Annual report pursuant to Section 13 and 15(d)

16. FAIR VALUE MEASUREMENTS

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16. FAIR VALUE MEASUREMENTS
 12 Months Ended
Dec. 31, 2012
Fair Value Measurements  
NOTE P - FAIR VALUE MEASUREMENTS

 

The Company’s derivative liabilities are measured at fair value on a recurring basis and are classified in level 3 of the fair value hierarchy using inputs which are not actively observable either directly or indirectly.  The Company also carries certain intangible assets that are measured at fair value on a non-recurring basis, which are classified in level 3 of the fair value hierarchy using inputs which are not actively observable either directly or indirectly.

 

The following table sets forth certain Company assets as of December 31, 2011 which are measured at fair value on a non-recurring basis by level within the fair value hierarchy. These are classified based on the lowest level of input that is significant to the fair value measurement:

 

    Level 1     Level 2     Level 3     Total  
Goodwill-SSI   $ –     $ –     $ 2,774,016     $ 2,774,016  
Total   $ –     $ –     $ 2,774,016     $ 2,774,016  

 

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 assets (Goodwill-SSI) measured on a non-recurring basis for the year ended December 31, 2011(none during 2012):

       
Balance at beginning of year   $ 5,874,016  
Impairment of carried value     (3,100,000 )
Balance at end of period   $ 2,774,016  

 

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (derivative liability) for the year ended December 31, 2011 (none during 2012):

 

        December 31, 2011  
Balance at beginning of year       $ 1,901,775  
Repayment of debt, cancellation of warrants and related derivative liability         (1,158,730 )
Change in fair value of derivative liability         (172,476 )
Retirement of derivative liability related to warrant obligation         (570,569 )
Balance at end of year       $ –