Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2024

Fair Value of Financial Instruments

Fair Value of Financial Instruments

3. Fair Value of Financial Instruments

The Company follows ASC - Accounting Standards Codification (“ASC 820”), Fair Value Measurement, which has defined the fair value of financial instruments as the amount 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. Fair value measurements do not include transaction costs.

The accounting guidance also expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described below:

Level 1 Inputs that are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.

Level 3 Prices or valuation that require inputs that are both significant to the fair value measurement and unobservable.

In valuing assets and liabilities, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculated the fair value of its Level 1 and 2 instruments based on the exchange traded price of similar or identical instruments where available or based on other observable instruments. These calculations take into consideration the credit risk of both the Company and its counterparties. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period.

The fair value of the contingent consideration obligations was based on a probability weighted approach derived from the estimates of earn-out criteria and the probability assessment with respect to the likelihood of achieving those criteria. The measurement is based on significant inputs that were not observable in the market, therefore, the Company classifies this liability as Level 3 in the following table.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 according to the valuation techniques the Company used to determine their fair values:

	Fair Value Measurements as of June 30, 2024
	Level 1		Level 2		Level 3		Total
Investment securities - Mutual funds	$	3,295,100	$	-	$	-	$	3,295,100
Total	$	3,295,100	$	-	$	-	$	3,295,100
	Fair Value Measurements as of December 31, 2023
	Level 1		Level 2		Level 3		Total
Investment securities - Mutual funds	$	4,928,700	$	-	$	-	$	4,928,700
Total	$	4,928,700	$	-	$	-	$	4,928,700

Investments in marketable securities by security type as of June 30, 2024 and December 31, 2023 consisted of the following:

As of June 30, 2024:	Cost		Fair Value		Unrealized Holding  Gain
Mutual funds	$	3,284,700	$	3,295,100	$	10,400
Total	$	3,284,700		3,295,100	$	10,400
As of December 31, 2023:	Cost		Fair Value		Unrealized Holding (Loss)
Mutual funds	$	4,929,300	$	4,928,700	$	(600	)
Total	$	4,929,300	$	4,928,700	$	(600	)