Warrants

The following is a summary of warrant activity for the six months ended September 30, 2014 (in thousands):



	September 2013 Warrants		December 2012 Warrants		April 2011 Warrants		March 2011 Warrants	March 2010 Warrants		August 2009 Warrants		Consultant and Oxford Warrants		Total
Outstanding, January 1, 2014	6,442		4,917		1,158		176	290		978		889		14,850
Granted	—		—		—		—	—		—		300		300
Exercised	(2,469	)	(1,886	)	(543	)	—	(265	)	(62	)	(469	)	(5,694	)
Outstanding, September 30, 2014	3,973		3,031		615		176	25		—		720		8,540
Expiration	September 2018		December 2017		April 2017		March 2016	March 2016		August 2014		Varies 2014-2020

Warrants consist of warrants potentially settleable in cash, which are liability-classified warrants, and equity-classified warrants.

Warrants classified as liabilities

Liability-classified warrants consist of warrants to purchase common stock issued in connection with equity financings in September 2013, December 2012, April 2011, March 2011, March 2010 and August 2009. These warrants are potentially settleable in cash and were determined not to be indexed to our common stock.

The estimated fair value of outstanding warrants accounted for as liabilities is determined at each balance sheet date. Any decrease or increase in the estimated fair value of the warrant liability since the most recent balance sheet date is recorded in the condensed consolidated statement of comprehensive loss as other income (expense). The fair value of the warrants is estimated using an appropriate pricing model with the following inputs:



	As of September 30, 2014
	September 2013 Warrants			December 2012 Warrants			April 2011 Warrants			March 2011 Warrants			March 2010 Warrants
Strike price	$	2.50		$	1.90		$	0.65		$	0.65		$	2.15
Expected term (years)	3.97			3.23			2.56			1.43			1.49
Volatility %	74.39		%	76.97		%	78.24		%	79.41		%	79.03		%
Risk-free rate %	1.41		%	1.15		%	0.85		%	0.32		%	0.35		%



	As of December 31, 2013
	September 2013 Warrants			December 2012 Warrants			April 2011 Warrants			March 2011 Warrants			March 2010 Warrants			August 2009 Warrants
Strike price	$	2.50		$	1.90		$	0.65		$	0.65		$	2.15		$	4.50
Expected term (years)	4.72			3.98			3.31			2.18			2.24			0.59
Volatility %	71.97		%	71.38		%	71.71		%	73.45		%	73.36		%	66.85		%
Risk-free rate %	1.61		%	1.25		%	0.93		%	0.45		%	0.47		%	0.11		%

The expected volatility assumptions are based on the company's implied volatility in combination with the implied volatilities of similar publicly traded entities. The expected life assumption is based on the remaining contractual terms of the warrants. The risk-free rate is based on the zero coupon rates in effect at the time of valuation. The dividend yield used in the pricing model is zero, because the company has no present intention to pay cash dividends.

The changes in fair value of the warrant liability for the nine months ended September 30, 2014 were as follows (in thousands):



	September 2013 Warrants			December 2012 Warrants			April 2011 Warrants			March 2011 Warrants			March 2010 Warrants			August 2009 Warrants			Total
Warrant liability, January 1, 2014	$	22,950		$	18,060		$	5,069		$	763		$	945		$	1,178		$	48,965
Fair value of warrants exercised	(12,713		)	(10,086		)	(2,906		)	—			(1,159		)	(162		)	(27,026		)
Change in fair value of warrants	(6,066		)	(4,605		)	(1,214		)	(505		)	232			(1,016		)	(13,174		)
Warrant liability, September 30, 2014	$	4,171		$	3,369		$	949		$	258		$	18		$	—		$	8,765

Warrants classified as equity

Equity-classified warrants consist of warrants issued in connection with consulting services provided to us. Additionally, on May 8, 2013 as a part of our Loan financing, we granted Oxford Financial LLC warrants to purchase up to 182,186 shares of common stock at an exercise price of $2.47, which equaled to the 20-day average market price of our common stock prior to the date of the grant. The warrants were valued using the Black Scholes model as described in Note 8, below. The fair value assumptions for the grant included a volatility of 75.34%, expected term of seven years, risk free rate of 1.20%, and a dividend rate of 0.00%. The fair value of the warrants granted was $1.93 per share. These warrants are recorded in equity at fair value upon issuance, and not as liabilities, and are not subject to adjustment to fair value in subsequent reporting periods.