Note 4 - Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE 4.  Fair Value of Financial Instruments

Fair value accounting is applied for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Financial instruments include cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued liabilities that approximate fair value due to their relatively short maturities.

Assets and liabilities recorded at fair value on a recurring basis in the consolidated balance sheets are categorized based upon the level of judgment associated with inputs used to measure their fair values. The accounting guidance for fair value provides a framework for measuring fair value and requires certain disclosures about how fair value is determined. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance also establishes a three-level valuation hierarchy that prioritizes the inputs to valuation techniques used to measure fair value based upon whether such inputs are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions made by the reporting entity.

The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The following table sets forth the fair value of the Company’s financial assets that are measured on a recurring basis as of  December 31, 2021 and 2020 (in thousands):

	Level 1		Level 2		Level 3		Total
December 31, 2021
Recurring financial assets:
Money market funds	$	70,978	$	—	$	—	$	70,978
U.S. Treasury securities		—		24,997		—		24,997
Commercial paper		—		7,491		—		7,491
Corporate debt securities		—		6,464		—		6,464
Total assets	$	70,978	$	38,952	$	—	$	109,930

	Level 1		Level 2		Level 3		Total
December 31, 2020
Recurring financial assets:
Money market funds	$	60,005	$	—	$	—	$	60,005
Total assets	$	60,005	$	—	$	—	$	60,005

The Company held no financial liabilities measured on a recurring basis as of December 31, 2021 or 2020, or in the years ended December 31, 2021, 2020 or 2019.