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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jun. 30, 2018
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. An investment is categorized as Level 3 if its fair value is based on assumptions developed by the Company about what a market participant would use in pricing the assets. The following table details the fair value measurements of the Company’s financial assets:
|  |  | Fair Value Measurement June 30, 2018 Using:
| Total |  | Level 1 |  | Level 2 |  | Level 3
Cash and Cash Equivalents | $ | 22,742,575 |  |  | $ | 22,742,575 |  |  | $ | — |  |  | $ | — |
U.S. Government Securities | 23,418,514 |  |  | 2,997,600 |  |  | 20,420,914 |  |  | — |
Corporate Debt | 7,262,615 |  |  | — |  |  | 7,262,615 |  |  | — |
GCS Holdings | 384,477 |  |  | 384,477 |  |  | — |  |  | — |
Equity Investments | 5,708,816 |  |  | — |  |  | — |  |  | 5,708,816 |
| $ | 59,516,997 |  |  | $ | 26,124,652 |  |  | $ | 27,683,529 |  |  | $ | 5,708,816 |
|  |  | Fair Value Measurement December 30, 2017 Using:
| Total |  | Level 1 |  | Level 2 |  | Level 3
Cash and Cash Equivalents | $ | 24,848,227 |  |  | $ | 24,848,227 |  |  | $ | — |  |  | $ | — |
U.S. Government Securities | 34,725,811 |  |  | 6,927,323 |  |  | 27,798,488 |  |  | — |
Corporate Debt | 8,980,906 |  |  | — |  |  | 8,980,906 |  |  | — |
Certificates of Deposit | 200,740 |  |  | — |  |  | 200,740 |  |  | — |
GCS Holdings | 478,546 |  |  | 478,546 |  |  | — |  |  | — |
Warrant | 2,000,000 |  |  | — |  |  | — |  |  | 2,000,000 |
| $ | 71,234,230 |  |  | $ | 32,254,096 |  |  | $ | 36,980,134 |  |  | $ | 2,000,000 |
Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. Changes in Level 3 investments are as follows:
| December 30, 2017 |  | Net unrealized gains/(losses) |  | Purchases, issuances and settlements |  | Transfers in and or out of Level 3 |  | June 30, 2018
Equity Investments | $ | — |  |  | $ | (141,000 | ) |  | $ | 3,900,000 |  |  | $ | 1,949,816 |  |  | $ | 5,708,816 |
Warrant | 2,000,000 |  |  | (50,184 | ) |  | — |  |  | (1,949,816 | ) |  | — |
| $ | 2,000,000 |  |  | $ | (191,184 | ) |  | $ | 3,900,000 |  |  | $ | — |  |  | $ | 5,708,816 |
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature. If accrued liabilities were carried at fair value, these would be classified as Level 2 in the fair value hierarchy. Marketable Debt Securities The corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates that are reset every three months based on the then-current three-month London Interbank Offering Rate (three-month Libor). The Company validates the fair market values of the financial instruments above by using discounted cash flow models, obtaining independent pricing of the securities or through the use of a model that incorporates the three-month Libor, the credit default swap rate of the issuer and the bid and ask price spread of the same or similar investments which are traded on several markets. Warrant The Company had a warrant to acquire up to 15% of the next round of equity offered by a customer as part of the licensing of technology to the customer. The Company exercised the warrant in April 2018. Equity Investments The Company acquired an interest in an equity investment by transferring $1.0 million cash and certain intellectual property ("IP") in exchange for shares of common stock in the equity investment. The Company used the pricing of the shares being offered to other investors receiving shares of common stock in the same investment as well as a valuation of the IP to determine the value of its equity interest. As the initial value of the equity investment was determined to be $3.9 million and the carrying value of the IP on the Company’s books was zero, the Company recorded a gain of $2.9 million. The Company recorded a $0.1 million unrealized loss in the six months ended June 30, 2018 in this equity investment due to a fluctuation in the foreign exchange rate. The Company acquired an interest in an equity investment by exercising a warrant to acquire up to 15% of the next round of equity offered by a customer as part of the licensing of technology to the customer. The Company used the customer's capital structure, pricing of the shares being offered and 15% from the customer's qualified financing round in determining the value of its equity investment. The Company recorded an unrealized loss of less than $0.1 million in the six months ended June 30, 2018 in this equity investment due to a change in the Company's estimate of the value of the equity investment based on the observable transaction price at the exercise date of the warrant. The Company adopted ASU No. 2016-01 and the related amendments on December 31, 2017 (the first day of the Company's fiscal year 2018). This standard amends various aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The Company adopted the measurement alternative for equity investments without readily determinable fair values (often referred to as cost method investments) on a prospective basis. As a result, these investments will be revalued upon occurrence of an observable price change for similar investments and for impairments.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 + Details
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