Stereotaxis
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10-Q
STEREOTAXIS, INC. filed this Form 10-Q on 08/08/2018
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   Fair Value Measurement Using 
   Total   Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)
   Significant
Other
Observable
Inputs
(Level 2)
   Significant
Unobservable
Inputs
(Level 3)
 
Liabilities at June 30, 2018:                    
Warrants issued August 2013  $   $   $   $ 
Warrants issued September 2016                
Total liabilities at fair value:  $   $   $   $ 
Liabilities at December 31, 2017:                    
Warrants issued August 2013   5,746            5,746 
Warrants issued September 2016   19,569,231            19,569,231 
Total liabilities at fair value:  $19,574,977   $   $   $19,574,977 

 

Level 1

 

The Company does not have any financial assets or liabilities classified as Level 1.

 

Level 2

 

The Company does not have any financial assets or liabilities classified as Level 2.

 

Level 3

 

In conjunction with the Company’s August 2013 and September 2016 financing transactions, the Company issued warrants to purchase shares of the Company’s common stock. Due to the provisions included in the warrant agreements at the time of issuance, the warrants did not meet the exemptions for equity classification and as such, the Company accounted for these warrants as derivative instruments. The calculated fair value of the warrants issued in conjunction with the August 2013 financing transactions is classified as a liability and is periodically re-measured with any changes in value recognized in “Other income (expense)” in the Statements of Operations. As detailed in Note 9, the remaining warrants from the September 2016 transaction were modified on February 28, 2018 and reclassified to equity.

 

The remaining warrants from the August 2013 transaction (Exchange Warrants) expire in November 2018 and were revalued as of June 30, 2018 using the following assumptions: 1) volatility of 71.73%; 2) risk-free interest rate of 2.11%; and 3) a closing stock price of $0.77.

 

The significant unobservable input used in the fair value measurement of the Company’s warrants is volatility. Significant increases (decreases) in the volatility in isolation would result in significantly higher (lower) liability fair value measurements.

 

The following table sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities for the six month period ended June 30, 2018:

 

   Warrants issued
August 2013
   Warrants issued
September 2016
   Total Liabilities 
Balance at beginning of period  $5,746   $19,569,231   $19,574,977 
Issues   -    -    - 
Reclassifications   -    (16,984,616)   (16,984,616)
Settlements   -    -    - 
Revaluation   (5,746)   (2,584,615)   (2,590,361)
Balance at end of period  $-   $-   $- 

 

The Company currently does not have derivative instruments to manage its exposure to currency fluctuations or other business risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. All derivative financial instruments are recognized in the balance sheet at fair value.

 

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