FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2021

NOTE 4 FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis in the condensed consolidated financial statements. The fair value hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

●

Level 1 quoted prices in active markets for identical assets and liabilities;

●

Level 2 inputs other than Level 1 quoted prices that are directly or indirectly observable; and

●

Level 3 unobservable inputs that are not corroborated by market data.

As of September 30, 2021 and December 31, 2020, the fair values of cash and cash equivalents, restricted cash, and notes and interest payable, approximate their carrying values.

The following tables provide the fair value measurements of applicable financial liabilities as of September 30, 2021 and December 31, 2020:


	Financial liabilities at fair value as of September 30, 2021
(in thousands)	Level 1		Level 2		Level 3		Total

5% Notes	$	—	$	—	$	623	$	623
Total	$	—	$	—	$	623	$	623


	Financial liabilities at fair value as of December 31, 2020
	Level 1		Level 2		Level 3		Total

5% Notes	$	—	$	—	$	938	$	938
Total	$	—	$	—	$	938	$	938

The Level 3 amounts above represent the fair value of the 5% Notes and related accrued interest.

The Company’s financial instruments include cash, cash equivalents consisting of money market funds, accounts payable and debt. Cash, cash equivalents, accounts payable and debt are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature.

The following table summarizes the changes in Level 3 instruments during the nine months ended September 30, 2021:


(in thousands)
Balance at December 31, 2020		938
Interest accrued on face value of 5% Notes		764
Change in fair value of Level 3 liabilities		(1,079)
Balance at September 30, 2021	$	623

The change in the fair value of the Level 3 liabilities is reported in other (income) expense in the accompanying condensed consolidated statements of operations.

- Definition

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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