Stock Purchase Warrants

As of December 31, 2015, the following equity classified warrants were outstanding:



NUMBER OF UNDERLYING SHARES	EXERCISE PRICE PER SHARE		WARRANT EXPIRATION DATE	TYPE OF EQUITY SECURITY
75,000	$	5.00	February 2019	Common Stock
75,000	$	5.00	November 2019	Common Stock
7,500	$	5.00	August 2020	Common Stock
223,482	$	0.05	December 2019	Common Stock

The warrants outstanding at December 31, 2015 are all currently exercisable with weighted-average remaining lives of 3.8 years.

Prior to the IPO, the Company recognized all of its outstanding warrants as liabilities on its consolidated balance sheet as they were subject to price protection provisions. The warrant liability was revalued at each reporting period and changes in fair value were included as a component of Other income (expense), net. For the year ended December 31, 2013, the Company recognized $3.7 million of expense related to changes in the fair value of the warrant liability. The initial recognition and subsequent changes in fair value of the warrant liability had no effect on the Company’s consolidated statement of cash flows.

The Company estimated the fair value of the warrants using the Black-Scholes option-pricing model utilizing the fair value of underlying preferred and common stock. Black-Scholes has inherent limitations for use in the case of a warrant with a price protection provision, since the model is designed to be used when the inputs to the model are static throughout the life of a security. Management concluded, under the Company’s facts and circumstances, that the estimated fair values of the warrants using the Black-Scholes option-pricing model approximates, in all material respects, the values determined using a Monte Carlo valuation model. The estimates in the Black-Scholes option-pricing model and the Monte Carlo valuation model are based, in part, on assumptions, including but not limited to stock price volatility, the expected life of the warrants, the risk free rate and the fair value of the equity stock underlying the warrants.

Key assumptions utilized in the fair value calculation as of October 30, 2013, the IPO closing date, appear in the table below.



	OCTOBER 30, 2013
Expected term (years)	5.32-6.84
Volatility	65.00	%
Risk-free interest rate	1.51%-2.00%
Dividend yield	—	%