Annual report pursuant to Section 13 and 15(d)

Investment In Marketable Securities

v2.4.1.9
Investment In Marketable Securities
12 Months Ended
Dec. 31, 2014
Investments, Debt and Equity Securities [Abstract]  
Investment in Marketable Securities

NOTE 2 - INVESTMENT IN MARKETABLE SECURITIES

 

The Company’s securities investments that are bought and held for an indefinite period of time are classified as available-for-sale securities. Available-for-sale securities are purchased with the intent of selling them before they reach maturity and are recorded at fair value on the balance sheet in current assets, with the change in fair value during the period excluded from earnings and recorded net of tax as a component of other comprehensive income. The Company’s available-for-sale securities are marketable securities and have no maturity date. When sold the cost of the securities is determined using the average purchase cost of the securities and the difference is recorded as a realized gain or loss. The Company will transfer some of its available for sale securities to trading securities. When this occurs the unrealized gain or loss is immediately recognized in earnings. Trading securities are purchased with the intent of selling them in the short term. Trading securities are recorded at market value and the difference between market value and cost of the securities is recorded as an unrealized gain or loss in the statement of operations. Gains from the sales of such marketable securities will be utilized to fund payment of obligations and to provide working capital for operations and to finance future growth, including, but not limited to: conducting our ongoing business, conducting strategic business development, marketing analysis, due diligence investigations into possible acquisitions, and research and development and implementation of the Company’s business plans generally.

 

During the year ended December 31, 2014, unrealized gain on trading securities included in results of operations resulting from transfers of securities from the available for sale category into the trading category were $1,285,009. As of December 31, 2014 all of the Company’s investments in marketable securities were classified as trading securities.

 

The Company’s securities investments that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value based on quoted market price (level 1) on the balance sheet in current assets, with the change in fair value during the period included in earnings.

 

Investments in securities are summarized as follows:

 

    December 31, 2014
        Gross   Gross    
    Cost   Unrealized   Unrealized   Fair
    Basis   Gain   (Loss)   Value
Trading securities    $                  7,130,688    $                  2,063,103    $                (3,167,011)    $             6,026,780

 

    December 31, 2013
        Gross   Gross    
    Cost   Unrealized   Unrealized   Fair
    Basis   Gain   (Loss)   Value
Trading securities    $                  3,543,711    $                       67,841    $                (1,894,116)    $             1,717,436
Available-for-sale securities    $                  4,185,099    $                              -       $                (1,285,009)    $             2,900,090

  

Results of operations for the year ended December 31, 2014 includes a gain of $2,007,374 on unrealized holding gains on trading securities, which includes $1,285,009 for unrealized holding gains on available-for-sale securities that existed at December 31, 2013 and were subsequently transferred to trading securities.

 

Realized gains and losses are determined on the basis of specific identification. During the years ended December 31, 2014 and 2013, sales proceeds and gross realized gains and losses on securities classified as available-for-sale securities and trading securities were:

    December 31, 2014   December 31, 2013
       
  Sales proceeds   $ 8,579,373     $ 5,365,534  
  Gross realized (losses)     (74,732 )     (3,522,139 )
  Gross realized gains     6,063,950       4,639,844  
  Gain on sale of marketable securities   $ 5,989,218     $ 1,117,705  
                 

 

The following table discloses the assets measured at fair value on a recurring basis and the methods used to determine fair value:

 

        Fair Value Measurements at Reporting Date Using
          Significant  
        Quoted Prices   Other   Significant
    Fair Value at   in Active   Observable   Unobservable
    December 31,
2014
  Markets
(Level 1)
  Inputs
(Level 2)
  Inputs
(Level 3)
Trading securities   $ 6,026,780     $ 6,026,780     $ —       $ —    
Money market funds     673,281       673,281       —         —    
Total   $ 6,700,061     $ 6,700,061     $ —       $ —    

 

        Fair Value Measurements at Reporting Date Using
          Significant  
        Quoted Prices   Other   Significant
    Fair Value at   in Active   Observable   Unobservable
    December 31,
2013
  Markets
(Level 1)
  Inputs
(Level 2)
  Inputs
(Level 3)
Trading securities   $ 1,717,436     $ 1,717,436     $ —       $ —    
Money market funds     97,356       97,356       —         —    
Available-for-sale securities     2,900,090       2,900,090       —         —    
Total   $ 4,714,882     $ 4,714,882     $ —       $ —    

  

Generally, for all trading securities and available-for-sale securities, fair value is determined by reference to quoted market prices (level 1).