Fair Value Measurements

12 Months Ended

Dec. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 5 – Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and requires disclosure for each major asset and liability category measured at fair value on either a recurring or non-recurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets.

Level 2: Inputs, other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The following table summarizes fair value measurements by level on December 31, 2022 of the Company’s assets measured at fair value on a recurring basis:

	Fair Value Measurements Using
	Fair Value		Level 1		Level 2		Level 3
U.S. government and agency obligations	$	4,036,014	$	4,036,014		-		-

The following table summarizes fair value measurements by level on December 31, 2021 of the Company’s assets measured at fair value on a recurring basis:

	Fair Value Measurements Using
	Fair Value		Level 1		Level 2		Level 3
Cash and cash equivalents	$	60,021	$	60,021	$	-	$	-
Mutual funds		5,933,364		5,933,364		-		-
Total financial assets	$	5,993,385	$	5,993,385	$	-	$	-

The Company determines fair value for cash equivalents and marketable securities with Level 1 inputs through the reference to the quoted market prices.

The table below presents the 2021 changes in Level 3 liabilities measured at fair value on a recurring basis (See Note 8).

	Convertible Notes
Balance at December 31, 2020	$	-
Issuance of Amended Notes (Note 8)		3,168,236
Change in fair value of convertible notes		195,962
Fair value of convertible notes at IPO date		(3,364,198	)
Balance at December 31, 2021	$	-

At the IPO date, the Amended Notes were converted into 641,895 shares of common stock (see Note 8). The interest expense of $89,239 for the period between the date of the Conversion Agreements related to the Amended Notes (see Note 8) and December 31, 2021, is included in the change in fair value of the Amended Notes.

There are no assets or liabilities measured at fair value on a non-recurring basis during the years ended December 31, 2022, and 2021.

The carrying values of financial instruments such as accounts receivable, net, other receivables, accounts payable, and accrued expenses approximated fair value as of December 31, 2022 and December 31, 2021 due to their short-term maturities. The carrying value of the Company’s Non-Convertible Promissory Note approximated its fair value as of December 31, 2022 and December 31, 2021.