Investments and Fair Value Instruments

3 Months Ended

Mar. 31, 2025

Investments And Fair Value Instruments [Abstract]

6. Investments and Fair Value Instruments

Investments

The investments are carried at fair value, based on quoted market prices or other readily available market information. Unrealized and realized gains and losses are recognized as other income in the consolidated statements of operations and comprehensive income (loss).

The following tables summarize the amortized cost and fair value of the investment securities portfolio at March 31, 2025 and December 31, 2024:


(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
March 31, 2025
Cash equivalents:
Money market funds	$	2,034	$	—	$	—	$	2,034
Total Assets at Fair Value	$	2,034	$	—	$	—	$	2,034


(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
December 31, 2024
Cash equivalents:
Money market funds	$	2,757	$	—	$	—	$	2,757
Total Assets at Fair Value	$	2,757	$	—	$	—	$	2,757

The Company did not have any investment categories that were in a continuous unrealized loss position for more than twelve months as of March 31, 2025.

Fair Value Measurement

The fair value of the investment securities at March 31, 2025 were as follows:


	Fair Value Measurements at March 31, 2024
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at Fair Value
Cash equivalents:
Money market funds	$	2,034	$	—	$	—	$	2,034
Total Assets at Fair Value	$	2,034	$	—	$	—	$	2,034

The fair value of the investment securities at December 31, 2024 were as follows:


	Fair Value Measurements at December 31, 2024
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at Fair Value
Cash equivalents:
Money market funds	$	2,757	$	—	$	—	$	2,757
Total Assets at Fair Value	$	2,757	$	—	$	—	$	2,757

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2025 or 2024. The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable and other receivables, note receivable, accounts payable and accrued liabilities. For accounts receivable and other receivables and accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of March 31, 2025 and December 31, 2024 were considered representative of their fair values due to their short term to maturity or repayment. Cash equivalents are carried at cost, which approximates their fair value. The note receivable is recorded at amortized cost. The amortized cost of the note receivable is considered approximate fair value due to its variable interest rate.

The Company’s Level 3 liabilities consist of a contingent liability resulting from the Anawah, Inc. ("Anawah") acquisition as described in Note 14, as well as preferred investment options related to the March 2023 Private Placement and August 2022 Registered Direct offerings.

The contingent liability related to the Anawah acquisition was measured and recorded on a recurring basis as of March 31, 2025 and December 31, 2024, using unobservable inputs, namely the Company’s ability and intent to pursue certain specific products developed using technology acquired in the purchase. A significant deviation in the Company’s ability and/or intent to pursue the technology acquired in the purchase could result in a significantly lower (higher) fair value measurement.

The preferred investment option liabilities were measured and recorded on a recurring basis using the Black-Scholes Model with the following assumptions as of March 31, 2025 and December 31, 2024:


	March 2023 Options - Series A & March 2023 Placement Agent Options						August 2022 Options & August 2022 Placement Agent Options
	March 31, 2025			December 31, 2024			March 31, 2025			December 31, 2024
Remaining term (in years)		2.89			3.14			2.42			2.67
Expected volatility		94.8	%		101.7	%		97.3	%		95.9	%
Risk-free interest rate		3.9	%		4.3	%		3.9	%		4.3	%
Expected dividend yield		—			—			—			—

The significant input used in the fair value measurement of the Company’s Level 3 options liabilities is volatility. A significant increase (decrease) in volatility could result in a significantly higher (lower) fair value measurement.

The following table sets forth the establishment of the Company’s Level 3 assets and liabilities, as well as a summary of the changes in the fair value and other adjustments (in thousands):



(Dollars in thousands)	March 2023 Options - Series A			March 2023 Placement Agent Options			August 2022 Options			August 2022 Placement Agent Options			Note Receivable Bifurcated Derivatives		Contingent Liabilities			Total
Balance as of December 31, 2024	$	2,285		$	90		$	349		$	7		$	250	$	2,000		$	4,981
Change in fair value		(1,562	)		(59	)		(236	)		(5	)		—		(1,000	)		(2,862	)
Balance as of March 31, 2025	$	723		$	31		$	113		$	2		$	250	$	1,000		$	2,119