Fair Value of Financial Assets and Liabilities

9 Months Ended

Sep. 30, 2023

Fair Value of Financial Assets and Liabilities [Abstract]

Fair Value of Financial Assets and Liabilities

Note 9. Fair Value of Financial Assets and Liabilities

Financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

The Company uses three levels of inputs that may be used to measure fair value:

Level 1 - quoted prices in active markets for identical assets or liabilities

Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

The following table presents the Company’s assets and liabilities that are measured at fair value as of September 30, 2023, and December 31, 2022 ($ in thousands):

	Fair value measured as of September 30, 2023
	Total at September 30,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	2023		(Level 1)		(Level 2)		(Level 3)
Assets
Marketable securities:
Equities	$	16,274	$	16,274	$	-	$	-
Total marketable securities	$	16,274	$	16,274	$	-	$	-
Short-term investment	$	1	$	-	$	-	$	1
Notes receivable at fair value, current portion	$	6,336	$	-	$	-	$	6,336
Notes receivable at fair value, non-current portion	$	1,372	$	-	$	-	$	1,372

	Fair value measured as of December 31, 2022
	Total at December 31,		Quoted prices in active markets		Significant other observable inputs		Significant unobservable inputs
	2022		(Level 1)		(Level 2)		(Level 3)
Assets
Marketable securities:
Equities	$	7,130	$	7,130	$	-	$	-
Total marketable securities	$	7,130	$	7,130	$	-	$	-
Short-term investment	$	13	$	-	$	-	$	13
Notes receivable at fair value, current portion	$	7,474	$	-	$	-	$	7,474
Notes receivable at fair value, non-current portion	$	1,100	$	-	$	-	$	1,100

Level 3 Measurement

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis ($ in thousands):

Short-term investment at December 31, 2022	$	13
Change in fair value of investment		(12	)
Short-term investment at September 30, 2023	$	1
Notes receivable at fair value, current portion at December 31, 2022	$	7,474
Collection of principal outstanding		(750	)
Note receivable, Convergent Therapeutics, non-current portion		(250	)
Unrealized loss on note receivable		(212	)
Accrued interest receivable		74
Notes receivable at fair value, current portion at September 30, 2023	$	6,336
Notes receivable at fair value, non-current portion at December 31, 2022	$	1,100
Note receivable, Convergent Therapeutics, non-current portion		250
Accrued interest receivable		22
Notes receivable at fair value, non-current portion at September 30, 2023	$	1,372

Note Receivable at fair value

As of September 30, 2023, the fair value of the notes receivable was measured taking into consideration cost of the investment, market participant inputs, market conditions, liquidity, operating results and other qualitative and quantitative factors. No material change was noted in the fair value of the notes receivable during the three months ended September 30, 2023.