Note 2 - Basis of Presentation and Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

2 .  Basis of Presentation and Recent Accounting Pronouncements

The accompanying unaudited interim consolidated financial statements as of and for the

three

months ended

March 31, 2019

and

March 31, 2018

have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and in accordance with the instructions to Form

10

-Q. Accordingly, they do

not

include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. All intercompany balances and transactions have been eliminated in consolidation. Operating results for the

three

months ended

March 31, 2019

are

not

necessarily indicative of the results that

may

be expected for any future periods or the year ending

December 31, 2019.

The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's

2018

Annual Report on Form

10

-K filed with the Securities and Exchange Commission (“SEC”) on

March 5, 2019.

Leases

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued an accounting standards update which modifies the accounting for leasing arrangements, particularly those arrangements classified as operating leases. This update will require entities to recognize the assets and liabilities arising from operating leases on the balance sheet. The Company adopted the requirements of this guidance as of

January 1, 2019,

utilizing the modified retrospective approach. Due to the Company

not

having any qualifying lease obligations, the adoption of this guidance did

not

have any impact on the Company’s consolidated financial statements.

Liability Classified Warrants

In

July 2017,

the FASB issued an accounting standards update which modifies the requirements for the classification of certain financial instruments with down round features as equity versus liabilities. The guidance will allow for financial instruments previously required to be presented as liabilities due to the presence of down round features to be presented as equity upon meeting other criteria. The Company adopted the requirements of this update effective as of

January 1, 2019,

utilizing the full retrospective transition option. Accordingly, the Company reclassified the warrant liability to additional paid in capital on its

December 31, 2018

consolidated balance sheets, which increased additional paid-in capital by

$6,970,

increased accumulated deficit by

$4,778,

and decreased warrant liability by

$2,192.

In addition, because of the retrospective adoption, the Company credited change in fair value of warrant liability on its consolidated statements of operations by

$1,267

for year ended

December 31, 2018.

The change in fair value of the warrant liability was offset by a

$1,267

credit to accumulated deficit on the consolidated balance sheets. Similarly, the Company credited change in fair value of warrant liability on its consolidated statements of operations by

$275

for

three

months ended

March 31, 2018.

The adoption of this guidance had

no

impact on the Company’s consolidated statement of cash flows in the current or previous interim and annual reporting periods. The following table provides a reconciliation of warrant liability, additional paid-in capital, accumulated deficit, and change in fair value of warrant liability on the consolidated balance sheets for the year ended

December 31, 2018

and the

three

-months ended

March 31, 2018 (

in thousands):

	Balance Sheet
	Warrant Liability			Additional Paid-in Capital		Accumulated Deficit
Balance as of 12/31/2018 (Prior to Adoption of ASU 2017-11)	$	925		$	279,306	$	(252,809	)
Reverse beginning balance as of January 1, 2018		(2,192	)		6,970		(4,778	)
Change in fair value of warrant liability		1,267			-		(1,267	)
Balance as of 12/31/2018 (After Adoption of ASU 2017-11)	$	-		$	286,276	$	(258,854	)

	Statement of Operations
	Change in Value of Warrant Liability			Net Loss and Comprehensive Loss
Balance as of 3/31/2018 (Prior to Adoption of ASU 2017-11)	$	(275	)	$	(2,438	)
Reverse beginning balance as of January 1, 2018		-			-
Change in fair value of warrant liability		275			275
Balance as of 3/31/2018 (After Adoption of ASU 2017-11)	$	-		$	(2,163	)

Fair Value

Measurements

The estimated fair values of financial instruments reported in the consolidated financial statements have been determined using available market information and valuation methodologies, as applicable. The fair value of cash and restricted cash approximate their carrying value due to their short maturities and are classified as Level

1

instruments within the fair value hierarchy.

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. Entities are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value based upon the following fair value hierarchy:

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

Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; 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 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Other recent pronouncements

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants and the SEC did

not

or are

not

believed by management to have a material impact on the Company's present or future consolidated financial statements.