XML 23 R12.htm IDEA: XBRL DOCUMENT v3.20.2
Fair Value Measurement
 9 Months Ended
Sep. 30, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurement

NOTE 5. FAIR VALUE MEASUREMENT

 

In accordance with ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities or a group of assets or liabilities, such as a business.

 

ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

● Level 1 — Quoted prices in active markets for identical assets and liabilities
   
● Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities)
   
● Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value)

 

The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019:

 

      September 30, 2020  
      Level 1       Level 2       Level 3       Total  
Liabilities:                                
Secured convertible notes   $ —     $ —     $ —     $ —  
Proceeds investment agreement obligation     —       —       —     $ —  
    $ —     $ —     $ —     $ —  

 

    December 31, 2019  
    Level 1     Level 2     Level 3     Total  
Liabilities:                                
Secured convertible notes   $ —     $ —     $ 1,593,809     $ 1,593,809  
Proceeds investment agreement obligation     —       —       6,500,000       6,500,000  
    $ —     $ —     $ 8,093,809     $ 8,093,809  

 

The following table represents the change in Level 3 tier value measurements:

 

    2019     2020              
    Secured     Secured     Proceeds        
    Convertible     Convertible     Investment        
    Notes     Notes     Agreement     Total  
                         
Balance, December 31, 2019   $ 1,593,809     $ —     $ 6,500,000     $ 8,093,809  
                                 
Issuance of secured convertible debt     —       778,859       —       778,859  
                                 
Conversion of secured convertible debentures     (1,259,074 )     (1,665,666 )     —       (2,924,740 )
                                 
Repayment of proceeds investment agreement     —       —       (1,250,000 )     (1,250,000 )
                                 
Repayment of secured convertible notes     (747,180 )     (1,000 )     —       (748,180 )
                                 
Change in fair value of secured convertible debentures and proceeds investment agreement     412,445       887,807       (5,250,000 )     (3,949,748 )
                                 
Balance, September 30, 2020   $ —     $ —     $ —     $ —