Note 3 - Fair Value Measurements

6 Months Ended

Jun. 30, 2018

NOTE

FAIR VALUE MEASUREMENTS

The Company measures the fair value of financial assets and liabilities based on authoritative guidance which 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 received 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 warrant liability is classified within Level

of the fair value hierarchy because the value is calculated using significant judgment based on the Company’s 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

June 30, 2018:

			Fair Value Measurements Using
(in thousands)	Balance at June 30, 2018		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	102	$	102	$	—	$	—
Restricted cash held as a certificate of deposit		324		324		—		—
Deposit held as a certificate of deposit		151		151		—		—
Total assets	$	577	$	577	$	—	$	—

Liabilities
Warrant liability	$	785	$	—	$	—	$	785
Total liabilities	$	785	$	—	$	—	$	785

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

December 31, 2017:

			Fair Value Measurements Using
(in thousands)	Balance at December 31, 2017		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Cash equivalents	$	101	$	101	$	—	$	—
Restricted cash held as a certificate of deposit		324		324		—		—
Deposit held as a certificate of deposit		150		150		—		—
Total assets	$	575	$	575	$	—	$	—

Liabilities
Warrant liability	$	1,489	$	—	$	—	$	1,489
Total liabilities	$	1,489	$	—	$	—	$	1,489

As a result of the fair value adjustment of the warrant liability, the Company recorded a non-cash gain of

$490

thousand for the

three

-month period ended

June 30, 2018

on a decrease in the fair value of the warrants. See Note

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

(in thousands)	Warrant liability
Fair value of warrant liability at December 31, 2017	$	1,489
Decrease in fair value at March 31, 2018		(214	)
Fair value of warrant liability at March 31, 2018		1,275
Decrease in fair value at June 30, 2018		(490	)
Fair value of warrant liability at June 30, 2018	$	785

- 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.

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