XML 18 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Note 4 - Fair Value Measurements
 6 Months Ended
Jun. 30, 2016
Notes to Financial Statements  
Fair Value Disclosures [Text Block]
4. Fair Value Measurements
 
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, is as follows:
 
 
●
Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
 
●
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
 
 
●
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
 
We measure the following financial assets at fair value on a recurring basis. The fair values of these financial assets at June 30, 2016 were as follows (in thousands):
 
 
           
Fair Value Measurements at Reporting Date Using
  
 
 
 
 
 
 
Quoted Prices in
 
 
Significant
 
 
 
 
 
 
 
 
 
 
 
Active Markets
 
 
Other
 
 
Significant
 
 
 
Balance at
 
 
for Identical
 
 
Observable
 
 
Unobservable
 
 
 
June 30
,
 
 
Assets
 
 
Inputs
 
 
Inputs
 
 
 
2016
 
 
(Level 1)*
 
 
(Level 2)*
 
 
(Level 3)
 
Money market funds
   $ 55,330     $ 55,330     $ —     $ —  
United States corporate debt securities
     4,904       —       4,904       —  
United States commercial paper
     7,796       —       7,796       —  
Total
   $ 68,030     $ 55,330     $ 12,700     $ —  
 
*There were no significant transfers between level 1 and level 2 investments during the six months ended June 30, 2016.
 
As of June 30, 2016, short-term investments consisted of approximately $12,700,000 of available-for-sale securities with contractual maturities of one year or less. As of June 30, 2015, we did not hold any investment securities, and our cash equivalents consisted solely of money market funds.
 
A company may elect to use fair value to measure accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees and issued debt. Other eligible items include firm commitments for financial instruments that otherwise would not be recognized at inception and non-cash warranty obligations where a warrantor is permitted to pay a third party to provide the warranty goods or services. If the use of fair value is elected, any upfront costs and fees related to the item such as debt issuance costs must be recognized in earnings and cannot be deferred. The fair value election is irrevocable and generally made on an instrument-by-instrument basis, even if a company has similar instruments that it elects not to measure based on fair value. Unrealized gains and losses on existing items for which fair value has been elected are reported as a cumulative adjustment to beginning retained earnings and any changes in fair value are recognized in earnings. We have elected to not apply the fair value option to our financial assets and liabilities.
 
We consider the carrying amount of cash and cash equivalents, receivables, pre-launch inventory, prepaid expenses and other current assets, accounts payable and accrued liabilities to be representative of their respective fair values because of the short-term nature of those instruments.
 
Unrealized gains and losses associated with our investments, if any, are reported in stockholders’ equity. For the three months ended June 30, 2016, we recorded approximately $2,000 in net unrealized losses associated with our short-term investments. For the six months ended June 30, 2016, we recorded approximately $39,000 in net unrealized gains associated with our short-term investments. There were no unrealized gains or losses for the three and six months ended June 30, 2015.
 
Realized gains and losses associated with our investments, if any, are reported in the statement of comprehensive loss. There were no realized gains or losses for the three and six months ended June 30, 2016 and 2015.