Note 4 - Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2013

Fair Value Disclosures [Abstract]

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).

Cash and cash equivalents, other current assets, accounts payable and other accrued liabilities are reflected in the balance sheet at their estimated fair values primarily due to their short-term nature. The common stock warrant liability has been valued using the Black-Scholes option pricing model, the inputs of which are more fully described in Note 11 to the financial statements. There were no transfers of assets of liabilities between Level 1 and Level 2 and no transfers in or out of Level 3 during 2013 except for the change in the fair market value of the warrant liability was included in earnings.

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, 2013
Short-term investments available for sale
Bonds – corporate issuances	$	37,156,381	$	37,156,381	$	−	$	−
As of December 31, 2012
Short-term investments available for sale
Bonds – corporate issuances	$	8,037,620	$	8,037,620	$	−	$	−
Liabilities:
As of December 31, 2013
Common stock warrant liability	$	3,026	$	−	$	−	$	3,026
As of December 31, 2012
Common stock warrant liability	$	4,283,932	$	−	$	−	$	4,283,932