Fair Value Measurements

9 Months Ended

Sep. 30, 2020

16. Fair Value Measurements

The majority of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable) are carried at cost which approximates their fair values due to the short-term nature of the instruments. The Company’s investment in equity securities at fair value, and investment in convertible loan-AFS are carried at fair value (see Note 4).

U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:

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Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

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Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities.

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Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.

The Company has an equity investment in the common stock of a publicly traded company. The Company’s investment in this equity security is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period (see Note 4). The fair value of the common stock is based on quoted market price for the investee’s common stock, a Level 1 input.

The following tables present the Company’s financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, by level within the fair value hierarchy:


(In thousands)	Fair Value at
Description	September 30, 2020		Level 1		Level 2		Level 3
Investment in common stock	$	1,796	$	1,796	$	—	$	—
Investment in convertible loan-AFS	$	83	$	—	$	—	$	83


(In thousands)	Fair Value at
Description	December 31, 2019		Level 1		Level 2		Level 3
Investment in common stock	$	625	$	625	$	—	$	—

Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

The Company measures equity investments without readily determinable fair values at its cost, minus impairment, if any, plus or minus changes resulting from observable transactions of identical or similar securities of the same issuer. On September 29, 2020, the Company remeasured the investments in equity securities in Juventas (see Note 4) to the fair value. The Company estimated the fair value of these securities based on the transaction price of similar securities issued by the investee adjusted for contractual rights and obligations of the securities it holds.

Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

As of June 30, 2020, the intangible assets and assets held for sale with a total carrying amount of $3,087,000 were written down to their fair value of $1,550,000, resulting in an impairment charge of $1,537,000, which represents the difference between the carrying value of the intangible asset and assets held for sale and its fair value. The Company estimated the fair value using Level 2 inputs based on quoted price. Related intangible assets were reclassified as assets held for sale during the quartered ended September 30, 2020.


(In thousands)	Fair Value at
Description	December 31, 2019		Level 1		Level 2		Level 3
Long-lived assets	$	287	$	—	$	—	$	287

The long-lived assets represent equipment leased to Juventas (Note 17).

As of December 31, 2019, equipment leased to Juventas with a total carrying amount of $673,000 were written down to their fair value of $287,000, resulting in an impairment charge of $386,000, representing the difference between total carrying amount and fair value of these long-lived assets, which was calculated based on Level 3 Inputs.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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