Fair Value Of Financial Instruments

3 Months Ended

Jul. 31, 2013

Fair Value Of Financial Instruments [Abstract]

Fair Value Of Financial Instruments

5.  Fair Value of Financial Instruments

We have adopted the FASB guidance on fair value measurements and disclosures, which defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements.

Under this guidance, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability 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 values its warrants based on open form option pricing models which, based on the relevant inputs, render the fair value estimate Level 3. We based our estimates of fair value for liabilities on the amount we would pay a third-party market participant to transfer the liability and incorporates inputs such as equity prices, historical and implied volatilities, dividend rates and prices of convertible securities issued by comparable companies maximizing the use of observable inputs when available. The fair value hierarchy for valuation inputs gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

• Level 1 – Quoted prices in active markets for identical assets and liabilities.

• Level 2 – Observable inputs other than those included in Level 1, such as quoted market prices for similar assets and liabilities in active markets or quoted prices for identical assets in inactive markets.  

• Level 3 – Unobservable inputs are used when little or no market data is available and reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability.

Fair Value on a Recurring Basis

The table below categorizes assets and liabilities measured at fair value on a recurring basis as of July 31, 2013 (in thousands):   

		Fair value		Fair value measurement using
		July 31, 2013		Level 1		Level 2		Level 3
Common stock warrant liability	$	303	$	-	$	-	$	303

The following table summarizes the activity of Level 3 inputs measured on a recurring basis for the nine months ended July 31, 2013:   

(in thousands)	Common stock warrants
Balance at April 30, 2013	$	204
Change in fair value of common stock warrant liability		99
Balance at July 31, 2013		303