Cash and Cash Equivalents

At December 31, 2014, cash equivalents consisted of demand deposits of $10.8 million and money market funds of $67.6 million with maturities of less than 90 days at the date of purchase. At December 31, 2013, cash equivalents consisted of demand deposits of $18.9 million and money market funds of $82.8 million with maturities of less than 90 days at the date of purchase.

    Short-term Investments

At December 31, 2014, there were no short term investments. At December 31, 2013, short-term investments consisted of U.S. treasury securities of $20.0 million, with maturities of greater than 90 days and less than one year from the date of purchase.

Foreign Exchange Options

The Company holds debt and may incur revenue and expenses denominated in foreign currencies, which exposes it to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and the Euro. The Company is required in the future to make principal and accrued interest payments in Euros on its €15.0 million loan from Servier (See Note 7: Long-Term Debt and Other Arrangements). In order to manage its foreign currency exposure related to these payments, in May 2011, the Company entered into two foreign exchange option contracts to buy €1.5 million and €15.0 million in January 2014 and January 2016, respectively. By having these option contracts in place, the Company’s foreign exchange rate risk is reduced if the U.S. dollar weakens against the Euro. However, if the U.S. dollar strengthens against the Euro, the Company is not required to exercise these options, but will not receive any refund on premiums paid.

Upfront premiums paid on these foreign exchange option contracts totaled $1.5 million. The fair values of these option contracts are revalued at each reporting period and are estimated based on pricing models using readily observable inputs from actively quoted markets. The fair values of these option contracts are included in other assets on the consolidated balance sheet and changes in fair value on these contracts are included in other income (expense) on the consolidated statements of comprehensive loss.

As of December 31, 2014, one option contract had expired.  The remaining foreign exchange option was revalued at December 31, 2014 and the fair value was de minimis.  As of December 31, 2013, the fair value was $0.4 million. The Company recognized losses of $0.4 million, $0.1 million, and $0.7 million related to the revaluation for the years ended December 31, 2014, 2013, and 2012, respectively.

Receivables

Accounts receivable are stated at their net realizable value.  Specific allowances are recorded for known troubled accounts or based on other available information.  Accounts receivable are written off after all reasonable means to collect the full amount have been exhausted.

Receivables consisted of the following at December 31, 2014 and 2013 (in thousands):

Property and Equipment

Property and equipment consisted of the following at December 31, 2014 and 2013 (in thousands):

Depreciation and amortization expense was $1.9 million, $2.9 million and $4.1 million for the years ended December 31, 2014, 2013, and 2012, respectively.

Accrued Liabilities

Accrued liabilities consisted of the following at December 31, 2014 and 2013 (in thousands):

Contingent Warrant Liabilities

In December 2014, in connection with a registered direct offering to select institutional investors, the Company issued two-year warrants to purchase up to an aggregate of 8,097,165 shares of XOMA’s common stock at an exercise price of $7.90 per share. These warrants contain provisions that are contingent on the occurrence of a change in control, which could conditionally obligate the Company to repurchase the warrants for cash in an amount equal to their fair value using the Black-Scholes Model on the date of such change in control. Due to these provisions, the Company accounts for the warrants issued in December 2014 as a liability at fair value. In addition, the estimated liability related to the warrants is 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. On December 8, 2014, the date of issuance, the fair value of the warrant liability was estimated to be $10.3 million using the Black-Scholes Model. The Company revalued the warrant liability at December 31, 2014, and recorded a $5.1 million decline in the fair value as a gain in the revaluation of contingent warrant liabilities in the accompanying consolidated statements of comprehensive loss. The decrease in liability is due primarily to the decrease in the market price of XOMA’s common stock at December 31, 2014. As of December 31, 2014, all of the warrants were outstanding and had a fair value of $5.2 million.

In March 2012, in connection with an underwritten offering, the Company issued five-year warrants to purchase 14,834,577 shares of XOMA’s common stock at an exercise price of $1.76 per share. These warrants contain provisions that are contingent on the occurrence of a change in control, which could conditionally obligate the Company to repurchase the warrants for cash in an amount equal to their fair value using the Black-Scholes Model on the date of such change in control. Due to these provisions, the Company accounts for the warrants issued in March 2012 as a liability at fair value. In addition, the estimated liability related to the warrants is 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. As of December 31, 2013, 12,562,682 of these warrants were outstanding and had a fair value of $68.7 million. The Company revalued the warrant liability at December 31, 2014 using the Black-Scholes Model and recorded the $39.5 million decrease in the fair value of as a gain in the revaluation of contingent warrant liabilities in the accompanying consolidated statements of comprehensive loss. In 2014, the Company reclassified $2.5 million from contingent warrant liabilities to equity on the consolidated balance sheet due to the exercise of these warrants. As of December 31, 2014, 12,109,418 of these warrants were outstanding and had a fair value of $26.7 million. The decrease in liability is due primarily to the decrease in the market price of XOMA’s common stock at December 31, 2014.

In February 2010, in connection with an underwritten offering, the Company issued five-year warrants to purchase 1,260,000 shares of XOMA’s common stock at an exercise price of $10.50 per share. The warrants contain provisions that are contingent on the occurrence of a change in control, which could conditionally obligate the Company to repurchase the warrants for cash in an amount equal to their fair value using the Black-Scholes Model on the date of such change in control. Due to these provisions, the Company accounts for the warrants as liabilities at fair value. At December 31, 2013, all of the warrants were outstanding and had a fair value of $1.1 million. The Company revalued the warrant liability at December 31, 2014 using the Black-Scholes Model and recorded the $1.1 million decrease in the fair value as a gain in the revaluation of contingent warrant liabilities in the accompanying consolidated statements of comprehensive loss. As of December 31, 2014, all of the warrants were outstanding and the fair value was de minimis. The decrease in liability is due primarily to the decrease in the market price of XOMA’s common stock at December 31, 2014.

In June 2009, the Company issued warrants to certain institutional investors as part of a registered direct offering. The warrants represent the right to acquire an aggregate of up to 347,826 shares of XOMA’s common stock over a five year period beginning December 11, 2009 at an exercise price of $19.50 per share. The warrants contain provisions that are contingent on the occurrence of a change in control, which could conditionally obligate us to repurchase the warrants for cash in an amount equal to their fair value using the Black-Scholes Model on the date of such change in control. Due to these provisions, the Company accounts for the warrants as liabilities at fair value. At December 31, 2013, all of the warrants were outstanding and had a fair value of $0.1 million. As of December 31, 2014, all of the warrants had expired unexercised.