Fair Value Measurements

3. Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

	Balance as of December 31, 2013
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	3,357	$	3,357	$	—	$	—
Liabilities:
Series D redeemable convertible preferred stock warrants	$	126	$	—	$	—	$	126

	Balance as of March 31, 2014
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents	$	2,438	$	2,438	$	—	$	—
Liabilities:
Series D redeemable convertible preferred stock warrants	$	814	$	—	$	—	$	814

In order to determine the fair value of the Series D redeemable convertible preferred stock warrants, the Company used an option pricing model for the year ended December 31, 2013 and the three months ended March 31, 2014. The valuation required the input of subjective assumptions, including the risk-free interest rate, the value of the underlying securities and the expected stock price volatility. The risk-free interest rate assumption was based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the term of the warrants. The expected stock price volatility assumption was based on historical volatilities for publicly traded stock of comparable companies over the term of the warrants.

The following table presents the changes in the Company’s Level 3 instruments measured at fair value on a recurring basis (in thousands):

	Series D Warrants
Balance as of December 31, 2013	$	126
Change in fair value of warrant liability	688
Balance as of March 31, 2014	$	814

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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