Fair Value Measurements
|3 Months Ended
Mar. 31, 2023
|Fair Value Measurements
|Fair Value Measurements
3. Fair Value Measurements
A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
Items Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis, including their levels in the fair value hierarchy were as follows:
The Akerna Corp. (“Akerna”) marketable security balance included in investments has Level 1 inputs. The HERBL Inc. (“HERBL”) balance included in investments is recorded at cost and excluded from the schedule above. The Big Toe Ventures LLC (“Big Toe”) balance included in investments was initially recorded at cost, but impairment was subsequently identified and the balance was adjusted to zero as an approximation of fair value using Level 3 inputs during the year ended December 31, 2022. There were no adjustments made during the three months ended March 31, 2023.
During the three months ended March 31, 2022, the Company recorded a loss of $45 related to its investment in Akerna, which is included in unrealized loss on investment on the condensed consolidated statements of operations and comprehensive loss. No losses were recorded related to the Company’s investments during the three months ended March 31, 2023.
During the three months ended March 31, 2022, the Company recorded a loss of $2,163 on the change in fair value of its warrant liability. This loss is included in other income (expense) in the condensed consolidated statements of operations and comprehensive loss. There was no warrant liability as of March 31, 2023.
The carrying amount of the Company’s term loan approximates its fair value based upon market interest rates available to the Company for debt of similar risk and maturities, a Level 3 input. See Note 10 — Notes Payable for additional information. Additionally, the carrying amount of the Company’s loans receivable, net of related current expected credit losses, approximates their fair values. See Note 8 — Loans Receivable for additional information. The carrying amounts of all financial assets and liabilities, other than notes payable and loans receivables, approximate their fair values. There were no transfers between the levels of fair value hierarchy during the three months ended March 31, 2023 and 2022.