7. FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2012

Fair Value Disclosures [Text Block]

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

In accordance with ASC Topic 820, the Company measures cash equivalents, marketable securities, other investments and interest rate swap contract at fair value. Our cash equivalents, marketable securities and interest rate swap contract are classified within Level 1 or Level 2. This is because our cash equivalents, marketable securities and interest rate swap are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs. Our other investments are classified within Level 3 because they are valued using valuation models which use some inputs that are unobservable and supported by little or no market activity and are significant.

Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Fair value measurement at reporting date using
	Total		Quoted Prices in Active		Significant Other		Significant
	September 30,		Markets for Identical Assets		Observable Inputs		Unobservable Inputs
Description	2012		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents:
Time deposits	$	54,000		-	$	54,000		-
Money market mutual funds		1,512,000	$	1,512,000		-		-
Marketable securities:
Corporate debt securities		758,000		-		758,000		-
Marketable equity securities		1,146,000		1,146,000		-		-
Total assets	$	3,470,000	$	2,658,000	$	812,000	$	-
Liabilities:
Interest rate swap contract		2,066,000		-		2,066,000		-
Total liabilities	$	2,066,000		-	$	2,066,000		-

	Fair value measurement at reporting date using
	Total		Quoted Prices in Active		Significant Other		Significant
	December 31,		Markets for Identical Assets		Observable Inputs		Unobservable Inputs
Description	2011		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents:
Time deposits	$	54,000		-	$	54,000		-
Money market mutual funds		1,537,000	$	1,537,000		-		-
Marketable securities:
Corporate debt securities		885,000		-		885,000		-
Marketable equity securities		1,134,000		1,134,000		-		-
Total assets	$	3,610,000	$	2,671,000	$	939,000	$	-
Liabilities:
Interest rate swap contract		1,975,000		-		1,975,000		-
Total liabilities	$	1,975,000		-	$	1,975,000		-

Assets measured at fair value on a nonrecurring basis are summarized below:

	Fair value measurement at reporting date using								Total losses
	Total		Quoted Prices in Active		Significant Other		Significant		for the three and nine
	September 30,		Markets for Identical Assets		Observable Inputs		Unobservable Inputs		months ended
Description	2012		(Level 1)		(Level 2) (a)		(Level 3) (b)		9/30/2012
Assets:
Other investments by investment focus:
Technology & Communication	$	518,000	$	-	$	518,000	$	-	$	-
Diversified businesses		1,409,000		-		1,409,000		-		-
Real estate and related		1,464,000		-		511,000		953,000		(28,000	)
Other		300,000		-		—		300,000		-
	$	3,691,000	$	-	$	2,438,000	$	1,253,000	$	(28,000	)
Goodwill (Bayshore)		5,629,000						5,629,000
Total assets	$	9,320,000	$	-	$	2,438,000	$	6,882,000	$	(28,000	)

	Fair value measurement at reporting date using								Total
	Total		Quoted Prices in Active		Significant Other		Significant		losses for
	December 31,		Markets for Identical Assets		Observable Inputs		Unobservable Inputs		year ended
Description	2011		(Level 1)		(Level 2) (a)		(Level 3) (b)		12/31/2011
Assets:
Other investments by investment focus:
Technology & Communication	$	478,000	$	-	$	478,000	$	-	$	(2,000	)
Diversified businesses		1,445,000		-		1,445,000		-		-
Real estate and related		1,523,000		-		542,000		981,000		(84,000	)
Other		300,000		-		—		300,000		-
	$	3,746,000	$	-	$	2,465,000	$	1,281,000	$	(86,000	)
Goodwill (Bayshore)		5,629,000				-		5,629,000
Total assets	$	9,375,000	$	-	$	2,465,000	$	6,910,000	$	(86,000	)

(a)   Other investments measured at fair value on a non-recurring basis include investments in certain entities that calculate net asset value per share (or its equivalent such as member units or an ownership interest in partners’ capital to which a proportionate share of net assets is attributed, “NAV”).  This class primarily consists of private equity funds that have varying investment focus.  These investments can never be redeemed with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation of the underlying assets of the fund.  If these investments were held it is estimated that the underlying assets of the fund would be liquidated over 5 to 10 years.  As of September 30, 2012, it is probable that all of the investments in this class will be sold at an amount different from the NAV of the Company’s ownership interest in partners’ capital.  Therefore, the fair values of the investments in this class have been estimated using recent observable information such as audited financial statements and/or statements of partners’ capital obtained directly from investees on a quarterly or other regular basis. During the nine months ended September 30, 2012, the Company made contributions totaling $227,000 in this type of investment.  These contributions include one new investment in a medical technology related company for $51,000 which was fully funded in January 2012 and follow on contributions totaling $176,000 towards funding commitments in various other existing investments. As of September 30, 2012, the amount of the Company’s unfunded commitments related to the aforementioned investments is approximately $812,000.

(b)   Other investments above which are measured on a nonrecurring basis using Level 3 unobservable inputs consist of investments primarily in commercial real estate in Florida through private partnerships and two investments in the stock of private banks in Florida and Texas.  The Company does not know when it will have the ability to redeem the investments and has categorized them as a Level 3 fair value measurement.  The Level 3 real estate and related investments of approximately $953,000 include one investment in a commercial building located near the Company’s offices purchased in 2005 with a carrying value as of September 30, 2012 of $724,000.  These investments are measured using primarily inputs provided by the managing member of the partnerships with whom the Company has done similar transactions in the past and is well known to management.  The fair values of these real estate investments have been estimated using the net asset value of the Company’s ownership interest in partners’ capital. The investments in private bank stocks include a private bank and trust located in Coral Gables, Florida in the amount of $250,000 made in 2009, and a $50,000 investment in a bank located in El Campo, Texas made in 2010. The fair values of these bank stock investments have been estimated using the cost method less distributions received and other than temporary impairments. This investment is valued using inputs provided by the management of the banks.

The following table includes a roll-forward of the investments classified within level 3 of the fair value hierarchy for the nine months ended September 30, 2012:

	Level 3 Investments:
Balance at January 1, 2012	$	1,281,000
Additional investment in limited partnership		-
Other than temporary impairment loss		(28,000	)
Transfers from Level 2		-
Balance at September 30, 2012	$	1,253,000