Note 5. Investments and Fair Value Measurements

Available-for-Sale Investments

The Company classified short-term and long-term investments as “available-for-sale.” Investments are free of trading restrictions. The investments are carried at fair value, based on quoted market prices or other readily available market information. Unrealized gains and losses, net of taxes, are included in accumulated other comprehensive income (loss), which is reflected as a separate component of stockholder’s equity (deficit) in the Consolidated Balance Sheets. Gains and losses are recognized when realized in the Consolidated Statements of Operations and Comprehensive Loss.

The Company’s investments in fixed income securities consisted of the following as of December 31, 2016:

(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Assets at Fair Value
Cash equivalents:
Money market funds	$	1,549	$	—	$	—		$	1,549
Short-term investments:
Certificates of Deposit		3,049		—		(2	)		3,047
Commercial paper		21,248		—		—			21,248
U.S. government securities		19,267		—		(9	)		19,258
U.S. government agency securities		5,000		—		(6	)		4,994
Long-term investments:
U.S. government securities		2,500		—		(2	)		2,498
Total Assets at Fair Value	$	52,613	$	—	$	(19	)	$	52,594

The Company’s investments in fixed income securities consisted of the following as of December 31, 2015:

(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
Assets at Fair Value
Cash equivalents:
Money market funds	$	12,799	$	—	$	—		$	12,799
Commercial paper		5,949		—		—			5,949
U.S. government agency securities		3,049		—		—			3,049
Short-term investments:
Certificates of Deposit		3,374		—		—			3,374
Commercial paper		3,598		—		—			3,598
U.S. government securities		13,678		—		(30	)		13,648
U.S. government agency securities		5,653		1		(4	)		5,650
Long-term investments:
Certificates of Deposit		3,049		—		—			3,049
U.S. government securities		11,780		—		(52	)		11,728
U.S. government agency securities		5,001		—		(30	)		4,971
Total Assets at Fair Value	$	67,930	$	1	$	(116	)	$	67,815

The Company did not have any investment categories that were in a continuous unrealized loss position for more than twelve months as of December 31, 2016. The unrealized gains and losses amounts above are included in AOCI as of December 31, 2016. All long-term investments will mature in 2018.

As of December 31, 2016, for fixed income securities that were in unrealized loss positions, the Company has determined that (i) it does not have the intent to sell any of these investments, and (ii) it is not more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. The Company anticipates that it will recover the entire amortized cost basis of such fixed income securities and has determined that no other-than-temporary impairments associated with credit losses were required to be recognized during the year ended December 31, 2016.

Fair Value Measurement

The fair value of the available-for-sale investments at December 31, 2016 were as follows:

	Fair Value Measurements at December 31, 2016
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at Fair Value
Cash equivalents:
Money market funds	$	1,549	$	—	$	—	$	1,549
Short-term investments:
Certificates of Deposit		—		3,047		—		3,047
Commercial paper		—		21,248		—		21,248
U.S. government securities		19,258		—		—		19,258
U.S. government agency securities		—		4,994		—		4,994
Long-term investments:
U.S. government securities		2,498		—		—		2,498
Total Assets at Fair Value	$	23,305	$	29,289	$	—	$	52,594

The fair value of the available-for-sale investments at December 31, 2015 were as follows:

	Fair Value Measurements at December 31, 2015
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at Fair Value
Cash equivalents:
Money market funds	$	12,799	$	—	$	—	$	12,799
Commercial paper		—		5,949		—		5,949
U.S. government agency securities		—		3,049		—		3,049
Short-term investments:
Certificates of Deposit		—		3,374		—		3,374
Commercial paper		—		3,598		—		3,598
U.S. government securities		13,648		—		—		13,648
U.S. government agency securities		—		5,650		—		5,650
Long-term investments:
Certificates of Deposit		—		3,049		—		3,049
U.S. government securities		11,728		—		—		11,728
U.S. government agency securities		—		4,971		—		4,971
Total Assets at Fair Value	$	38,175	$	29,640	$	—	$	67,815

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2016 or 2015. The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and debt instruments. For accounts receivable, accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of December 31, 2016 and 2015 were considered representative of their fair values due to their short term to maturity or repayment. Cash equivalents are carried at cost, which approximates their fair value. The carrying values of long-term debt, approximate fair value and is principally measured using Level 2 inputs based on quoted market prices or pricing models using current market rates.

The Company’s Level 3 liabilities, which were measured and recorded on a recurring basis, consist of derivative liabilities related to the convertible promissory note. The following table sets forth a summary of the changes in the fair value and other adjustments of these derivative liabilities (in thousands):

	Year Ended December 31,
	2016		2015
Beginning balance	$	—	$	1,580
Change in fair value and other adjustments		—		9
Derecognition of derivative liabilities upon debt extinguishment		—		(1,589	)
Ending balance	$	—	$	—