4. Common Stock Warrants

In January 2014, in connection with the 2013 financing, the Company completed the sale of common stock for aggregate proceeds of $3.0 million and as part of this transaction, the Company issued five-year warrants to purchase 120,800 shares of common stock at an exercise price of $5.75 per share. Due to certain provisions, the Company is required to account for the warrants issued as a liability at fair value. In addition, the estimated liability related to the warrants is required to be revalued at each reporting period until the earlier of the exercise of the warrants, at which time the liability will be reclassified to stockholders’ equity, or expiration of the warrants. At issuance date, the fair value of the total warrant liability was estimated to be $0.4 million using a binomial lattice options-pricing model.