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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2018
Fair Value Disclosures [Abstract] |
Fair Value Measurements | 12. Fair Value Measurements The Company’s financial instruments consist of Level 1 and Level 3 assets as of December 31, 2018. As of December 31, 2018, the Company’s cash and cash equivalents of $2,406,596, were Level 1 assets and included savings deposits, overnight investments, and other liquid funds with financial institutions. The Company accounts for certain warrants and the embedded conversion features of the 8% Promissory Notes and 10% Convertible Debentures (both as described in Note 13) as derivative liabilities, which requires that the Company carry such amount in its consolidated balance sheets as a liability at fair value, as adjusted at each reporting period-end. The Company determined, due to their greater complexity, prior to the reset provision (as described in Note 13), the fair value of the L2 Warrants (as described in Note 17) and the embedded conversion feature with respect to the 8% Promissory Notes, as of the date of repayment, and 10% Convertible Debentures, as of the date of conversion, using appropriate valuation models derived through consultations with the Company’s independent valuation firm. The Company determined the fair value of the Strome Warrants (as described in Note 17) utilizing the Black-Scholes valuation model as further described below. After the reset provision, the Company determined the fair value of the L2 Warrants utilizing the Black-Scholes valuation model as further described below since such valuation model meets the fair value measurement objective based on the substantive characteristics of the instrument. These warrants and the embedded conversion features are classified as Level 3 within the fair-value hierarchy. Inputs to the valuation model include the Company’s publicly quoted stock price, the stock volatility, the risk-free interest rate, the remaining life of the warrants, notes and debentures, the exercise price or conversion price, and the dividend rate. The Company uses the closing stock price of its common stock over an appropriate period of time to compute stock volatility. These inputs are summarized as follows: L2 Warrants – Valuation model: Black-Scholes option-pricing; expected life: 4.44 years; risk-free interest rate: 2.49%; volatility factor: 124.40%; dividend rate: 0.0%; transaction date closing market price: $0.48; exercise price: $0.50. Strome Warrants – Valuation model: Black-Scholes option-pricing; expected life: 4.45 years; risk-free interest rate: 2.49%; volatility factor: 124.22%; dividend rate: 0.0%; transaction date closing market price: $0.48; exercise price: $0.50. B. Riley Warrants – Valuation model: Black-Scholes option-pricing; expected life: 6.80 years; risk-free interest rate: 2.59%; volatility factor: 121.65%; dividend rate: 0.0%; transaction date closing market price: $0.48; exercise price: $1.00. The following table represents the carrying amount, valuation and roll-forward of activity for the Company’s warrants accounted for as a derivative liability and classified within Level 3 of the fair-value hierarchy for the year ended December 31, 2018:
|  | L2 Warrants |  |  | Strome Warrants |  |  | B. Riley Warrants |  |  | Total Warrant Derivative Liabilities |
Carrying amount at January 1, 2018 |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Issuance of warrants on June 11, 2018 |  |  | 312,837 |  |  |  | - |  |  |  | - |  |  |  | 312,837 |
Issuance of warrants on June 15, 2018 |  |  | 288,149 |  |  |  | 1,344,648 |  |  |  | - |  |  |  | 1,632,797 |
Issuance of warrants on October 18, 2018 |  |  | - |  |  |  | - |  |  |  | 382,725 |  |  |  | 382,725 |
Change in valuation of warrant derivative liabilities |  |  | (182,772 | ) |  |  | (756,677 | ) |  |  | (24,675 | ) |  |  | (964,124 | )
Carrying amount at December 31, 2018 |  | $ | 418,214 |  |  | $ | 587,971 |  |  | $ | 358,050 |  |  | $ | 1,364,235 |
For the year ended December 31, 2018, the change in valuation of warrant derivative liabilities as described in the above table of $964,124 was recognized within other income on the consolidated statements of operations. The L2 Warrants were fully exercised on a cashless basis subsequent to December 31, 2018 (see Note 24). The Company did not have any warrant derivative liabilities as of December 31, 2017. The following table represents the carrying amount, valuation and a roll-forward of activity for the conversion option features, buy-in features, and default remedy features, as deemed appropriate for each instrument (collectively the embedded derivative liabilities), with respect to the 8% Promissory Notes, 10% Convertible Debentures, 10% OID Convertible Debentures, 12% Convertible Debentures (refer to Note 15 for each instrument), and Series G Preferred Stock (as described in Note 16) accounted for as embedded derivative liabilities and classified within Level 3 of the fair-value hierarchy for the year ended December 31, 2018:
|  | 8% Promissory Notes |  |  | 10% Convertible Debentures |  |  | 10% OID Convertible Debentures |  |  | 12% Convertible Debentures |  |  | Series G Preferred Stock |  |  | Total Embedded Derivative Liabilities |
Carrying amount at December 31, 2017 |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 72,563 |  |  | $ | 72,563 |
Recognition of embedded derivative liabilities (conversion option feature) on June 11, 2018 |  |  | 78,432 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 78,432 |
Recognition of embedded derivative liabilities (conversion option feature) on June 15, 2018 |  |  | 81,169 |  |  |  | 471,002 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 552,171 |
Recognition of embedded derivative liabilities (buy-in features and default remedy feature) on October 18, 2018 |  |  | - |  |  |  | - |  |  |  | 49,000 |  |  |  | - |  |  |  | - |  |  |  | 49,000 |
Recognition of embedded derivative liabilities (conversion option feature, buy-in feature, and default remedy feature) on December 12, 2018 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,760,000 |  |  |  | - |  |  |  | 4,760,000 |
Gain on extinguishment of embedded derivative liabilities upon extinguishment of host instrument |  |  | (29,860 | ) |  |  | (1,042,000 | ) |  |  | (25,000 | ) |  |  | - |  |  |  | - |  |  |  | (1,096,860 | )
Change in valuation of embedded derivative liabilities |  |  | (129,741 | ) |  |  | 570,998 |  |  |  | (24,000 | ) |  |  | 2,627,000 |  |  |  | (72,563 | ) |  |  | 2,971,694 |
Carrying amount at December 31, 2018 |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | 7,387,000 |  |  | $ | - |  |  | $ | 7,387,000 |
For the year ended December 31, 2018, the change in valuation of embedded derivative liabilities as described in the above table of $2,971,694 was recognized as other expense on the consolidated statements of operations. For the year ended December 31, 2017, the change in valuation of embedded derivative liabilities for the embedded conversion feature for the Series G Preferred Stock of $64,614 was recognized as other income on the consolidated statements of operations. In addition, the fair value requirement at each period-end for the Series G Preferred Stock embedded conversion feature was no longer required for the year ended December 31, 2018 since it is not considered a derivative liability, therefore, the carrying amount of $72,563 as of December 31, 2017 was recognized as other income of $72,563 during the year ended December 31, 2018 on the consolidated statements of operations.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=117815213&loc=d3e19207-110258 + Details
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