Fair Value Measurements

6 Months Ended

Jun. 30, 2023

ASC Topic 820, Fair Value Measurement, establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, as follows: Level 1 Inputs - unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date; Level 2 Inputs - other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3 Inputs - unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

Assets measured at fair value on a recurring basis as of June 30, 2023 are as follows:


	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents:
Money market funds	$	1,148	$	1,148	$	—	$	—



Short-term investments:

Investment in convertible notes receivable	2,000		—		—		2,000


Total financial assets	$	3,148	$	1,148	$	—	$	2,000

Assets measured at fair value on a recurring basis as of December 31, 2022 are as follows:


	Total		Level 1		Level 2		Level 3
Assets
Cash equivalents:
Money market funds	$	1,612	$	1,612	$	—	$	—






Total financial assets	$	1,612	$	1,612	$	—	$	—

The Company uses the market approach and Level 1 and Level 2 inputs to value its cash equivalents and Level 2 inputs to value its short-term investments. The Company uses the market approach and Level 3 inputs to value its liabilities. There were no liabilities measured at fair value on a recurring basis as of December 31, 2022.

Warrant Liability

A summary of the warrant liability activity for the six months ended June 30, 2023, is as follows:


	Warrants Outstanding		Fair Value Per Share		Fair Value
(in thousands, except per share data)
Balance at December 31, 2022	—		$	—	$	—
Option to exercise	526		$	1.52	$	800
Payment to warrant holder	(526)		$	1.52	$	(800)
Balance at June 30, 2023	—	0	$	—	—

Investment in Convertible Notes Receivable

A summary of the AFS activity for the six months ended June 30, 2023, is as follows:


	Fair Value
Balance at December 31, 2022	$	—
Investment in convertible notes receivable	2,000
Balance at June 30, 2023	$	2,000

Fair value as of June 30, 2023 approximated the purchase price as there were no significant changes in fair value between purchase in May and June 30, 2023.

There were no transfers between Level 1, 2, or 3, during the years ended December 31, 2023, and 2022. Both observable and unobservable in puts were used to determine fair value of the positions that the Company classified within the Level 3 category. Unrealized gains and losses associated within the Level 3 category include changes in fair value that were attributable to both observable and unobservable inputs.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details