We have prepared the accompanying condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and with the instructions to Form -Q and Regulation S- of the Securities and Exchange Commission (“SEC”). Accordingly, they do include all of the information and footnotes required by US GAAP for complete financial statements. These condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals which, in the opinion of management, are necessary to present fairly our consolidated financial position, consolidated results of operations, consolidated statement of shareholders’ equity and consolidated cash flows for the periods and as of the dates presented. Our fiscal year ends on The condensed consolidated balance sheet as of was derived from audited consolidated financial statements but does include all disclosures required by US GAAP. These condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto. The nature of our business is such that the results of any interim period be indicative of the results to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current basis of presentation.

 

 

The Company considers all bank deposits, including money market funds, and other investments purchased with an original maturity of months or less to be cash and cash equivalents.

 

 

Financial instruments that potentially expose the Company to concentration of credit risk consist primarily of cash and cash equivalents and marketable securities.

 

The Company maintains its cash balances primarily with financial institutions. These balances exceed federally insured limits. The Company has experienced any losses in such accounts and believes it is exposed to any significant credit risk in cash and cash equivalents.

 

The Company believes that the credit risk related to marketable securities is limited due to the adherence to an investment policy focused on the preservation of principal.

 

 

The Company’s marketable securities consist solely of available-for-sale securities and were valued in accordance with the fair value measurement guidance discussed below. Available-for-sale securities are carried at fair value with unrealized gains and losses reported as a component of shareholders’ equity as accumulated other comprehensive income (loss). Realized gains and losses, if any, are calculated on the specific identification method and are included in other income in the condensed consolidated statements of operations.

 

Available-for-sale securities are reviewed for possible impairment at least quarterly, or more frequently if circumstances arise that indicate impairment. When the fair value of the securities declines below the amortized cost basis, impairment is indicated and it must be determined whether it is other than temporary. Impairment is considered to be other than temporary if the Company: (i) intends to sell the security, (ii) will more likely than be forced to sell the security before recovering its cost, or (iii) does expect to recover the security’s amortized cost basis. If the decline in fair value is considered other than temporary, the cost basis of the security is adjusted to its fair market value and the realized loss is reported in earnings. Subsequent increases or decreases in fair value are reported in equity as accumulated other comprehensive income (loss).

 

 

Under the authoritative guidance for fair value measurements, 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 authoritative 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 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 developed based upon the best information available in the circumstances. The categorization of financial assets and financial liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

The hierarchy is broken down into levels defined as follows:

 

— quoted prices in active markets for identical assets and liabilities

— observable inputs other than quoted prices in active markets for identical assets and liabilities

— unobservable inputs

 

As of the Company believes that the carrying amounts of its other financial instruments, including amounts receivable, accounts payable and accrued liabilities, approximate their fair value due to the short-term maturities of these instruments. See Note titled “” for additional information.

 

 

In the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) - . The guidance in ASU - supersedes the lease recognition requirements in the Accounting Standards Codification Topic . ASU - requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The new standard requires the immediate recognition of all excess tax benefits and deficiencies in the statements of operations and requires classification of excess tax benefits as an operating activity as opposed to a financing activity in the statements of cash flows. This standard became effective for us on

 

The FASB has subsequently issued the following amendments to ASU - which have the same effective date and transition date of and which we collectively refer to as the new leasing standards:

 

 

 

 

 

Additional information and disclosures required by this new standard are contained in Note titled “

 

We adopted the new leasing standards on using a modified retrospective transition approach to be applied to leases existing as of, or entered into after, and, consequently, financial information will be updated and the disclosures required under Topic will be provided for dates and periods prior to We have reviewed our existing lease contracts and the impact of the new leasing standards on our consolidated results of operations, financial position and disclosures. Upon adoption of the new leasing standards, we recognized a lease liability and related right-of-use asset on our condensed consolidated balance sheet of approximately

 

In the FASB issued ASU - “,” to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. This ASU is effective for public entities for fiscal years beginning after Prior to the adoption of this ASU, share-based compensation awarded to non-employees was subject to revaluation over its vesting terms. Subsequent to the adoption of this ASU, non-employee share-based payment awards are measured on the date of grant, similar to share-based payment awards granted to employees. We adopted this standard on and the adoption of this ASU did have a material impact on our financial position or our condensed consolidated statements of operations.