2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries; Columbia Laboratories Bermuda Ltd., Juniper Pharmaceuticals France SA, Juniper Pharmaceuticals UK Ltd, and Juniper Pharma Services Ltd. All significant intercompany balances and transactions have been eliminated in consolidation.

Basis of Presentation

On July 26, 2013, Juniper’s Board of Directors set a ratio of 1-for-8 for its previously approved reverse stock split which took effect on August 9, 2013. The reverse stock split was approved by Juniper’s shareholders at its annual meeting of shareholders on May 1, 2013. All share and per share amounts relating to the common stock, stock options and common stock warrants included in the financial statements and accompanying footnotes have been retroactively adjusted for all periods presented to give effect to this reverse stock split, including reclassifying an equal amount to the reduction in par value of common stock to additional paid-in capital. The reverse stock split did not result in a retroactive adjustment to the share amounts for any of the classes of the Company’s preferred stock.

Segments

The Company and its subsidiaries currently operate in two segments: product and service. The product segment includes supply chain management for CRINONE, the Company’s sole commercialized product. The product segment also includes the royalty stream the Company receives from Allergan for CRINONE sales in the United States as well as the development of new product candidates. The service segment includes pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services for the Company’s customers as well as characterizing and developing pharmaceutical product candidates for the Company’s internal programs and managing the preclinical and clinical manufacturing of COL-1077 and the Company’s IVR. In September 2013, the Company acquired Juniper Pharma Services, a U.K.-based provider of pharmaceutical development, clinical trial manufacturing, and advanced analytical and consulting services to the pharmaceutical industry. The Company has integrated its supply chain management for its sole commercialized product, CRINONE into those operations and have therefore sought to capture synergies by transferring all operational activities related to its historic business.

The Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (CODM), currently manages the business based on revenue and gross profit and as such the Company has concluded that it is two segments, which consists of product and service. Segment information is consistent with the financial information regularly reviewed by our CODM, who we have determined to be the chief executive officer, for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. Juniper’s CODM does not review our assets, operating expenses or non-operating income and expenses by business segment at this time.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures at the date of the financial statements during the reporting period. Significant estimates are used for, but are not limited to revenue recognition, sales return reserves, allowance for doubtful accounts, inventory reserve, impairment analysis of goodwill and intangibles including their useful lives, research and development accruals, deferred tax assets, liabilities and valuation allowances, common stock warrant valuations, and fair value of stock options. On an ongoing basis, management evaluates its estimates. Actual results could differ from those estimates.

Foreign Currency

The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at current exchange rates and revenue and expense items are translated at average rates of exchange prevailing during the period. The functional currency of Juniper’s foreign subsidiaries is considered to be the local currency for each entity and, accordingly, translation adjustments for these subsidiaries are included in accumulated other comprehensive income within stockholders’ equity. Certain intercompany and third party foreign currency-denominated transactions generated foreign currency re-measurement losses of approximately $70,000, $33,000 and $47,000 during the years ended December 31, 2015, 2014 and 2013, respectively, which are included in other expense, net in the consolidated statements of operations.

Cash Equivalents

The Company considers all investments purchased with an original maturity of three months or less to be cash equivalents.

Fair Value of Financial Instruments

U.S. GAAP establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the amount that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes the following fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets and liabilities.

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The fair value of cash and cash equivalents are classified as Level 1 at December 31, 2015 and 2014.

The estimated fair value of the common stock warrant liability resulting from the October 2009 registered direct offering of 1,362,500 shares of the common stock and warrants to purchase 681,275 shares of common stock was $0.4 million as of December 31, 2013. There was no value associated with the common stock warrant liability as of December 31, 2015. There was no value associated with the common stock warrant liability as of December 31, 2014 as the Company neared the expiration of these warrants in April 2015. These values were determined by using the Black-Scholes option pricing model which is based on the Company’s stock price at measurement date, exercise price of this common stock warrant, risk-free rate and historical volatility, and are classified as a Level 2 measurement. During the years ended December 31, 2014 and 2013, the Company recorded income of $0.4 million and $0.8 million, respectively, to adjust the value of the common stock warrant liability to market. The fair value of the common stock warrant liability as of December 31, 2015 was zero, as the warrants expired in April 2015. Therefore, during the year ended December 31, 2015, no income or expense was recorded.


