total of

15,000,000

shares of common stock to Visser Precision Cast, LLC under a Master Transaction Agreement (the “Visser MTA Agreement”). These warrants had an original exercise price of

$0.22

per share and an expiration date of

June 1, 2017

and were originally valued at

$4,260.

These warrants also had certain anti-dilution and exercise price reset provisions which qualified the warrants to be classified as a liability under FASB ASC

815.

As a result of subsequent issuances of the Company’s common stock, which resulted in an anti-dilution impact, the exercise price of these warrants was reduced to

$0.16

as of

March 22, 2017

and

December 31, 2016.

In addition, the number of shares to be issued under the warrants as a result of the anti-dilution provision increased to

21,317,094

as of

March 22, 2017

and

December 31, 2016.

March 22, 2017,

Visser Precision Cast exercised, on a cashless basis, all

21,317,094

warrants, resulting in the issuance of

4,241,386

shares of the Company’s common stock. Upon exercise, the Company reclassified

$975

of the associated warrant liability to additional paid in capital, with

being allocated to common stock and

$971

to additional paid in capital. The change in warrant value for these warrants for the

three

and

six

months ended

June 30, 2018

was

and

$0,

respectively. This compares to a gain of

and (

$553

) for the

three

and

six

months ended

June 30, 2017,

respectively.

July 2, 2012,

the Company issued warrants to purchase a total of

18,750,000

shares of common stock in connection with a private placement of senior convertible notes (“the

July 2012

Private Placement”). These warrants had an exercise price of

$0.384

per share, expired on

January 2, 2018,

and were originally valued at

$5,053.

These warrants had certain anti-dilution and exercise price reset provisions which qualified the warrants to be classified as a liability under FASB ASC

815.

During the year ended

December 31, 2017

investors party to the

July 2012

Private Placement exercised a total of

10,540,750

warrants at an exercise price of

$0.17

per share. As a result of these warrant exercises, the Company issued

7,457,902

shares of common stock, for total consideration of

$712,

and associated warrant liabilities of

$1,247

were reclassified to additional paid in capital. The change in warrant value for these warrants for the

three

and

six

months ended

June 30, 2018

was

and

$0,

respectively. This compares to a loss of

$1,059

and

$663

for the

three

and

six

months ended

June 30, 2017,

respectively.

March 10, 2016,

the Company issued warrants to purchase a total of

10,066,809

shares of common stock as part of the

2016

Purchase Agreement. These warrants have an exercise price of

$0.07

per share, expire on

March 10, 2026,

and were originally valued at

$760.

These warrants have certain anti-dilution and exercise price reset provisions which qualify the warrants to be classified as a liability under FASB ASC

815.

As of

June 30, 2018,

these warrants were valued at

$2,184

under the Black-Scholes valuation model utilizing the following assumptions: (i) expected life of

7.69

years, (ii) volatility of

88%,

(iii) risk-free interest rate of

2.9%,

and (iv) dividend rate of

The change in fair value for these warrants for the

three

and

six

months ended

June 30, 2018

was a gain of

$283

and

$8,

respectively. This compares to a loss of

$980

and

$779

for the

three

and

six

months ended

June 30, 2017,

respectively.

The following table summarizes the change in the Company’s warrant liabilities as of

June 30, 2018:

	2016 Purchase
	Agreement

Beginning Balance - December 31, 2017	$	2,192
Change in value of warrant liabilities, (gain)		(8	)
Exercises		-
Ending Balance - June 30, 2018	$	2,184

The Company had warrants to purchase

10,066,809

and

10,066,809

shares of common stock outstanding as of

June 30, 2018

and

December 31, 2017,

respectively, which were valued and classified as liabilities under FASB ASC

815.