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Fair Value Measurement of Assets and Liabilities | 6 Months Ended
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Jun. 30, 2014
Fair Value Disclosures [Abstract] |
Fair Value Measurement of Assets and Liabilities |
6. | Fair value measurement of assets and liabilities
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2014 and December 31, 2013:
|  |  |  |  | Quoted Prices in |  |  |  |  |  |  |  |  | Quoted Prices in |  |  |  |
|  | Balances as of |  |  | active markets for |  |  | Significant other |  |  | Balances as of |  |  | active markets for |  |  | Significant other |
|  | June 30, |  |  | identical Assets |  |  | observable inputs |  |  | December 31, |  |  | identical Assets |  |  | observable inputs |
Description |  | 2014 |  |  | (Level 1) |  |  | (Level 2) |  |  | 2013 |  |  | (Level 1) |  |  | (Level 2) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money Market Funds |  | $ | 38,994,495 |  |  | $ | 38,994,495 |  |  | $ | — |  |  | $ | 19,630,109 |  |  | $ | 19,630,109 |  |  | $ | — |
Corporate Debt Securities |  |  | 24,607 |  |  |  | 24,607 |  |  |  | — |  |  |  | 88,648 |  |  |  | 88,648 |  |  |  | — |
Investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign Debt Securities |  |  | 34,254,717 |  |  |  | 34,254,717 |  |  |  | — |  |  |  | 30,395,890 |  |  |  | 30,395,890 |  |  |  | — |
Corporate Debt Securities |  |  | 21,899,049 |  |  |  | 16,123,624 |  |  |  | 5,775,425 |  |  |  | 25,239,905 |  |  |  | 19,110,709 |  |  |  | 6,129,196 |
Total Financial Assets |  | $ | 95,172,868 |  |  | $ | 89,397,443 |  |  | $ | 5,775,425 |  |  | $ | 75,354,552 |  |  | $ | 69,225,356 |  |  | $ | 6,129,196 |
As of June 30, 2014, the Company’s financial assets valued at fair value consisted of assets valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets); and ii) Level 2 inputs, which are obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date. As of June 30, 2014, the Company did not have any assets without market values that would require a high level of judgment to determine fair value (Level 3). The unrealized net gains or loss on short term and long term investments are reported as a component of other comprehensive income. The Company does not anticipate any significant realized losses associated with those investments in excess of the Company’s historical cost. In addition, as of June 30, 2014 and December 31, 2013, the Company had $100,664,973 and $66,677,156 of short-term investments, respectively, which consisted of time deposits. Those investments are accounted for at amortized cost which, as of June 30, 2014 and December 31, 2013, approximates their fair values. As of June 30, 2014 and December 31, 2013, the carrying value of the Company’s financial assets and liabilities measured at amortized cost approximated their fair value mainly because of its short term maturity. These assets and liabilities included cash and cash equivalents (excluding money markets funds), accounts receivables, credit card receivables, funds payable to customers, other receivables, other assets, accounts payables, social security payables, taxes payables, provisions and other liabilities. The convertible senior notes approximate their fair value as explained in Note 9 to these interim condensed consolidated financial statements. The rest of the loans payable and other financial liabilities approximate their fair value because the interest rate of the loans, are not materially different from market interest rate for similar instruments. The following table summarizes the fair value level for those financial assets and liabilities of the Company measured at amortized cost as of June 30, 2014 and December 31, 2013:
|  | Balances as of |  |  | Significant other |  |  | Balances as of |  |  | Significant other |
|  | June 30, |  |  | observable inputs |  |  | December 31, |  |  | observable inputs |
|  | 2014 |  |  | (Level 2) |  |  | 2013 |  |  | (Level 2) |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Time Deposits |  | $ | 100,664,973 |  |  |  | 100,664,973 |  |  | $ | 66,677,156 |  |  |  | 66,677,156 |
Accounts receivable |  |  | 34,690,697 |  |  |  | 34,690,697 |  |  |  | 25,884,260 |  |  |  | 25,884,260 |
Credit Cards receivable |  |  | 59,432,409 |  |  |  | 59,432,409 |  |  |  | 52,045,851 |  |  |  | 52,045,851 |
Prepaid expenses |  |  | 4,982,687 |  |  |  | 4,982,687 |  |  |  | 3,836,081 |  |  |  | 3,836,081 |
Other assets |  |  | 35,657,537 |  |  |  | 35,657,537 |  |  |  | 35,888,029 |  |  |  | 35,888,029 |
Total Assets |  | $ | 235,428,303 |  |  | $ | 235,428,303 |  |  | $ | 184,331,377 |  |  | $ | 184,331,377 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Accounts and funds payable |  | $ | 40,677,870 |  |  | $ | 40,677,870 |  |  | $ | 34,405,333 |  |  | $ | 34,405,333 |