	2015		2014
Stock Price	$	—	$	5.60
Exercise Price	$	—	$	12.16
Risk free interest rate		—		0.030	%
Expected term		—		0.25 years
Dividend yield		—		—
Expected volatility		—		22.76	%

The fair value of accounts receivable and accounts payable approximate their carrying amount. The Company’s long-term debt is carried at amortized cost, which approximates fair value based on current market pricing available to the Company for similar debt instruments and is categorized as a Level 2 measurement.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market. Components of inventory cost include materials, labor and manufacturing overhead. Inventories consist of the following (in thousands):


	December 31,
	2015		2014
Raw materials	$	1,410	$	761
Work in process		1,840		1,095
Finished goods		373		1,345

Total	$	3,623	$	3,201

Reserves for excess and obsolete inventory were $0.3 million and $36,000 at December 31, 2015 and 2014, respectively.

Juniper provides inventory allowances when conditions indicate that the selling price could be less than cost due to physical deterioration, usage, obsolescence, reductions in estimated future demand and reductions in selling prices. Juniper balances the need to maintain strategic inventory levels with the risk of obsolescence due to changing technology and customer demand levels. Unfavorable changes in market conditions may result in a need for additional inventory reserves that could adversely impact Juniper’s gross margins. Conversely, favorable changes in demand could result in higher gross margins when the Company sells products.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are reported at their outstanding unpaid principal balances reduced by allowances for doubtful accounts. The Company estimates doubtful accounts based on our historical bad debts, factors related to specific customers’ ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectable.

Accounts receivable allowance activity consisted of the following for the years ended December 31 (in thousands):


	2015			2014		2013
Balance at beginning of year	$	358		$	112	$	100
Additions		—			246		12
Deductions		(95	)		—		—

Balance at end of year	$	263		$	358	$	112

Juniper’s accounts receivable balance, net of allowance for doubtful accounts, was $7.5 million as of December 31, 2015, and $5.3 million as of December 31, 2014. Included in the accounts receivable balance at December 31, 2015 and 2014 were $1.9 million and $0.7 million of unbilled accounts receivable, respectively. Juniper’s unbilled accounts receivable is derived from services performed that have not been billed as of the balance sheet date.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation. Leasehold improvements are amortized over the lesser of the useful life or the term of the leases. Depreciation is computed on the straight-line basis over the estimated useful lives of the respective assets, as follows:


		Years
Machinery and equipment		3-10
Furniture and fixtures		3-5
Computer equipment and software		3-5
Buildings		Up to 39
Land		Indefinite

Costs of major additions and improvements are capitalized and expenditures for maintenance and repairs that do not extend the life of the assets are expensed. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation are eliminated from the accounts and any resultant gain or loss is credited or charged to operations.

Juniper continually evaluates whether events or circumstances have occurred that indicate that the remaining useful life of its long-lived assets may warrant revision or that the carrying value of these assets may be impaired. Juniper evaluates the realizability of its long-lived assets based on profitability and cash flow expectations for the related asset. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Based on this evaluation, Juniper believes, as of each balance sheet date presented, none of Juniper’s long-lived assets were impaired.

Concentration of Risk

The Company has two major customers – Allergan and Merck KGaA. See Note 12 of our consolidated financial statements for customer and product concentrations.

The Company depends on one supplier for a key excipient (ingredient) used in its products and one supplier for one of the active pharmaceutical ingredients.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination. The Company does not amortize its goodwill, but instead tests for impairment annually in the fourth quarter and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than its carrying value of the asset.

In accordance with Accounting Standards Codification, or ASC 350, Goodwill and Other Intangibles (“ASC 350”), we use the two step approach for each reporting unit. The first step compares the carrying amount of the reporting unit to its estimated fair value (Step 1) utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated using a risk-adjusted discount rate. To the extent that the carrying value of the reporting unit exceeds its estimated fair value, a second step is performed, wherein the reporting unit’s carrying value is compared to the implied fair value (Step 2). To the extent that the carrying value of goodwill exceeds the implied fair value of goodwill, impairment exists and must be recognized.

We have concluded that our business represents two reporting units for goodwill impairment testing, which are product and service. Our goodwill is assigned to our service reporting unit. We have performed our annual test for impairment as of October 1, 2015 and have determined that our goodwill is not impaired as of December 31, 2015.

