Note 4: Investment in Equity Interest

As of September 30, 2024 and December 31, 2023, the Company owned 6,857,132 shares of YFE. At the time of the initial investment in 2021, it was determined that based on the Company’s 28.69% ownership in YFE, the Company had significant influence over the entity. Therefore, under the equity method of accounting, the Company elected to account for the investment at fair value under the fair value option. Under the fair value option, the investment is remeasured and recorded at fair value each reporting period, with the change recorded through earnings. As of September 30, 2024, the fair value of the investment was determined to be $18.0 million recorded within noncurrent assets on the Company’s condensed consolidated balance sheets. YFE shows a considerably lower trading volume compared to industry standards, especially within the broader media and entertainment sector. Under ASC 820, for an asset or liability to qualify as Level 1, it must have quoted prices in an active market. However, the standard also addresses situations where trading volume is low. ASC 820-10-35-41 states that an active market is one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. When trading volume is low, determining whether the market is still active requires judgment. When considering the use of share price to value an investment in YFE the company had to weigh the arguments for and against the application of Level 1 inputs under ASC 820. An asset could remain in Level 1 if there are enough considerations to support that the market is accessible and reflects current pricing information, despite low volume. While the low trading volume raises concerns regarding the reliability of using share price as a Level 1 input under ASC 820, the company will closely monitor the trading volume and financial performance of the investee. This ongoing oversight will help ensure that any updates to the investment's fair value reflect true market conditions as they evolve over time, considering both the potential growth of the company and fluctuations in trading activity.

The fair value as of September 30, 2024 decreased by net $1.1 million, as compared to December 31, 2023. The decrease is the effect of foreign currency remeasurement from EURO to USD resulting in a gain of $0.2 million and share price fluctuations resulting in a loss of $1.3 million. The total change in fair value is recorded within Other Income (Expense), net on the Company’s condensed consolidated statements of operations. As of September 30, 2024 and December 31, 2023, the Company’s ownership in YFE was 44.8%.