FAIR VALUE OF FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

6. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy:

	Fair Value Measurement at September 30, 2023
	Total		Level 1		Level 2		Level 3
Assets:
Investment in common stock of Alzamend Neuro, Inc. (“Alzamend”) – a related party	$	2,712,000	$	2,712,000	$	-	$	-
Investments in marketable equity securities		72,000		72,000		-		-
Cash and marketable securities held in trust account		2,171,000		2,171,000		-		-
Total assets measured at fair value	$	4,955,000	$	4,955,000	$	-	$	-
Liabilities:
Warrant and embedded conversion feature liabilities	$	832,000	$	-	$	-	$	832,000
Convertible promissory notes		18,054,000		-		-		18,054,000
Total liabilities measured at fair value	$	18,886,000	$	-	$	-	$	18,886,000

	Fair Value Measurement at December 31, 2022
	Total		Level 1		Level 2		Level 3
Assets:
Investment in common stock of Alzamend – a related party	$	6,449,000	$	6,449,000	$	-	$	-
Investments in marketable equity securities		6,590,000		6,590,000		-		-
Cash and marketable securities held in trust account		118,193,000		118,193,000		-		-
Investments in other equity securities		13,340,000		-		-		13,340,000
Total assets measured at fair value	$	144,572,000	$	131,232,000	$	-	$	13,340,000
Liabilities:
Warrant and embedded conversion feature liabilities	$	2,967,000	$	-	$	-	$	2,967,000
Convertible promissory notes		12,776,000		-		-		12,776,000
Total liabilities measured at fair value	$	15,743,000	$	-	$	-	$	15,743,000

The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks.

The following table summarizes the changes in investments in other equity securities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the nine months ended September 30, 2023 (no changes during the three months ended September 30, 2023):

	Investments in other equity securities
Balance at January 1, 2023	$	13,340,000
Conversion to Level 1 marketable securities		(13,340,000	)
Balance at September 30, 2023	$	-

Equity Investments for Which Measurement Alternative Has Been Selected

As of September 30, 2023 and December 31, 2022, the Company held equity investments in other securities, which consisted of investments in preferred stock, valued at $26.0 million and $29.2 million, respectively, that were valued using a measurement alternative. These investments are included in other equity securities in the accompanying condensed consolidated balance sheets.

Measurement Alternative Impairment

The Company has made cumulative downward adjustments for impairments for equity securities that do not have readily determinable fair values as of September 30, 2023, totaling $11.6 million. Approximately $9.6 million of these adjustments have been reflected in other income (expense) and $2.0 million of these adjustments related to Fintech lending operations and have been recorded against revenue from lending and trading activities on the consolidated statement of operations and comprehensive loss.