Intangible Assets

The Company capitalizes and includes in intangible assets the costs of trademark, developed technology and customer relationships. Intangible assets are recorded at fair value at the time of their acquisition and stated net of accumulated amortization. The Company amortizes its intangible assets that have finite lives using either the straight-line or accelerated method, based on the useful life of the asset over which it is expected to be consumed utilizing expected undiscounted future cash flows. Amortization is recorded over the estimated useful lives ranging from 3 to 7 years. The Company evaluates the realizability of its definite lived intangible assets whenever events or changes in circumstances or business conditions indicate that the carrying value of these assets may not be recoverable based on expectations of future undiscounted cash flows for each asset group. If the carrying value of an asset or asset group exceeds its undiscounted cash flows, the Company estimates the fair value of the assets, generally utilizing a discounted cash flow analysis based on the present value of estimated future cash flows to be generated by the assets using a risk-adjusted discount rate. To estimate the fair value of the assets, the Company uses market participant assumptions pursuant to ASC 820, Fair Value Measurements. If the estimate of an intangible asset’s revised useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised useful life.

Income Taxes

Deferred tax assets or liabilities are determined based on timing differences between when income and expense items are recognized for financial statement purposes versus when they’re recognized for tax purposes, as measured by enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be settled. A valuation allowance is provided against deferred tax assets in circumstances where management believes it is more likely than not that all or a portion of the assets will not be realized. The Company has provided a full valuation allowance against its net domestic deferred tax assets as of December 31, 2015 and 2014. The Company has provided a full valuation allowance against its net foreign deferred tax assets as of December 31, 2015 and 2014.

Accumulated Other Comprehensive (Loss) Income

Changes to accumulated other comprehensive income during the year ended December 31, 2014 were as follows (in thousands):


	Translation Adjustment
Balance – December 31, 2014	$	(63	)
Current period other comprehensive income		(1,099	)

Balance – December 31, 2015	$	(1,162	)

Revenue Recognition and Sales Returns Reserves

Revenues include product revenues, which primarily consist of sales of CRINONE to Merck KGaA, royalty revenues, which primarily consist of royalty revenues from Allergan on sales of CRINONE, service revenues, which primarily consist of analytical and consulting services, pharmaceutical development and clinical trial manufacturing services and other revenues.

Revenues from the sale of products are recorded at the time goods are shipped to customers, except in the case of product shipments to Allergan, which were recognized when received at Allergan’ warehouse. Sales to Merck KGaA for CRINONE (progesterone gel) are determined on a country-by-country basis and are the greater of (i) a percentage of Merck KGaA’s net selling price, or (ii) Juniper’s direct manufacturing cost plus 20%. Juniper estimates net selling prices based on historical experience and other current information from Merck KGaA; the amounts are reconciled on a quarterly basis when information is received from Merck KGaA. In 2012 and 2013, certain quantity discounts applied to annual purchases over 10 million, 20 million, and 30 million units. Juniper accrues an estimated volume discount on a quarterly basis and reconciles it on an annual basis.

In April 2013, Juniper’s license and supply agreement with Merck KGaA for the sale of CRINONE outside the United States was renewed for an additional five year term, extending the expiration date from to May 19, 2020.

Under the terms of the amended license and supply agreement, Juniper will sell CRINONE to Merck KGaA on a country-by-country basis at the greater of (i) direct manufacturing cost plus 20% or (ii) a percentage of Merck KGaA’s net selling price. From 2014 through 2020, the percentage of net selling price will be determined based on a tiered structure, which is based on volume sold. As sales volumes increase Juniper’s percentage share of each incremental tier decreases.

Juniper derives its revenues from the sale of product, the performance of professional services and royalties.

Juniper recognizes its product revenues under written contracts at the time goods are shipped to its customer and collection from its customer is reasonably assured.

The professional service contracts that Juniper enters into and operates under specifies whether the engagement will be billed on a time-and-materials or a fixed-price basis. These engagements generally last three to six months, although some of Juniper’s engagements can be much longer in duration. Each contract must be approved by one of Juniper’s officers.

Juniper recognizes substantially all of the Company’s professional services revenues under written contracts when the fee is fixed or determinable, as the services are provided, and only in those situations where collection from the client is reasonably assured. In certain cases Juniper bills clients prior to work being performed, which requires Juniper to defer revenue in accordance with U.S. GAAP. In these cases, these amounts are fully reserved until all criteria for recognizing revenue are met.

Juniper’s professional services revenue is derived from fixed price and time-and-materials service contracts. Revenues from time-and-materials service contracts are recognized as the services are performed based upon hours worked and contractually agreed-upon hourly rates, as well as indirect fees based upon hours worked.

