Fair value measurements

6 Months Ended

Jun. 30, 2011

Fair value measurements

3. Fair value measurements

As of June 30, 2011 and December 31, 2010, the carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and other liabilities and dividends payable approximate their fair values due to the short term maturities of these instruments. Management considers that the carrying amounts for loans receivable and long term debt as of June 30, 2011 and December 31, 2010 approximate their fair value.

Under the relevant accounting guidance fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability. The guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, 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 for substantially the full term of the assets or liabilities.

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.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value as of June 30, 2011 and December 31, 2010:

	June 30, 2011
	Level 1		Level 2		Level 3		Total
Assets:
Recurring
Cash equivalents	$	22,244,249	$	-	$	-	$	22,244,249
Nonrecurring
Investment in affiliate	$	-	$	-	$	6,902,311	$	6,902,311

	December 31, 2010
	Level 1		Level 2		Level 3		Total
Assets:
Recurring
Cash equivalents	$	27,413,838	$	-	$	-	$	27,413,838
Nonrecurring
Investment in affiliate	$	-	$	-	$	7,812,523	$	7,812,523

 A reconciliation of the beginning and ending balances for Level 3 investments for the six months ended June 30, 2011:

Balance as of December 31, 2010	$	7,812,523
Equity in earnings (loss) of OC-BVI		632,472
Distribution of earnings from OC-BVI		(202,631	)
Payments received on loan receivable from OC-BVI		(1,100,000	)
Other		(240,053)
Balance as of  June 30, 2011	$	6,902,311