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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2021

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

(3) FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables summarize the Company’s financial assets measured at fair value on a recurring basis and their respective input levels based on the fair value hierarchy (in thousands):

SCHEDULE OF FAIR VALUE INSTRUMENTS

		December 31, 2021				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (level 3)
						Fair Value Measurements Using
		December 31, 2021				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents
Money market funds		$	39,653			$	39,653			$	-			$	-
Commercial paper			14,448				-				14,448				-
Total cash equivalents			54,101				39,653				14,448				-

Short-term investments
U.S. Treasury bills			25,135				25,135				-				-
Corporate debt securities			10,715				-				10,715
Commercial paper			77,328				-				77,328				-
Total short-term investments			113,178				25,135				88,043				-

Total		$	167,279			$	64,788			$	102,491			$	-

The Company’s cash as of December 31, 2020, of $4.6 million, represented a Level 1 asset.

Cash Equivalents and Short-Term Investments

Financial assets measured at fair value on a recurring basis consist of the Company’s cash equivalents and short-term investments. Cash equivalents consisted of cash, money market funds and commercial paper, and short-term investments consisted of U.S. Treasury bills, corporate debt securities and commercial paper. The Company obtains pricing information from its investment manager and generally determines the fair value of investment securities using standard observable inputs, including reported trades, broker/dealer quotes, and bids and/or offers.

The following tables summarize the Company’s short-term investments as of December 31, 2021 (in thousands):

SUMMARY OF SHORT TERM INVESTMENT

				As of December 31, 2021
		Maturity		Amortized cost				Gross unrealized gains				Gross unrealized losses				Estimated fair value
Corporate debt securities		1 year or less		$	10,726			$	-			$	(11	)		$	10,715
Commercial paper		1 year or less			77,328				9				(9	)			77,328
U.S. Treasury bills		2 years or less			25,183				-				(48	)			25,135
				$	113,237			$	9			$	(68	)		$	113,178

As of December 31, 2020, the Company had no short-term investments.

The Company considers whether unrealized losses have resulted from a credit loss or other factors. The unrealized losses on the Company’s available-for-sale securities as of December 31, 2021 were caused by fluctuations in market value and interest rates as a result of the economic environment and not credit risk. The Company concluded that an allowance for credit losses was unnecessary as of December 31, 2021. It is neither management’s intention to sell nor is it more likely than not that the Company will be required to sell these investments prior to recovery of their cost basis or recovery of fair value. Unrealized gains and losses are included in accumulated other comprehensive loss.

The Company excludes accrued interest from both the fair value and the amortized cost basis of the available-for-sale debt securities for the purposes of identifying and measuring an impairment and to not measure an allowance for expected credit losses for accrued interest receivables. Accrued interest receivable is written off through net realized investment gains (losses) at the time the issuer of the bond defaults or is expected to default on payment. It is the Company’s policy to present the accrued interest receivable balance as part of prepaid expenses and other current assets in the balance sheets. Accrued interest receivable related to short-term investments was $0.1 million as of December 31, 2021.

Convertible Promissory Notes

The Company had no liabilities measured using significant unobservable inputs (Level 3) for the year ended December 31, 2021. The following table presents the changes in estimated fair value of the Company’s Level 3 liabilities for the year ended December 31, 2020 (in thousands):

		Convertible Promissory Notes
Balance at December 31, 2019		$	2,500
Issuance of convertible promissory notes, related party			2,500
Change in fair value of convertible promissory notes, related party			644
Exchange of convertible promissory notes (Note 5)			(5,644	)
Balance at December 31, 2020		$	-

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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