Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Assets and Liabilities Measured at Fair Value

The following table provides a summary of the recognized assets and liabilities that we measure at fair value on a recurring basis:

	Balance as of		Basis of Fair Value Measurements
	September 30, 2014		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	3,644,000	$	3,644,000	$	—	$	—

Liabilities:
Warrant liability	$	287,000	$	—	$	—	$	287,000

	Balance as of		Basis of Fair Value Measurements
	December 31, 2013		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	4,644,000	$	4,644,000	$	—	$	—

Change in Level 3 Warrant Liability Value

The following table summarizes the change in our Level 3 warrant liability value:

	Three months ended			Nine months ended
Warrant liability	September 30, 2014			September 30, 2014

Beginning balance	$	—		$	—
Fair value of warrants allocated from additional paid in capital		421,000			421,000
Decrease in fair value recognized in operating expenses		(134,000	)		(134,000	)
Ending balance	$	287,000		$	287,000

- Definition

Tabular disclosure of the fair value measurement of financial instruments classified in shareholders' equity using significant unobservable inputs (level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of level 3 (for example, transfers due to changes in the observability of significant inputs) by class of equity.

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