Note 4. Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Text Block]

4. FAIR VALUE MEASUREMENTS

The Company measures at fair value certain financial assets and liabilities in accordance with a hierarchy which requires an entity to maximize the use of observable inputs which reflect market data obtained from independent sources and minimize the use of unobservable inputs which reflect the Company’s market assumptions when measuring fair value.  There are three levels of inputs that may be used to measure fair value:

·   Level 1 — quoted prices in active markets for identical assets or liabilities;

·   Level 2 — observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

·   Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities measured at fair value consisted of the following as of June 30, 2011 and December 31, 2010 (in thousands):

	June 30, 2011								December 31, 2010
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds (asset)	$	44,855	$	—	$	—	$	44,855	$	4,005	$	—	$	—	$	4,005
Certificates of deposits (asset)		—	$	15,796		—	$	15,796		—	$	23,363		—	$	23,363
Warrants (liability)		—		—	$	42,464	$	42,464		—		—	$	12,983	$	12,983

If quoted market prices in active markets for identical assets are not available to determine fair value, then the Company uses quoted prices from similar assets or inputs other than the quoted prices that are observable either directly or indirectly.  These investments are included in Level 2 and consist of certificates of deposits denominated at or below $250,000 issued by banks insured by the Federal Deposit Insurance Corporation.

There were no transfers between Levels 1 and 2 during the three and six months ended June 30, 2011.  The changes in fair value of warrants classified in Level 3 in the amount of $28.0 million and $29.5 million, respectively, for the three and six months ended June 30, 2011 are recognized in the condensed consolidated statements of operations.   A discussion of the valuation techniques and inputs to determine fair value of these instruments is included in Note 9.