Annual report pursuant to Section 13 and 15(d)

Note 5 - Fair Value

Note 5 - Fair Value

12 Months Ended

Dec. 31, 2018

5.	Fair Val ue

The Company’s available-for-sale securities consist of certificates of deposit which are measured using Level

inputs.

MT issued warrants to purchase MT Common Stock with certain characteristics including a net settlement provision that require the warrants to be accounted for as a derivative liability at fair value on the consolidated balance sheets. The estimated fair value of the MT warrants is

$63,000

at both

December 31, 2018

and

2017,

is included in other liabilities on the accompanying consolidated balance sheets, and will continue to be measured on a recurring basis. See Notes

(m) and

10.

The following table sets forth, by level, financial assets and liabilities measured at fair value on a recurring basis:

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2018
Description	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Certificates of deposit	$	—	$	799,270	$	—	$	799,270
Liabilities:
Liability related to MT warrants	$	—	$	—	$	63,000	$	63,000

Assets and Liabilities Measured at Fair Value on a Recurring Basis as of December 31, 2017
Description	Quoted Prices in Active Markets for Identical Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Certificates of deposit	$	—	$	1,797,604	$	—	$	1,797,604
Liabilities:
Liability related to MT warrants	$	—	$	—	$	63,000	$	63,000

Valuation Processes-Level

Measurements:

The Company utilizes

third

-party valuation services that use complex models such as Monte Carlo simulation to estimate the value of our financial liabilities.

Sensitivity Analysis-Level

Measurements:

Changes in the valuation of MT as a whole

may

cause material changes in the fair value of the MT warrants. Significant increases (decreases) in the valuation of MT, such as

may

be the result of additional financing, could result in a higher (lower) fair value measurement. A change in the valuation of MT would

not

necessarily result in a directionally similar change in the value of the MT warrants.

There were

Level

or Level

liabilities outstanding at any time during the years ended

December 31, 2018

and

2017.

There were

transfers in or out of our Level

or Level

liabilities during the years ended

December 31, 2018

and

2017.

Changes in the estimated fair value of our Level

liabilities relating to unrealized gains (losses) are recorded as changes in fair value of financial instruments in the consolidated statements of operations. The change in the estimated fair value of our Level

liabilities during the year ended

December 31, 2017

was an approximate decrease of

$153,000.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details