Fair Value of Financial Instruments |
14. |
Fair
Value of Financial Instruments |
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Cash
and Equivalents, Receivables, Other Current Assets, Short-Term Debt, Accounts Payable, Accrued and Other Current Liabilities. |
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The
carrying amounts of these items approximated fair value. |
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Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting
Standards Board ("FASB") ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3
measurements). |
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Level 1—Valuations
based on quoted prices for identical assets and liabilities in active markets. |
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Level 2—Valuations
based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities
in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other
inputs that are observable or can be corroborated by observable market data. |
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Level 3—Valuations
based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other
market participants. These valuations require significant judgment. |
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The
application of the three levels of the fair value hierarchy under Topic 820-10-35 to our assets and liabilities are described
below: |
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December 31, 2020 Fair Value Measurements |
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Level 1 |
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Level 2 |
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Level 3 |
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Total Fair Value |
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Assets |
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Other assets |
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$ |
- |
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$ |
- |
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$ |
- |
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$ |
- |
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Total |
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$ |
- |
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$ |
- |
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$ |
- |
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$ |
- |
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Liabilities |
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Derivative Liabilities |
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$ |
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$ |
- |
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$ |
1,416,045 |
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$ |
1,416,045 |
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Total |
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$ |
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$ |
- |
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$ |
1,416,045 |
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$ |
1,416,045 |
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June 30, 2020 Fair Value
Measurements |
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Level 1 |
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Level 2 |
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Level 3 |
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Total Fair Value |
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Assets |
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Other assets |
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$ |
- |
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$ |
- |
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$ |
- |
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$ |
- |
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Total |
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$ |
- |
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$ |
- |
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$ |
- |
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$ |
- |
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Liabilities |
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Derivative Liabilities |
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$ |
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$ |
- |
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$ |
1,590,638 |
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$ |
1,590,638 |
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Total |
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$ |
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$ |
- |
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$ |
1,590,638 |
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$ |
1,590,638 |
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Management
considers all of its derivative liabilities to be Level 3 liabilities. At December 31, 2020 and June 30, 2020, respectively
the Company had outstanding derivative liabilities, including those from related parties of $1,416,045 and $1,590,638, respectively.
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