Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

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Fair Value Measurements
 6 Months Ended
Jun. 30, 2015
Fair Value Measurements [Text Block]

Note 11. Fair Value Measurements

The Company adopted the accounting guidance on fair value measurements for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

•     Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

•     Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;

•     Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liability measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014:

    Fair value measurement using  
          Significant     Significant        
    Quoted prices in     other     unobservable        
    active markets     observable     inputs        
($ rounded to nearest thousand)   (Level 1)     inputs (Level 2)     (Level 3)     Total  
Balance at June 30, 2015                        
Assets:                        
Cash and cash equivalents $ 2,371,000   $   —   $   —   $ 2,371,000  
Liabilities:                        
Warrant liability $   —   $   —   $ 2,975,000   $ 2,975,000  

    Fair value measurement using  
          Significant     Significant        
    Quoted prices in     other     unobservable        
    active markets     observable     inputs        
($ rounded to nearest thousand)   (Level 1)     inputs (Level 2)     (Level 3)     Total  
Balance at December 31, 2014                        
Assets:                        
Cash and cash equivalents $ 4,220,000   $   —   $   —   $ 4,220,000  
Liabilities:                        
Warrant liability $   —   $   —   $ 4,633,000   $ 4,633,000  

The reconciliation of warrant liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:

($ rounded to nearest thousand)                                                                                                          Warrant Liability  
Balance at December 31, 2013 $ 1,711,000  
Issuance of additional warrants   4,416,000  
Exercise of warrants   (331,000 )
Change in fair value of warrant liability   (1,163,000 )
Balance at December 31, 2014   4,633,000  
Issuance of additional warrants   -  
Exercise of warrants   -  
Change in fair value of warrant liability   (1,658,000 )
Balance at June 30, 2015 $ 2,975,000  

The fair value of the warrant liability is based on Level 3 inputs. For this liability, the Company developed its own assumptions that do not have observable inputs or available market data to support the fair value. See Note 8 for further discussion of the warrant liability.

The Company believes that the fair values of its current assets and current liabilities approximate their reported carrying amounts. There were no transfers between Level 1, 2 and 3.