Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Fair Value Measurements

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Note 6 - Fair Value Measurements
3 Months Ended
Mar. 31, 2016
Fair Value Disclosures [Abstract]  
Note 6 - Fair Value Measurements

Note 6 – Fair Value Measurements

 

Accounting guidance on fair value measurements and disclosures defines fair value, establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system, and defines required disclosures. It clarifies that fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.

 

The Company's balance sheet contains derivative and warrant liabilities that are recorded at fair value on a recurring basis. The three-level valuation hierarchy for disclosure of fair value is as follows:

 

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.

 

The fair value of the Company’s recorded derivative liability is determined based on unobservable inputs that are not corroborated by market data, which require a Level 3 classification. A Black-Scholes option valuation model was used to determine the fair value. The Company records derivative liability on the condensed consolidated balance sheets at fair value with changes in fair value recorded in the condensed consolidated statements of operation.

 

The following table presents changes in the liabilities with significant unobservable inputs (Level 3) for the three months ended March 31, 2016:

 

    Fair Value Measurements Using
      Quoted Prices in     Significant Other     Significant      
      Active Markets for     Observable     Unobservable      
      Identical Assets     Inputs     Inputs      
      (Level 1)     (Level 2)     (Level 3)     Total
As of March 31, 2016                        
   Derivative liability   $ -   $ -   $ 3,340,633   $ 3,340,633
Total   $ -   $ -   $ 3,340,633   $ 3,340,633