Fair value measurements

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Fair value measurements

Fair value measurements

The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023 (in thousands):

Description	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
September 30, 2024
Assets:
Cash and cash equivalents	$	70,651	$	70,651	$	—	$	—
Due from factor:
Beneficiary interest in factored invoices	1,062		—		—		1,062
Other non-current liabilities
Warrant liability	987		—		—		987
Total	$	72,700	$	70,651	$	—	$	2,049
December 31, 2023
Assets:
Cash and cash equivalents	$	221,755	$	221,755	$	—	$	—
Due from factor:
Beneficiary interest in factored invoices	560		—		—		560
Total	$	222,315	$	221,755	$	—	$	560

Cash and cash equivalents

The Company considers all highly liquid securities with original final maturities of 90 days or less from the date of purchase to be cash equivalents. As of September 30, 2024 and December 31, 2023, cash and cash equivalents comprise funds in cash and money market accounts held at multiple banking and asset management institutions.

Factoring agreement

Due from factor classified as Level 3 within the valuation hierarchy consists of beneficiary interest in transferred invoices. The Company estimates the fair value of the beneficiary interest based on the estimated cash flows after applying counterparty and credit risk adjustments associated with the factoring agent and distributors, respectively. As of September 30, 2024, no adjustment to the beneficiary interest in invoices sold was deemed an unobservable input and was determined based from ongoing credit evaluations and historical experience with aging of such invoices, among other factors. A significant change to this input could result in a significantly lower fair value measurement.

The following table shows a reconciliation of the beginning and ending balances for due from factor Level 3 financial liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2024:

	For the nine months ended September 30,
	2024
Balance at December 31, 2023	$	560
Beneficiary interest obtained in transferred invoices	4,850
Gross proceeds from previously transferred invoices	(4,240)
Accrual for factor reserve deficiency	(26)
Accrual for anticipated loss on sale of invoices	(82)
Balance at September 30, 2024	$	1,062

Common stock warrants

On March 15, 2024, in connection with its debt issuance (see Note 8, Term loan debt), the Company issued warrants to a lender to purchase shares of the Company’s common stock at an exercise price of $1.45 per share. On August 13, 2024, the Company amended the exercise price of the warrants to be the lesser of $1.03 per share and the price per share of the Company’s first financing event within six months of August 13, 2024 or February 13, 2025. As a result of the modification, the warrants were reclassified from additional paid-in-capital within stockholders' equity to other non-current liabilities on the condensed consolidated balance sheet at their fair value as of the modification date. The warrants are adjusted to fair value at period end through “other income (expense)” on the condensed consolidated statements of operations and comprehensive loss.

The warrants have been recorded at their fair value using the Black-Scholes option-pricing model and the following assumptions: no dividend yield, probability-weighted exercise price ranging between $0.50 and $1.03, stock price of $0.52 per share, expected volatility of 85.7%, risk free rate of 3.7%, and expected term of 7 years, equal to the life of the warrant.

The following table shows a reconciliation of the beginning and ending balances for other non-current liabilities due from factor Level 3 financial liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2024:

	For the nine months ended September 30,
	2024
Balance at December 31, 2023	$	—
Warrant modification and reclassification to liabilities	2,100
Change in fair value	(1,113)
Balance at September 30, 2024	$	987