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Fair Value Measurements
 9 Months Ended
Sep. 30, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 4 – Fair Value Measurements

 

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and requires disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an 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. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

  Level 1: Observable inputs such as quoted prices in active markets.

 

  Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

 

  Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

As of September 30, 2022, the Company had $4,002,061 of investments in U.S. Treasury Securities, of which $1,502,376 was included in cash and cash equivalents. The fair value of these investments was determined with Level 1 inputs through references to quoted market prices.

 

As of December 31, 2021, the Company had $5,993,385 of investments in mutual funds, of which $60,021 was included in cash and cash equivalents. The fair value of these investments was determined with Level 1 inputs through references to quoted market prices.

 

There were no liabilities measured at fair value at September 30, 2022 or December 31, 2021. 

 

The table below presents the changes in Level 3 liabilities measured at fair value on a recurring basis for the nine-month period ended September 30, 2021.

 

   Convertible
Notes		 
Balance at December 31, 2020  $
-
 
Issuance of Amended Notes   3,168,236 
Change in fair value of convertible notes   195,962 
Fair value of convertible notes at IPO date   (3,364,198)
Balance at September 30, 2021  $
-
 

 

At the IPO date, the Amended Notes (as defined in Note 7) were converted into 641,895 shares of common stock (see Note 7). The interest expense of $89,239 for the period between the date of the Conversion Agreements related to the Amended Notes (see Note 7) and September 30, 2021 was included in the change in fair value of the Amended Notes.

 

There were no assets or liabilities measured at fair value on a non-recurring basis during the three- and nine- months ended September 30, 2022 or 2021.

 

The carrying values of financial instruments such as accounts receivable, net, other receivables, accounts payable, and accrued expenses approximated fair value as of September 30, 2022 and December 31, 2021 due to their short-term maturities.

 

The carrying value of the Company’s Non-Convertible Promissory Note approximated its fair value as of September 30, 2022 and December 31, 2021.