XML 21 R11.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Fair Value Measures
 6 Months Ended
Jun. 30, 2024
Fair Value Measures [Abstract]  
Fair Value Measures

Note 4 — Fair Value Measures

 

Fair Values of Assets and Liabilities

 

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures fair value at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:

 

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

 

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.

 

Level 3: Unobservable inputs for which there is little or no market data which require the Company to develop its own assumptions about how market participants would price the asset or liability.

 

Valuation techniques for assets and liabilities include methodologies such as the market approach, the income approach or the cost approach, and may use unobservable inputs such as projections, estimates and management’s interpretation of current market data. These unobservable inputs are only utilized to the extent that observable inputs are not available or cost-effective to obtain.

 

At June 30, 2024 and December 31, 2023, the Company’s assets and liabilities measured at fair value on a recurring basis were as follow:

 

   June 30, 2024   December 31, 2023 
   Fair Value Measurements Using Input Types   Fair Value Measurements Using Input Types 
(In thousands)  Level 1   Level 2   Level 3   Total   Level 1   Level 2   Level 3   Total 
Assets:                                
Money market funds  $4   $
—
   $
—
   $4   $4   $
—
   $
—
   $4 
Total assets  $4   $
—
   $
—
   $4   $4   $
—
   $
—
   $4 
Liabilities:                                        
Warrant liabilities - January 2022 warrants  $
—
   $
—
   $
—
   $
—
   $
—
   $
—
   $1   $1 
Warrant liabilities - March 2022 warrants   
—
    
—
    1    1    
—
    
—
    7    7 
Warrant liabilities - August 2022 warrants   
—
    
—
    3    3    
—
    
—
    18    18 
Warrant liabilities - December 2022 warrants   
—
    
—
    499    499    
—
    
—
    1,264    1,264 
Total liabilities  $
—
   $
—
   $503   $503   $
—
   $
—
   $1,290   $1,290 

 

Fair Value of Financial Instruments

 

The Company has certain financial instruments which consist of cash and cash equivalents, marketable securities, accounts receivable, loans receivable, accounts payable, accrued expenses, contingent consideration, operating lease liabilities, long-term debt, related party debt, and warrant liabilities. Fair value information for each of these instruments as well as other balances of the Company are as follows:

 

●Cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate their fair value based on the short-term nature of these instruments.

 

●Marketable securities classified as current held-to-maturity securities are recorded at amortized cost, which at June 30, 2024 and December 31, 2023, approximated fair value.

 

●Loans receivable are presented net of an allowance for estimated credit losses, which approximates fair value.

 

●The Company’s contingent consideration was recorded in connection with acquisitions during the years ended December 31, 2021 and 2022 using an estimated fair value discount at the time of the transactions. As of December 31, 2023, the carrying value of the deferred consideration approximated fair value.

 

●The carrying value of lease liabilities approximates fair value due to the implicit discount rates used in the determination of the lease liabilities being consistent with the Company’s incremental borrowing rates at the time of lease inception and accounting for the duration of the leases.

 

●Long-term debt and related party debt, including the debt that has undergone troubled debt restructuring, is carried at amortized cost, dictated by the prevailing market interest rates at the time of each transaction in accordance with ASC 470, Debt.

 

●The Company’s warrant liabilities are marked-to-market each reporting period with the changes in fair value of warrant liabilities recorded in other income (expense), net in the accompanying unaudited condensed consolidated statements of operations until the warrants are exercised. The fair value of the warrant liabilities are estimated using a Black-Scholes option-pricing model.

 

●As detailed in Note 9 - Stockholders’ Equity (Deficit), during the three months ended June 30, 2024, Company issued prefunded warrants to a related party. These liability classified warrants were recorded at fair value upon issuance. Through an amendment executed as of June 30, 2024, the warrants met the requirements for equity classification and were marked to fair value as of that date. The warrants will not be marked to fair value on a recurring basis.

 

Marketable Securities

 

As of June 30, 2024 and December 31, 2023, the Company held investments in money market funds. They are valued using quoted market prices in active markets and are classified under Level 1 within the fair value hierarchy.

 

The fair value of the Company’s money market funds as of June 30, 2024 and December 31, 2023 amounted to $4 thousand for both periods, respectively.

 

Warrant Liabilities

 

The estimated fair value of the warrant liabilities on June 30, 2024 and December 31, 2023 is determined using Level 3 inputs. Inherent in a Black-Scholes option-pricing model are assumptions used in calculating the estimated fair values that represent the Company’s best estimate. The volatility rate is determined utilizing the Company’s own share price and the share price of competitors over time.

 

However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.

 

The following table summarizes the Company’s assumptions used in the valuations as of June 30, 2024 and December 31, 2023:

 

   January
2022
Warrants		   March
2022
Warrants		   August
2022
Warrants		   December
2022
Warrants		   January
2022
Warrants		   March
2022
Warrants		   August
2022
Warrants		   December
2022
Warrants		 
   June 30, 2024   December 31, 2023 
Stock price  $0.45   $0.45   $0.45   $0.45   $1.26   $1.26   $1.26   $1.26 
Exercise price  $1,496   $430   $246   $0.38   $1,496   $430   $246   $3.45 
Expected term (in Years)   3.07    3.63    3.63    3.63    3.57    4.13    4.13    4.13 
Volatility   137.00%   137.00%   137.00%   137.00%   138.00%   136.00%   136.00%   136.00%
Discount rate - treasury yield   4.51%   4.46%   4.46%   4.46%   3.96%   3.91%   3.91%   3.91%

 

The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liabilities for the six months ended June 30, 2024 and for the year ended December 31, 2023:

 

(In thousands)  Six months
ended
June 30,
2024		   For the year
ended
December 31,
2023		 
Warrant liabilities – beginning of period  $1,290   $5,985 
Initial fair value of issued warrant liabilities   5,599    
—
 
Reclassification of warrant liabilities to equity   (6,791)   
—
 
Change in estimated fair value   404    (4,695)
Warrant liabilities –end of period  $503   $1,290