Fair value measurements are market-based measurements, not entity-specific measurements. Therefore, fair value measurements are determined based on the assumptions that market participants would use in pricing the asset or liability. We follow a three-level hierarchy to prioritize the inputs used in the valuation techniques to derive fair values. The basis for fair value measurements for each level within the hierarchy is described below:

Warrants issued by the Company in connection with the 2018 Rights Offering in July 2018 (“Series T Warrants”) and in September 2019 Offering (“Series U Warrants”) are classified as liabilities instruments. Because some of the inputs to our valuation model are either not observable or are not derived principally from or corroborated by observable market data by correlation or other means, the warrant liability is classified as Level 3 in the fair value hierarchy.

The Series T Warrants are not traded in an active securities market, and as such the estimated the fair value as of December 31, 2019 and 2018 was determined by using an option pricing model with the following assumptions:

	As of December 31, 2019			As of December 31, 2018
Expected term	1.1 years			2.1 years
Common stock market price	$	2.40		$	14.50
Risk-free interest rate		1.59	%		2.48	%
Expected volatility		168	%		125	%
Resulting fair value (per warrant)	$	1.47		$	6.50

The warrants issued in connection with the 2018 Rights Offering may be redeemed by the Company at $0.01 per warrant prior to their expiration if the Company’s common stock closes above $3.63 per share, subject to adjustment, for 20 consecutive trading days. The initial fair value of the liability associated with these warrants was $3.1 million, and the fair value decreased to $0.1 million as of December 31, 2019. The main driver for the change in the fair value of warrants at December 31, 2019 and 2018, was related to the change in our stock price.

The Company estimated the fair value of the Series U Warrants on the issuance date as well as at December 31, 2019 with the Black Scholes model. The Series U warrants will be marked to market as of each balance sheet date until they are exercised or upon expiration, with the changes in fair value recorded as non-operating income or loss in the statement of operations and comprehensive income (loss).

	As of December 31, 2019			As of September 25, 2019
Expected term	4.75 years			5 years
Common stock market price	$	2.40		$	3.42
Risk-free interest rate		1.68	%		1.60	%
Expected volatility		134.5	%		134.9	%
Resulting fair value (per warrant)	$	1.94		$	2.90

The following table summarizes the change in our Level 3 warrant liability value (in thousands):

	Years ended December 31,
Warrant liability	2019			2018
Beginning balance	$	916		$	3,148
Issuance of warrants		10,214			—
Exercises		(794	)		—
Change in fair value		(3,407	)		(2,233	)
Ending balance	$	6,929		$	916

Fair value information is disclosed about all financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate fair value. The disclosures of estimated fair value of financial instruments at December 31, 2019 and 2018, were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.

The carrying amounts for cash and cash equivalents, accounts receivable, other current assets, accounts payable, accrued expenses and other liabilities approximate fair value due to the short-term nature of these instruments.

At December 31, 2019 and 2018, the aggregate fair value and the carrying value of the Company’s term loan were as follows (in thousands):

	December 31, 2019				December 31, 2018
	Fair Value		Carrying Value		Fair Value		Carrying Value
Debt	$	10,761	$	11,060	$	14,043	$	14,202

Carrying value is net of debt discount of $0.4 million and $0.6 million as of December 31, 2019 and 2018, respectively.

The fair value of debt is classified as Level 3 in the fair value hierarchy as some of the inputs, primarily the effective interest rate, to the valuation model are either not observable quoted prices or are not derived principally from or corroborated by observable market data by correlation or other means.

The Company applies fair value techniques on a non-recurring basis, if and when necessary, associated with: (1) valuing potential impairment losses related to goodwill which are accounted for pursuant to the authoritative guidance for intangibles—goodwill and other; and (2) valuing potential impairment losses related to long-lived assets which are accounted for pursuant to the authoritative guidance for property, plant and equipment.