Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Financial Instruments and Investments

v3.7.0.1
Note 5 - Financial Instruments and Investments
3 Months Ended
Mar. 31, 2017
Notes  
Note 5 - Financial Instruments and Investments

NOTE 5 - FINANCIAL INSTRUMENTS AND INVESTMENTS

 

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs.

 

A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is divided into the following three categories:

 

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

Level 2: Observable market-based inputs or inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

 

Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision.  Changes in assumptions can significantly affect estimated fair value.

 

The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value because of the short-term nature of these instruments. Investments are presented at fair value as of the balance sheet date and accumulated gains or losses on those investments are reported in other comprehensive income. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from financial instruments and any declines in the value of investments are temporary in nature.

 

The following tables show the adjusted cost, unrealized losses and fair value of the Company’s cash and cash equivalents and investments held as of March 31, 2017 and December 31, 2016:

 

March 31, 2017

Adjusted Cost

Gross Unrealized Losses

Fair Value

Cash and Cash Equivalents

Short Term Investments

Long Term Investments

Level 1

Money Market Funds

$616,486

 $-  

$616,486

$616,486

 $-  

 $-  

Mutual Funds

1,626,236

(69,657)

1,556,579

 -  

 -  

1,556,579

Subtotal

2,242,722

(69,657)

2,173,065

616,486

 -  

1,556,579

Level 2

Certificates of Deposit

$3,000,000

 $-  

$3,000,000

 $-  

$3,000,000

 $-  

Corporate Bonds

2,142,900

(23,923)

2,118,977

 -  

299,707

1,819,270

Municipal Bonds

4,609,423

(27,751)

4,581,672

 -  

1,922,230

2,659,442

Subtotal

9,752,323

(51,674)

9,700,649

 -  

5,221,937

4,478,712

Total

$11,995,045

$(121,331)

$11,873,714

$616,486

$5,221,937

$6,035,291

December 31, 2016

Adjusted Cost

Gross Unrealized Losses

Fair Value

Cash and Cash Equivalents

Short Term Investments

Long Term Investments

Level 1

Money Market Funds

$1,053,844

 $-  

$1,053,844

$1,053,844

 $-  

 $-  

Mutual Funds

1,473,536

(90,495)

1,383,041

 -  

 -  

1,383,041

Subtotal

2,527,380

(90,495)

2,436,885

1,053,844

 -  

1,383,041

Level 2

Certificates of Deposit

$2,250,000

 $-  

$2,250,000

 $-  

$2,250,000

 $-  

Corporate Bonds

2,246,956

(29,419)

2,217,537

 -  

400,053

1,817,484

Municipal Bonds

4,929,249

(59,294)

4,869,955

 -  

2,565,483

2,304,472

Subtotal

9,426,205

(88,713)

9,337,492

 -  

5,215,536

4,121,956

Total

$11,953,585

$(179,208)

$11,774,377

$1,053,844

$5,215,536

$5,504,997

 

Unrealized gains on investments incurred during the periods are presented below:

 

For the Three Months Ended March 31,

2017

2016

Unrealized holding gains, net of tax

$36,288

 $-0

 

The maturities for bonds held by the Company as of March 31, 2017 are presented in the table below:

 

Maturity

Fair Value

Less Than One Year

2,221,937

1-2 years

307,671

2-5 years

3,617,421

5-10 years

253,620

Over 10 years

300,000

6,700,649