Accompanying notes are an integral part of these consolidated financial statements.
Accompanying notes are an integral part of these consolidated financial statements.
Accompanying notes are an integral part of these consolidated financial statements.
Condensed Notes to Consolidated Financial Statements
June 30, 2016
(unaudited)
NOTE 1. Basis of
Presentation
The accompanying unaudited consolidated financial statements and these condensed notes have been prepared in accordance
with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934, as
amended (the Exchange Act). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. The preparation of financial statements requires management to make estimates and
assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results are likely to differ from those estimates, but management does not believe such differences will materially affect the financial position or
results of operations of InfoSonics Corporation (the Company), although they may. These unaudited consolidated financial statements and condensed notes should be read in conjunction with the financial statements and notes as of and for
the year ended December 31, 2015 included in the Companys Annual Report on Form 10-K for such year.
The Companys
consolidated financial statements include assets, liabilities and operating results of its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.
In the opinion of management, these unaudited consolidated financial statements reflect all normal recurring adjustments considered necessary
to fairly present the Companys results of operations, financial position and cash flows as of June 30, 2016 and for all periods presented. The results reported in these consolidated financial statements for the three and six months ended
June 30, 2016 are not necessarily indicative of the operating results, financial condition or cash flows that may be expected for the full fiscal year of 2016 or for any future period.
NOTE 2. Stock-Based Compensation
The
Company has two stock-based compensation plans: the 2006 Equity Incentive Plan (2006 Plan) and the 2015 Equity Incentive Plan (2015 Plan), both of which were approved by our stockholders. As of June 30, 2016, options to
purchase 832,000 and 290,000 shares were outstanding under the 2006 Plan and the 2015 Plan, respectively, and a total of 1,033,000 shares were available for grant under the 2015 Plan. No options are available for grant under the 2006 Plan.
The Companys stock options vest on an annual or a monthly basis. Stock options generally are exercisable for up to seven years after
grant, subject to continued employment or service. The Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally the option vesting term. Such amount may change as
a result of additional grants, forfeitures, modifications in assumptions and other factors. Income tax effects of share-based payments are recognized in the financial statements for those awards which will normally result in tax deductions under
existing tax law. During the three and six months ended June 30, 2016, we recorded an expense of $78,000 and $155,000, respectively, related to options previously granted. During the three and six months ended June 30, 2015, we recorded an
expense of $52,000 and $103,000, respectively, related to options previously granted. Under current U.S. federal tax law, we receive a compensation expense deduction related to non-qualified stock options only when those options are exercised and
vested shares are received. Accordingly, the financial statement recognition of compensation expense for non-qualified stock options creates a deductible temporary difference that results in a deferred tax asset and a corresponding deferred tax
benefit in our consolidated statements of operations.
During the six months ended June 30, 2016, the Company did not grant any stock
options. As of June 30, 2016, there was $239,000 of total unrecognized compensation expense related to non-vested stock options. That expense is expected to be recognized over the remaining weighted-average period of 1.24 years. During the six
months ended June 30, 2015, the Company granted a stock option for 20,000 shares. The fair value of the option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate of 1.86% based on the U.S. Treasury yields in effect at the time of grant; expected dividend yield of 0% as the Company has not, and does not intend to, declare dividends; and an expected life of 6 years based
upon the historical life of options. The expected volatility used in the calculation was 96.6% based on the Companys historical stock price fluctuations for a period matching the expected life of the option.
6
A summary of option activity under both the 2006 Plan and the 2015 Plan as of June 30, 2016
and changes during the six months then ended is presented in the table below (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Wtd. Avg.
Exercise Price
|
|
|
Wtd. Avg.
