Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2023

Note 4. Fair Value of Financial Instruments

The carrying value of the Company’s cash, cash equivalents, accounts receivable, accounts payable, accrued liabilities, and other current liabilities approximate fair value based on the short-term maturities of these instruments. The carrying value of the Company’s notes receivable also approximates fair value based on the associated credit risk.

The Company classifies money market funds, U.S. treasury bills, and certificates of deposit as Level 1 within the fair value hierarchy as the fair value is based on quoted prices. The Company classifies its warrant derivative liabilities as Level 3 within the fair value hierarchy as the Company estimates the fair value of the warrant liabilities using recently quoted market prices of the Company's common stock and the Black-Scholes option pricing model, refer to Note 10, Warrant Liabilities.

The following table sets forth by level, within the fair value hierarchy, the Company's assets and liabilities at fair value as of December 31, 2023:


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	11,171	$	—	$	—	$	11,171
U.S. treasury bills		5,942		—		—		5,942
Certificates of deposit		983		—		—		983
Total assets	$	18,096	$	—	$	—	$	18,096

Liabilities
Warrant derivative liabilities	$	—	$	—	$	8,457	$	8,457
Total liabilities	$	—	$	—	$	8,457	$	8,457

There were no assets or liabilities measured at fair value as of December 31, 2022. There were no transfers between fair value hierarchy levels during the years ended December 31, 2023.

The fair value of the Company's financial assets that are measured at fair value on a recurring basis as of December 31, 2023 are as follows:


	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Cash equivalents
Money market funds	$	11,171	$	—	$	—	$	11,171
U.S. treasury bills		2,989		1		—		2,990
Short-term investments
U.S. treasury bills		2,952		—		—		2,952
Certificates of deposit		490		1		—		491
Long-term investments
Certificates of deposit		490		2		—		492
Total	$	18,092	$	4	$	—	$	18,096

The change in fair value of warrant liabilities measured on a recurring basis using unobservable Level 3 inputs for the year ended December 31, 2023 is set forth below:


					Fair Value at
	Fair Value at		Change in		December 31,
	May 18, 2023		Fair Value		2023
Series A Warrant	$	2,971	$	1,491	$	4,462
Series B Warrant		2,634		1,361		3,995
Total warrant liabilities	$	5,605	$	2,852	$	8,457

- 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