FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2013

FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS [Text Block]

NOTE 3 FAIR VALUE MEASUREMENTS AND FINANCIAL INSTRUMENTS

The Company values its financial instruments as required by FASB ASC 320-12-65 (formerly SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”). The estimated fair value amounts have been determined by the Company, using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value 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. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

Level one —	Quoted market prices in active markets for identical assets or liabilities;
Level two —	Inputs other than level one inputs that are either directly or indirectly observable; and
Level three —	Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter.

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

		Fair value measurement using inputs						Carrying amount at
Financial instruments		Level 1		Level 2		Level 3		December 31, 2012
Liabilities:
Derivative instruments – Warrants	$	—	$	173	$	—	$	173
Total	$	—	$	173	$	—	$	173

The carrying values of cash and cash equivalents, trade and other receivables and payables approximate their fair values due to the short maturities of these instruments. The carrying value of derivative instruments - Warrants, being classified as Level 2 financial instruments, was nil as of June 30, 2013.

There was no asset or liability measured at fair value on a non-recurring basis as of June 30, 2013 and December 31, 2012.

For stock-based derivative financial instruments, the Company uses Monte-Carlo simulation methods to value the derivative instruments at inception and on subsequent valuation dates. These stock-based derivative financial statements, including Series A Series B Warrants and Series C Warrants expired on December 16, 2012 and June 28, 2013, respectively (note 10).