Professional service revenues from a majority of Juniper’s fixed-price engagements are recognized on a proportional performance method based on the ratio of costs incurred, substantially all of which are labor-related, to the total estimated project costs. In general, project costs are classified in costs of services and are based on the direct salary of the employees on the engagement plus all direct expenses incurred to complete the engagement, including any amounts billed to Juniper by its vendors. The proportional performance method is used for fixed-price contracts because reasonably dependable estimates of the revenues and costs applicable to various stages of a contract can be made, based on historical experience and the terms set forth in the contract, and are indicative of the level of benefit provided to Juniper’s clients. In the event of a termination, fixed-price contracts generally provide for payment for services rendered up to termination. Juniper’s management maintains contact with project managers to discuss the status of the projects. In cases where the Company may be required to commit unanticipated additional resources to complete projects, which may result in lower than anticipated income or losses on those contracts.

Professional service revenues also include reimbursements, which include reimbursement for travel and other out-of-pocket expenses, outside consultants, and other reimbursable expenses. Juniper’s project managers and finance personnel monitor payments from its customers and assess any collection issues. The Company maintains accounts receivable allowances for estimated losses resulting from disputed amounts or the inability of Juniper’s customers to make required payments. Juniper bases its estimates on the Company’s historical collection experience, current trends, and credit policy. In determining these estimates, Juniper examines historical write-offs of its receivables and review client accounts to identify any specific customer collection issues. If the financial condition of Juniper’s customers were to deteriorate or disputes were to arise regarding the services provided, resulting in an impairment of their ability or intent to make payment, additional allowances may be required. A failure to estimate accurately the accounts receivable allowances and ensure that payments are received on a timely basis could have a material adverse effect on Juniper’s business, financial condition, and results of operations.

Royalty revenues, based on sales by licensees, are recorded as revenues when those sales are made by the licensees.

Juniper collects value added tax from its customers for revenues generated out of the United Kingdom for which the customer is not tax exempt and remits such taxes to the appropriate governmental authorities. Juniper presents its value added tax on a net basis; therefore, these taxes are excluded from revenues.

Up to July 2013, Juniper was responsible for sales returns for CRINONE and PROCHIEVE products sold prior to the Allergan transaction on July 2, 2010, and for STRIANT products sold prior to the sale of the product to Auxilium in April 2011. The Company is not and were not responsible for returns for international sales. The Company’s policy for sales to the trade made prior to the Allergan and Auxilium transactions allows product to be returned for a period that began three months prior to the product expiration date and ended twelve months after the product expiration date. Provisions for returns on sales to wholesalers, distributors and retail chain stores were estimated based on a percentage of sales, using such factors as historical sales information, distributor inventory levels and product prescription data, and were recorded as a reduction to sales in the same period as the related sales were recognized. Juniper assumed that the Company’s customers were using the first-in, first-out method in filling orders so that the oldest saleable product was used first. Juniper recorded a provision for returns on a quarterly basis using an estimated rate and adjusted the provision when necessary. Currently there is no sales returns reserve as the return rights obligation has elapsed for all products for which Juniper provided a right of return.

An analysis of the reserve for sales returns at December 31, 2014 and 2015 is as follows (in thousands):


	Total
Balance – December 31, 2013	$	138
Provision:
Related to current period sales		—
Related to prior period sales		(136	)

		(136	)

Returns:
Related to prior period sales		(2	)

		(2	)

Balance – December 31, 2014	$	—

Deferred Revenue

As part of the acquisition of Juniper Pharma Services, Juniper assumed a $2.5 million obligation under a grant arrangement with the Regional Growth Fund on behalf of the Secretary of State for Business, Innovation, and Skills in the United Kingdom. Juniper Pharma Services used this grant to fund the building of its second facility, which includes analytical labs, office space, and a manufacturing facility. As a part of the arrangement, Juniper Pharma Services is required to create and maintain certain full-time equivalent personnel levels through October 2017. As of December 31, 2015, the Company is in compliance with the covenants of the arrangement.

The income from the Regional Growth Fund will be recognized on a decelerated basis through September 30, 2017. As of December 31, 2015, and 2014, the obligation is valued at $1.5 million and $2.1 million, respectively and is recorded in deferred revenue on the consolidated balance sheets.

Amounts paid but not yet earned on a sale are recorded as deferred revenue until such time as performance is rendered or the obligation to perform the service is completed.

