Annual report pursuant to Section 13 and 15(d)

FAIR VALUE OF FINANCIAL INSTRUMENTS

v3.23.2
FAIR VALUE OF FINANCIAL INSTRUMENTS
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The tables below reflect the level of the inputs used in the Company’s fair value calculations:

 

                                 
(in thousands)  

Quoted Prices in Active Markets

(Level 1)

   

Significant Observable Inputs

(Level 2)

     Significant Unobservable Inputs (Level 3)     Total Fair Value  
December 31, 2022                                
Assets (Note 6)                                
Common stock of Sonnet   $ 12     $ —     $ —     $ 12  
Liabilities (Note 9)                                
Convertible note payable   $ —     $ —     $ 1,000     $ 1,000  

 

                                 
(in thousands)  

Quoted Prices in Active Markets

(Level 1)

    Significant Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)     Total Fair Value  
December 31, 2021                                
Assets (Note 6)                                
Common stock of Sonnet   $ 50     $ —     $ —     $ 50  
Liabilities (Note 9)                                
Convertible note payable   $ —     $ —     $ 1,099     $ 1,099  

 

The Company evaluated the convertible note payable issued in connection with the acquisition of Pie Squared Holdings (see Note 9) 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 convertible note payable at fair value, with changes in fair value recognized in operations. As of December 31, 2022, the convertible note payable is classified as current, and, as such, the outstanding principal amount due and payable at maturity approximates the fair value.

 

The reconciliation of the convertible note payable measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:

    Year Ended  
(in thousands)  

December 31, 2022

    

December 31, 2021

  
Beginning balance   $ 1,099     $ —  
Fair value at issuance date     —       1,194  
Change in fair value     (99 )     (95 )
Ending balance   $ 1,000     $ 1,099