XML 21 R11.htm IDEA: XBRL DOCUMENT
v3.21.2

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy: | 6 Months Ended
--- | ---
Jun. 30, 2021
Fair Value Disclosures [Abstract] |
The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy: | 5. fair value of financial instruments The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy:
|  | Fair Value Measurement at June 30, 2021 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Investments in convertible and term promissory notes of Avalanche International, Corp. (“AVLP”) and Ault and Company, Inc. (“Ault & Company”) – related parties |  | $ | 13,913,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 13,913,000 |
Investments in common stock and warrants of AVLP – a related party |  |  | 4,753,000 |  |  |  | 450,000 |  |  |  | — |  |  |  | 4,303,000 |
Investment in common stock and warrants of Alzamend Neuro, Inc. (“Alzamend”) – a related party |  |  | 55,602,000 |  |  |  | 46,025,000 |  |  |  | — |  |  |  | 9,577,000 |
Investments in marketable equity securities |  |  | 30,172,000 |  |  |  | 30,172,000 |  |  |  | — |  |  |  | — |
Investments in debt and equity securities |  |  | 4,013,000 |  |  |  | — |  |  |  | — |  |  |  | 4,013,000 |
Total Investments |  | $ | 108,453,000 |  |  | $ | 76,647,000 |  |  | $ | — |  |  | $ | 31,806,000 |
|  | Fair Value Measurement at December 31, 2020 |
|  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |
Investments in convertible promissory notes and advances of AVLP and Alzamend – related parties |  | $ | 10,668,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 10,668,000 |
Investments in common stock and warrants of AVLP – a related party |  |  | 5,486,000 |  |  |  | 500,000 |  |  |  | — |  |  |  | 4,986,000 |
Investment in common stock and warrants of Alzamend – a related party |  |  | 653,000 |  |  |  | — |  |  |  | — |  |  |  | 653,000 |
Investments in marketable equity securities |  |  | 2,563,000 |  |  |  | 2,563,000 |  |  |  | — |  |  |  | — |
Investments in debt and equity securities |  |  | 262,000 |  |  |  | — |  |  |  | — |  |  |  | 262,000 |
Total Investments |  | $ | 19,632,000 |  |  | $ | 3,063,000 |  |  | $ | — |  |  | $ | 16,569,000 |
The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. The Company measures equity investments without readily determinable fair values on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. The Company’s other current financial assets and current financial liabilities have fair values that approximate their carrying values. The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. Investments The Company considers all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. The Company made an irrevocable election to record available-for-sale debt investments at fair value utilizing the fair value option available under U.S. GAAP. The Company believed that carrying these investments at fair value better portrayed the economic substance of the investments. Under the fair value option, gains and losses on the debt investments are included in unrealized gains/(losses) on investments within net earnings each reporting period. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, The Company evaluates, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. To determine credit losses, the Company employs a systematic methodology that considers available quantitative and qualitative evidence. In addition, the Company considers specific adverse conditions related to the financial health of, and business outlook for, the investee. If the Company has plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, the Company may incur future impairments. Equity Investments The following discusses the Company’s marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity securities. Our marketable equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because the Company uses quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments in active markets. Our non-marketable equity securities are investments in privately held companies without readily determinable market values. The carrying value of the Company’s non-marketable equity securities is adjusted to fair value upon observable transactions for identical or similar investments of the same issuer or impairment (referred to as the measurement alternative). Non-marketable equity securities that have been remeasured during the period based on observable transactions are classified within Level 2 or Level 3 in the fair value hierarchy because the Company estimates the value based on valuation methods which may include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities the Company holds. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3. The Company performs a qualitative assessment on a periodic basis and recognizes an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in other income (expense), net. Derivatives Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net. The following table summarizes the changes in investments in debt and equity securities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the six months ended June 30, 2021:
|  | Investments in |
|  | debt and equity |
|  | securities |
Balance at January 1, 2021 |  | $ | 262,000 |
Investment in convertible promissory notes |  |  | 1,136,000 |
Investment in convertible preferred stock |  |  | 600,000 |
Investment in warrants |  |  | 2,467,000 |
Change in fair value of warrants |  |  | 1,224,000 |
Accretion of discount |  |  | 980,000 |
Conversion to marketable securities |  |  | (2,656,000 | )
Balance at June 30, 2021 |  | $ | 4,013,000 |
Investments in debt and equity securities in the preceding table include the Company’s investments in certain preferred stocks and common stock warrants that do not have readily determinable market values as defined under GAAP. The Company applied standard valuation techniques in valuing the preferred stock and made assumptions regarding the expected duration of the investment and the effects of subordination in liquidation. The fair value of the Company’s holdings warrants was estimated using the Black-Scholes option-pricing method and the following assumptions:
Exercise price |  | $ | 15.00 |
Remaining contractual term (in years) |  |  | 2.56 |
Volatility |  |  | 115.6% |
Weighted average risk free interest rate |  |  | 0.355% |
Expected dividend yield |  |  | 0% |
The volatility factor was determined based on historical stock prices for similar technology companies with market capitalizations under $100 million. The warrant valuation is a Level 3 measurement. See Note 12 for the changes in investments in AVLP, Alzamend and Ault & Company measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) during the six months ended June 30, 2021.

X
- Definition Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19279-110258 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2C -URI http://asc.fasb.org/extlink&oid=123874694&loc=SL7498348-110258 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (bb) -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueAssetsAndLiabilitiesMeasuredOnRecurringAndNonrecurringBasisTableTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration