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FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 29, 2018
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS
Financial instruments are categorized as Level 1, Level 2 or Level 3 based upon the method by which their fair value is computed. An investment is categorized as Level 1 when its fair value is based on unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. An investment is categorized as Level 2 if its fair market value is based on quoted market prices for similar assets in active markets, quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates, yield curves, or derived from or corroborated by observable market data by correlation or other means. An investment is categorized as Level 3 if its fair value is based on assumptions developed by the Company about what a market participant would use in pricing the assets.
The following table details the fair value measurements of the Company’s financial assets:
 
 
 
Fair Value Measurement September 29, 2018 Using:
 
Total
 
Level 1
 
Level 2
 
Level 3
Cash and Cash Equivalents
$
19,367,048

 
$
19,367,048

 
$
—

 
$
—

U.S. Government Securities
15,656,107

 
998,100

 
14,658,007

 
—

Corporate Debt
11,179,861

 
—

 
11,179,861

 
—

GCS Holdings
307,644

 
307,644

 
—

 
—

Equity Investments
5,572,816

 
—

 
—

 
5,572,816

 
$
52,083,476

 
$
20,672,792

 
$
25,837,868

 
$
5,572,816

 
 
 
 
 
 
 
 
 
 
 
Fair Value Measurement December 30, 2017 Using:
 
Total
 
Level 1
 
Level 2
 
Level 3
Cash and Cash Equivalents
$
24,848,227

 
$
24,848,227

 
$
—

 
$
—

U.S. Government Securities
34,725,811

 
6,927,323

 
27,798,488

 
—

Corporate Debt
8,980,906

 
—

 
8,980,906

 
—

Certificates of Deposit
200,740

 
—

 
200,740

 
—

GCS Holdings
478,546

 
478,546

 
—

 
—

Warrant
2,000,000

 
—

 
—

 
2,000,000

 
$
71,234,230

 
$
32,254,096

 
$
36,980,134

 
$
2,000,000

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. Changes in Level 3 investments were as follows:
 
December 30, 2017
 
Net unrealized losses
 
Purchases, issuances and settlements
 
Transfers in and or out of Level 3
 
September 29, 2018
Equity Investments
$
—

 
$
(277,000
)
 
$
5,849,816

 
$
—

 
$
5,572,816

Warrant
2,000,000

 
(50,184
)
 
(1,949,816
)
 
—

 
—

 
$
2,000,000

 
$
(327,184
)
 
$
3,900,000

 
$
—

 
$
5,572,816


The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value because of their short-term nature. If accrued liabilities were carried at fair value, these would be classified as Level 2 in the fair value hierarchy.
Marketable Debt Securities
The corporate debt consists of floating rate notes with a maturity that is over multiple years but has interest rates that are reset every three months based on the then-current three-month London Interbank Offering Rate ("three-month Libor"). The Company validates the fair market values of the financial instruments above by using discounted cash flow models, obtaining independent pricing of the securities or through the use of a model that incorporates the three-month Libor, the credit default swap rate of the issuer and the bid and ask price spread of the same or similar investments which are traded on several markets.
Warrant
The Company had a warrant to acquire up to 15% of the next round of equity offered by a customer as part of the licensing of technology to the customer. The Company exercised the warrant in April 2018.
Equity Investments
The Company adopted ASU No. 2016-01 and the related amendments on December 31, 2017 (the first day of the Company's fiscal year 2018). This standard amends various aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The Company adopted the measurement alternative for equity investments without readily determinable fair values (often referred to as cost method investments) on a prospective basis. As a result, these investments will be revalued upon occurrence of an observable price change for similar investments and for impairments. See Note 8. Equity Investments for additional information regarding the Company's equity investments.