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Financial Instruments:
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The guidance for fair value measurements applies to all assets and liabilities that are being measured and reported on a fair value basis. This guidance enables the reader of the
consolidated financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. The same guidance requires that assets
and liabilities carried at fair value should be classified and disclosed in one of the following three categories based on the inputs used to determine its fair value:
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Level 1: Quoted market prices in active markets for identical assets or liabilities;
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Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data;
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Level 3: Unobservable inputs that are not corroborated by market data.
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(a)
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Significant Risks and Uncertainties, including Business and Credit Concentration
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The Company places its temporary cash investments, consisting mostly of deposits, primarily with high credit qualified financial institutions. The
Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. The Company limits its credit risk with accounts receivable by performing ongoing credit
evaluations of its customers’ financial condition and generally does not require collateral for its accounts receivable and does not have any agreements to mitigate credit risk.
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(b)
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Fair Value of Financial Instruments
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The principal financial assets of the Company consist of Cash and cash equivalents, restricted cash, accounts receivable trade and other current
assets. The principal financial liabilities of the Company consist of trade accounts and other payables long-term debt and other financial liabilities.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
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a.
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Cash and cash equivalents, restricted cash, accounts receivable trade, other current assets subject to fair value measurement and trade accounts and other payables: the carrying amounts
approximate fair value because of the short maturity of these instruments. The carrying value approximates the fair market value for interest bearing cash classified as restricted cash, non-current.
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b.
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Long-term debt and other financial liabilities: The carrying value of long-term debt and other financial liabilities with variable interest rates (obtained through Level 2 inputs of the fair
value hierarchy) approximates the fair market value as the long-term debt and other financial liabilities bear interest at floating interest rate.
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