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9. Fair Value Measurements
 3 Months Ended
Mar. 31, 2014
Fair Value Disclosures [Abstract]  
9. Fair Value Measurements

The Company complies with the fair value measurements and disclosures standard which defines fair value, establishes a framework for measuring fair value, and expands disclosure for those assets and liabilities carried on the balance sheet on a fair value basis.

 

The Company's balance sheet contains derivative financial instruments that are recorded at fair value on a recurring basis. Fair value measurements and disclosures require that assets and liabilities carried at fair value be classified and disclosed according to the process for determining fair value. There are three levels of determining fair value.

 

Level 1 uses quoted market prices in active markets for identical assets or liabilities.

 

Level 2 uses observable market based inputs or unobservable inputs that are corroborated by market data.

 

Level 3 uses unobservable inputs that are not corroborated by market data.

 

A description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

 

Warrant liability: The warrant liability consists of stock warrants issued by the Company that contain conditional obligation to repurchase feature. In accordance with accounting for warrants as liabilities, the Company calculated the fair value of warrants under Level 3 using the assumptions described in “Fair Value of Warrants”. Realized and unrealized gains and losses related to the change in fair value of the warrant liability are included in other income on the Statement of Operations.

 

The following table summarizes financial liabilities measured at fair value on a recurring basis as of March 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

 

    Total     Level 1     Level 2     Level 3  
Warrant liability   $ 108     $ -     $ -     $ 108  
                                 

 

The following table reflects the activity for liabilities measured at fair value using Level 3 inputs for the three months ended March 31, 2014:

 

Balance as of December 31, 2013   $ 60  
Issuances of warrant liabilities     -  
Exercise of warrant liabilities     -  
Related change in fair value     48  
Balance as of March 31, 2014   $ 108