4. Cash, Cash Equivalents and Investments

The Company’s cash and investments consisted of the following:

	June 30,		December 31,
	2016		2015
Cash	$	4,526	$	6,077
Cash equivalents		2,779		978
Short-term investments		21,973		24,728
	$	29,278	$	31,783

Cash and Cash equivalents

At June 30, 2016, cash and cash equivalents included bank balances and investments with original maturities less than 90 days. At June 30, 2016 and December 31, 2015, the Company’s cash equivalents were invested in highly liquid AAA rated money market funds that are required to comply with Rule 2a-7 of the Investment Company Act of 1940. Such funds utilize the amortized cost method of accounting, seek to maintain a constant $1.00 per share price, and are redeemable upon demand. The Company restricts its investments in AAA money market funds to those invested 100% in either short-term U.S. government agency securities or bank repurchase agreements collateralized by these same securities. The fair values of these money market funds are established through quoted prices in active markets for identical assets (Level 1 inputs). The cash in the Company’s U.S. banks is insured by the Federal Deposit Insurance Corporation up to the insurable limit of $250.

At June 30, 2016, the Company had $4.5 million in cash and $2.8 million in cash equivalents, and at December 31, 2015, the Company had $6.1 million in cash and $1.0 million in cash equivalents. The Company had $2.0 million and $1.3 million of cash and cash equivalents in foreign bank accounts at June 30, 2016 and December 31, 2015, respectively. Within the cash in foreign bank accounts, the Company has cash of $1.6 million and $0.8 million in China bank accounts at June 30, 2016 and December 31, 2015, respectively. The Company plans to repatriate its cash from its subsidiary in Israel during 2016 because the Company expects to cease operations of this subsidiary during 2016. In 2015 the Company recorded the expense for the estimated incremental income tax of $0.1 million related to the repatriation of the funds from Israel. The Company does not expect the foreign currency exchange related to the repatriation of these funds to have a material impact on the financial statements. As of June 30, 2016, the Company has no intentions of repatriating the cash in its foreign bank accounts in the U.K. or China. If the Company decides to repatriate the cash in the foreign bank accounts, it may experience difficulty in doing so in a timely manner. The Company may also be exposed to foreign currency fluctuations and taxes if it repatriates these funds. The Company’s cash in its foreign bank accounts is not insured.

Investments

At June 30, 2016 and December 31, 2015, the Company’s short-term investments consisted of pre-refunded municipal bonds, U.S. government agency bonds, AA or higher rated corporate bonds, and certificates of deposit, all classified as held-to-maturity. At June 30, 2016, the Company had invested $6.7 million in AA rated or higher corporate bonds, $5.0 million in U.S. government agency bonds, $7.3 million in pre-refunded municipal bonds and $2.9 million in certificates of deposit. The income and principal from the pre-refunded municipal bonds are secured by an irrevocable trust of U.S. Treasury securities. The bonds have original maturities greater than 90 days and mature in less than one year. The Company’s bond investments are recorded at the purchase price and carried at amortized cost. The net unrealized gains (losses) were $2 and $1 at June 30, 2016 and December 31, 2015, respectively. Approximately 9% and 11% of the Company’s bond investments were protected by bond default insurance at June 30, 2016 and December 31, 2015, respectively.

At December 31, 2015, the Company had invested $7.6 million in AA rated or higher corporate bond funds, $7.5 million in pre-refunded municipal bonds and taxable bond funds, $7.0 million in U.S. government agency bonds, and $2.7 million in certificates of deposit.

The Company categorizes its financial instruments within a fair value hierarchy according to accounting guidance for fair value. The fair value hierarchy is described under the Fair Value of Financial Instruments in Note 2. For the Level 2 investments, the Company uses quoted prices of similar assets in active markets.

Cash equivalents and Level 1 and Level 2 investments measured at fair value were as follows:

	June 30, 2016								December 31, 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds and other cash equivalents	$	2,779	$	0	$	0	$	2,779	$	978	$	0	$	0	$	978

Investments:
Pre-refunded municipal bonds		0		7,345		0		7,345		0		7,497		0		7,497
Corporate bonds		0		6,743		0		6,743		0		7,558		0		7,558
US government agency bonds		0		5,034		0		5,034		0		7,008		0		7,008
Certificates of deposit		2,850		0		0		2,850		2,666		0		0		2,666
Total	$	5,629	$	19,122	$	0	$	24,751	$	3,644	$	22,063	$	0	$	25,707