FAIR VALUE OF FINANCIAL INSTRUMENTS

3 Months Ended

Aug. 30, 2024

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

3. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company measures its cash equivalents and money market funds at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three-tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.

Level 3 — Unobservable inputs that are supported by little or no market activities.

The following table represents the Company’s assets measured at fair value on a recurring basis as of August 30, 2024, and the basis for that measurement:

	Balance as of
(In thousands)	August 30, 2024		Level 1		Level 2		Level 3
Money market funds	$	36,716	$	36,716	$	-	$	-
Total	$	36,716	$	36,716	$	-	$	-

The following table represents the Company’s assets measured at fair value on a recurring basis as of May 31, 2024, and the basis for that measurement:

	Balance as of
(In thousands)	May 31, 2024		Level 1		Level 2		Level 3
Money market funds	$	44,280	$	44,280	$	-	$	-
Total	$	44,280	$	44,280	$	-	$	-

Included in money market funds as of August 30, 2024 and May 31, 2024 is $0.2 million restricted cash representing a security deposit for the Company’s United States manufacturing and office space lease. There were no financial liabilities measured at fair value as of August 30, 2024 and May 31, 2024. There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended August 30, 2024. The carrying amounts of financial instruments, including cash equivalents, accounts receivable, accounts payable and certain other accrued liabilities, approximate fair value due to their short maturities.