Fair Value Measurements

12 Months Ended

Jul. 31, 2023

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

NOTE 11 – FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

● Level 1 - quoted prices in active markets for identical assets or liabilities;

● Level 2 - quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability; or

● Level 3 - unobservable inputs for the asset or liability, such as discounted cash flow models or valuations.

The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following is a listing of the Company’s assets required to be measured at fair value on a recurring basis and where they are classified within the fair value hierarchy as of July 31, 2023 and 2022:

	July 31, 2023
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Available-for-sale securities - Corporate Bonds	$	—	$	46,439	$	—	$	46,439
Available-for-sale securities - U.S. Treasury Bills		11,275		—		—		11,275
Investment in equity securities		294		—		—		294
Investment in Cyclo Therapeutics Inc. - Common stock		3,898		—		—		3,898
Investment in Cyclo Therapeutics Inc. - Warrants		865		—		—		865
Hedge funds		—		—		4,984		4,984
Convertible note receivable, related party		—		—		1,921		1,921
Total	$	16,332	$	46,439	$	6,905	$	69,676

	July 31, 2022
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Available-for-sale securities - Corporate Bonds	$	—	$	36,698	$	—	$	36,698
Hedge funds		—		—		4,764		4,764
Total	$	—	$	36,698	$	4,764	$	41,462

As of July 31, 2023 and 2022, the Company did not have any liabilities measured at fair value on a recurring basis.

The following table summarizes the changes in the fair value of the assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):

	Year Ended July 31,
	2023			2022
	(in thousands)
Balance, beginning of period	$	4,764		$	5,268
Total gain (loss) included in earnings		220			(504	)
Convertible note receivable, related party		2,000			—
Total loss included in other comprehensive loss		(79	)		—
Balance, end of period	$	6,905		$	4,764

Hedge funds classified as Level 3 include investments and securities which may not be based on readily observable data inputs. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. The fair value of these assets is estimated based on information provided by the fund managers or the general partners. Therefore, these assets are classified as Level 3.

Available-for-sale securities classified as Level 3 include a convertible note receivable, related party (see Note 5) which may not be based on readily observable data inputs. The availability of observable inputs can vary and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. The fair value of this asset is estimated using a scenario-based analysis based on the probability-weighted present value of future investments returns, considering each of the possible outcomes available to us, including cash repayment, equity conversion, and collateral transfer scenarios. Estimating the fair value of the convertible note requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. Therefore, this asset is classified as Level 3.

The Company holds $0.1 and $0.5 million as of July 31, 2023 and 2022, respectively, in investments in securities in another entity that are not liquid, which were included in Investments - Other Pharmaceuticals in the accompanying consolidated balance sheets. The investment is accounted for under ASC 321, Investments - Equity Securities, using the measurement alternative as defined within the guidance, and the Company recorded an impairment loss of $334 thousand and $0 for the years ended July 31, 2023 and 2022, respectively.

Fair Value of Other Financial Instruments

The estimated fair value of the Company’s other financial instruments was determined using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting these data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

The Company’s financial instruments include trade accounts receivable, trade accounts payable, and due from related parties. The recorded carrying amounts of accounts receivable, accounts payable and due to related parties approximate their fair value due to their short-term nature.