Warrants (Tables)

6 Months Ended

Jun. 30, 2015

On April 1, 2015, 52,120 warrants, issued on June 26, 2013, were exercised, resulting in the issuance of 52,120 shares of common stock and $630,000 being reclassified from the warrant liability account and into shareholders’ equity, based on the fair value of the warrants on the exercise date. On April 29, 2015, 4,524 warrants, issued on June 26, 2013, were exercised, resulting in the issuance of 4,524 shares of common stock and $46,000 was reclassified from the warrant liability account and into shareholders’ equity, based on the fair value of the warrants on the exercise date.

On May 8, 2015, the Company, upon approval of more than two-thirds of the holders of the 2013 warrants issued on June 26, 2013, July 15, 2013 and December 23, 2013, amended these warrants to remove certain the “down-round” provisions of these warrants. As a result of this amendment, all outstanding warrants from those issuance dates were reclassified as equity instruments resulting in the reclassification of $5,462,000 from the warrant liability to shareholders’ equity, reflecting the fair value of these warrants on the amendment date.

The Company re-measured the fair value of the warrant liability and recorded a gain of $4,604,000 for the quarter ended June 30, 2015, reflecting a decrease in the liability associated with the warrants at their estimated fair value, which totaled $3,984,000 as of June 30, 2015For the six months ended June 30, 2015, the Company recorded a loss of $86,000 related to the change in fair value of the warrants for that period.

All share amounts of warrants are after giving consideration to the 1-for-50 reverse split of the Company’s common stock which was effective August 7, 2015 (see footnote 12.)

The following table provides the number of warrants, exercise price and aggregate proceeds to the Company if exercised as of June 30, 2015 and December 31, 2014:



	March 2015				2013 Series B Warrants				December 2013				2013 Convertible Notes				2011				Totals
																							Weighted
																							Average
			Exercise				Exercise				Exercise				Exercise				Exercise				Exercise
	Shares		Price		Shares		Price		Shares		Price		Shares		Price		Shares		Price		Shares		Price
Balance, December 31, 2014		-	$	-		523,690	$	7.00		86,408	$	12.50		140,608	$	7.00		27,103	$	23.00		777,809	$	8.00
Issuances		488,485		11.00		-		-		-		-		-		-		-		-		488,485		11.00
Exercises		-		-		(56,644)		7.00		-		-		-		-		-		-		(56,644)		7.00
Balance, June 30, 2015		488,485	$	11.00		467,046	$	7.00		86,408	$	8.50		140,608	$	7.00		27,103	$	23.00		1,209,650	$	9.90

Aggregate proceeds if exercised	$	5,373,335			$	3,269,322			$	734,468			$	984,256			$	623,369			$	11,975,535

- Definition

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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