Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.3.0.814
Fair Value Measurements
9 Months Ended
Sep. 30, 2015
Fair Value Measurements [Abstract]  
Fair Value Measurements

15.  Fair Value Measurements

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not adjusted for transaction costs.  ASC 820 also establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). 

 

The three levels are described below:

 

Level 1 Inputs

 

 

Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible by the Company;

Level 2 Inputs

 

 

Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

Level 3 Inputs

 

 

Unobservable inputs for the asset or liability including significant assumptions of the Company and other market participants.

The following tables present assets and liabilities that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy.  There have been no changes in the methodologies used at September 30, 2015 and December 31, 2014. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at September 30, 2015

 

  Total  

Level 1

Level 2

Level 3

Assets:

 

 

 

 

 

 

 

 

    Certificates of Deposit

$

6,486,869 

$

 -

$

6,486,869 

$

 -

    Corporate Bonds

 

2,519,800 

 

 -

 

2,519,800 

 

 -

Total Assets:

$

9,006,669 

$

 -

$

9,006,669 

$

 -

 

 

 

 

 

 

 

 

 

Liabilities: 

 

 

 

 

 

 

 

 

    Warrant Liabilities

$

1,476,497 

 

-

 

-

$

1,476,497 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2014

 

  Total  

Level 1

Level 2

Level 3

Assets:

 

 

 

 

 

 

 

 

    Certificates of Deposit

$

18,838,271 

$

 -

$

18,838,271 

$

 -

    Commercial Paper

 

1,997,910 

 

 -

 

1,997,910 

 

 -

    Corporate Bonds

 

2,035,870 

 

 -

 

2,035,870 

 

 -

Total Assets:

$

22,872,051 

$

 -

$

22,872,051 

$

 -

 

 

 

 

 

 

 

 

 

Liabilities: 

 

 

 

 

 

 

 

 

    Warrant Liabilities

$

3,768,351 

 

-

 

-

$

3,768,351 

 

The fair value of the Company’s Level 2 marketable securities is determined by using quoted prices from independent pricing services that use market data for comparable securities in active or inactive markets.  A variety of data inputs, including benchmark yields, interest rates, known historical trades and broker dealer quotes are using with pricing models to determine the quoted prices.

 

The fair value methodology for the warrant liabilities is disclosed in Note 12.

 

The carrying amounts reported in the financial statements for cash and cash equivalents (Level 1), prepaid expenses and other assets, and accounts payable and accrued expenses approximate fair value because of the short term maturity of these financial instruments.

 

The following table sets forth a reconciliation of changes in the nine months ended September 30, 2015 and 2014 in the fair value of the liabilities classified as Level 3 in the fair value hierarchy:

 

 

 

 

 

 

 

 

 

 

 

 

Warrant Liabilities

Balance at January 1, 2015

 

$

3,768,351 

Additions

 

 

 -

Unrealized gains, net

 

 

(2,282,476)

Transfers out of level 3

 

 

(9,378)

Balance at September 30, 2015

 

$

1,476,497 

 

 

 

 

 

 

 

 

 

 

 

 

Warrant Liabilities

Balance at January 1, 2014

 

$

5,034,058 

Additions

 

 

3,691,429 

Unrealized losses, net

 

 

6,793,765 

Transfers out of level 3

 

 

(10,137,243)

Balance at September 30, 2014

 

$

5,382,009 

 

Additions consist of the fair value of warrant liabilities upon issuance.  Transfers out of Level 3 for warrant liabilities consist of warrant exercises, where the liability is converted to additional paid-in capital upon exercise.  The Company’s policy is to recognize transfers in and transfers out as of the actual date of the event or change in circumstance that caused the transfer.