Fair value of financial instruments
and derivative financial instruments - The carrying amounts of cash and current liabilities approximate fair value because
of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters
of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect
these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in
the management of our foreign exchange, commodity price or interest rate market risks.
The FASB Codification clarifies
that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. It also requires disclosure about how fair value is determined for assets
and liabilities and establishes a hierarchy for which these assets and liabilities must be grouped, based on significant levels
of inputs as follows:
Level 1: Quoted prices in active
markets for identical assets or liabilities.
Level 2: Quoted
prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.
Level 3: Unobservable
inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The determination of where assets
and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.