Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.2.0.727
Fair Value Measurements
6 Months Ended
Jun. 30, 2015
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]
Note 2.  Fair Value Measurements
 
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These levels are:
 
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
 
Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities.
 
Level 3 – inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 non-derivative assets primarily comprise investments in certain corporate bonds and goodwill when it is recorded at fair value due to an impairment charge.
  
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
We have segregated our financial assets and liabilities that are measured at fair value into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date.
 
The inputs used in measuring the fair value of cash and cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of our funds.
 
We had no financial assets or liabilities measured at fair value using level 3 inputs on a recurring basis at June 30, 2015 or December 31, 2014.
 
The following table presents the activity for those items measured at fair value on a recurring basis using Level 3 inputs for the six months ended June 30, 2014:
 
 
 
Derivative
 
 
 
Instruments - Stock
 
 
 
Purchase Warrants
 
Balance at December 31, 2013
 
$
1,417,527
 
Change in fair value
 
 
334,133
 
Exercise of underlying warrants
 
 
(1,751,660)
 
Balance at June 30, 2014
 
$
-
 
 
The (gains) losses resulting from the changes in the fair value of the derivative instruments are classified as the “change in the fair value of derivative instruments” in the accompanying condensed statements of operations. The fair value of the common stock purchase warrants is determined based on the Black-Scholes option pricing model for “plain vanilla” stock options and other option pricing models as appropriate, and includes the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends. Changes in any of the assumptions related to the unobservable inputs identified above may change the embedded conversion options’ fair value; increases in expected term, anticipated volatility and expected dividends generally result in increases in fair value, while decreases in these unobservable inputs generally result in decreases in fair value.
 
Non-Financial Assets and Liabilities Measure at Fair Value on a Recurring Basis
We have no non-financial assets or liabilities that are measured at fair value on a recurring basis.
 
Non-Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
We measure our long-lived assets, including property and equipment and patent assets, at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. No such fair value impairment was recognized in the six months ended June 30, 2015 or 2014.