FAIR VALUE OF FINANCIAL INSTRUMENTS
|12 Months Ended|
Dec. 31, 2021
|Fair Value Disclosures [Abstract]|
|FAIR VALUE OF FINANCIAL INSTRUMENTS||
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
The reconciliation of the Note issued in connection with the acquisition of Pie Squared Holdings on August 30, 2021 (see Note 3) measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:
SCHEDULE OF FAIR VALUE LIABILITIES MEASURED ON RECURRING BASIS
The Company evaluated the Note in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion price discount creates a derivative. This derivative was not clearly and closely related to the debt host and was required to be separated and accounted for as a derivative instrument. The Company elected to initially and subsequently measure the Note at fair value, with changes in fair value recognized in operations.
The Note had an estimated fair value of $1.1 million at December 31, 2021 as determined using a Monte Carlo simulation and the following assumptions:
SCHEDULE OF ESTIMATED FAIR VALUE ASSUMPTIONS
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.
Reference 1: http://www.xbrl.org/2003/role/disclosureRef