Annual report pursuant to Section 13 and 15(d)

Note 5 - Fair Value Consideration

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Note 5 - Fair Value Consideration
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
Note
5:
Fair Value Consideration
 
The Company’s financial instruments include cash, restricted cash, accounts receivable, notes receivable, accounts payable, accrued expenses and notes payable. The carrying amounts of its financial instruments approximate their fair value due to their short maturities.
 
The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks.
 
Authoritative guidance defines fair value 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 measurement date. The guidance establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability, developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into
three
levels based on reliability of the inputs as follows:
 
 
Level
1:
Observable inputs such as quoted prices in active markets;
  
 
Level
2:
Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
 
 
Level
3:
Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
 
As of
December
31,
2016
and
2015,
the Company does
no
t have any financial instruments that are measured on a recurring basis as Level
1,
2
or
3.
 
As of
December
31,
2016,
the Company had non-recurring fair value measurements as a result of the sale subsequent to year end, the Company recorded the assets at the lesser of their carrying values and their fair value less costs to sell, which resulted in a write-down of
$3.5
million. The inputs used to determine such fair values which were based on the offer price provided by a
third
party in connection with the sale are classified within Level
3
in the hierarchy.