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2. Cash, Cash Equivalents, Restricted Cash and Marketable Securities
9 Months Ended
Feb. 29, 2012
Cash and Cash Equivalents Disclosure [Text Block]
2.  Cash, Cash Equivalents, Restricted Cash and Marketable Securities

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents.

Restricted cash and cash equivalents at February 29, 2012 and May 31, 2011 consist of deposits in a savings account required to be held as collateral for our corporate credit card.

At February 29, 2012 and May 31, 2011, our current portion of marketable securities in the amount of $2,061,481 and $2,207,009, respectively, consists of the par value plus accrued interest of our time deposits.  At February 29, 2012, our non-current portion of marketable securities in the amount of $245,733 consists of the par value plus accrued interest of time deposits.  These marketable securities are classified as available for sale and are reported at fair market value.

We follow authoritative guidance to account for our marketable securities as available for sale.  Under this authoritative guidance we are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We determine fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment or valuations by third party professionals. The three levels of inputs that we may use to measure fair value are:

Level  1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

The following tables detail the fair value measurements within the fair value hierarchy of our cash, cash equivalents and investments in marketable securities:

         
Fair Value Measurements at February 29, 2012 Using
 
   
Fair Value at
February 29,
2012
   
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
   
Significant
Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
 
Cash and cash equivalents:
                       
Cash
  $ 294,940     $ 294,940     $ -     $ -  
Money market funds
    4,942,598       4,942,598       -       -  
Certificates of deposit
    1,228,169       1,228,169                  
Restricted cash
    20,887       20,887                  
Marketable securities:
                               
Short-term:
                               
Certificates of deposit
    2,061,481       2,061,481       -       -  
Long-term:
                               
Certificates of deposit
    245,733       245,733                  
Total
  $ 8,793,808     $ 8,793,808     $ -     $ -  

         
Fair Value Measurements at May 31, 2011 Using
 
   
Fair Value at
May 31,
2011
   
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
   
Significant
Other
Observable
Inputs
(Level 2)
   
Significant
Unobservable
Inputs
(Level 3)
 
Cash and cash equivalents:
                       
Cash
  $ 128,655     $ 128,655     $ -     $ -  
Money market funds
    8,080,005       8,080,005       -       -  
Certificates of deposit
    245,005       245,005       -       -  
Restricted cash
    20,809       20,809       -       -  
Marketable securities:
                               
Certificates of deposit
    2,207,009       2,207,009       -       -  
Total
  $ 10,681,483     $ 10,681,483     $ -     $ -  

The following table summarizes the activity for the period by investment type for the nine months ended February 28, 2011: 

   
Fair Value Measurements Using Significant
Unobservable Inputs
(Level 3)
 
Description
 
Auction Rate
 Securities
 
Beginning balance, June 1, 2010
 
$
5,133,835
 
Total realized/unrealized recovery (losses):
       
Included in earnings
   
(648,740
)
Included in comprehensive income (loss)
   
416,165
 
Settlements
   
(350,000
)
Settlements
   
(4,551,260
)
Ending balance, February 28, 2011
 
$
-
 

All realized gains or losses related to financial instruments whose fair value is determined based on Level 3 inputs are included in other income. All unrealized gains or losses related to financial instruments whose fair value is determined based on Level 3 inputs are included in other comprehensive income (loss).

During September 2010, we reached a confidential settlement agreement with Deutsche Bank.  Under terms of the agreement, we transferred approximately $5.2 million in illiquid auction rate securities instruments to Deutsche Bank for a substantial portion of the face value of the securities, and if the instruments are redeemed by a certain date then we will receive the full face amount of the instruments.  On October 4, 2010, we received settlement proceeds from Deutsche Bank of $4,551,260 plus $6,330 of interest income.

Beginning in fiscal 2011, we purchased certificates of deposit with varying maturity dates greater than three months.  The following table summarizes the maturities, gross unrealized gains or losses and fair value of the certificates of deposit as of February 29, 2012:

   
February 29, 2012
 
   
Cost
   
Gross Unrealized Gains/(Losses)
   
Fair
Value
 
Maturity
                 
Due in three months or less
  $ 1,228,169     $ -     $ 1,228,169  
Due in one year or less
  $ 2,061,481     $ -     $ 2,061,481  
Due in one year or more
  $ 245,733     $ -     $ 245,733  

The following table summarizes the maturities, gross unrealized gains or losses and fair value of the certificates of deposit as of May 31, 2011:

   
May 31, 2011
 
   
Cost
   
Gross Unrealized Gains/(Losses)
   
Fair
Value
 
Maturity
                 
Due in three months or less
  $ 245,005     $ -     $ 245,005  
Due in one year or less
  $ 2,207,009     $ -     $ 2,207,009