Note 7:

WARRANT LIABILITY AND FAIR VALUE MEASUREMENTS

A summary of quantitative information with respect to valuation methodology and significant unobservable inputs used for the Company’s common stock purchase warrants that are categorized within Level 3 of the fair value hierarchy for the three months ended March 31, 2017 and 2016 is as follows:

	Three Months Ended
	March 31,
	2017		2016
Stock price	$	4.49	$	8.16
Exercise price	$	1.20		$1.20 - $300.00
Contractual term (years)		0.12 - 1.28		0.53 - 4.45
Volatility (annual)		67% - 79%		85% - 151%
Risk-free rate		0.74% - 1.03%		0.65% - 1.12%
Dividend yield (per share)		0%		0%

The foregoing assumptions are reviewed quarterly and are subject to change based primarily on management’s assessment of the probability of the events described occurring. Accordingly, changes to these assessments could materially affect the valuations.

Financial Liabilities Measured at Fair Value on a Recurring Basis

Financial liabilities measured at fair value on a recurring basis are summarized below and disclosed on the balance sheet under Warrant liability:

Fair value measured at March 31, 2017

Quoted prices in active

Significant other

Significant

markets

observable inputs

unobservable inputs

Fair value at

(Level 1)

(Level 2)

(Level 3)

March 31, 2017

Warrant liability

17,500

Fair value measured at December 31, 2016

Quoted prices in active

Significant other

Significant

markets

observable inputs

unobservable inputs

Fair value at

(Level 1)

(Level 2)

(Level 3)

December 31, 2016

Warrant liability

14,500

The fair value accounting standards define fair value as 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 determined based upon assumptions that market participants would use in pricing an asset or liability. Fair value measurements are rated on a three-tier hierarchy as follows:

Level 1 inputs: Quoted prices (unadjusted) for identical assets or liabilities in active markets;

Level 2 inputs: Inputs, other than quoted prices included in Level 1, that are observable either directly or indirectly; and

Level 3 inputs: Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

There were no transfers between Level 1, 2 or 3 during the three months ended March 31, 2017.

The following table presents changes in Level 3 liabilities measured at fair value for the three months ended March 31, 2017:

	Warrant
	Liability
Balance - December 31, 2016	$	14,500
Change in fair value of warrant liability		3,000
Balance – March 31, 2017	$	17,500