Remaining
Contractual
Life in Years
|
|
Outstanding at December 31, 2015
|
|
|
1,257
|
|
|
$
|
1.04
|
|
|
|
4.51
|
|
Granted
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Exercised
|
|
|
|
|
|
$
|
|
|
|
|
|
|
Expired
|
|
|
(108
|
)
|
|
$
|
0.51
|
|
|
|
|
|
Forfeited
|
|
|
(27
|
)
|
|
$
|
2.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2016
|
|
|
1,122
|
|
|
$
|
1.06
|
|
|
|
4.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest
|
|
|
1,071
|
|
|
$
|
1.04
|
|
|
|
4.30
|
|
Exercisable at June 30, 2016
|
|
|
845
|
|
|
$
|
0.92
|
|
|
|
3.79
|
|
A summary of the status of the Companys non-vested options at June 30, 2016 and changes during the
six months then ended is presented below (shares in thousands):
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Weighted-average
grant-date fair value
|
|
Non-vested at December 31, 2015
|
|
|
450
|
|
|
$
|
1.16
|
|
Granted
|
|
|
|
|
|
$
|
|
|
Vested
|
|
|
(145
|
)
|
|
$
|
1.12
|
|
Forfeited
|
|
|
(27
|
)
|
|
$
|
1.66
|
|
|
|
|
|
|
|
|
|
|
Non-vested at June 30, 2016
|
|
|
278
|
|
|
$
|
1.13
|
|
|
|
|
|
|
|
|
|
|
The Companys share-based compensation is classified in the same expense line item as cash compensation.
Information about share-based compensation included in the unaudited results of operations for the three and six months ended June 30, 2016 and 2015 is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
June 30,
|
|
|
For the Six Months Ended
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Officer compensation
|
|
$
|
33
|
|
|
$
|
24
|
|
|
$
|
66
|
|
|
$
|
47
|
|
Non-employee directors
|
|
|
16
|
|
|
|
11
|
|
|
|
32
|
|
|
|
22
|
|
Sales, general and administrative
|
|
|
29
|
|
|
|
17
|
|
|
|
57
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock option/warrant expense, included in total operating expenses
|
|
$
|
78
|
|
|
$
|
52
|
|
|
$
|
155
|
|
|
$
|
103
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 3. Earnings Per Share
Basic earnings per share are computed by dividing income available to common stockholders by the weighted-average number of common shares
outstanding. Diluted earnings per share are computed similarly to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential additional
common shares that were dilutive had been issued. Common share equivalents are excluded from the computation if their effect is anti-dilutive. The Companys common share equivalents consist of stock options.
Common shares from the potential exercise of certain options are excluded from the computation of diluted earnings (loss) per share if their
exercise prices are greater than the Companys average stock price for the period. For both the three and six month periods ended June 30, 2016, the number of such shares excluded was 551,000. For both the three and six
month periods ended June 30, 2015, the number of such shares excluded was 20,000. In addition, because their effect would have been anti-dilutive, common shares from exercise of 571,000 in-the-money options for both the three and six month
periods ended June 30, 2016 have been excluded from the computation of net loss per share. For the three and six month periods ended June 30, 2015, the number of such shares excluded were 550,000 and 466,000, respectively.
7
NOTE 4. Income Taxes
The Company made a comprehensive review of its portfolio of uncertain tax positions in accordance with applicable standards of the Financial
Accounting Standards Board (FASB). In this regard, an uncertain tax position represents the Companys expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been
reflected in measuring income tax expense for financial reporting purposes. As a result of this review, the Company concluded that at this time there are no uncertain tax positions, and there has been no cumulative effect on retained earnings.
The Company is subject to U.S. federal income tax as well as income tax in multiple states and foreign jurisdictions. For all major taxing
jurisdictions, the tax years 2004 through 2015 remain open to examination or re-examination. As of June 30, 2016, the Company does not expect any material changes to unrecognized tax positions within the next twelve months.
The Company recognizes the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future
tax consequences of events that have been recognized in an entitys financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in our financial statements or tax
returns. Fluctuations in the actual outcome of these future tax consequences could materially impact the Companys financial position or results of operations. For the three and six months ended June 30, 2016, deferred income tax assets
and the corresponding valuation allowance increased by $500,000 and $592,000, respectively.
