|9 Months Ended|
Sep. 30, 2018
|Derivative Instruments and Hedging Activities Disclosure [Abstract]|
Note 6 - Derivative Liability
In June 2015, we granted warrants to purchase 959,924 shares of the Company’s common stock through a private offering of units (“Units”). Each Unit included one share of Common Stock, par value $0.0001 per share, and a three-year Warrant to purchase one share of Common Stock at an initial exercise price per share equal to $0.75, subject to adjustment for certain corporate transactions such as a merger, stock-split or stock dividend and, if the Company did not continue to be a reporting company under the Securities Exchange Act of 1934 during the two-year period after closing, the exercise price would be reduced to $0.01 per share. Each Unit includes limited registration rights for the investors for the shares of Common Stock and the shares of Common Stock that would be issued upon the exercise of a Warrant ("Underlying Shares") when and if we register our shares of Common Stock in a different offering, subject to certain excluded registered offerings. The Company has also issued to the placement agent warrants to purchase our shares of Common Stock equal to 10% of the total shares sold in the offering, or 95,992 shares. The vesting period expired at June 30, 2018.
Because these warrants had full reset adjustments that would preclude the instrument from being considered as index to the Company’s stock, it was subject to derivative liability treatment under ASC 815-40-15, which required as of the date the warrants were issued, the derivative liability to be measured at fair value and re-evaluated at the end of each reporting period.
Key assumptions used to determine the fair value of the warrants follows:
As of September 30, 2018 and December 31, 2017, the fair value of the total warrants' derivative liability is $0 and $24,233, respectively, and were recorded in other accrued expenses in the Condensed Consolidated Balance Sheets. There was no gain or loss associated with the derivative liability recognized during the three months ended September 30, 2018. We recognized a gain on the derivative liability of $9,573 for the three months ended September 30, 2017. We recognized a gain on the derivative liability of $24,233 and $ $96,998 for the nine months ended September 30, 2018 and 2017, which is recorded in other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Income.
The following table summarizes the derivative liability included in other accrued expenses in the Condensed Consolidated Balance Sheets:
The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef