Note 13. Earn-out Milestone Liability

The total aggregate purchase price for the EGEN Acquisition included potential future Earn-out Payments contingent upon achievement of certain milestones. The difference between the aggregate $30.4 million in future Earn-out Payments and the $13.9 million included in the fair value of the acquisition consideration at June 20, 2014 was based on the Company's risk-adjusted assessment of each milestone (10% to 67%) and utilizing a discount rate based on the estimated time to achieve the milestone (1.5 to 2.5 years). The earn-out milestone liability will be fair valued at the end of each quarter and any change in their value will be recognized in the financial statements.

As of March 31, 2016 and December 31, 2015, the Company fair valued these milestones at $14.2 million and $13.9 million, respectively, and recognized a non-cash charge of $302,656 during the three months ended March 31, 2016 as a result of the change in the fair value of these milestones from December 31, 2015. As of March 31, 2015 and December 31, 2014, the Company fair valued these milestones at $13.8 million and $13.7 million, respectively, and recognized a non-cash charge of $172,136 during the three months ended March 31, 2015 as a result of the change in the fair value of these milestones from December 31, 2014.

The following is a schedule of the Company’s risk-adjustment assessment of each milestone:

Date	Risk-adjustment Assessment of each Milestone				Discount Rate		Estimated Time to Achieve (years)

March 31, 2016		10%	to	75%		9%		0.25	to	2.25
December 31, 2015		10%	to	75%		9%		0.50	to	2.50
March 31, 2015		10%	to	67%		9%		1.17	to	6.26
December 31, 2014		10%	to	75%		9%		1.25	to	6.50

The following is a summary of the changes in the earn-out milestone liability for 2016:

Balance at January 1, 2016	$	13,921,412
Non-cash charge from the adjustment for the change in fair value included in net loss		302,656
Balance at March 31, 2016	$	14,224,068