NOTE 5. Inventory
Inventory is stated at the lower of cost (first-in, first-out) or market and consists primarily of cellular phones and cellular phone
accessories. The Company records a reserve against inventories to account for obsolescence and possible price concessions required to liquidate inventories below cost. During the six months ended June 30, 2016, the inventory reserve balance was
decreased by $98,000. As of June 30, 2016 and December 31, 2015, the inventory reserve was $178,000 and $276,000, respectively. From time to time, the Company has prepaid inventory as a result of payments for products which have not been
received by the balance sheet date. As of June 30, 2016 and December 31, 2015, the prepaid inventory balances were $1,351,000 and $1,232,000, respectively, which are included in prepaid assets in the accompanying consolidated balance
sheets. Inventory consists of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
(unaudited)
|
|
|
December 31,
2015
(audited)
|
|
Finished goods
|
|
$
|
3,972
|
|
|
$
|
6,913
|
|
Inventory reserve
|
|
|
(178
|
)
|
|
|
(276
|
)
|
|
|
|
|
|
|
|
|
|
Net inventory
|
|
$
|
3,794
|
|
|
$
|
6,637
|
|
|
|
|
|
|
|
|
|
|
NOTE 6. Property and Equipment
Property and equipment are primarily located in the United States and China and consisted of the following as of the dates presented (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30
2016
(unaudited)
|
|
|
December 31,
2015
(audited)
|
|
Machinery and equipment
|
|
$
|
384
|
|
|
$
|
322
|
|
Tooling and molds
|
|
|
|
|
|
|
58
|
|
Furniture and fixtures
|
|
|
164
|
|
|
|
164
|
|
|
|
|
|
|
|
|
|
|
Subtotal
|
|
|
548
|
|
|
|
544
|
|
Less accumulated depreciation
|
|
|
(373
|
)
|
|
|
(388
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
175
|
|
|
$
|
156
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense for the three and six months ended June 30, 2016 was $22,000 and $43,000,
respectively, and for the three and six months ended June 30, 2015 was $26,000 and $48,000, respectively.
8
NOTE 7. Accrued Expenses
As of June 30, 2016 and December 31, 2015, accrued expenses consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
(unaudited)
|
|
|
December 31,
2015
(audited)
|
|
Accrued product costs
|
|
$
|
449
|
|
|
$
|
465
|
|
Accrued coop advertising
|
|
|
143
|
|
|
|
567
|
|
Accrued vacation pay
|
|
|
208
|
|
|
|
217
|
|
Income taxes payable
|
|
|
99
|
|
|
|
109
|
|
Other accruals
|
|
|
875
|
|
|
|
985
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,774
|
|
|
$
|
2,343
|
|
|
|
|
|
|
|
|
|
|
NOTE 8. Line of Credit
On March 27, 2014, the Company entered into a Loan and Security Agreement and an attendant Intellectual Property Security Agreement
(collectively the Agreement) with Silicon Valley Bank (SVB), pursuant to which the Company could borrow up to $2 million based upon both its domestic and foreign eligible accounts receivable multiplied by an advance rate of
80% and 70%, respectively, with eligibility determined in accordance with the Agreement (the Credit Facility). The Credit Facility is secured by substantially all of the Companys assets. Borrowings under the Credit Facility bear
interest based on the face amount of the financed receivables at the prime rate plus 4.5% for domestic receivables and 3.53% for foreign receivables. On August 4, 2015, the Credit Facility, which contains representations and warranties,
affirmative, restrictive and financial covenants, and events of default which are customary for credit facilities of this type, was amended to increase the availability of borrowings under the Credit Facility to $7 million. At June 30,
2016, the Company was in compliance with all covenants, no amounts were drawn against the Credit Facility and $7 million was available for borrowing under the credit line. The maturity date of the Credit Facility is September 27, 2017.
NOTE 9. Foreign Exchange Hedging Facility
On January 14, 2016, the Company entered into an Agreement for Purchase and Sale of Foreign Securities (the FS Agreement) with
SVB. Under the FS Agreement, the Company and SVB can enter into foreign currency spot contracts, forward contracts, forward window contracts and options to manage the Companys foreign currency risk. On January 20, 2016, the Company
entered into forward contracts designated as cash flow hedges to protect against the foreign currency exchange rate risk of the Mexican Peso inherent in its forecasted net sales and cash collections from customers in Mexico. The hedges matured on a
monthly basis through June 30, 2016. Changes in the fair value of the hedges were initially recorded in accumulated other comprehensive loss as a separate component of stockholders equity in the Consolidated Balance Sheet and subsequently
reclassified into earnings as other income (loss) on the Consolidated Statement of Operations and Comprehensive Income (Loss) in the period in which the hedge matured. During the three and six months ended June 30, 2016, the Company recorded
losses of $157,000 and $325,000, respectively, on forward contracts that matured during the periods. No additional forward contracts were entered into during the three months ended June 30, 2016, and no such contracts were outstanding at
June 30, 2016.
