NOTE 3 - INVESTMENTS AND FAIR VALUE MEASUREMENTS

At December 31, 2019 and 2018, $24,136 and $4,256, respectively, of funds held for clients were invested in available-for-sale securities consisting of government and commercial bonds, including mortgage backed securities. As of December 31, 2019 and 2018, we also had $48,500 and $0, respectively, of funds held for clients invested in money market funds and other cash equivalents. Additionally, as of December 31, 2018, we had $8,111 in money market funds classified as cash equivalents. Cash equivalents as of December 31, 2019 was not material.

Investments classified as available-for-sale consisted of the following:



	Amortized Cost		Gross Unrealized Gains ⁽¹⁾		Gross Unrealized Losses ⁽¹⁾			Aggregate Estimated Fair Value
December 31, 2019:
Funds Held for Clients ⁽²⁾
Certificates of deposit	$	8,828	$	11	$	—		$	8,839
Corporate debt securities	6,883		6		(9		)	6,880
Municipal bonds	6,383		6		(7		)	6,382
US Government agency securities	1,000		—		—			1,000
Asset-backed securities	1,067		—		(32		)	1,035
Total	$	24,161	$	23	$	(48	)	$	24,136

December 31, 2018:
Funds Held for Clients ⁽²⁾
Corporate debt securities	$	4,334	$	21	$	(99	)	$	4,256

(1)

Unrealized gains and losses on available-for-sale securities are included as a component of comprehensive loss. At December 31, 2019, there were 53 securities in an unrealized gain position and there were 18 securities in an unrealized loss position. These unrealized losses were less than $35 individually and $50 in the aggregate. These securities have not been in a continuous unrealized gain or loss position for more than 12 months. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. The Company reviews its investments to identify and evaluate investments that have an indication of possible other-than-temporary impairment. Factors considered in determining whether a loss is other-than-temporary include the length of time and extent to which fair value has been less than the cost basis, the financial condition and near-term prospects of the investee, and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value.


(2)	At December 31, 2019 and 2018, none of these securities were classified as cash and cash equivalents on the Company’s balance sheet.

Expected maturities of available-for-sale securities as of December 31, 2019 are as follows:



One year or less	$	6,414
After one year through five years	17,681
After five years through 10 years	—
After 10 years	41
	$	24,136

ASC 820, Fair Value Measurements and Disclosures defines fair value, establishes a framework for measuring fair value in U.S. generally accepted accounting principles and expands disclosures about fair value measurements.

ASC 820 establishes a three-tier fair value hierarchy, which is based on the reliability of the inputs used in measuring fair values. These tiers include:


Level 1:	Quoted prices in active markets for identical assets or liabilities;


Level 2:	Quoted prices in active markets for similar assets or liabilities; quoted prices in markets that are not active for identical or similar assets or liabilities; and model-driven valuations whose significant inputs are observable; and


Level 3:	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table presents the fair value hierarchy for our financial assets measured at fair value on a recurring basis as of December 31, 2019 and December 31, 2018, respectively:



			Fair Value Measure at December 31, 2019
	Total Carrying Value at December 31, 2019		Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Funds held for clients
Money market funds	48,500		48,500		—		—
Available-for-sale securities	24,136		—		24,136		—
Total	$	72,636	$	48,500	$	24,136	$	—



			Fair Value Measure at December 31, 2018
	Total Carrying Value at December 31, 2018		Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents
Money market funds	$	8,111	$	8,111	$	—	$	—
Funds held for clients
Available-for-sale securities	4,256		—		4,256		—
Total	$	12,367	$	8,111	$	4,256	$	—

Other Financial Assets and Liabilities

Financial assets and liabilities with carrying amounts approximating fair value include cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other current liabilities. The carrying amount of these financial assets and liabilities approximates fair value because of their short maturities.

Our line of credit and notes payable, including current portion, as of December 31, 2019, had a carrying value of $26,713. This carrying value approximates fair value. The fair value is based on interest rates that are currently available to us for issuance of debt with similar terms and remaining maturities.