Certificates of Deposit and Marketable Securities

6 Months Ended

Nov. 30, 2023

Certificates of Deposit and Marketable Securities [Abstract]

Certificates of Deposit and Marketable Securities

5.	Certificates of Deposit and Marketable Securities

The Company has characterized its investments in marketable securities, based on the priority of the inputs used to value the investments, into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and lowest priority to unobservable inputs (Level 3). If the inputs used to measure the investments fall within different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Investments recorded in the accompanying condensed consolidated balance sheets are categorized based on the inputs to valuation techniques as follows:

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Level 1 - These are investments where values are based on unadjusted quoted prices for identical assets in an active market the Company has the ability to access.

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Level 2 - These are investments where values are based on quoted market prices that are not active or model derived valuations in which all significant inputs are observable in active markets.

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Level 3 - These are investments where values are derived from techniques in which one or more significant inputs are unobservable.

The following are the major categories of assets measured at fair value on a recurring basis as of November 30, 2023 and May 31, 2023 using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2) and significant unobservable inputs (Level 3):

November 30, 2023	Level 1		Level 2		Level 3		Total
Certificates of Deposit	$	500,000	$	-	$	-	$	500,000
Equity Securities		35,760		-		-		35,760
	$	535,760	$	-	$	-	$	535,760

May 31, 2023	Level 1		Level 2		Level 3		Total
Certificates of Deposit	$	490,000	$	-	$	-	$	490,000
Equity Securities		25,152		-		-		25,152
	$	515,152	$	-	$	-	$	515,152

Based upon the Company’s intent and ability to hold its certificates of deposit to maturity (which range up to twelve (12) months at purchase), such securities have been classified as held-to-maturity and are carried at amortized cost, which approximates market value. The Company’s equity securities are classified as trading securities, which are carried at fair value, as determined by quoted market prices, which is a Level 1 input, as established by the fair value hierarchy. The related unrealized gains and losses are included in earnings. The Company’s marketable securities at November 30, 2023 and May 31, 2023 are summarized as follows:

November 30, 2023	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Recorded Value
Certificates of Deposit	$	500,000	$	-	$	-	$	500,000
Equity Securities		16,866		18,894		-		35,760
	$	516,866	$	18,894	$	-	$	535,760

May 31, 2023	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Recorded Value
Certificates of Deposit	$	490,000	$	-	$	-	$	490,000
Equity Securities		16,866		8,286		-		25,152
	$	506,866	$	8,286	$	-	$	515,152

The Company’s investments in marketable securities consist primarily of investments in equity securities. Market values were determined for each individual security in the investment portfolio. When evaluating the investments for other-than-temporary impairment, the Company reviews factors such as length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, and the Company’s ability and intent to hold the investment for a period of time, which may be sufficient for anticipated recovery in market values.

TSR INC 10-Q