ACCOUNTS PAYABLE AND ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2022

Payables and Accruals [Abstract]

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

21. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at December 31, 2022 and 2021 consisted of:

	December 31,
	2022		2021
Accounts payable	$	21,347,000	$	6,902,000
Accrued payroll and payroll taxes		9,939,000		5,027,000
Accrued lender profit participation rights		6,000,000		-
Interest payable		3,207,000		187,000
Accrued legal		3,168,000		2,637,000
Advances from related parties		352,000		-
Financial instrument liabilities		651,000		4,249,000
Other accrued expenses		17,980,000		3,753,000
Total liabilities	$	62,644,000	$	22,755,000

Accrued Lender Profit Participation Rights

The accrued lender profit participation rights relate to the November 18, 2022 secured promissory notes. The secured promissory notes have a security interest in certain marketable securities to be acquired by BNI (the “Participation Collateral”). When the Company sells the Participation Collateral, the Company is required to give the investors a profits participation interest equal to 45% of the realized gains. The Company estimated the profit participation right resulting in a $6.0 million estimated liability based on 45% of the expected realized gain as of December 31, 2022.

Financial Instruments

Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments that do not have fixed settlement provisions are deemed to be derivative instruments. In prior years, the Company granted certain warrants that resulted in these warrants being accounted for as a financial instrument in accordance with ASC 815 and being re-measured every reporting period with the change in value reported in the statement of operations.

The financial instruments were valued using a variety of pricing models with the following valuation assumptions for the year ended December 31, 2021:

	December 31, 2021
Stock price	$	2.50
Exercise price	$	2.50
Contractually defined remaining term		5.0
Contractually defined volatility		135	%
Dividend yield		0	%
Risk-free interest rate		1.3	%

Per the terms of the warrant agreements underlying the financial instruments, the value to the warrant holders is defined within the agreement based on a stock price, contractual term, volatility factor and dividend rate as defined in the warrant agreement, and not indexed to the company’s stock, resulting in the financial instrument accounting. The risk-free interest rate was based on rates established by the Federal Reserve Bank.

The following table sets forth a summary of the changes in the estimated fair value of the financial instruments during the years ended December 31, 2022 and 2021:

	December 31,
	2022			2021
Beginning balance	$	4,249,000		$	4,192,000
Recognition of financial instruments		-			4,239,000
Change in fair value		17,000			542,000
Extinguishment		(4,266,000	)		(4,724,000	)
Ending balance	$	-		$	4,249,000

Advances from Related Parties

As of December 31, 2022, the balance of advances from related parties was $0.3 million. This amount consists of unsecured, non-interest-bearing loans due on demand, which were borrowed in December 2022. $0.2 million of the balance was borrowed from Mr. Nisser, and $0.1 million was borrowed from Mr. Horne. These loans are not subject to written agreements.