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Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2011
Summary of Significant Accounting Policies

NOTE 2 — Summary of Significant Accounting Policies

 

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates, and such differences may be material to the financial statements.

 

Cash Equivalents and Fair Value of Financial Instruments

The Company considers all highly liquid investments purchased with an original maturity date of 90 days or less at date of purchase to be cash equivalents. At June 30, 2011 and December 31, 2010, all of the Company’s cash and cash equivalents consisted of amounts held in demand and money market deposits in banks. The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, debt and foreign exchange contracts approximate fair value due to the relatively short period of time to maturity.

 

Restricted Cash

Under the terms of the Company’s senior convertible note issued in November 2010, the Company is required at all times to maintain collateralization of the convertible note with an amount equivalent to the unconverted principal plus accrued interest. Collateral consists of qualified accounts receivables of the Company, plus cash to the extent qualified accounts receivables are less than the unconverted principal plus accrued interest (see “NOTE 4 — Senior Convertible Note” and “NOTE — 12 Subsequent Event” for more information). At June 30, 2011, the Company’s accounts receivable fully collateralized the note and therefore no cash was classified as restricted. At December 31, 2010 all of the Company’s restricted cash consisted of amounts held in demand deposits in banks under the terms of our senior convertible note.