Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements

12. Fair Value Measurements

As of January 1, 2008, the Company adopted ASC 820-10, Fair Value Measurements (originally issued as SFAS No. 157, Fair Value Measurements) (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosures about fair value measurements. The ASC 820-10 hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) in active markets for identical assets and liabilities;

Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 — Unobservable inputs that are not corroborated by market data, therefore requiring the Company to develop its own assumptions.

As of January 1, 2010, the Company adopted ASU 2010-06, Fair Value Measurements and Disclosures — Topic 855 (“ASU 2010-06”). ASU 2010-06 provides amendments to ASC 820-10 to require new disclosures for transfers in and out of levels 1 and 2, as well as a reconciliation of activity within level 3. In addition, ASU 2010-06 provides amendments that clarify existing disclosures regarding levels of disaggregation and inputs and valuation techniques.

In accordance with ASC 820-10, as amended by ASU 2010-06, the Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company.

The financial assets and liabilities subject to fair value measurements at December 31 were as follows:

December 31, 2011	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	18,503,061	$	0	$	0	$	18,503,061
Short-term investments (GSE securities, corporate, municipal and bank bonds, and commercial paper)		0		42,950,397		0		42,950,397
Total cash and investments	$	18,503,061	$	42,950,397	$	0	$	61,453,458

December 31, 2010	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	11,628,329	$	0	$	0	$	11,628,329
Short-term investments (GSE securities and corporate bonds)		0		65,751,039		0		65,751,039
Long-term investments (GSE securities)		0		15,001,765		0		15,001,765
Total cash and investments	$	11,628,329	$	80,752,804	$	0	$	92,381,133

Fair value estimate

At December 31, 2011 and 2010, the fair value measurement amounts for the Company’s short-term and long-term investments consisted of marketable securities which are classified as available-for-sale. The carrying amounts reported in the consolidated balance sheets approximate the fair value of the Company’s marketable securities based on quoted market prices or alternative pricing sources and models utilizing market observable inputs. The Company’s cash and cash equivalents include cash on hand, deposits in banks, certificates of deposit and money market funds. Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate the fair value of cash and cash equivalents.

To be consistent with the current presentation, the Company reclassified $80,752,804 of marketable securities previously reported as Level 1 assets as of December 31, 2010 to Level 2. The Company determined these assets should be classified as Level 2 because the investments are in corporate and agency notes, municipals, and commercial paper securities. At December 31, 2011 and 2010, the Company did not have any financial liabilities that were subject to fair value measurements.