Stock Purchase Warrants

The Company has historically issued warrants to purchase shares of the Company’s common stock in connection with certain common stock offerings. The following warrants were outstanding during the year ended December 31, 2015, and include provisions that could require cash settlement of the warrants or have anti-dilution price protection provisions requiring the warrants to be recorded as liabilities of the Company at the estimated fair value at the date of issuance, with changes in estimated fair value recorded as income or expense (non-cash) in the Company’s statement of operations in each subsequent period:



		August 2013 Warrants
Exercise price		$4.80
Expiration date		August 16, 2018
Total shares issuable on exercise		724,950

In July and December 2015, the January and December 2010 Class A warrants convertible into 226,299 and 15,405 shares of common stock, respectively, expired unexercised. The fair value of the remaining August 2013 warrants are measured using the Black-Scholes valuation model. Inherent in the Black-Scholes valuation model are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend yield is based on the historical rate, which the Company anticipates to remain at zero.

The assumptions used by the Company are summarized in the following table:



August 2013 Warrants	December 31, 2015			December 31, 2014
Closing stock price	$	2.58		$	3.04
Expected dividend yield	—		%	—		%
Expected stock price volatility	91.4		%	83.2		%
Risk-free interest rate	1.31		%	1.20		%
Expected life (years)	2.63			3.63