12.

CONVERTIBLE PREFERRED STOCK WARRANT

The Company has an outstanding convertible preferred stock warrant related to a 2013 debt financing (see Note 5) whereby the Company issued a warrant to purchase 128,231 shares of Series C convertible preferred stock. The convertible preferred stock warrant was recorded as a liability and is adjusted to fair value at each balance sheet date, with the change in fair value being recorded as a component of other income (expense), net in the statements of operations. Upon issuance, the fair value of the warrant was estimated to be $158 thousand. Due to the close proximity of the issuance date in December 2013 to the year end, no mark to market adjustment was recognized during the year ended December 31, 2013. The Company recorded a gain of $20 thousand related to the change in fair value of preferred stock warrant liability as part of other income (expense), net in the accompanying statements of operations for the year ended December 31, 2014.

The key terms of the outstanding convertible preferred stock warrant and the convertible preferred stock warrant liability at December 31, 2013 and 2014 were as follows (in thousands):

Issuance
Date

Expiration Date

Exercise
Price per
Share

Shares

Fair Value of Warrant

December 31,
2013

December 31,
2014

Series C Warrant

December
2013

The later of
December 2023
or five years
after an IPO

5.84

128,231

158

138

The Company used the Black-Scholes option-pricing model to estimate the fair value of the convertible preferred stock warrant with the following assumptions:


	December 31,
	2013			2014
Series C Warrant:
Expected term (in years)		2.0			5.3
Expected volatility		30.0	%		30.0	%
Risk-free interest rate		0.4	%		1.7	%
Expected dividend yield		0	%		0	%