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Fair Value Measurements
 6 Months Ended
Jan. 31, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENTS

NOTE 7 – FAIR VALUE MEASUREMENTS

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

 

●Level 1 - quoted prices in active markets for identical assets or liabilities;

 

●Level 2 - quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or

 

●Level 3 - unobservable inputs for the asset or liability, such as discounted cash flow models or valuations.

 

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

The following is a listing of the Company’s assets required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of January 31, 2022 and July 31, 2021:

 

   January 31, 2022 
   Level 1   Level 2   Level 3   Total 
Assets:  (unaudited, in thousands) 
Hedge funds  $
—
   $
—
   $5,025   $5,025 
Total  $
—
   $
—
   $5,025   $5,025 

 

   July 31, 2021 
   Level 1   Level 2   Level 3   Total 
Assets:  (in thousands) 
Hedge funds  $
—
   $
—
   $5,268   $5,268 
Total  $
—
   $
—
   $5,268   $5,268 

 

At January 31, 2022 and July 31, 2021, the Company did not have any liabilities measured at fair value on a recurring basis.

 

The following table summarizes the changes in the fair value of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

 

   Three Months Ended
January 31,		   Six Months Ended
January 31,		 
   2022   2021   2022   2021 
   (unaudited, in thousands)   (unaudited, in thousands) 
Balance, beginning of period  $5,479   $6,454   $5,268   $7,510 
Liquidation of Hedge Fund Investments   
—
    
—
    
—
    (2,000)
Total gain included in earnings   (454)   2,489    (243)   3,433 
Balance, end of period  $5,025   $8,943   $5,025   $8,943 

 

Hedge funds classified as Level 3 include investments and securities which may not be based on readily observable data inputs. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3. In October 2020, the Company received a $2 million distribution of the Company’s investments in Hedge Funds.

 

The Company holds $0.5 million in investments in securities in another entity that are not liquid, which were included in Investments - Other Pharmaceuticals in the accompanying consolidated balance sheets. The investment is accounted for under ASC 321, Investments - Equity Securities, using the measurement alternative as defined within the guidance, and the Company recorded an impairment loss of $0 for the three months ended January 31, 2022 and 2021, and $0 and $0.7 million for the six months ended January 31, 2022 and 2021, respectively.

 

Fair Value of Other Financial Instruments

 

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

 

Cash and cash equivalents, investment in equity securities, trade accounts receivable, and accounts payable. At January 31, 2022 and July 31, 2021, the carrying amount of these assets and liabilities approximated fair value because of the short period of time to maturity. The fair value estimates for cash and cash equivalents were classified as Level 1.

 

Other assets and other liabilities. At January 31, 2022 and July 31, 2021, the carrying amount of these assets and liabilities approximated fair value. The fair values were estimated based on the Company’s assumptions, which were classified as Level 3 of the fair value hierarchy.

 

The Company’s financial instruments include trade accounts receivable, trade accounts payable, and due from related parties. The recorded carrying amounts of trade accounts receivable, trade accounts payable and due from related parties approximate their fair value due to their short-term nature. Other than noted above, the Company did not have any other assets or liabilities that were measured at fair value on a recurring basis as of January 31, 2022 or July 31, 2021.