NOTE 3—SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES

Short-term investments and marketable securities, which consist of stock and various corporate and government obligations, are stated at market value. The Company has classified its investments as Available-for-Sale securities and considers as current assets those investments which will mature or are likely to be sold in the next fiscal year. The remaining investments are considered non-current assets. The cost and market values of the investments at November 30, 2012 and November 30, 2011 are as follows:

The market value at November 30, 2012 was $2,283,772 as compared to $5,345,022 at November 30, 2011. The gross unrealized gains and (losses) were $76,119 and $(20,256) for November 30, 2012 and $188,265 and $(380,335) for November 30, 2011, respectively. The cost and market values of the investments at November 30, 2012 were as follows:

During the years ended November 30, 2012, 2011 and 2010, available-for-sale securities were liquidated and proceeds amounting to $4,430,892, $3,516,000 and $17,619,057 were received, with resultant realized gains (losses) totaling $121,670, $815, and $(10,481), respectively. Cost of available-for-sale securities includes unamortized premium or discount.

As of November 30, 2012, the Company had unrealized gains on its investments of $55,863. This amount was reduced by deferred tax of $20,616, of which a $77,594 benefit was recorded in prior fiscal years and an expense of $98,210 was recorded in fiscal 2012. The unrealized gains are accounted for under mark-to-market rules for Available-for-Sale securities. Please see Note 2 for further information.

The Company adopted ASC Topic 820, “Fair Value Measurements and Disclosures” as of December 1, 2007, which expands disclosures about investments that are measured and reported at fair market value. ASC Topic 820 established a fair value hierarchy that prioritizes the inputs to valuation techniques utilized to measure fair value into three broad levels as follows:

Level 1 – Quoted market prices in active markets for the identical asset or liability that the reporting entity has ability to access at measurement date.

Level 2 – Quoted market prices for identical or similar assets or liabilities in markets that are not active, and where fair value is determined through the use of models or other valuation methodologies.

Level 3 – Unobserved inputs for the asset or liability. Fair value is determined by the reporting entity’s own assumptions utilizing the best information available, and includes situations where there is little market activity for the investment.