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FAIR VALUE MEASUREMENTS | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | 4. 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, based on quoted prices for identical or similar assets in markets that are not active, based on observable inputs such as interest rates or 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: SCHEDULE OF FAIR VALUE MEASUREMENTS OF FINANCIAL ASSETS
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  |  |  |  | Fair Value Measurement at September 30, 2023 Using: |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash and cash equivalents and restricted cash |  | $ | 10,099,675 |  |  | $ | 10,099,675 |  |  | $ | — |  |  | $ | — |
U.S. government securities |  |  | 4,438,315 |  |  |  | — |  |  |  | 4,438,315 |  |  |  | — |
Certificates of deposit |  |  | 7,172,170 |  |  |  | 7,172,170 |  |  |  | — |  |  |  | — |
Equity investments |  |  | 4,603,014 |  |  |  | 169,112 |  |  |  | — |  |  |  | 4,433,902 |
Financial instruments, owned, at fair value |  | $ | 26,313,174 |  |  | $ | 17,440,957 |  |  | $ | 4,438,315 |  |  | $ | 4,433,902 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
|  |  |  |  | Fair Value Measurement at December 31, 2022 Using: |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Cash and cash equivalents |  | $ | 8,258,878 |  |  | $ | 8,258,878 |  |  | $ | — |  |  | $ | — |
U.S. government securities |  |  | 2,397,730 |  |  |  | — |  |  |  | 2,397,730 |  |  |  | — |
Corporate debt |  |  | 1,500,445 |  |  |  | — |  |  |  | 1,500,445 |  |  |  | — |
Certificates of deposit |  |  | 490,603 |  |  |  | 490,603 |  |  |  | — |  |  |  | — |
Equity investments |  |  | 7,721,206 |  |  |  | 213,016 |  |  |  | — |  |  |  | 7,508,190 |
Financial instruments, owned, at fair value |  | $ | 20,368,862 |  |  | $ | 8,962,497 |  |  | $ | 3,898,175 |  |  | $ | 7,508,190 |
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: SCHEDULE OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS
|  | December 31, 2022 |  |  | Net unrealized losses |  |  | Foreign currency losses |  |  | Purchases, issuances and settlements |  |  | September 30, 2023 |
Equity investments |  | $ | 7,508,190 |  |  | $ | (3,327,347 | ) |  | $ | (186,395 | ) |  | $ | 439,454 |  |  | $ | 4,433,902 |
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 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. Equity Investments From 2017 through 2019, the Company made several equity investments in a customer. In the fourth quarter of 2019, the Company reviewed the financial condition and other factors of the customer and, as a result, recorded an impairment charge of $5.2 million to reduce its investment in the customer to zero as of December 28, 2019. In the first quarter of 2022, the customer raised additional equity capital and, based on an observable price change of the customer’s share prices and terms of the equity sale, the Company remeasured the fair market value of its investment and recorded a gain of $4.7 million. In the second quarter of 2022, the Company made an additional equity investment of $0.5 million. During the quarter ended July 1, 2023, the Company received common stock of the equity investment valued at approximately $0.4 million for the payment of royalties. During the three and nine months ended September 30, 2023, the Company also performed an impairment evaluation using an Option Pricing Method and as a result recorded impairment charges of approximately $0 and $3.1 million, respectively. As of September 30, 2023, the Company owned an approximate 2.9% interest in this investment. On September 30, 2019, the Company entered into an Asset Purchase Agreement pursuant to which the Company sold and licensed certain assets of our SolosTM product line and WhisperTM Audio technology. As consideration for the transaction, the Company received a 20.0% equity stake in Solos Incorporation (“Solos Inc.”). The Company’s 20.0% equity stake will be maintained until Solos Inc. has raised a total of $7.5 million in equity financing. Based on the price paid for equity by the other 80.0% owners of Solos Inc. and other factors, the Company estimated the fair value of its equity holdings at $0.6 million and in 2019 recorded a $0.6 million gain on its investment for this equity transaction as the basis of assets transferred was zero. The investment was written down to $0.4 million as a result of an impairment analysis and write down performed in 2020. During the three and nine months ended September 30, 2023, the Company recorded impairment charges of $0 and $0.2 million, respectively. During the three and nine months ended September 30, 2023, the Company recorded approximately $0.1 million and $0.2 million, respectively, of unrealized losses on its equity interest in a company due to a fluctuation in the foreign exchange rate.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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