Annual report pursuant to Section 13 and 15(d)

Disclosures about Fair Value

v2.4.1.9
Disclosures about Fair Value
 12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]  
Disclosures about Fair Value

18. DISCLOSURES ABOUT FAIR VALUE

 

Assets and liabilities measured at fair value on a recurring basis are summarized in the following tables according to FASB ASC 820 pricing levels.

 

    Fair Value Measurement Using  
    Recorded
value 		    Quoted prices
in active
markets of
identical
assets
(Level 1) 		    Significant
other
observable
inputs
(Level 2) 		    Significant
Unobservable
Inputs
(Level 3) 		 
                         
December 31, 2014                                
Assets:                                
Available-for-sale securities   $ 35,362     $ 35,362     $ -     $ -  
Liabilities:                                
Embedded conversion feature   $ 1,610,900     $ -     $ -     $ 1,610,900  
                                 
December 31, 2013                                
Assets:                                
Available-for-sale securities   $ 55,112     $ 55,112     $ -     $ -  
Liabilities:                                
Embedded conversion feature   $ 2,146,000     $ -     $ -     $ 2,146,000  

 

At December 31, 2014 and 2013, the Company’s available-for-sale equity securities were valued using Level 1 and Level 2 inputs as summarized above. Level 1 inputs are based on unadjusted prices for identical assets in active markets that the Company can access. Level 2 inputs are based on quoted prices for similar assets other than quoted prices in Level 1, quoted prices in markets that are not yet active, or other inputs that are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets.

 

The derivative liabilities are measured at fair value using quoted market prices and estimated volatility factors based on historical quoted market prices for the Company’s common stock, and are classified within Level 3 of the valuation hierarchy.

 

Certain assets are not carried at fair value on a recurring basis, including investments accounted for under the equity and cost methods. Accordingly, such investments are only included in the fair value hierarchy disclosure when the investment is subject to re-measurement at fair value after initial recognition and the resulting re-measurement is reflected in the consolidated financial statements.

 

See Note 4 for further details of the Company’s investments.

 

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets measured at fair value on a recurring basis using significant unobservable inputs during the year ended December 31, 2014 and 2013.

 

    Warrants     Conversion
Feature 		    Total  
Balance at January 31, 2013   $ -     $ -     $ -  
Change in fair value of derivative liability             (119,600 )     (119,600 )
Included in debt discount             2,115,400       2,115,400  
Included in interest             150,200       150,200  
Balance at December 31, 2013     -       2,146,000       2,146,000  
                         
Change in fair value of derivative liability     (292,600 )     (935,000 )     (1,227,600 )
Amount included in debt discounts     626,900       399,900       1,026,800  
Balance at December 31, 2014   $ 334,300     $ 1,610,900     $ 1,945,200