4. Investments and Fair Value of Financial Instruments

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 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 following tables summarize the amortized cost and fair value of the available-for-sale investment securities portfolio at September 30, 2017 and December 31, 2016, and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (“AOCI”):


(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
September 30, 2017
Cash equivalents:
Money market funds		2,631		—		—			2,631
Short-term investments:
Certificates of Deposit		980		—		—			980
Commercial paper		4,290		—		—			4,290
U.S. government securities		5,001		—		(4	)		4,997
U.S. government agency securities		2,500		—		—			2,500
Total Assets at Fair Value	$	15,402	$	—	$	(4	)	$	15,398

(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value
December 31, 2016
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 did not have any investment categories that were in a continuous unrealized loss position for more than twelve months as of September 30, 2017. The unrealized gains and losses amounts above are included in AOCI. All short-term investments will mature in 2017 except for two totaling $3.9 million, which will mature in 2018.

As of September 30, 2017, 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 three and nine months ended September 30, 2017.

Fair Value Measurement

Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the condensed consolidated financial statements on a recurring basis. Assets and liabilities recorded at fair value in the condensed consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity associated with the inputs to the valuation of these assets or liabilities, are as follows:

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Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date.

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Level 2 inputs are observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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Level 3 inputs are unobservable inputs for the asset or liability.

The carrying values of the Company’s financial instruments, including cash equivalents, accounts receivable, and accounts payable, approximated their fair values due to the short period of time to maturity or repayment.

The fair value of the available-for-sale investments at September 30, 2017 and December 31, 2016 were as follows:

	Fair Value Measurements at September 30, 2017
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at Fair Value
Cash equivalents:
Money market funds		2,631		—		—		2,631
Short-term investments:
Certificates of Deposit		—		980		—		980
Commercial paper		—		4,290		—		4,290
U.S. government securities		4,997		—		—		4,997
U.S. government agency securities		—		2,500		—		2,500
Total Assets at Fair Value	$	7,628	$	7,770	$	—	$	15,398

	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 Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2017 or 2016. 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 September 30, 2017 and December 31, 2016 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.