| Investment valuation | 3. Investment valuation The
Company carries its investments at fair value. Fair value is an estimate of the exit price, representing the amount that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants (i.e., the exit price at the measurement
date). Fair value measurements are not adjusted for transaction costs. A
fair value hierarchy provides for prioritizing inputs to valuation techniques used to measure fair value into three levels:
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 Inputs other than quoted market prices that are observable, either directly or indirectly, and reasonably available. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the Company.
Level 3 Unobservable inputs. Unobservable inputs reflect the assumptions that the Company develops based on available information about what market participants would use in valuing the asset or liability. An
asset or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. Availability of observable inputs can vary and is affected by a variety of factors. The Company uses judgment in determining
fair value of assets and liabilities and Level 3 assets and liabilities involve greater judgment than Level 1 or Level 2 assets or liabilities. As of March 31, 2024, the
Company held investments in U.S. government debt securities of $2,422,000 which are included in cash and cash equivalents. As of
December 31, 2023, the Company held investments in U.S. government debt securities of $2,409,000. As of March 31, 2024 and December
31, 2023, the Company held investments in equity securities which consist of mutual funds of $550,000 and $735,000,
respectively. U.S. government securities are valued using a model that incorporates market observable data, such as reported
sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued principally
using dealer quotations. Money market and mutual funds are valued at the closing price reported by the fund sponsor from an actively
traded exchange. U.S. government securities are categorized in Level 2 of the fair value hierarchy, depending on the inputs used and
market activity levels for specific securities. Mutual funds are categorized in Level 1 of the fair value hierarchy, depending on
the unadjusted quoted prices in active markets for identical assets. The U.S. government debt securities, which , are reported as Cash and cash equivalents, and
those with longer maturities are reported as Investments, on the Condensed Consolidated Balance Sheets Short-term investments
in marketable securities have a stated maturity of twelve months or less from the balance sheet date. These securities are considered
as available for sale and are reported at fair value. For debt securities, unrealized gains and losses are recorded net of tax as a component
of Accumulated other comprehensive income within stockholders' equity. Realized gains and losses are calculated based on the specific identification method and are included in Interest
and other income, net, in the Condensed Consolidated Statement of Operations. The
Company follows the guidance in ASC 321, “Investments – Equity Securities” (“ASC 321”) for its investments
in equity securities with unrealized and realized gains and losses recorded in Interest and other income, net, on the Condensed
Consolidated Statement of Operations. The
following table presents the Company’s financial instruments at fair value (in thousands):
Fair
Value Measurements
Total Quoted Prices Significant Significant
Investments in Mutual Funds $ 550 $ 550 $ - $ -
Fair Value Measurements as of December 31, 2023
Total Quoted Prices Significant Significant
Investments in U.S. Treasury bills $ 2,409 $ - $ 2,409 -
Investments in Mutual Funds 735 735 - -
Total $ 3,144 $ 735 $ 2,409 - Investments in equity securities as of March
31, 2024 are summarized by type below (in thousands).
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Mutual Funds $ 550 $ - $ - $ 550 Investments in
debt and equity securities as of December 31, 2023 are summarized by type below (in thousands).
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury bills $ 2,369 $ 40 $ - $ 2,409
Mutual Funds 735 - - 735
Total $ 3,104 $ 40 $ - $ 3,144 All investments
in debt securities are due in one year or less as of March 31, 2024. Changes
in the accumulated other comprehensive income balance, net of income taxes, relates solely to net unrealized gain on available-for-sale
securities for the three-month ended March 31, 2024 is as follows:
Balance at December 31, 2023 $ 40
Amounts reclassified from accumulated other Comprehensive income to interest income and other income (56 )
(16 )
Net current-period other comprehensive income 16
Balance at March 31, 2024 $ - The Company
may be exposed to credit losses through its available-for-sale investments. An available-for-sale security is impaired when its
fair value declines below its amortized cost basis. Unrealized losses resulting from the amortized cost basis of any available-for-sale
debt security exceeding its fair value are evaluated for identification of credit losses. When evaluating the investments for impairment
at each reporting period, the Company reviews factors such as the extent of the unrealized loss, historical losses, current and future
economic market conditions, and financial condition of the issuer. As of March 31, 2024, the Company has not recognized an allowance
for expected credit losses related to its available-for-sale securities as the Company has not identified any unrealized losses for these
investments attributable to credit factors. |
