Note 9 - Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 9 – Fair Value Measurements

Financial Instruments Carried at Cost

Short-term financial instruments in our consolidated balance sheets, including cash and cash equivalents, accounts payable and accrued expenses, are carried at cost which approximates fair value, due to their short-term nature.

Fair Value Measurements

Our consolidated balance sheets include certain financial instruments that are carried at fair value. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

● Level 1, defined as observable inputs such as quoted prices in active markets for identical assets;

● Level 2, defined as observable inputs other than Level 1 prices such as quoted prices for similar assets; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

An asset or liability’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. At each reporting period, we perform a detailed analysis of our assets and liabilities that are measured at fair value. All assets and liabilities for which the fair value measurement is based on significant unobservable inputs or instruments which trade infrequently, and therefore have little or no price transparency are classified as Level 3.

Financial Assets and Liabilities Measured at Fair Value

The Company has no financial assets and liabilities measured at fair value.

The Company had no financial assets and liabilities measured at fair value on a recurring or non-recurring basis as of  December 31, 2021.

Non-Financial Assets and Liabilities Measured at Fair Value

The Company’s property and equipment is measured at fair value on a non-recurring basis when there are indicators of impairment. There were no impairments during the years ended December 31, 2022 and 2021.

During 2021, the Company measured certain equity-linked financial instruments at fair value. The financial instruments measured at fair value are as follows:

Equity-linked financial instrument	Issue date	Issued date fair value		Classification	Valuation methodology
3,977,961 stock purchase warrants modified	12/1/2021	$	163,096	Equity	Black-Scholes option pricing model
2,877,500 stock purchase warrants modified	12/1/2021	$	13,937	Equity	Black-Scholes option pricing model

The fair value of “plain vanilla” stock purchase warrants is measured on the issuance date using the Black-Scholes option pricing model, and uses estimated of stock price volatility, estimated period of time that warrants are expected to be outstanding, the risk-free rate based on the U.S. Treasury yield curve in effect at the time of issuance, an estimated dividend rate and the price of our common stock at the issuance date. The assumptions are summarized in the following table:

	2021
Risk free rate		0.26	%
Weighted average expected years until exercise		5
Expected stock volatility		100	%
Dividend yield		-