XML 30 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Fair Value Measurement
 6 Months Ended
Jun. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurement

Note 3. Fair Value Measurement

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, we are required to apply a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. The three levels of the fair value hierarchy are:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Directly or indirectly observable inputs other than in Level 1, that include quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3 — Unobservable inputs which are supported by little or no market activity that reflects the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets measured at fair value are classified below based on the three fair value hierarchy tiers described above.

 

Our cash equivalents are classified as Level 1 because they are valued primarily using quoted market prices.

Our liability for warrants issued in our 2011 and 2016 financing is classified as Level 2 as the liability is valued using a Black-Scholes model. Some of the significant inputs used to calculate the fair value of warrant liability include our stock price on the valuation date, expected volatility of our common stock as traded on NASDAQ, and risk-free interest rates that are derived from the yield on U.S. Treasury debt securities, all of which are observable from active markets.

The following table presents financial assets and liabilities measured at fair value as of June 30, 2016:

 

     Fair Value Measurement
at Report Date Using		                
     Quoted Prices
in Active Markets
for
Identical Assets
(Level 1)		      Significant
Other
Observable
Inputs
(Level 2)		      Unobservable
Inputs
(Level 3)		      As of
June 30,
2016		  

Financial assets:

            

Cash equivalents:

            

Money market funds

    $ 573,239       $ —         $ —         $ 573,239   

U.S. Treasury debt obligations

      665,100         —           —           665,100   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total financial assets

    $ 1,238,339       $ —         $ —         $ 1,238,339   
  

 

 

     

 

 

     

 

 

     

 

 

  

Financial liabilities:

            

Warrant liabilities

      —           591,037        —           591,037  
  

 

 

     

 

 

     

 

 

     

 

 

  

Total financial liabilities

    $ —         $ 591,037       $ —         $ 591,037