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Note 7 - Derivative Liabilities
3 Months Ended
Mar. 31, 2022
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 7. DERIVATIVE LIABILITIES

 

The Company accounts for its derivative instruments under the provisions of ASC 815,Derivatives and Hedging”. Under the provisions of ASC 815, the Company identified embedded features within the Series D Preferred host contracts that qualify as derivative instruments and require bifurcation.

 

The Company determined that the conversion option, redemption option and participating dividend feature contained in the Series D Preferred host instrument required bifurcation. The Company valued these bifurcatable features at fair value. Such liabilities aggregated approximately $6,024,000 and $5,292,000 at March 31, 2022 and December 31, 2021, respectively, and are classified as current liabilities on the Company’s condensed consolidated balance sheets under the caption “Derivative liabilities”. The Company will revalue these features at each balance sheet date and record any change in fair value in the determination of period net income or loss.

 

The change in fair value of such amounts is recorded in the caption “Change in fair value of derivative liabilities” in the Company’s condensed consolidated statements of operations. For the three months ended March 31, 2022, the Company recorded an increase to its derivative liabilities using fair value methodologies of approximately $667,000. For the three months ended March 31, 2021, the Company recorded a decrease to its derivative liabilities using fair value methodologies of approximately $1,172,000.