4. Cash, Cash Equivalents and Investments

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

	March 31,		December 31,
	2017		2016
Cash	$	6,116	$	7,507
Cash equivalents		8,844		7,348
Short-term investments		18,002		18,456
	$	32,962	$	33,311

Cash and Cash Equivalents

At March 31, 2017 and December 31, 2016, cash and cash equivalents included bank balances and investments with original maturities less than 90 days. At March 31, 2017 and December 31, 2016, 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 Company’s cash in U.S. banks is insured by the Federal Deposit Insurance Corporation up to the insurable limit of $250.

At March 31, 2017, the Company had $6.1 million in cash and $8.8 million in cash equivalents, and at December 31, 2016, the Company had $7.5 million in cash and $7.3 million in cash equivalents. At March 31, 2017, the Company had in cash equivalents $0.3 million in pre-refunded municipal bonds, $5.8 million in AA rated or higher corporate bonds, $2.1 million in U.S. government agency bonds, $0.4 million in certificates of deposit, and $0.2 million in money market funds. At December 31, 2016, the Company had in cash equivalents, $3.6 million in AA rated or higher corporate bonds, $2.8 million in U.S. government agency bonds, $0.8 million in certificates of deposit, and $0.1 million in money market funds.

The Company had $1.7 million and $0.9 million of cash and cash equivalents in foreign bank accounts at March 31, 2017 and December 31, 2016, respectively. With respect to the cash in foreign bank accounts, the Company had cash of $1.3 million and $0.5 million in China bank accounts at March 31, 2017 and December 31, 2016, respectively. The Company ceased ongoing operations of its Israel subsidiary during the third quarter 2016. The Company expects to liquidate the subsidiary and repatriate its remaining cash during 2017. As of March 31, 2017, 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 March 31, 2017 and December 31, 2016, 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 March 31, 2017, the Company had invested $8.8 million in pre-refunded municipal bonds, $4.4 million in AA rated or higher corporate bonds, $2.8 million in U.S. government agency bonds, and $2.0 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 losses were $10 and $9 at March 31, 2017 and December 31, 2016, respectively. Approximately 7% and 6% of the Company’s bond investments were protected by bond default insurance at March 31, 2017 and December 31, 2016, respectively.

At December 31, 2016, the Company had invested $7.8 million in pre-refunded municipal bonds and taxable bond funds, $5.6 million in AA rated or higher corporate bond funds, $2.6 million in U.S. government agency bonds, and $2.5 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 investments measured at fair value were as follows at March 31, 2017 and December 31, 2016:

	March 31, 2017								December 31, 2016
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash equivalents:
Corporate bonds	$	0	$	5,783	$	0	$	5,783	$	0	$	3,608	$	0	$	3,608
Pre-refunded municipal bonds		0		303		0		303		0		0		0		0
US government agency bonds		0		2,150		0		2,150		0		2,846		0		2,846
Certificates of deposit		351		0		0		351		750		0		0		750
Money market funds		257		0		0		257		145		0		0		145
Investments:
Corporate bonds		0		4,377		0		4,377		0		5,569		0		5,569
Pre-refunded municipal bonds		0		8,808		0		8,808		0		7,776		0		7,776
US government agency bonds		0		2,781		0		2,781		0		2,571		0		2,571
Certificates of deposit		2,026		0		0		2,026		2,530		0		0		2,530
Total	$	2,634	$	24,202	$	0	$	26,836	$	3,425	$	22,370	$	0	$	25,795