Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table provides information about the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2015 and December 31, 2014, respectively:

	Balance at March 31, 2015		Level 1		Level 2		Level 3		Balance at December 31, 2014		Level 1		Level 2		Level 3
Asset included in:
Money Markets	$	1,816,071	$	1,816,071	$	—	$	—	$	3,608,890	$	3,608,890	$	—	$	—
Liabilities:
Growth Term Loan warrants	$	231,140	$	—	$	—	$	231,140	$	301,508	$	—	$	—	$	301,508
Preferred Stock warrants	$	120,418	$	—	$	—	$	120,418	$	429,035	$	—	$	—	$	429,035
Convertible Note warrants	$	727,737	$	—	$	—	$	727,737	$	—	$	—	$	—	$	—

Summary of Fair Value Assessment of Warrant Liability Inputs using Black Sholes Option Pricing Model

The March 31, 2015 and December 31, 2014 fair value assessments used the Black-Sholes option pricing model using the following assumptions:

	March 31, 2015	December 31, 2014
Fair value of Series B/C/D Stock and Series E Stock shares on grant date or measurement date	$0.01 – $0.12	$0.14 – $0.22
Exercise price	$0.01 – $0.346	$0.01 – $0.346
Expected risk-free interest rate	0.4 – 1.90%	1.20%
Expected volatility	55 – 75%	70%
Expected term	0.7 – 9.4 years	4.1 years
Expected dividend yield	0%	0 – 8%

Reconciliation of Beginning and Ending Liabilities Measured at Fair Value on Recurring Basis

A reconciliation of the beginning and ending liabilities measured at fair value on a recurring basis using Level 3 inputs for March 31, 2015 and December 31, 2014 are as follows:


	March 31, 2015		December 31, 2014
Beginning balance	$	730,543	$	44,120
Issuance of Series E Warrants		—		2,190,708
Exercise of Series E Warrants		(4,116)		(1,889,201	)
Exercise of Series D Warrants		—		(4,020	)
Issuance of Convertible Note Warrants		741,828		—
Change in stock warrant valuation		(388,960)		388,936
Ending balance	$	1,079,295	$	730,543

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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