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WARRANTS

6 Months Ended

Jun. 30, 2015

(11) WARRANTS

In the three and six months ended June 30, 2015, the Company issued warrants to purchase 999,999 and 1,666,666 shares of our common stock, respectively, in connection with a partial closing related to the private placement of the Company’s Common Stock as well as the 333,333 shares of our common stock in connection with a Reimbursement Agreement. See Notes 6and7.

The Derivative Warrants to purchase 700,000 shares of our Common Stock, at exercise prices ranging from $20.00 to $22.70, and expiring in 2017, are included in the outstanding warrants at January 1, 2015. On February 12, 2015, these warrants were re-priced to $7.50 to compensate PPVA in connection with the Reimbursement Agreement reached between the Company and PPVA. See Notes 6 and 7.

A summary of warrant activity for the six months ended June 30, 2015 is as follows:

Warrants	Shares			Weighted-Average Exercise Price
Outstanding warrants at January 1, 2015		1,847,066		$	10.04
Granted		1,999,999		$	3.00
Forfeited		(37,638	)	$	22.50
Outstanding warrants at June 30, 2015		3,809,427		$	3.81

At June 30, 2015, the Company had the following outstanding warrants:

Type of Warrant/ Range of Exercise Prices		Expirations	Number Outstanding		Weighted- Average Remaining Contractual Life (years)		Weighted- Average Exercise Price		Number Exercisable
Derivative:
$	7.50	8/31/17 to 11/6/17		700,000		2.23	$	7.50		700,000
Equity:
$	2.75 - $3.00	12/10/18 to 03/09/20		3,109,427		4.59	$	2.98		3,109,427
Total outstanding				3,809,427						3,809,427

The Company uses valuation methods and assumptions that consider among other factors the fair value of the underlying stock, risk-free interest rate, volatility, expected life and dividend rates in estimating fair value for the warrants considered to be derivative instruments. The following assumptions were utilized by the Company:

Risk-free interest rate	.70 %
Expected dividend yield	—
Expected term - years (contractual term)	2.5
Forfeiture rate	—
Expected volatility	92 %

Expected volatilities are based on historical volatility of the Common Stock using historical periods consistent with the expected term of the warrant. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the warrant.