2. Summary of Significant Accounting Policies

There have been no material changes to the Company’s significant accounting policies during the six months ended June 30, 2013 as compared to the significant accounting policies described in the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2012.

The accompanying financial information for the three and six months ended June 30, 2013 and 2012 are unaudited. These unaudited interim condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP and applicable rules and regulations of the SEC regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In management’s opinion, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, and include all adjustments, which include only normal recurring adjustments necessary for the fair presentation of our statement of financial position as of June 30, 2013, our statement of operations and comprehensive loss for the three and six months ended June 30, 3013 and 2012 and our cash flows for the six months ended June 30, 2013 and 2012. The results for the three and six months ended June 30, 2013 are not necessarily indicative of the results expected for the full fiscal year or any other period(s).

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

Cash, Cash Equivalents and Marketable Securities

All highly liquid securities with original final maturities of 90 days or less from the date of purchase are considered to be cash equivalents. As of June 30, 2013 and December 31, 2012, cash and cash equivalents were comprised of funds in cash and money market accounts. The Company maintains cash balances in excess of amounts insured by the FDIC. The accounts are monitored by management to mitigate the risk.

Investments with an original maturity of more than 90 days are considered marketable securities. Marketable securities are stated at fair value as determined by quoted market prices. The Company has classified the entire investment portfolio as available-for-sale securities. Accordingly, any unrealized gain or loss on the investments is reported as a component of accumulated other comprehensive loss. The amortized cost of these securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortizations as well as realized gains and losses determined on a specific identification basis are included in interest income or expense. The entire investment portfolio, except for restricted investments, is considered available for use in current operations and, accordingly, all such investments are considered current assets although the stated maturity of individual investments may be one year or more beyond the balance sheet date.

Realized gains and losses and declines in value, if any, judged to be other-than-temporary on available-for-sale securities are reported in interest income or expense. When securities are sold, any associated unrealized gain or loss previously reported as a separate component of stockholders’ equity is reclassified out of stockholders’ equity and recorded in the statement of operations for the period. Accrued interest and dividends are included in interest income.

The Company periodically reviews the available-for-sale securities for other-than-temporary declines in fair value below the cost basis whenever events or changes in the circumstances indicate that the carrying amount of an asset may not be recoverable. If the Company concludes that an other-than-temporary impairment exists, it recognizes an impairment charge to reduce the investment to fair value and record the related charge as a reduction of interest income. No impairment was recognized for the three and six months ended June 30, 2013 and 2012.

Property and Equipment

Property and equipment are recorded at historical cost and consisted of the following:

	June 30, 2013			December 31, 2012
Cameras	$	923,000		$	923,000
Computer hardware and electronics	182,000			147,000
Furniture and fixtures	234,000			227,000
Software	21,000			21,000
	1,360,000			1,318,000
Less accumulated depreciation	(1,210,000		)	(1,043,000		)
	$	150,000		$	275,000

Depreciation is recorded using the straight-line method over the estimated useful lives of the assets (one to five years). The Company reviews its property and equipment assets for impairment in value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company had no disposals during the six months ended June 30, 2013 and 2012.

Comprehensive (Loss) Income

Comprehensive (loss) income is comprised of net (loss) income and other comprehensive income or loss. The only component of other comprehensive income or loss is unrealized gains and losses on marketable securities. There were no reclassifications out of accumulated other comprehensive loss during the three and six months ended June 30, 2013 and 2012.

Fair Value of Financial Instruments

The carrying amounts reported in the accompanying financial statements for cash and cash equivalents, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these accounts. The fair value of marketable securities and notes payable are discussed in Note 8, “Fair Value Measurements.”

Recent Accounting Pronouncements

In February 2013, a new accounting standard was issued that requires increased disclosure requirements regarding amounts that are reclassified out of accumulated other comprehensive income. The standard is required to be adopted prospectively beginning on January 1, 2013. Adoption of this standard did not have a material impact on the Company’s financial statements.