Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.10.0.1
Fair Value Measurements
 9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 2 – Fair Value Measurements

 

FASB Accounting Standards Codification (“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 categorizes its cash as Level 1 fair value measurements. The Company categorizes its warrants potentially settleable in cash as Level 3 fair value measurements. The warrants potentially settleable in cash are measured at fair value on a recurring basis and are being marked to fair value at each reporting date until they are completely settled or meet the requirements to be accounted for as component of stockholders’ equity. The warrants are valued using the Black-Scholes option-pricing model as discussed in Note 5 - Warrants.

 

The following table presents a summary of fair values of assets and liabilities that are re-measured at fair value at each balance sheet date as of September 30, 2018 and December 31, 2017, and their placement within the fair value hierarchy as discussed above:

 

          Quoted
Prices in
Active
Markets 		    Significant
Other
Observable
Inputs 		    Unobservable
Inputs 		 
Description   September 30, 2018     (Level 1)     (Level 2)     (Level 3)  
Assets:                                
Cash and restricted cash   $ 4,713     $ 4,713     $ -     $ -  
Total assets   $ 4,713     $ 4,713     $ -     $ -  
                                 
Liabilities:                                
Warrants potentially settleable in cash   $ 159     $ -     $ -     $ 159  
Total liabilities   $ 159     $ -     $ -     $ 159  

 

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

 

The Company has not transferred any financial instruments into or out of Level 3 classification during the nine months ended September 30, 2018 or 2017. A reconciliation of the beginning and ending Level 3 liabilities for the nine months ended September 30, 2018 and 2017 is as follows (in thousands):

 

    Fair Value Measurements Using
Significant Unobservable Inputs
(Level 3) 		 
    September 30, 2018     September 30, 2017  
Balance, January 1,   $ 569     $ 1,476  
Change in fair value of warrants     (410 )     (621 )
Balance at September 30,   $ 159     $ 855