Research and Development Costs

Research and development consist of consultants, material costs, salaries and other personnel related expenses including stock-based compensation of employees and non-employees primarily engaged in research and development activities and materials used and other overhead expenses incurred. All research and development costs are expensed as incurred. Research and development costs that are paid in advance of performance are capitalized as prepaid expenses until incurred.

Clinical trial expenses include expenses associated with clinical research organizations. The invoicing from clinical research organizations for services rendered can lag several months. Juniper accrues the cost of services rendered in connection with clinical research organizations activities based on our estimate of costs incurred. Juniper maintains regular communication with its clinical research organizations to assess the reasonableness of its estimates. Differences between actual expenses and estimated expenses recorded have not been material and are adjusted for in the period in which they become known.

Juniper entered into an agreement with Allergan to collaborate on the development of progesterone products, specifically the PREGNANT study. The PREGNANT study expenses consisted of fees for preparation, filing and approval process of the related drug application. Under the terms of the agreement, Juniper performed certain research and development activities, the cost of which was partially funded by Allergan.

In 2015, 2014, and 2013, there were no research and development expenses or reimbursements from Allergan.

In 2014, the Company completed its commercial and intellectual property assessment and clinical and regulatory diligence on COL-1077, extended-release lidocaine vaginal gel in addition to performing initial assessments of other potential proprietary product candidates. The target indication for COL-1077 is an acute use anesthetic for minimally invasive gynecological procedures. The Company is leveraging the technical capabilities of its Nottingham site to advance the COL-1077 development program.

In March 2015, the Company entered into an exclusive patent license agreement with The General Hospital Corporation, d/b/a Massachusetts General Hospital, pursuant to which Juniper has licensed the exclusive worldwide rights to Massachusetts General Hospital patent rights in a novel intra-vaginal ring (IVR) technology for delivery of one or more pharmaceutical dosages and release rates in a single segmented ring. The Company is leveraging the technology to advance JNP-0101, JNP-0201 and JNP-0301.

Stock-based compensation

Juniper follows the fair value recognition provisions of ASC 718, Stock Compensation Topic (ASC 718) and ASC Subtopic 505-50, Equity – Equity Based Payments to Nonemployees. Juniper expenses the fair value of stock options over the requisite service period. Juniper records its stock-based compensation expense without a forfeiture rate. Accordingly, Juniper reviews its actual forfeitures and aligns its stock compensation expense with the options that are vesting.

Juniper recorded stock-based compensation expense of $1.8 million, $0.6 million and $0.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

Total stock-based compensation expense was recorded to cost of revenues, and operating expenses based upon the functional responsibilities of the individuals holding the respective options as follows (in thousands):


	Years Ended December 31,
	2015		2014		2013
Cost of revenues	$	79	$	44	$	14
Sales and marketing		38		28		—
Research and development		1,126		2		—
General and administrative		507		533		461

Total employee stock-based compensation	$	1,750	$	607	$	475

As of December 31, 2015, total unamortized share-based compensation cost related to non-vested stock options was $2.6 million, which is expected to be recognized on a straight-line basis over a weighted average period of 2.6 years.

Cash received from option exercises was $0.1 million, $33,000 and $11,000 during the years ending December 31, 2015, 2014 and 2013, respectively.

Juniper granted 387,000, 312,000 and 88,749 stock options to employees during the years ended December 31, 2015, 2014 and 2013, respectively.

The Company records stock-based compensation expense for stock options granted to non-employees based on the fair value of the stock options, which is re-measured over the graded vesting term resulting in periodic adjustments to stock-based compensation expense. During 2015, 243,000 stock options were granted by the Company to non-employees. During the twelve months ended December 31, 2015, the Company recorded stock-based compensation expense of $1.1 million related to these awards. The stock-based compensation expense recorded for non-employees is primarily reflected in the research and development line of the statement of operations. The 240,000 options reflected in the research and development line will be re-measured over a 1.25 year period from the date of grant versus the remaining 3,000 options will be re-measured over a 3.75 year period from the date of grant. There was no stock-based compensation expense recorded for consultants in years ended December 31, 2014 and 2013, respectively. No tax benefit has been recognized due to the net tax losses during the periods presented.

