Annual report pursuant to Section 13 and 15(d)

Fair Value Measurement

v3.8.0.1
Fair Value Measurement
 12 Months Ended
Dec. 31, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurement

10. Fair Value Measurement

 

ASC 820 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

 

Level 1 — quoted prices in active markets for identical assets or liabilities.

Level 2 — other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date.

Level 3 — significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

 

The Company categorized its cash equivalents as Level 1 fair value measurements. The warrants are valued using the Black-Scholes option-pricing model as discussed in Note 8 above.

 

The following table presents a summary of fair values of assets and liabilities that are remeasured at fair value at each balance sheet date as of December 31, 2017 and 2016, and their placement within the fair value hierarchy as discussed above (in thousands):

 

    December 31,     Quoted Prices in Active Markets     Significant Other Observable Inputs     Unobservable Inputs  
Description   2017     (Level 1)     (Level 2)     (Level 3)  
Assets:                                
Cash, cash equivalents, and restricted cash   $ 777     $ 777     $ -     $ -  
                                 
Liabilities:                                
Warrants potentially settleable in cash   $ 569     $ -     $ -     $ 569  

 

    December 31,     Quoted Prices in Active Markets     Significant Other Observable Inputs     Unobservable Inputs  
Description   2016     (Level 1)     (Level 2)     (Level 3)  
Assets:                                
Cash, cash equivalents, and restricted cash   $ 3,640     $ 3,640     $ -     $ -  
                                 
Liabilities:                                
Warrants potentially settleable in cash   $ 1,476     $ -     $ -     $ 1,476  

 

The Company has not transferred any financial instruments into or out of Level 3 classification during the years ended December 31, 2017, 2016, or 2015. A reconciliation of the beginning and ending Level 3 liabilities for the years ended December 31, 2017, 2016 and 2015, is as follows (in thousands):

 

    Fair Value Measurements Using Significant
Unobservable Inputs (Level 3) 		 
    2017     2016     2015  
Balance, January 1,   $ 1,476     $ 4,115     $ 8,464  
Value of warrants converted in cashless exercise     -       (36 )     (14,265 )
Change in fair value of warrants for the year ended     (907 )     (2,603 )     9,916  
Balance at December 31,   $ 569     $ 1,476     $ 4,115