The Company accounts for equity securities under ASC 321. Such securities are reported at fair value on the condensed consolidated balance sheets, and the related unrealized gains and losses are reported in the condensed consolidated statements of cash flows as a non-cash activity. Any unrealized appreciation or depreciation on investment securities is reported in the condensed consolidated statements of operations as an unrealized gain or loss on marketable securities. During the nine months ended September 30, 2021 and 2020, unrealized (loss) gain on marketable securities was ($18,665,000) and $15,000, respectively.

Details of marketable securities held at September 30, 2021 are as follows (in thousands):

					Cumulative
					Unrealized
IronNet Securities:	Fair Value		Basis		(Loss) Gain
1,250,000 restricted common shares	$	19,390	$	26,501	$	(7,111	)
272,529 PIPE related common shares		4,647		6,185		(1,538	)
2,065,000 private warrants		20,374		31,504		(11,130	)
		44,411		64,190		(19,779	)
Equity funds and other securities		6,417		5,181		1,236
	$	50,828	$	69,371	$	(18,543	)

The IRNT securities were received by the Company as a result of the previously discussed Sponsor distribution. The fair value of these shares determined at the date of distribution represents the basis of these securities.

As a result of the IronNet Business Combination and LGL’s investment in the SPAC sponsor, LGL Systems Acquisition Holding Company, LLC, LGL was distributed 2,065,000 IRNT private warrants and 1,572,529 common shares on September 14, 2021. Of these common shares, 1,300,000 shares are restricted from sale for at least six months from the date of closing and are subject to the applicable shareholder lock-up agreements. In an effort to continue its stakeholder responsibilities in the context of global corporate citizenship, the Company made a charitable gift on September 28, 2021 of 50,000 of these IRNT shares (see Note Q - Donation), leaving 1,250,000 IRNT restricted common shares outstanding at September 30, 2021. The fair value of these shares was determined by applying a discount for lack of marketability to the publicly quoted market price of IRNT common stock. The 272,529 PIPE related IRNT common shares and 2,065,000 private warrants were subject to trading restrictions upon distribution until the registration statement became effective on September 30, 2021. In determining the fair value of the PIPE related shares, the publicly quoted market price was used at September 30, 2021.

The 2,065,000 IRNT private warrants are exercisable to purchase one share of IRNT common stock at an exercise price of $11.50 per share and have a contractual term of five years from the date of the IronNet Business Combination along with other terms and conditions including a cashless exercise alternative which LGL elected to pursue on October 1, 2021, receiving 1,271,406 IRNT freely-tradable common shares as a result of such exercise (see Note R – Subsequent Events). The Company utilized a Monte Carlo simulation model to determine the fair value of the private warrants at September 30, 2021. Key assumptions used in the Monte Carlo model are assumptions related to expected stock-price volatility, risk-free interest rate and dividend yield. The estimated stock-price volatility of IRNT common stock was based on the historical volatility of select peer companies. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.