Quarterly report pursuant to Section 13 or 15(d)

FAIR VALUE MEASUREMENT

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FAIR VALUE MEASUREMENT
6 Months Ended
Mar. 31, 2019
Fair Value Measurement  
FAIR VALUE MEASUREMENT

NOTE 6 – FAIR VALUE MEASUREMENT

 

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories:

 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. GulfSlope considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that GulfSlope values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivative financial instruments as well as warrants to purchase common stock and long-term incentive plan liabilities calculated using the Black-Scholes model to estimate the fair value as of the measurement date.
Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity).

  

As required by ASC 820-10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

 

Fair Value on a Recurring Basis

 

The following table sets forth by level within the fair value hierarchy the Company’s derivative financial instruments that were accounted for at fair value on a recurring basis as of March 31, 2019:

 

Description  

Quoted Prices in

ActiveMarkets for

Identical Assets 
(Level 1)

 

Significant Other

Observable Inputs  
(Level 2)

 

Significant Other

Unobservable

Inputs     
(Level 3)

  Total Carrying
Value as of
Derivative Financial Instrument at September 30, 2018           (271,710 )           (271,710 )
Changes in Fair Value at December 31, 2018           (196,266 )           (196,266 )
Changes in Fair Value at March 31, 2019           179,274             179,274  
Derivative Financial Instrument at March 31, 2019           (288,702 )           (288,702 )

  

During the quarter ended March 31, 2019, the Company issued warrants and stock options measured at fair value on a non-recurring basis.