FAIR VALUE OF FINANCIAL INSTRUMENTS
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Dec. 31, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6. FAIR VALUE OF FINANCIAL INSTRUMENTS
In accordance with the fair value hierarchy described in Note 1, the following table shows the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2013 and June 30, 2013:
As of December 31, 2013 and June 30, 2013, the fair values of the Company’s Level 1 financial instruments were $2,684 and $192,620, respectively. These financial instruments consist of cash equivalents, including money market accounts. As of December 31, 2013 and June 30, 2013, the Company held no Level 2 financial instruments.
As of December 31, 2013 and June 30, 2013, the fair values of the Company’s Level 3 financial instruments totaled $469,437 and $650,638, respectively. The Level 3 financial instrument consists of common stock warrants issued by the Company in March 2011, which include features requiring liability treatment of the warrants. The fair value of warrants issued in March 2011 to purchase 3.9 million shares of the Company’s common stock is based on valuations performed by an independent third party valuation firm. The fair value was determined using proprietary valuation models using the quality of the underlying securities of the warrants, restrictions on the warrants and security underlying the warrants, time restrictions and precedent sale transactions completed in the secondary market or in other private transactions.
The following table summarizes the changes in fair value of the Company’s Level 3 financial instruments for the six-months ended December 31, 2013 and 2012:
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