Note 2 - Fair Value Measurements

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

2. FAIR VALUE MEASUREMENTS

Fair value is defined under FASB ASC 820, “Fair Value Measurement and Disclosures”. ASC 820 defines fair value, establishes a framework for measuring fair value under U.S. GAAP and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 describes a fair value hierarchy based on three levels of inputs of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

Level 1–Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Level 2–Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3–Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement.

The Company’s assets and liabilities that are measured at fair value on a non-recurring basis include cash, accounts payable, accrued expenses, and interest payable given their short-term nature. Furthermore, the fair value of the Company’s notes payable are initially measured at fair value given that they are estimated based on current rates that would be available for debt of similar terms.

The following tables provide information about the Company’s financial instruments measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020 by the fair value hierarchy:

							Balance as of
							September 30,
	Level 1		Level 2		Level 3		2021
Investments:
Publicly traded common stock	$	845,820	$	-	$	-	$	845,820
Publicly traded options		46,848						46,848
Private company common stock		-		-		178,824		178,824
Private company preferred stock		-		-		4,781,520		4,781,520
Total	$	892,668	$	-	$	4,960,344	$	5,853,012

							Balance as of
							December 31,
	Level 1		Level 2		Level 3		2020
Investments:
Publicly traded common stock	$	979,020	$	-	$	-	$	979,020
Publicly traded options	$	55,848						55,848
Private company common stock		-		-				-
Private company preferred stock		-		-		2,574,665		2,574,665
Total	$	1,034,868	$	-	$	2,574,665	$	3,609,533

The following tables presents the Company’s investments measured at fair value using significant unobservable inputs (Level 3), including the valuation technique and unobservable inputs used to measure the fair value of those financial instruments:

	Fair Value as of
	September 30, 2021		Valuation Technique	Unobservable Inputs
Private Company Common Stock	$	178,824	Purchase price 3-10-2021	Acquisition cost
Private Company Preferred Stock	$	4,781,521	Big data technology "MESE" valuation system	company valuation range $1.2bn to $5.0bn Best-fit $2.6bn company growth 131.9% SPAC inqueries

	Fair Value as of
	December 31, 2020		Valuation Technique	Unobservable Inputs
Private Company Preferred Stock	$	2,574,665	Big data technology "MESE" valuation system	company valuation average range $1.0bn to $1.5bn SPAC inqueries

The following table presents additional information about Level 3 assets measured at fair value on a recurring basis for nine months ended September 30, 2021 and 2020. Both observable and unobservable inputs may be used to determine the fair value of positions that the Company has classified within the Level 3 category. As a result, unrealized gains or (losses) during the period for assets and liabilities within the Level 3 category presented in the tables below may include changes in fair value during the period that were attributable to both observable and unobservable inputs.

	Nine Months Ended
	September 30, 2021
Balance as of December 31, 2020	$	2,574,665
Unrealized gain on investments		2,206,855
Purchase of investment		178,824
Balance as of September 30, 2021	$	4,960,344

	Nine Months Ended
	September 30, 2020
Balance as of December 31, 2019	$	2,574,665
Unrealized gain on investments		-
Purchase of investment		-
Balance as of September 30, 2020	$	2,574,665