Note G – INVESTMENT IN AVAILABLE FOR SALE SECURITIES
The Company has elected the fair value option in accordance with ASC 825, Financial Instruments, as it relates to its shares held in NeoGenomics’ common stock that were acquired resulting from the NeoGenomics Master License Agreement executed on January 6, 2012. Management made the election for the fair value option related to this investment because it believes the fair value option for the NeoGenomics common stock provides a better measurement from which to compare financial statements from reporting period to reporting period. No other financial assets or liabilities are fair valued using the fair value option.
The Company’s investment in NeoGenomics’ common stock is recorded on the accompanying balance sheets as of September 30, 2012 under the caption Investment in Available for Sale Securities. The carrying value of this investment on the date of acquisition approximated $1,945,000. The change in fair value from the acquisition date to September 30, 2012 is $1,502,580 and is classified as other income under the caption Unrealized Gain on Available for Sale Securitiesin the accompanying statements of operations. For the three months ended September 30, 2012, an unrealized gain of $1,135,380 was recognized in the statements of operations andan unrealized gain of $1,502,580 was recognized for the nine months ended September 30, 2012. The Company classifies its investment as an available for sale security presented as a trading security on the balance sheet and the fair value is considered a Level 1 investment in the fair value hierarchy. The September 30, 2012 fair value of the investment of $2,862,510 is based on the closing stock price of the NeoGenomics common stock at the end of the reporting period.
On August 13, 2012, the Company sold 409,000 shares of NeoGenomics and received proceedsin the amount of $922,711. This transaction resulted in the Company recognizing a Realized Gain on the Sale of Available for Sale Securities in the accompanying statements of operations in the amount of $337,841 in the current period.
As of September 30,2012 the Company holds 951,000 shares of NeoGenomics stock as compared to the initial 1,360,000 shares acquired as a result of the of the NeoGenomics Master License Agreement.