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FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 28, 2024
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, 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 at September 28, 2024 Using: 
   Total   Level 1   Level 2   Level 3 
Cash equivalents  $12,279,360   $12,279,360   $—   $— 
U.S. Government and agency-backed securities   17,254,705    15,758,720    1,495,985    — 
Corporate debt   4,957,538    4,957,538    —    — 
Equity Investments   1,097,440    223,187    —    874,253 
Financial instruments, owned, at fair value  $35,589,043   $33,218,805   $1,495,985   $874,253 

 

                 
       Fair Value Measurement at December 30, 2023 Using: 
   Total   Level 1   Level 2   Level 3 
Cash equivalents  $5,079,605   $5,079,605   $—   $— 
U.S. Government and agency-backed securities   4,474,375    —    4,474,375    — 
Corporate debt   7,717,625    7,717,625    —    — 
Equity Investments   4,688,522    174,178    —    4,514,344 
Financial instruments, owned, at fair value  $21,960,127   $12,971,408   $4,474,375   $4,514,344 

 

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 Securities

 

Corporate debt consists of floating rate notes with a maturity that may be over multiple years but has interest rates that are reset every three months. US government and agency-backed securities consist of high-quality U.S. Government and government-backed (e.g., Fannie Mae, FDIC guaranteed bonds and certificates of deposit) securities. 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 interest rate, 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

 

The Company has an investment in RealWear Inc. (RealWear) which had been valued at $5.2 million. In the second quarter of 2023, the Company received shares valued at approximately $0.4 million as payment of royalties. In the second quarter of 2023, the Company reviewed the financial condition and an observable price point in an equity transaction, and as a result, the Company recorded an impairment charge of $3.1 million to reduce the value of the investment to $2.5 million. In both the second and third quarters of 2024, the Company reviewed the financial condition and an observable price point in an equity transaction, and as a result, recorded impairment charges of $0.7 million and $1.1 million, respectively, to reduce the value of the investment to $0.7 million. As of September 28, 2024, the Company owned an approximate 2.8% interest in this investment.

 

The equity investments categorized as Level 1 at September 28, 2024 were the Company’s equity investments in publicly traded companies that met the categorization requirements for Level 1 classification.

 

The equity investments that were not remeasured to fair value and therefore did not meet the Level 1, Level 2 or Level 3 classification requirements had a value of $2.0 million at September 28, 2024.

 

As of September 28, 2024, the Level 3 equity investments include the Company’s investment in RealWear of $0.7 million and the value of an additional equity investment.