Note 5. Financial Instruments

6 Months Ended

Jun. 30, 2011

Financial Instruments Disclosure [Text Block]

5. FINANCIAL INSTRUMENTS

Financial instruments consist of cash and cash equivalents, short-term investments and accounts receivable that will result in future cash receipts, as well as accounts payable, accrued liabilities and notes payable that require future cash outlays.

Short-term Investments

Short-term investments are classified as available-for-sale securities and are carried at market value with unrealized temporary holding gains and losses, where applicable, excluded from income and reported in other comprehensive income (loss).  Available-for-sale securities are written down to fair value through income whenever it is necessary to reflect an other-than-temporary impairment.    The Company determined that the gross unrealized losses on our marketable securities as of June 30, 2011 were temporary in nature, and the Company currently does not intend to sell these securities before recovery of their amortized cost basis.  As of June 30, 2011 and 2010, short-term investments consisted of certificates of deposit denominated at or below $250,000 issued by banks insured by the Federal Deposit Insurance Corporation.  All asset classes purchased are limited to a final maturity from purchase date of twelve months.

The amortized cost, unrealized losses and fair value for the periods presented are summarized below (in thousands):

	As of June 30, 2011			As of December 31, 2010
Amortized cost	$	15,886		$	23,363
Unrealized losses		(90	)		—
Fair value	$	15,796		$	23,363

Accounts Receivable, Government Grant Receivable, Accounts Payable and Accrued Liabilities

The carrying amounts of accounts receivable, government grant receivable and accounts payable and accrued liabilities approximate their fair values due to the short-term nature of these financial instruments.

Class UA Preferred Stock

The fair value of class UA preferred stock is assumed to be equal to its carrying value as the amounts that will be paid and the timing of the payments cannot be determined with any certainty.

Notes Payable

The Company utilizes quoted market prices to estimate the fair value of its fixed rate debt, when available.  If quoted market prices are not available, the Company uses an approach that reflects the proceeds that it would receive if it were to issue an identical liability as of the measurement date with the same remaining term and the same remaining cash flows.  As of June 30, 2011, the fair value of the term loan approximated the carrying value.

Limitations

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment; therefore, they cannot be determined with precision.  Changes in assumptions could significantly affect the estimates.