WARRANTS

From time to time, we have issued warrants to purchase shares of common stock. These warrants have been issued in connection with the financing transactions and consulting services. Our warrants are subject to standard anti-dilution provisions applicable to shares of our common stock.

Investor Relations Warrants

In August 2014 and October 2014, we entered into agreements with our investor relations firm, or IR Firm, and an IR consultant to provide us with investor relations services. Pursuant to the IR Firm agreement, in addition to monthly cash compensation of $8,500 per month, we issued to the IR Firm a 3-year consulting warrant, or IR Consulting Warrant, for the purchase of 42,000 shares of common stock that became fully vested on July 21, 2015. The IR Consulting Warrant has an exercise price of $8.31 and expires on July 17, 2017. We estimated the fair value of the IR Consulting Warrant at issuance date to be $119,000 using the Black-Scholes option valuation model with the following assumptions: market price of the stock of $6.91 per share, time to maturity of 3.0 years, volatility of 69.7%, zero expected dividend rate and risk free rate of 0.88%. In September, 2015 we amended the agreement with the IR Firm and adjusted the monthly cash compensation to $3,000 per month. Pursuant to our agreement with the IR consultant, in addition to monthly cash compensation of $5,000 per month, we issued to the IR consultant a 4 year consulting warrant, or IR Warrant, for the purchase of 6,000 shares of common stock that vested monthly over twelve months. The IR Warrant has an exercise price of $6.50 and expires on September 30, 2018. Since the IR Warrant vested monthly, we estimated the fair value of the IR Warrant at the date of each vesting period over the three and six month periods ending June 30, 2015 using the Black-Scholes option valuation model with the following assumptions: market prices of the stock of $2.98 - $11.62 per share, time to maturity of 3.8 to 3.3 years, volatility of 60% to 81.8%, zero expected dividend rate and risk free rate range of 0.91% to 1.5%.

We recorded reductions of $(69,000) and $(29,000) of stock compensation related to the IR warrants during the three and six months ended June 30, 2015 which was included in general and administrative expense. There was no expense recorded for the three and six months ended June 30, 2016 as the warrants had become fully vested as of December 31, 2015.

Private Placement Warrants

In April 2016, we issued warrants to purchase 1,996,880 shares of our common stock at an exercise price of $2.86 in connection with our private placement sale of 1,996,880 shares of common stock. The warrants are exercisable for a period

commencing 6 months and ending 36 months after the closing of the financing on April 25, 2016. We also issued to the placement agents in the financing, warrants to purchase an aggregate of 99,844 shares of our common stock at an exercise price of $2.86 for a period commencing 6 months and ending 36 months after the closing. We refer to these warrants as Private Placement Warrants. We estimated the fair value of the Private Placement Warrants at $2.5 million using the Black-Scholes option valuation model with the following assumptions: market prices of the stock of $2.90 per share, time to maturity of 3 years, volatility of 60%, zero expected dividend rate and risk free rate of 0.97%. The allocation of the fair value of these warrants was included in additional paid-in capital on the condensed consolidated balance sheet.

A roll-forward of warrant share activity from January 1, 2015 to June 30, 2015 is shown in the following table:



	Issued and Outstanding Warrants as of January 1, 2015	Warrants Issued	Warrants Exercised/ Expired			Issued and Outstanding Warrants as of June 30, 2015
Bridge Warrants	249,999	—	—			249,999
Consulting Warrant	222,222	—	(104,444	)	(1)	117,778
Financing Warrant	208,763	—	(130,577	)	(1)	78,186
Underwriting Warrant	310,500	—	—			310,500
IR Consulting Warrant	48,000	—	—			48,000
	1,039,484	—	(235,021	)		804,463


(1)	During the six months ended June 30, 2015, there were 235,021 common stock warrants that were exercised through a cashless exercise which netted 208,184 shares being issued.

A roll-forward of warrant share activity from January 1, 2016 to June 30, 2016 is shown in the following table:



	Issued and Outstanding Warrants as of January 1, 2016	Warrants Issued	Warrants Exercised/ Expired			Issued and Outstanding Warrants as of June 30, 2016
Bridge Warrants	249,999	—	—			249,999
Consulting Warrant	117,778	—	(19,778	)	(1)	98,000
Financing Warrant	78,186	—	—			78,186
Underwriting Warrant	310,500	—	—			310,500
IR Consulting Warrants	48,000	—	—			48,000
Private Placement Warrants	—	2,096,724				2,096,724
	804,463	2,096,724	(19,778	)		2,881,409


(1)	During the six months ended June 30, 2016, there were 19,778 common stock warrants that were exercised through cashless exercises which netted 19,693 shares being issued.