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Note 9 - Fair Value Measurements
 12 Months Ended
Dec. 31, 2024
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

9. Fair Value Measurements

 

The fair value of the Company's cash, cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their carrying values because of the short-term nature of these instruments. Restricted cash includes a separately maintained cash account, as required under the terms of a lease agreement the Company entered into on  October 10, 2018 for office space in New York City.

 

As of December 31, 2024, the Company regards the fair value of its long-term debt to approximate its carrying value. 
 
The following tables present the Company’s fair value hierarchy for assets and liabilities that are measured at fair value on a recurring basis as of  December 31, 2024  and  December 31, 2023 :

 

  

December 31, 2024

  

December 31, 2023

 
  

Level 1

  

Level 2

  

Level 3

  

Level 1

  

Level 2

  

Level 3

 

Assets:

                        

Restricted cash

 $1,255   —   —  $—   —   — 

Liabilities:

                        

Long term debt, net(1)

  —   33,045   —   —   31,250   — 

Convertible Notes, with related parties

  —   —   3,720   —   —   — 

Contingent consideration in connection with TAPP consolidation(2)

  —   —   988   —   —   1,950 

 

(1)

Inclusive of the credit facilities and notes payable. The debt fair value does not include debt issuance costs or debt discount. See Note 8, Long-term debt, net.

(2)

Balance recorded in prepaid and other expenses and other non-current assets with changes to the balance as a result of adjustment of the fair value related to the initial discount rate and payments made. See Note 14, Variable Interest Entity, for initial assumptions of the fair value.

 

Convertible Notes, with related parties

 

The Company issued the Convertible Notes on  August 19, 2024 and elected the fair value option, see Note 8, Long-term debt, net. The following is a reconciliation of the fair value from the issuance date of such notes to  December 31, 2024:

 

  

Amount

 

Fair value as of August 19, 2024

 $4,160 

(Gain) loss on change in fair value reported in the consolidated statement of operations

  (440)

Fair value as of December 31, 2024

 $3,720 

 

As the Convertible Notes mature on  April 2, 2029, and bear interest at 13% per annum paid in kind but  may be converted into shares of the Company’s common stock (the "call option"), the estimated fair value is computed as the sum of (a) the present value of the expected interest and principal payments using the discounted cash flow method based on an estimated discount rate and (b) the fair value of the call option computer using the Black-Scholes model. Both approaches are based on the following assumptions:

 

Assumptions

 

December 31, 2024

 

Face value of principal payable

 $2,148 

Conversion price

  3.04 

Value of common stock

  2.52 

Contractual term (years)

  4.3 

Volatility

  79.0%

Risk free rate

  3.8%

Discount rate

  16.8%

 

Contingent Consideration 

 

In connection with the contingent consideration received related to the consolidation of TAPP, the Company had to determine the fair value of the identified assets acquired and liabilities assumed. The Company determined that the estimated fair value of the net assets acquired, excluding the net working capital, was a Level 3 measurement, as certain inputs to determine fair value were unobservable. See Note 14, Variable Interest Entity.

 

  

Amount

 

Fair value as of December 31, 2023

 $1,950 

Payment for annual bonus

  (1,083)

Adjustment to compensation expense

  121 

Fair value as of December 31, 2024

 $988 

 

The fair value of certain long-lived non-financial assets and liabilities  may be required to be measured on a nonrecurring basis in certain circumstances, including when there is evidence of impairment. As of  December 31, 2024, certain non-financial assets have been measured at fair value subsequent to their initial recognition. The Company determined the estimated fair value to be a Level 3 measurement, as certain inputs used to determine fair value are unobservable. See Note 7, Goodwill.