Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurement

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Fair Value Measurement
9 Months Ended
Dec. 31, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurement

NOTE 3 FAIR VALUE MEASUREMENT

 

The Company’s financial instruments primarily include cash, cash equivalents, restricted cash, marketable securities and accounts payable. Due to the short-term nature of cash, cash equivalent, restricted cash, marketable securities and accounts payable, the carrying amounts of these assets and liabilities approximate their fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

 

  Level 1 - quoted prices in active markets for identical assets or liabilities;
     
  Level 2 - inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or
     
  Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

The Company accounted for the warrants issued to accredited shareholders included, among others, down round protective provisions as a non-current liability according to provisions of ASC 815. The Company had measured the warrants at fair value in each reporting period until they are exercised or expired, with changes in the fair value being recognized in the Company’s statement of comprehensive loss. Under ASC 820, the warrants and option liability are classified as Level 3 and cash, cash equivalents, restricted cash and marketable securities invested in mutual funds are classified as Level 1. There has been no transfer between any levels during the period. During the third quarter of 2018, the Company adopted ASU 2017-11 retrospectively to outstanding financial instruments with a down round feature by means of cumulative-effect adjustment. The balance as of April 1, 2018 for additional paid-in capital was increased by $6,194,292 and accumulated deficit was decreased by $516,358.

 

    As of March 31, 2018  
    Level 1     Level 2     Level 3     Total  
Assets                        
Cash and cash equivalents   $ 732,542     $ -     $ -     $ 732,542  
Restricted cash     5,692       -       -       5,692  
Marketable securities -     -       -       -       -  
Mutual funds     8,304,392       -       -       8,304,392  
                                 
    $ 9,042,626     $ -     $ -     $ 9,042,626  

 

    As of March 31, 2018  
    Level 1     Level 2     Level 3     Total  
Liabilities                        
Liabilities related to warrants   $ -     $ -     $ 5,677,934     $ 5,677,934  
                                 

 

    As of December 31, 2018  
    Level 1     Level 2     Level 3     Total  
Assets                        
Cash and cash equivalents   $ 479,700     $ -     $ -     $ 479,700  
Restricted cash     15,912       -       -       15,912  
Marketable securities -     -       -       -       -  
Mutual funds     2,573,605       -       -       2,573,605  
                                 
    $ 3,069,217     $ -     $ -     $ 3,069,217  

 

    As of December 31, 2018  
    Level 1     Level 2     Level 3     Total  
Liabilities                        
Liabilities related to warrants   $ -     $ -     $ -     $ -  
Options to be issued to NitricGen     -       -       295,000       295,000  
    $ -     $ -     $ 295,000     295,000  

 

The following is a summary of the warrant and option liabilities from March 31, 2018 to December 31, 2018.

 

Balance, March 31, 2018   $ 5,677,934  
Fair market value of options to be issued to NitricGen     295,000  

Reclassification of warrant liabilities to stockholders’ equity

upon adoption of ASU-2017-11

    (5,677,934 )
Balance, December 31, 2018   $ 295,000