Fair Value

9 Months Ended

Sep. 30, 2013

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]

Fair Value

6. Fair Value

The Company held certain assets and liabilities that are required to be measured at fair value on a recurring basis. These assets include available for sale securities classified as cash equivalents and preferred stock warrant liability. ASC 820-10 requires the valuation using a three-tiered approach, which requires that fair value measurements be classified and disclosed in one of three tiers. These tiers are: Level 1, defined as quoted prices in active markets for identical assets or liabilities; Level 2, defined as valuations based on observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable input data; and Level 3, defined as valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by other market participants.

For assets and liabilities recorded at fair value, it is the Company’s policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets and liabilities where there exists limited or no observable market data and therefore, are based primarily upon estimates, are often calculated based on the economic and competitive environment, the characteristics of the asset or liability and other factors. Therefore, the results cannot be determined with precision and may not be realized in an actual sale or immediate settlement of the asset or liability. Additionally, there may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future values. The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures.

 

As prescribed by U.S. GAAP, the Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. An adjustment to the pricing method used within either Level 1 or Level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy.

The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures and based on various factors, it is possible that an asset or liability may be classified differently from period to period. However, the Company expects changes in classifications between levels will be rare.

The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2012, and September 30, 2013 (unaudited), using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):

 

	December 31, 2012
	(In thousands)
Description	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)		December 31, 2012
Assets measured at fair value
Cash and Cash Equivalents	$	8,896	$	-	$	-	$	8,896
Restricted Cash		375		-		-		375
Short term investments				907				907
Total Assets measured at fair value	$	9,271	$	907	$	-	$	10,178
Liabilities measured at fair value
Preferred Stock Warrant Liability	$	-	$	-	$	(109)	$	(109)
Total Liabilities measured at fair value	$	-	$	-	$	(109)	$	(109)

	September 30, 2013 (unaudited)
	(In thousands)
Description	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
	(Level 1)		(Level 2)		(Level 3)		September 30, 2013
Assets measured at fair value
Cash and Cash Equivalents	$	23,829	$	-	$	-	$	23,829
Restricted Cash		375		-		-		375
Short term investments		-	$	1,104			$	1,104
Total Assets measured at fair value	$	24,204	$	1,104	$	-	$	25,308