Annual report pursuant to Section 13 and 15(d)

Disclosures about Fair Value

v3.3.1.900
Disclosures about Fair Value
 12 Months Ended
Dec. 31, 2015
Fair Value Disclosures [Abstract]  
Disclosures about Fair Value

17. 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  
          Quoted prices              
          in active     Significant        
          markets of     other     Significant  
          identical     observable     Unobservable  
    Recorded     assets     inputs     Inputs  
    value     (Level 1)     (Level 2)     (Level 3)  
December 31, 2015                                
Assets:                                
Available-for-sale securities   $ 31,322     $ 31,322     $ -     $ -  
Liabilities:                                
Embedded conversion feature   $ 1,094,000     $ -     $ -     $ 1,094,000  
Warrants   $ 137,608                     $ 137,608  
December 31, 2014                                
Assets:                                
Available-for-sale securities   $ 35,362     $ 35,362     $ -     $ -  
Liabilities:                                
Embedded conversion feature   $ 1,610,900     $ -     $ -     $ 1,610,900  
Warrants   $ 334,300     $ -     $ -     $ 334,300  

  

At December 31, 2015 and 2014, 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 the Black Scholes option pricing model which involves the use of various inputs 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 for the Company’s shares 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.

 

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, 2015 and 2014.

 

          Conversion        
    Warrants     Feature     Total  
                   
Balance at January 1, 2014   $ -     $ 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  
                         
Change in fair value of derivative liability     (196,992 )     (671,600 )     (868,592 )
Amounts included in debt discount     -       778,900       778,900  
Reclassification in connection with conversion     -       (623,900 )     (623,900 )
Balance at December 31, 2015   $ 137,308     $ 1,094,300     $ 1,231,608