The Company uses the Black-Scholes option pricing model to determine the estimated fair value for stock-based awards. Option-pricing models require the input of various subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. Accordingly the weighted-average fair value of the options granted to employees during the years ended December 31, 2015, 2014 and 2013 was $4.38, $4.27 and $3.52, respectively based on the following assumptions:


	Years Ended December 31,
	2015	2014	2013
Risk free interest rate	0.87%-1.20%	0.93%-1.64%	0.71%-0.76%
Expected term	4.56-4.75 years	4.75 years	4.75 years
Dividend yield	—	—	—
Expected volatility	76.86%-83.09%	78.27%-81.36%	96.52%-97.02%

The weighted-average fair value of the options granted to non-employees during the years ended December 31, 2015, 2014 and 2013 was $4.52, $0 and $0, respectively based on the following assumptions:


	Years Ended December 31,
	2015	2014	2013
Risk free interest rate	1.47%-1.54%	—	—
Expected term	7 years	—	—
Dividend yield	—	—	—
Expected volatility	82.88%-83.09%	—	—

Juniper’s estimated expected stock price volatility is based on its own historical volatility. Juniper’s expected term of options granted in the years ended December 31, 2015, 2014 and 2013 was derived from the simplified method for employee grants and the contractual term is used for non-employee grants. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Net (Loss) Income Per Common Share

The calculation of basic and diluted income per common and common equivalent share is as follows (in thousands except for per share data):


	Years Ended December 31,
	2015			2014			2013
Basic net (loss) income per common share
Net (loss) income	$	(2,134	)	$	3,390		$	6,704
Less: Preferred stock dividends		(28	)		(28	)		(28	)

Net (loss) income applicable to common stock	$	(2,162	)	$	3,362		$	6,676

Basic weighted average number of common shares outstanding		10,774			10,992			11,259

Basic net (loss) income per common share	$	(0.20	)	$	0.31		$	0.59

Diluted net (loss) income per common share
Net (loss) income applicable to common stock	$	(2,162	)	$	3,362		$	6,676
Add: Preferred stock dividends		—			28			28
Less: Fair value of stock warrants for dilutive warrants		—			(379	)		(794	)

Net (loss) income applicable to dilutive common stock	$	(2,162	)	$	3,011		$	5,910

Basic weighted average number of common shares outstanding		10,774			10,992			11,259
Effect of dilutive securities
Dilutive stock awards		—			15			14

		—			15			14
Diluted weighted average number of common shares outstanding		10,774			11,007			11,273

Diluted net (loss) income per common share	$	(0.20	)	$	0.27		$	0.52

Basic (loss) income per common share is computed by dividing the net (loss) income, less preferred dividends by the weighted-average number of shares of common stock outstanding during a period. The diluted (loss) income per common share calculation gives effect to dilutive options, warrants, convertible notes, convertible preferred stock, and other potential dilutive common stock including selected restricted shares of common stock outstanding during the period. Diluted (loss) income per common share is based on the treasury stock method and includes the effect from potential issuance of common stock, such as shares issuable pursuant to the exercise of stock options, assuming the exercise of all in-the-money stock options. Common share equivalents have been excluded where their inclusion would be anti-dilutive.

Shares to be issued upon the exercise of the outstanding options and warrants, convertible preferred stock and selected restricted shares of common stock excluded from the income per share calculation amounted to 1,087,308, 1,692,180 and 1,599,551 for the years ended December 31, 2015, 2014 and 2013, respectively, because the awards were anti-dilutive.

Acquisition-Related Expenses

The Company’s acquisition-related expenses for 2013 were costs associated with the acquisition of Juniper Pharma Services and a failed transaction in the 2013 period. There were no acquisition-related expenses during the 2015 or 2014 periods.

Recent Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases. The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, Financial Instruments – Recognition and Measurement of Financial Assets and Financial Liabilities, which provides new guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. The standard becomes effective for Juniper beginning in the first quarter of 2018 and early adoption is permitted. Juniper is currently evaluating the effect, if any, that the standard will have on its consolidated financial statements and related disclosures.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern. The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company does not believe this ASU will have an impact on the Company’s financial statements.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”), which provides guidance for revenue recognition. ASU 2014-09 affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets and supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” and most industry-specific guidance. This ASU also supersedes some cost guidance included in Subtopic 605-35, “Revenue Recognition-Construction-Type and Production-Type Contracts.” The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which a company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company beginning January 1, 2018 and, at that time the Company may adopt the new standard under the full retrospective approach or the modified retrospective approach. Early adoption is not permitted. The Company is currently evaluating the method and impact that the adoption of ASU 2014-09 will have on the Company’s consolidated financial statements and related disclosures.