NOTE 10. Recent Accounting Pronouncements
Issued (Not adopted yet):
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue
recognition requirements in Revenue Recognition (Topic 605), and requires entities to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. Additionally, this guidance requires that entities disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In March 2016,
the FASB issued ASU 2016-08, Revenue from Contracts with Customers - Principal versus Agent Considerations (Reporting revenue gross versus net), which clarifies gross versus net revenue reporting when another party is involved in the
transaction. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers - Identifying Performance Obligations and Licensing, which amends the revenue guidance on identifying performance obligations and accounting
for licenses of intellectual property. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers - Narrow-Scope Improvements and Practical Expedients, which provides narrow-scope improvements to the guidance on
collectability, non-cash consideration, and completed contracts at transition. The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and permits
early adoption on a limited basis. The update permits the use of either the retrospective or cumulative effect transition method. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated
financial statements as well as the expected adoption method.
9
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements Going
Concern (Subtopic 205-40) -Disclosure of Uncertainties about an Entitys Ability to Continue as a Going Concern. This ASU requires management to assess an entitys ability to continue as a going concern by incorporating and expanding
upon certain principles that are currently in U.S. auditing standards. Specifically, the ASU (1) provides a definition of the term substantial doubt, (2) requires an evaluation every reporting period, including interim periods,
(3) provides principles for considering the mitigating effect of managements plans, (4) requires certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) requires an
express statement and other disclosures when substantial doubt is not alleviated, and (6) requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). This standard is
effective for the fiscal years ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on
its consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which
revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use (ROU) asset for all leases. For finance leases the lessee would recognize interest
expense and amortization of the ROU asset and for operating leases the lessee would recognize a straight-line total lease expense. The new lease guidance also simplified the accounting for sale and leaseback transactions primarily because lessees
must recognize lease assets and lease liabilities. ASU 2016-02 is effective for annual and interim reporting periods within those years beginning after December 15, 2018 and early adoption is permitted. This update should be applied through a
modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently evaluating the new guidance to determine the
impact it will have on its consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-05, Derivatives and
Hedging (Topic 815), which clarifies that a change in the counterparty to a derivative instrument that has been designed as a hedging instrument under Topic 815 does not, in and of itself, require dedesignation of that hedging relationship
provided that all other hedge accounting criteria continue to be met. ASU 2016-05 is effective for annual and interim reporting periods within those years beginning after December 15, 2016 and early adoption is permitted. This update should be
applied either on a prospective basis or through a modified retrospective basis. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09, Compensation Stock Compensation (Topic 718), which simplifies several
aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees maximum
statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for
the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for annual and interim reporting periods within those years beginning after December 15, 2016 and early
adoption is permitted. This update should be applied through the following methods: 1) a modified retrospective transition approach as related to the timing of when tax benefits are recognized, minimum statutory withholding requirements,
forfeitures, and intrinsic value, 2) retrospectively as related to the presentation of employee taxes paid on the statement of cash flows when an employer withholds hares to meet the minimum statutory withholding requirement, 3) prospectively as
related to the recognition of excess tax benefits and tax deficiencies in the income statement and the practical expedient for estimating expected term and 4) either prospective transition method or a retrospective transition method as related to
the presentation of excess tax benefits on the statement of cash flows. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.
Other accounting standards updates effective after June 30, 2016 are not expected to have a material effect on our consolidated financial
statements.
