As a result of design modifications to the SYNERGY System and our decision to move manufacturing
of the SYNERGY System to our Miami Lakes facility, we terminated a supply agreement with a SYNERGY components supplier in Germany. As a result of this termination, we recorded a charge of $0.7 million in the first quarter of 2014, which is included
in research and development expenses in our consolidated statements of operations.
Note 4. Fair Value Measurements
FASB ASC 820 Fair Value Measurements and Disclosures, defines fair value as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 requires disclosures about the fair value of all financial instruments, whether or not recognized, for
financial statement purposes. Disclosures about the fair value of financial instruments are based on pertinent information available to us as of the reporting dates. Accordingly, the estimates presented in the accompanying condensed consolidated
financial statements are not necessarily indicative of the amounts that could be realized on disposition of the financial instruments.
FASB ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or
unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the fair
value hierarchy are as follows:
Level 1 Quoted prices for identical instruments in active markets.
Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets
that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Instruments with primarily unobservable value drivers.
We review the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a
reclassification of levels of certain securities within the fair value hierarchy. There were no transfers between Level 1, Level 2, and Level 3 during the nine months ended September 30, 2015 or 2014.
The carrying amounts reported on our condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts
payable and other accrued liabilities approximate their fair value based on the short-term maturity of these instruments. Investments are considered available-for-sale as of September 30, 2015 and December 31, 2014 and are carried at fair