Flux Power Holdings, Inc.FLUX

Flux Power Holdings, Inc. Fair Value Disclosure

10-KFiled Sep 22, 20172 min read
NOTE
11
- FAIR VALUE MEASUREMENTS
 
We follow FASB ASC Topic
No.
820,
Fair Value Measurements and Disclosures
(“ASC
820”
) in connection with financial assets and liabilities measured at fair value on a recurring basis subsequent to initial recognition.
 
ASC
820
requires that assets and liabilities carried at fair value be classified and disclosed in
one
of the following categories:
 
Level
1:
Quoted market prices in active markets for identical assets and liabilities.
Level
2:
Observable market based inputs or unobservable inputs that are corroborated by market data.
Level
3:
Unobservable inputs that are
not
corroborated by market data
 
The hierarchy noted above requires us to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value.
 
The fair value of our recorded derivative liabilities is determined based on unobservable inputs that are
not
corroborated by market data, which is a (Level
3
) classification. We record derivative liabilities on our balance sheet at fair value with changes in fair value recorded in our consolidated statements of operations.  The fair value of our warrant derivative liabilities at
June 30, 2017
and
2016
was
$0
and
$24,000,
respectively.
 
The table below sets forth a summary of changes in the fair value of our (Level
3
) financial instruments for the year ended
June 30,
2017:
 
Fair value measurements of warrants using significant unobservable inputs (Level
3
)
Balance at June 30, 2016
   $
24,000
  
Change in fair value of warrant liability
    
(14,000
)
Warrant re-pricing modification charge (Note
9)
    
(10,000
)
Balance at June 30, 2017
   $
-
  
 
 
The fair value of our warrant derivative liabilities and the change in the estimated fair value of derivative liabilities that we
recorded during fiscal year
2017,
related to warrants issued in connection with our private placement transactions (see Notes
8
and
9
). 

Historical Timeline

Fiscal YearFiled
2017Sep 22, 2017Showing above
2015Sep 28, 2015

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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