Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v3.24.3
Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
Fair Value Measurements  
Fair Value Measurements

3. Fair Value Measurements

A number of the Company’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers all related factors of the asset by market participants in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as inherent risk, transfer restrictions and credit risk.

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

● Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
● Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).
● Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Assets and liabilities measured at fair value on a recurring basis, including their levels in the fair value hierarchy are as follows:

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As of September 30, 2024

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Fair value hierarchy

Fair value of assets

    

Level 1

    

Level 2

    

Level 3

Cash and cash equivalents

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$

2,609

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$

—

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$

—

Restricted cash

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1,300

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—

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—

Investments

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—

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—

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​

—

Total fair value of assets

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$

3,909

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$

—

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$

—

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Fair value of liabilities

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Contingent interest feature derivative

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—

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—

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(1,700)

Total fair value of liabilities

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$

—

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$

—

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$

(1,700)

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As of December 31, 2023

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Fair value hierarchy

Fair value of assets

    

Level 1

    

Level 2

    

Level 3

Cash and cash equivalents

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$

2,034

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$

—

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$

—

Restricted cash

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1,298

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—

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—

Investments

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1

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—

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​

—

Total

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$

3,333

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$

—

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$

—

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Contingent Interest Feature Derivative

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The fair value is based on Level 3 inputs, which include the projected escalating incremental interest expense from the 2024 Standard Farms Loan. See Note 10 — Notes Payable for additional information.

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Investments

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The Akerna Corp. (“Akerna”) marketable security balance included in investments has Level 1 inputs. During the nine months ended September 30, 2024, the Company recorded a loss of $1 related to its investment in Akerna, which brought the carrying value of the investment to zero. During the nine months ended September 30, 2023, the Company recorded a loss of $1 related to its investment in Akerna. These losses are included in unrealized loss on investment on the condensed consolidated statements of operations and comprehensive loss.

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The HERBL Inc. (“HERBL”) investment is recorded at cost and excluded from the schedule above. During the three months ended June 30, 2023, the Company noted declining conditions in its investment in HERBL and performed impairment testing. The Company concluded that the balance of its investment was not recoverable due to HERBL entering into receivership in June 2023 and recorded an impairment of $6,400 on its investment in HERBL, bringing the balance of its investment to zero. These losses are included in unrealized loss on investment on the condensed consolidated statements of operations and comprehensive loss. The balance was $0 as of both September 30, 2024 and December 31, 2023.

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See Note 6 — Investments for additional information about the Akerna and HERBL investments.

Financial Instruments

The carrying amount of the Company’s notes payable, which are recorded at amortized cost, approximates their fair value based upon market interest rates available to the Company for debt of similar risk and maturities, a Level 3 input. See Note 10 — Notes Payable for additional information. Additionally, the carrying amount of the Company’s loans receivable, net of expected credit losses, approximates their fair values. See Note 8 — Loans Receivable for additional information. There were no transfers between the levels of fair value hierarchy during each of the nine months ended September 30, 2024 and 2023.