Funds payable to customers |  |  | 147,908,193 |  |  |  | 147,908,193 |  |  |  | 129,038,663 |  |  |  | 129,038,663 |
Salaries and social security payable |  |  | 15,345,811 |  |  |  | 15,345,811 |  |  |  | 15,863,028 |  |  |  | 15,863,028 |
Tax payable |  |  | 18,440,304 |  |  |  | 18,440,304 |  |  |  | 17,854,110 |  |  |  | 17,854,110 |
Dividends payable |  |  | 7,329,546 |  |  |  | 7,329,546 |  |  |  | 6,313,869 |  |  |  | 6,313,869 |
Loans payable and other financial liabilities |  |  | 280,620,810 |  |  |  | 280,620,810 |  |  |  | 15,860,642 |  |  |  | 15,860,642 |
Other liabilities |  |  | 9,484,502 |  |  |  | 9,484,502 |  |  |  | 3,699,109 |  |  |  | 3,699,109 |
Total Liabilities |  | $ | 519,807,036 |  |  | $ | 519,807,036 |  |  | $ | 223,034,754 |  |  | $ | 223,034,754 |
As of June 30, 2014 and December 31, 2013, the Company held no direct investments in auction rate securities, collateralized debt obligations or structured investment vehicles, and does not have any non-financial assets or liabilities measured at fair value. As of June 30, 2014 and December 31, 2013, the fair value of money market funds, short and long-term investments classified as available for sale securities are as follows:
|  | June 30, 2014 |
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses (1) |  |  | Estimated Fair Value |
Cash and cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money Market Funds |  | $ | 38,989,224 |  |  | $ | 8,241 |  |  | $ | (2,970 | ) |  | $ | 38,994,495 |
Corporate Debt Securities |  |  | 24,611 |  |  |  | — |  |  |  | (4 | ) |  |  | 24,607 |
Total Cash and cash equivalents |  | $ | 39,013,835 |  |  | $ | 8,241 |  |  | $ | (2,974 | ) |  | $ | 39,019,102 |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign Debt Securities |  | $ | 1,891,573 |  |  | $ | 2,821 |  |  | $ | — |  |  | $ | 1,894,394 |
Corporate Debt Securities |  |  | 2,664,044 |  |  |  | 5,245 |  |  |  | — |  |  |  | 2,669,289 |
Total Short-term investments |  | $ | 4,555,617 |  |  | $ | 8,066 |  |  | $ | — |  |  | $ | 4,563,683 |
Long-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign Debt Securities |  | $ | 32,300,561 |  |  | $ | 59,762 |  |  | $ | — |  |  | $ | 32,360,323 |
Corporate Debt Securities |  |  | 19,124,836 |  |  |  | 108,531 |  |  |  | (3,607 | ) |  |  | 19,229,760 |
Total Long-term investments |  | $ | 51,425,397 |  |  | $ | 168,293 |  |  | $ | (3,607 | ) |  | $ | 51,590,083 |
Total |  | $ | 94,994,849 |  |  | $ | 184,600 |  |  | $ | (6,581 | ) |  | $ | 95,172,868 |
|  | December 31, 2013 |
|  | Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses (1) |  |  | Estimated Fair Value |
Cash and cash equivalents |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money Market Funds |  | $ | 19,631,550 |  |  | $ | 2,619 |  |  | $ | (4,060 | ) |  | $ | 19,630,109 |
Corporate Debt Securities |  |  | 88,640 |  |  |  | 8 |  |  |  | — |  |  |  | 88,648 |
Total Cash and cash equivalents |  | $ | 19,720,190 |  |  | $ | 2,627 |  |  | $ | (4,060 | ) |  | $ | 19,718,757 |
Short-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign Debt Securities |  | $ | 5,518,577 |  |  | $ | 1,616 |  |  | $ | — |  |  | $ | 5,520,193 |
Corporate Debt Securities |  |  | 4,393,594 |  |  |  | 2,271 |  |  |  | — |  |  |  | 4,395,865 |
Total Short-term investments |  | $ | 9,912,171 |  |  | $ | 3,887 |  |  | $ | — |  |  | $ | 9,916,058 |
Long-term investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sovereign Debt Securities |  | $ | 24,881,440 |  |  | $ | 483 |  |  | $ | (6,226 | ) |  | $ | 24,875,697 |
Corporate Debt Securities |  |  | 20,804,125 |  |  |  | 59,437 |  |  |  | (19,522 | ) |  |  | 20,844,040 |
Total Long-term investments |  | $ | 45,685,565 |  |  | $ | 59,920 |  |  | $ | (25,748 | ) |  | $ | 45,719,737 |
Total |  | $ | 75,317,926 |  |  | $ | 66,434 |  |  | $ | (29,808 | ) |  | $ | 75,354,552 |
(1) | Unrealized losses from securities are primarily attributable to market price movements. Management does not believe any remaining unrealized losses represent other-than-temporary impairments based on the evaluation of available evidence including the credit rating of the investments, as of June 30, 2014 and December 31, 2013.
The material portion of the Sovereign Debt Securities is U.S. Treasury Notes with no significant risk associated. As of June 30, 2014, the estimated fair values of money market funds, short-term and long-term investments classified by its effective maturities are as follows:
One year or less |  |  | 43,582,785 |
One year to two years |  |  | 21,864,218 |
Two years to three years |  |  | 17,386,820 |
Three years to four years |  |  | 9,234,908 |
Four years to five years |  |  | 3,104,137 |
More than five years |  |  | — |
Total |  | $ | 95,172,868 |

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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