Long Term Investments

12 Months Ended

Dec. 31, 2020

Long Term Investments

Long Term Investments

6.    Long Term Investments

Long term investments consist of the following for the periods presented:

	As of December 31,
	2020		2019
Investments in Private company #2	$	2,742	$	—
Investments in Private company #3		309		—
Total	$	3,051	$	—

Private company #2:

In October 2020, the Company purchased 211,928 shares of common stock of Private company #2 from certain sellers in exchange for 40,922 shares of the Company’s common stock. The total fair value of the purchase consideration as of December 31, 2020 was approximately $2,230. The Company has the right to, in various circumstances, sell any or all of these shares of common stock back to the sellers in exchange for the shares of the Company’s common stock originally issued to the sellers. These rights are tied to (a) Private company #2 completing a bona fide equity financing, (b) the share price in such financing, (c) the timing of delivery of certain documents to the Company or (d) at the Company’s sole option, at any time between March 31, 2021 and October 8, 2021.

In September 2020, the Company acquired a promissory note from Private company #2 in the principal amount of $500, $100 of which was retained for expense reimbursement. Subsequently, in December 2020, the Company agreed to convert the promissory note, together with all accrued interest thereon, into shares of preferred stock of Private company #2 as repayment in full of the promissory note. The value of the note exchanged for the shares of preferred stock of Private company #2 held by the Company as of December 31, 2020 was approximately $512.

Private company #3:

In October 2020, the Company acquired from a seller a convertible promissory note previously issued by Private company #3 to such seller for a purchase price of $59, which represented the $50 principal amount of the note and all accrued and unpaid interest thereon.

Subsequently, in October 2020, the Company purchased $250 of shares of preferred stock of Private company #3, and in connection with such transaction, the convertible promissory note, together with all accrued interest thereon, also converted pursuant to its terms into shares of preferred stock of Private company #3 as repayment in full of such convertible promissory note. The value of consideration exchanged for the shares of preferred stock of Private company #3 held by the Company as of December 31, 2020 was approximately $309.

Also in October 2020, the Company acquired another convertible promissory note directly from Private company #3 in the principal amount of $1,500, $100 of which was retained for expense reimbursement, and warrants to purchase common stock of Private company #3. In November 2020, this convertible promissory note, together with all accrued interest thereon, converted pursuant to its terms into shares of preferred stock of Private company #3. In December 2020, the Company transferred and sold such shares of preferred stock and the common stock warrants of Private company #3 to a significant stockholder of the Company for a cash purchase price of $1,942. As of December 31, 2020, the Company no longer held the shares acquired in connection with the conversion of such convertible promissory note. The Company recorded $442 in Other income associated with the sale during the year ended December 31, 2020.

The investments in Private company #2 and #3 securities that were retained by the Company as of December 31, 2020 were recorded in accordance with ASC 321, Investments – equity securities, which provides that investments in equity securities in privately-held companies without readily determinable fair values are generally recorded at cost, plus or minus subsequent observable price changes in orderly transactions for identical or similar investments, less impairments. The Company elected the practical expedient permitted by ASC 321 and recorded the above investments on a cost basis. As a part of the assessment for impairment indicators, the Company considers significant deterioration in the earnings performance and overall business prospects of the investee as well as significant adverse changes in the external environment these investments operate. If qualitative assessment indicates the investments are impaired, the fair value of these equity securities would be estimated, which would involve a significant degree of judgement and subjectivity.