(4)

Warrants

On May 10, 2016, in a registered offering pursuant to the 2014 shelf registration statement (as defined in Note 6 below), we sold 5,471,957 shares of our common stock (the Shares), at a purchase price of $0.91375 per share. In a private placement concurrent with the sale of the Shares, we sold to the investors who purchased the Shares warrants to purchase 4,103,968 shares of common stock (the Warrants). The Shares and the Warrants were sold pursuant to a securities purchase agreement for aggregate gross proceeds of $5.0 million. Subject to certain ownership limitations, the Warrants will be initially exercisable on November 10, 2016 at an exercise price equal to $0.83 per share of common stock, subject to adjustments as provided under the terms of the Warrants. The Warrants are exercisable until November 10, 2022.

In connection with the offering of the Shares and Warrants, we issued to the placement agent and its designees unregistered warrants to purchase an aggregate of 383,037 shares of our common stock (the Placement Agent Warrants). The Placement Agent Warrants have substantially the same terms as the Warrants, except that the Placement Agent Warrants will expire on May 4, 2021 and have an exercise price equal to $1.1422 per share of common stock.

A summary of the allocation of the proceeds of the offering is shown below:

(in thousands)

Allocated to warrant liabilities	$	2,511
Allocated to common stock and additonal paid-in capital		2,489
Total allocated gross proceeds	$	5,000

The closing costs of $664,775 included the 383,037 Placement Agent Warrants valued at $202,862, and $461,913 for placement agent and other fees. Based upon the estimated fair value of the Shares and Warrants in units, the Company allocated $250,279 to financing expense and $414,496 as stock issuance costs.

The table below sets forth the Warrants and Placement Agent Warrants as of June 30, 2016:

Offering Date

Outstanding Warrants

Exercise Price

Expiration Date

Status

May 2016

4,103,968

0.83

11/10/2022

Not Exercisable

May 2016

383,037

1.1422

5/4/2021

Not Exercisable

4,487,005

The Warrants contain a provision for liquidated damages in the event that there is a failure to deliver a Warrant within three days of receiving a notice to exercise. As a result of this liquidated damages provision, the Warrants require liability classification in accordance with ASC 480 and are recorded at fair value. The fair value of the Warrants has been determined under a Black-Scholes pricing model; assuming a weighted average 6.24 year remaining life for the warrants, 1.13% risk-free interest rate, a 101.66% expected volatility and no dividend yield, the weighted average fair value of warrant liability as of June 30, 2016 is $0.61. Changes in fair value are recorded against operations in the reporting period in which they occur; increases or decreases in fair value are recorded to other income/(expense) as a change in fair value of warrants.