Fair Value Measurements

9 Months Ended

Mar. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements [Text Block]

14. Fair Value Measurements

 

The Company measures fair value for financial assets and liabilities in accordance with the provisions of the accounting guidance regarding fair value measurements. The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. A brief description of those three levels is as follows:

· Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

· Level 2: Inputs other than quoted prices for identical assets or liabilities that are observable for the asset or liability, either directly or indirectly.

· Level 3: Significant unobservable inputs.

			Fair Value Measurements Using Fair Value Hierarchy
March 31, 2016	Fair Value		Level 1		Level 2		Level 3
Warrant liability	$	1,405,686	$	-	$	-	$	1,405,686
Total	$	1,405,686	$	-	$	-	$	1,405,686

The following is a reconciliation of the opening and closing balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period ended March 31, 2016:

	Fair Value
March 31, 2016
Balance at June 30, 2015	$	-
Warrant liability acquired in reverse merger		1,066,000
Change in fair value		340,000
Balance at March 31, 2016	$	1,406,000

The Company’s assets and liabilities subject to recurring fair value measurements as of March 31, 2016 are as follows:

The warrant liability represents the fair value of the warrants issued by the Company that have reset features. The Company is required to revalue the warrant liability at the end of each reporting period and record a non-cash gain or loss in the statement of operations for the change in the fair value of the warrant liability in the period in which the change occurs. The fair value of the warrant liability is estimated using an adjusted Black-Scholes model and the applicable level 1 and level 2 inputs and an unobservable level 3 input regarding the likelihood of a reset occurring. Since the Company uses a level 3 input, the warrant liability in included in the level 3 category in the table above. Estimating fair value requires the input of highly subjective assumptions and because changes in such assumptions can materially affect the fair value estimate, in management’s opinion, the existing models may not provide a reliable single measure of the fair value of the related assets or liabilities.

For the three and nine months ended March 31, 2016, the Company recorded non-cash losses of $340,000 in other expense for the change in fair value of the warrant liability.