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Fair Value Measurements
 3 Months Ended
Mar. 31, 2014
Fair Value Disclosures [Abstract]  
Fair Value Measurements
12. Fair Value Measurements

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, unbilled services, prepaid expenses and other current assets, accounts payable, and accrued expenses approximate their respective fair values due to the short-term nature of such instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached as of March 31, 2014 and December 31, 2013:

 

     Balance as of
March 31, 2014		      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		      Significant Other
Observable Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Derivative liability — Series C-1 warrants

    $ —         $ —         $ —         $ —     

Derivative liability — common stock warrants

      9,998         —           —           9,998   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivative liability

    $ 9,998       $ —         $ —         $ 9,998   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     Balance as of
December 31, 2013		      Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		      Significant Other
Observable Inputs
(Level 2)		      Significant
Unobservable
Inputs
(Level 3)		  

Derivative liability — Series C-1 warrants

    $ 37       $ —         $ —         $ 37   

Derivative liability — common stock warrants

      12,200             $ 12,200   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total derivative liability

    $ 12,237       $ —         $ —         $ 12,237   
  

 

 

     

 

 

     

 

 

     

 

 

  

The Company’s derivative liabilities are the only balance sheet amounts that are measured at fair value on a recurring basis. The fair value of these warrant derivatives is based on a valuation of the Company’s common stock. In order to determine the fair value of the Company’s common stock, the Company used a probability-weighted expected return method, or PWERM. Significant inputs for the PWERM included an estimate of the Company’s equity value, a weighted average cost of capital and an estimated probability and timing for each valuation scenario.

A reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:

 

     Three months ended
March 31, 2014		  

Beginning balance, December 31, 2013

    $ 12,237   

Issuance of warrants

      544   

Excess of fair value of warrants over proceeds

      362   

Adjustment to fair value

      (3,145 ) 
  

 

 

  

Ending balance, March 31, 2014

    $ 9,998