Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.4.0.6
Fair Value Measurements
 3 Months Ended
Mar. 31, 2013
Fair Value Measurements [Abstract]  
Fair Value Measurements

NOTE 12 – FAIR VALUE MEASUREMENTS

The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities.

Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments.

Financial assets and liabilities measured at fair value as of March 31, 2013 and December 31, 2012, are summarized below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

Money Market funds

$
3,211,661 

 

$

 -

 

$

 -

 

$
3,211,661 

Subtotal

 
3,211,661 

 

 

 -

 

 

 -

 

 
3,211,661 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 -

 

 
4,477,193 

 

 

 -

 

 
4,477,193 

Corporate Notes/Bonds

 

 -

 

 
4,557,917 

 

 

 -

 

 
4,557,917 

Commercial Paper

 

 -

 

 
1,644,327 

 

 

 -

 

 
1,644,327 

Subtotal

 

 -

 

 
10,679,437 

 

 

 -

 

 
10,679,437 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 -

 

 
959,555 

 

 

 -

 

 
959,555 

Corporate Notes/Bonds

 

 -

 

 
5,244,437 

 

 

 -

 

 
5,244,437 

Subtotal

 

 -

 

 
6,203,992 

 

 

 -

 

 
6,203,992 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accrued Consideration

 

 -

 

 

 -

 

 
(581,750)

 

 
(581,750)

Subtotal

 

 -

 

 

 -

 

 
(581,750)

 

 
(581,750)

 

 

 

 

 

 

 

 

 

 

 

 

Total

$
3,211,661 

 

$
16,883,429 

 

$
(581,750)

 

$
19,513,339 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

Money Market funds

$
5,497,788 

 

$

 -

 

$

 -

 

$
5,497,788 

Subtotal

 
5,497,788 

 

 

 -

 

 

 -

 

 
5,497,788 

 

 

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 -

 

 
7,258,768 

 

 

 -

 

 
7,258,768 

Corporate Notes/Bonds

 

 -

 

 
3,800,143 

 

 

 -

 

 
3,800,143 

Commercial Paper

 

 -

 

 
1,642,627 

 

 

 -

 

 
1,642,627 

Subtotal

 

 -

 

 
12,701,538 

 

 

 -

 

 
12,701,538 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term investments:

 

 

 

 

 

 

 

 

 

 

 

Certificates of deposit

 

 -

 

 
900,763 

 

 

 -

 

 
900,763 

Corporate Notes/Bonds

 

 -

 

 
4,475,634 

 

 

 -

 

 
4,475,634 

Subtotal

 

 -

 

 
5,376,397 

 

 

 -

 

 
5,376,397 

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accrued Consideration

 

 -

 

 

 -

 

 
(770,041)

 

 
(770,041)

Subtotal

 

 -

 

 

 -

 

 
(770,041)

 

 
(770,041)

 

 

 

 

 

 

 

 

 

 

 

 

Total

$
5,497,788 

 

$
18,077,935 

 

$
(770,041)

 

$
22,805,682 

 

The estimated fair value of remaining contingent consideration as of March 31, 2013 was $581,750, as noted above. The estimated fair value is considered a level 3 measurement because the probability weighted discounted cash flow methodology used to estimate fair value includes the use of significant unobservable inputs, primarily the contractual contingent consideration gross margin targets and assumed probabilities. The change in the estimated contingent consideration during the three months was due to $161,060 in payments and $27,231 in foreign currency gains. 

 

There were no transfers between levels during the three months ended March 31, 2013.