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Fair Value Measurements
9 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 4 - Fair Value Measurements

 

We evaluate assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by the Company. The following table sets forth our liabilities that were measured at fair value as of September 30, 2018, by level within the fair value hierarchy:

 

    Amounts at     Fair Value Measurement  
    Fair Value     Level 1     Level 2     Level 3  
Note Payable to AOR   $ 298,719       -       -     $ 298,719  
Total liabilities measured at fair value   $ 298,719       -       -     $ 298,719  

 

The note payable due to AOR, LLC is a Level 3 fair value measurement. The fair value of our liability was determined based on unobservable inputs that are not corroborated by market date, if available, when determining fair value.

 

The initial fair value of the note was determined to approximate its carry value. The change in fair value for the period ending September 30, 2018 was de minimis.

 

There is no active market for the debt and the value was based on the payment terms in addition to other facts and circumstances. The fair value of the convertible note was based on a probability-adjusted model, which entailed management estimating the probability of (i) exercising the early payment option and (ii) paying off the note according to the original terms. Factors affecting this estimate included the Company’s current financial position, financing plans, and operating objectives.

 

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances. Actual results may differ from management’s estimates if these results differ from historical experience or other assumptions do not prove to be substantially accurate, even if such assumptions are reasonable when made.