Annual report pursuant to Section 13 and 15(d)

Note 5 - Fair Value

v3.20.1
Note 5 - Fair Value
 12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
5.
Fair Val
ue
 
The Company’s available-for-sale securities consist of certificates of deposit which are measured using Level
2
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, which is measured using Level
3
inputs, is
$0
and
$63,000
at
December 31, 2019
and
2018,
respectively, and is included in other liabilities on the accompanying consolidated balance sheets, and will continue to be measured on a recurring basis until the MT warrants expire in
March 2020.
See Notes
1
(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
  
 
 
a.
Valuation Processes-Level
3
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.
 
 
b.
Sensitivity Analysis-Level
3
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
no
transfers in or out of our Level
1
or Level
2
liabilities during the years ended
December 31, 2019
and
2018.
Changes in the estimated fair value of our Level
3
liabilities relating to unrealized gains (losses) are recorded as changes in fair value of financial instruments in the consolidated statements of operations.