Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, prepaid expenses, accounts payable, accrued expenses, and other current liabilities including SAFE Liability. The carrying amounts of these financial instruments approximate their fair values due to their short-term maturity. The Company holds SAFE Liability as a financial

instruments that is required to be measured at fair value on a recurring basis. ASC 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value:

Level 1 -Quoted prices in active markets for identical assets or liabilities. 

Level 2 -Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. 

Level 3 -Unobservable inputs which are supported by little or no market activity.