FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS

3 Months Ended

Mar. 31, 2023

FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS

FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS

NOTE 6. – FAIR VALUE MEASUREMENTS AND SHORT-TERM INVESTMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Fair value measurement standards apply to certain financial assets and liabilities that are measured at fair value on a recurring basis (each reporting period). For the Company, these financial assets and liabilities include its short-term investment securities and equity investments. The Company does not have any nonfinancial assets or liabilities that are measured at fair value on a recurring basis.

The following table presents information about our assets and liabilities measured at fair value as of March 31, 2023 and December 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

	Fair Value
	March 31, 2023
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	4,728	$	—	$	—	$	4,728
Restricted cash		7,500		—		—		7,500
Corporate bonds		—		4,353		—		4,353
Change Agronomy Ltd. ordinary shares		—		—		682		682
Total assets	$	12,228	$	4,353	$	682	$	17,263
Liabilities
Detachable warrants	$	—	$	—	$	3,666	$	3,666
Contingent consideration		—		—		1,160		1,160
Total liabilities	$	—	$	—	$	4,826	$	4,826

	Fair Value
	December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets
Money market funds	$	10,163	$	—	$	—	$	10,163
Corporate bonds		—		7,031		—		7,031
U.S. treasury securities		—		999		—		999
Change Agronomy Ltd. ordinary shares		—		—		682		682
Total assets	$	10,163	$	8,030	$	682	$	18,875

Money market funds

Money market mutual funds are valued at their daily closing price as reported by the fund. Money market mutual funds held by the Company are open-end mutual funds that are registered with the SEC that generally transact at a stable $1.00 Net Asset Value (“NAV”) representing its estimated fair value. On a daily basis the fund’s NAV is determined by the fund based on the amortized cost of the funds underlying investments.

Corporate bonds

Corporate bonds are valued using pricing models maximizing the use of observable inputs for similar securities.

The following tables set forth a summary of the Company’s available-for-sale debt securities from amortized cost basis to fair value as of March 31, 2023 and December 31, 2022:

	Available for Sale Debt Securities
	March 31, 2023
	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value
Corporate bonds	$	4,391	$	—	$	(38)	$	4,353

	Available for Sale Debt Securities
	December 31, 2022
	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value
Corporate bonds	$	7,143	$	—	$	(112)	$	7,031

The following table sets forth a summary of the Company’s available-for-sale securities at amortized cost basis and fair value by contractual maturity as of March 31, 2023 and December 31, 2022:

	Available for Sale Debt Securities
	March 31, 2023				December 31, 2022
	Amortized				Amortized
	Cost Basis		Fair Value		Cost Basis		Fair Value
Due in one year or less	$	4,391	$	4,353	$	7,143	$	7,031

Investment in Change Agronomy

The investment in Change Agronomy Ltd. is in a privately held company and its stock does not have a readily determinable fair value; therefore, the investment is carried at cost less impairment, adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer.

Contingent Consideration

The following table presents the changes in the estimated fair values of the Company’s liabilities for contingent consideration measured using significant unobservable inputs (Level 3) for the three months ended March 31, 2023:

Fair value measurement at January 1, 2023	$	—
Initial measurement (see Note 2)		1,138
Fair value measurement adjustment		22
Fair value measurement at March 31, 2023	$	1,160

On January 19, 2023, the Company acquired the assets and liabilities of RXP, a privately-held company based in the U.K. The contingent consideration at March 31, 2023 is the estimated fair value of the Company’s obligations, under the sale and purchase agreement for RXP, to make additional payments if certain revenue goals are met.

As of March 31, 2023, the current portion of contingent consideration liabilities included in Other current liabilities was $566, and the non-current portion included in Other long-term liabilities on the Condensed Consolidated Balance Sheets was $594.

The following table provides quantitative information associated with the fair value measurement of the Company’s liabilities for contingent consideration as of March 31, 2023:

	Maximum Payout					Weighted Average
Contingency Type	(undiscounted)		Fair Value		Unobservable Inputs	or Range
Revenue-based payments	$	1,550	$	1,160	Discount rate	16	%
					Projected year(s) of payment	2024-2026

Detachable Warrants

The following table sets forth a summary of the changes in fair value of the Company’s stock warrants (Level 3 asset) for the three-month period ended March 31, 2023:

Fair value measurement at January 1, 2023	$	—
Initial measurement		3,527
Fair value measurement adjustment		139
Fair value measurement at March 31, 2023	$	3,666

The JGB detachable warrants were valued at the closing dates of the Senior Secured Credit Facility using a Monte Carlo valuation model with the following assumptions:

Risk-free interest rate per year		4.2	%
Expected volatility per year		88.1	%
Expected dividend yield		—	%
Contractual expiration		5.5	years
Exercise price	$	1.275
Stock price	$	0.91

The Omnia detachable warrants were valued at the closing dates of the Subordinated Note using a Monte Carlo valuation model with the following assumptions:

Risk-free interest rate per year		4.1	%
Expected volatility per year		83.8	%
Expected dividend yield		—	%
Contractual expiration		7.5	years
Exercise price	$	0.855
Stock price	$	0.91

There were no material changes in assumptions for valuation of the detachable warrants as of March 31, 2023 given the short period of time from issuance. The detachable warrants are measured at fair value using certain estimated factors which are classified within Level 3 of the valuation hierarchy. Significant unobservable inputs that are used in the fair value measurement of the Company’s detachable warrants include the volatility factor. Significant increases or decreases in the volatility factor would have resulted in a significantly higher or lower fair value measurement.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the three month periods ended March 31, 2023 and 2022 respectively, the Company did not have any financial assets or liabilities measured at fair value on a nonrecurring basis.