10
NOTE 11. Geographic Information
The Company currently operates in one business segment. Fixed assets are principally located in Company or third-party facilities in the United
States and Asia. The unaudited net sales by geographical area for the three and six months ended June 30, 2016 and 2015 were (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
June 30,
|
|
|
For the Six Months Ended
June 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Central America
|
|
$
|
4,345
|
|
|
$
|
1,474
|
|
|
$
|
7,980
|
|
|
$
|
4,772
|
|
South America
|
|
|
794
|
|
|
|
3,188
|
|
|
|
2,413
|
|
|
|
6,365
|
|
Mexico
|
|
|
4,459
|
|
|
|
2,138
|
|
|
|
6,241
|
|
|
|
5,933
|
|
U.S.-based Latin American distributors
|
|
|
2,175
|
|
|
|
2,571
|
|
|
|
3,745
|
|
|
|
5,833
|
|
United States
|
|
|
353
|
|
|
|
1,574
|
|
|
|
1,157
|
|
|
|
2,559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
12,126
|
|
|
$
|
10,945
|
|
|
$
|
21,536
|
|
|
$
|
25,462
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company will cease offering its products in the United States by September 30, 2016 due to a decline
in United States products sales as well as the costs of patent litigation associated with the Companys sales in the United States (see Note 12).
NOTE 12. Commitments and Contingencies
Blue Spike
Litigation
On October 8, 2013, Blue Spike, LLC (Blue Spike) filed a patent infringement lawsuit against the Company
in the U.S. District Court for the Eastern District of Texas, alleging that certain of our products infringe claims of U.S. Patent No. 5,745,569. Blue Spike is seeking recovery of unspecified monetary damages. On February 10, 2014 we filed
an answer with the Court stating that we do not infringe and setting forth multiple defenses. A scheduling conference was held on July 31, 2015 and a Markman Hearing was held on February 10, 2016. On May 16, 2016, the court issued its
ruling in the Markman Hearing and ruled on each term of the claim construction in favor of the Company. Mediation talks are expected to be scheduled soon, and the trial is scheduled for January 23, 2017. On November 19, 2015, Blue Spike
filed an additional patent infringement lawsuit against the Company in the U.S. District Court for the Eastern District of Texas, alleging that certain of our products infringe claims of U.S. Patent No. 8,930,719. The Company was served with
this lawsuit on February 12, 2016, and it is expected that the two lawsuits will be consolidated into one by the Court. We do not believe we infringe the Blue Spike patents and intend to defend ourselves vigorously. Due to the inherent
uncertainty of litigation, we cannot identify probable or estimable damages related to these lawsuits at this time.
Morpho Komodo Litigation
On June 19, 2015, Morpho Komodo LLC (Morpho Komodo) filed a patent infringement lawsuit against the Company in the U.S.
District Court for the Eastern District of Texas, alleging that certain of our products infringe claims of U.S. Patents No. 7,350,078, No. 7,725,725 and No. 8,429,415. Morpho Komodo was seeking injunctive relief as well as the
recovery of unspecified monetary damages. On May 25, 2016 we entered into a Settlement and License Agreement with Morpho Komodo whereby we denied any wrongdoing and received a fully paid up and perpetual license to four Morpho Komodo patents in
exchange for an immaterial one-time cash payment. The lawsuit was dismissed with prejudice.
The Company may become involved in certain
other legal proceedings and claims which arise in the normal course of business. Other than as described above, as of the filing date of this report, the Company did not have any significant litigation outstanding.
NOTE 13. Fair Value of Financial Instruments
The FASB accounting guidance requires disclosure of fair value information about financial instruments, whether or not recognized in the
accompanying consolidated balance sheets. Fair value as defined by the guidance is 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. The
fair value estimates of financial instruments are not necessarily indicative of the amounts we might pay or receive in actual market transactions. The use of different market assumptions and/or estimation methodologies may have a material effect on
the estimated fair value amounts. Effective April 1, 2008 the Company adopted and follows ASC 820, Fair Value Measurements and Disclosures (ASC 820), which established a fair value hierarchy that requires the Company to
maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instruments categorization within the hierarchy is based on the lowest level of input that is significant to the fair value
measurement.
11
The Companys cash, cash equivalents and forward contracts used to hedge foreign currency
risk are measured at fair value in the Companys consolidated financial statements and are valued using unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs under ASC 820). The carrying amount of
our accounts receivable, other accounts receivable, prepaid expenses, accounts payable and other accrued expenses reported in the consolidated balance sheets approximates fair value because of the short maturity of those instruments.
At June 30, 2016 and December 31, 2015, we did not have any material applicable nonrecurring measurements of nonfinancial assets and
nonfinancial liabilities.