Annual report pursuant to Section 13 and 15(d)

Note 5 - Fair Value of Financial Instruments

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Note 5 - Fair Value of Financial Instruments
12 Months Ended
Dec. 31, 2015
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]
Note 5
– Fair Value of Financial Instruments

The Company has categorized its financial assets and liabilities measured at fair value into a three level hierarchy in accordance with U.S. GAAP.  Fair value is defined as an exit price, the amount that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date.  The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability.  Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value.  Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation models that require more judgment.  These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability.

The three levels of fair value hierarchy are described below:

Level 1
Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
 
 
Level 2
Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
 
 
Level 3
Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, unbilled revenues, accounts payable, and due to factor, approximate their fair values because of the short maturity of these instruments.

The Company’s notes payable approximate the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements for the years ended December 31, 2015 and 2014.

The following tables disclose the assets and liabilities measured at fair value on a recurring basis for the period indicated and the basis for that measurement:

 
 
Fair Value Measurement at December 31, 2015
 
 
 
Total
   
Level 1
   
Level 2
   
Level 3
 
Liabilities
                       
 Contingent SwellPath acquisition consideration
 
$
618,037
   
$
-
   
$
-
   
$
618,037
 
 Derivative liability
   
17,220,000
     
-
     
-
     
17,220,000
 
 
 
$
17,838,037
   
$
-
   
$
-
   
$
17,838,037
 

As of December 31, 2014, the Company had no assets or liabilities measured at fair value.