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8. Outstanding Warrants

12 Months Ended

Dec. 31, 2015

Text Block [Abstract]

8. Outstanding Warrants

During the year ended December 31, 2015, the Company granted 229 thousand common stock warrants, which had the potential to enhance returns for accredited investors who entered into additional Notes. The accredited investors received 2 year warrants exercisable at $0.01 per share as part of note agreements. In addition, the Company granted 110 thousand common stock warrants outside the Company plans to certain employees with 1/12th vesting every three months over 3 years and to Board of Directors with immediate vesting. These warrants have a 10 year term and are exercisable at $2.59 per share as part of the warrant agreement. We estimate the fair value of warrant awards on the date of grant using the Black-Scholes option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

The weighted average fair value calculations for warrants granted are based on the following weighted average assumptions:

Description		For the years ended December 31
		2015				2014
Dividend-yield			0	%			0	%
Risk-free interest rate			1.10	%			0.49	%
Expected volatility		80.02		%			72.26	%
Expected life (years)			3.62				2
Market value per share on grant date		$	4.06			$	8.78
Fair value per share on grant date		$	3.85			$	8.77

For the twelve months ended December 31, 2015, Note investors exercised 229 thousand warrant shares at exercise prices of $0.01 per share and employees exercised 38 thousand warrant shares at exercise price of $1.30 per share.

A summary of historical warrant activity for the years ended December 31, 2015 and 2014 follows:

		Warrants Outstanding				Weighted - Average Exercise Price				Average Remaining Term in Years
Outstanding December 31, 2013			470			$	3.40				4.85
Granted			148				0.01
Exercised			(217	)			1.32
Expired			(50	)			4.97
Outstanding December 31, 2014			351			$	3.05				2.69
Granted			339				0.85
Exercised			(272	)			0.21
Expired			(50	)			1.30
Outstanding December 31, 2015			368			$	3.36				4.61

60 thousand of the above outstanding warrants are not vested and exercisable as of December 31, 2015.

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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