Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENTS

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FAIR VALUE MEASUREMENTS
 3 Months Ended
Sep. 30, 2012
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 8 – FAIR VALUE MEASUREMENTS

 

We follow FASB ASC Topic No. 820, Fair Value Measurements and Disclosures (“ASC 820”) in connection with financial assets and liabilities measured at fair value on a recurring basis subsequent to initial recognition.

 

ASC 820 requires that assets and liabilities carried at fair value will be classified and disclosed in one of the following categories:

 

Level 1: Quoted market prices in active markets for identical assets and liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data

 

The hierarchy noted above requires us to minimize the use of unobservable inputs and to use unobservable market data, if available, when determining fair value.

 

The fair value of our recorded derivative liabilities is determined based on unobservable inputs that are not corroborated by market data, which is a level 3 classification. We record derivative liabilities on our balance sheet at fair value with changes in fair value recorded in our consolidated statements of operations.

 

Following is a summary as of the reporting date of the fair values and applicable level within the fair value hierarchy of assets and liabilities measured at fair value on a recurring basis:

 

At September 30, 2012:

 

    Quoted Prices in
Active Markets
for Identical
Assets		     Significant Other
Observable Inputs		     Significant 
Unobservable
Inputs		  
    (Level 1)     (Level 2)     (Level 3)  
Description                        
                         
Derivative Liabilities   $ -     $ -     $ 4,411,000  
                         
Total Liabilities   $ -     $ -     $ 4,411,000  

 

At June 30, 2012:

 

    Quoted Prices in
Active Markets
for Identical
Assets		     Significant Other
Observable Inputs		     Significant 
Unobservable
Inputs		  
    (Level 1)     (Level 2)     (Level 3)  
Description                        
                         
Derivative Liabilities   $ -     $ -     $ 4,943,000  
                         
Total Liabilities   $ -     $ -     $ 4,943,000  

 

The table below sets forth a summary of changes in the fair value of our Level 3 financial instruments for the three months ended September 30, 2012:

 

    June 30,2012     Recorded New
Derivative
Liabilities		     Change in estimated
fair value 
recognized in results 
of operations		     September 30, 
2012		  
                         
Derivative Liabilities   $ 4,943,000     $ 856,000     $ (1,388,000 )   $ 4,411,000  

 

The fair value of new derivative liabilities and the change in the estimated fair value of derivative liabilities that we recorded during the three months ended September 30, 2012 were related to warrants issued in connection with our private placement transactions and Advisory Agreement (See Note 6).