Note 4 - Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Text Block]

4. FAIR VALUES OF FINANCIAL INSTRUMENTS

FASB Accounting Standards Codification (ASC) Section 820, Fair Value Measurements and Disclosures, establishes a three tier level hierarchy for fair value measurements which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other 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.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Assets and liabilities measured at fair value on a recurring basis are summarized below:

	Total Fair Value on the Balance Sheet		Quoted Prices In Active Markets For Identical Assets /Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
As of December 31, 2012
Short-term investments available for sale
Bonds – corporate issuances	$	8,037,620	$	8,037,620	$	−	$	−
As of December 31, 2011
Short-term investments available for sale
Bonds – corporate issuances	$	10,157,160	$	10,157,160	$	−	$	−
Equity Securities		–		–		–		–
Liabilities:
As of December 31, 2012
Common stock warrant liability	$	4,283,932	$	−	$	−	$	4,283,932
As of December 31, 2011
Common stock warrant liability	$	166,398	$	−	$	−	$	166,398

The following is a summary the changes in the common stock equity securities and warrant liability for the years ended December 31, 2012, 2011 and 2010:

	Equity  Securities			Warrant Liability
Beginning balance, January 1, 2010	$	58,929		$	(821,891	)
Unrealized (loss) gain included in other comprehensive (loss) income		(73,378	)		–
Gain from valuation of common stock warrant liability included in net loss		–			573,760
Ending balance, December 31, 2010		(14,449	)		(248,131	)
Unrealized gain (loss) included in other comprehensive (loss) income		(93,924	)		–
Gain from valuation of common stock warrant liability included in net loss		–			81,733
Ending balance, December 31, 2011	$	(108,373	)	$	(166,398	)
Unrealized gain (loss) included in other comprehensive (loss) income		108,373			–
Loss from valuation of common stock warrant liability included in net loss		–			(4,117,534	)
Ending balance, December 31, 2012	$	–		$	(4,283,932	)