Note 15 - Fair Value Measurements

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

15.

     Fair Value Measurements

Certain assets and liabilities are carried at fair value under GAAP. 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in

one

of the following

three

levels of the fair value hierarchy, of which the

first

two

are considered observable and the last is considered unobservable:

● Level 1—Quoted prices in active markets for identical assets or liabilities.

● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

● Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis:

	December 31 , 2016
	(Level 1)		(Level 2)		(Level 3)
Assets
Cash and cash equivalents	$	1,552,852	$	—	$	—
Liabilities
Contingent value rights distribution	$	—	$	—	$	—

	December 31, 2015
	(Level 1)		(Level 2)		(Level 3)
Assets
Cash and cash equivalents	$	1,997,192	$	—	$	—
Liabilities
Contingent value rights distribution	$	—	$	—	$	—

Contingent Value Rights Distribution

Each CVR represents a non-transferable right (subject to certain limited exceptions) to potentially receive certain cash payments, not to exceed

$50.0

million in the aggregate, in the event the Company receives net cash payments during the

five

(5)

year period after the Merger as a result of the sale, transfer, license or similar transaction relating to RES-

440.

Any option or warrant holder of the Company as of the record date for the CVRs would, at the time of exercise, be entitled to receive

one

CVR for each share of the Company’s common stock issued upon the future exercise of the option or warrant, which would entitle the holder to a pro rata portion of any CVR payments made after the date of exercise.

In connection with the abandonment of the RES-

440

IPR&D asset (See Note

4),

the Company remeasured the value of each CVR and as of

December

31,

2016,

determined the CVRs have no value.

The reconciliation of the contingent consideration liability measured at fair value on a recurring basis using significant unobservable inputs (Level

3)

is as follows:

	Contingent Value Rights Distribution
Issued in connection with the Merger transaction	$	10,000
Change in fair value upon abandonment of RES-440		(10,000	)
Balance at December 31, 2016	$	—