Note 3 - Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE

3.

FAIR VALUE MEASUREMENTS

The Company measures the fair value of financial assets and liabilities based on authoritative guidance that defines fair value, establishes a framework consisting of

three

levels for measuring fair value, and requires disclosures about fair value measurements. Fair value is defined as the exchange price that would be receive for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company’s cash equivalents and investments are classified within Level

1

or Level

2

of the fair value hierarchy because they are valued using quoted market prices in active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of investments that are generally classified within Level

1

of the fair value hierarchy include money market securities and certificates of deposits. The types of investments that are generally classified within Level

2

of the fair value hierarchy include corporate securities and U.S. government securities.

The Company’s warrant liability is classified within level

3

of the fair value hierarchy because the value is calculated using significant judgment based on our own assumptions in the valuation of this liability.

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of

December

31,

2016:

	Fair Value Measurements Using
(in thousands)	Balance at December 31, 2016		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	100	$	100	$	—	$	—
Restricted cash held as a certificate of deposit		324		324		—		—
Deposit held as a certificate of deposit		150		150		—		—
Total assets	$	574	$	574	$	—	$	—
Liabilities
Warrant liability	$	1,446	$	—	$	—	$	1,446
Total liabilities	$	1,446	$	—	$	—	$	1,446

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of

December

31,

2015:

	Fair Value Measurements Using
(in thousands)	Balance at December 31, 2015		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	2,385	$	2,385	$	—	$	—
Total assets	$	2,385	$	2,385	$	—	$	—
Liabilities
Warrant liability	$	1,450	$	—	$	—	$	1,450
Total liabilities	$	1,450	$	—	$	—	$	1,450

For the year ended

December

31,

2016,

as a result of the fair value adjustment of the warrant liability, the Company recorded a non-cash loss on a change in the fair value of

$2.1

million in its consolidated statements of operations and comprehensive loss.  See Note 

10

for further discussion on the calculation of the fair value of the warrant liability.

(in thousands)	2016			2015
Fair value of warrant liability at January 1	$	1,450		$	173
Fair value of warrants issued		—			1,251
Fair value of warrants transferred (to) from equity upon exercise		(2,103	)		2,175
Increase (decrease) in fair value on exercise date and December 31		2,099			(2,149	)
Fair value of warrant liability at December 31	$	1,446		$	1,450