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Note 6 - Fair Value Measurements

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

6.	FAIR VALUE MEASUREMENTS

The Company’s financial instruments consist of Level 1 assets at December 31, 2022 and 2023. The Company’s cash and restricted cash was $46.6 million and $22.2 million at December 31, 2022 and 2023, respectively, and included savings deposits and overnight investments.

The Company’s credit facility is carried at amortized cost at December 31, 2022 and December 31, 2023 and the carrying amount approximates fair value as the stated interest rate approximates market rates currently available to the Company.

The Company categorizes its warrants potentially settleable in cash as Level 3 fair value measurements. The warrants potentially settleable in cash are measured at fair value on a recurring basis and are being marked to fair value at each reporting date until they are completely settled or meet the requirements to be accounted for as a component of stockholders’ equity.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The following table summarizes the fair value of the Company’s financial assets that are measured at fair value for the years-ended December 31, 2022 and 2023 (in thousands):

		December 31, 2022
		Fair Value Measurement Category
		Level 1				Level 2				Level 3
Assets:
Cash and cash equivalents		$	43,574			$	—			$	—
Restricted Cash			3,055				—				—
Liabilities:
Fair value of warrant liability			—				—				3,473

		*December 31, 2023*
		*Fair Value Measurement Category*
		*Level 1*				*Level 2*				*Level 3*
Assets:
Cash and cash equivalents		$	20,023			$	—			$	—
Restricted cash			2,172				—				—
Liabilities:
Fair value of warrant liability			—				—				1,033

The following table summarizes the Company's warrant activity during the year-ended December 31, 2023 (in thousands):

		*December 31, 2023*
Warrants liability as of January 1, 2023		$	3,473
Change in fair value of warrants			(2,440	)
Warrants liability as of December 31, 2023		$	1,033

The fair value of the Prefunded Warrants and stock purchase warrants issued in connection with the Company's common stock offering on March 1, 2022 were measured using the Black Scholes model. Inputs used to determine estimated fair value of the warrant liabilities include the fair value of the underlying stock at the valuation date, the term of the warrants, and the expected volatility of the underlying stock. The significant unobservable input used in the fair value measurement of the warrant liabilities is the estimated term of the warrants. Upon the issuance of the Prefunded Warrants and stock purchase warrants, the Company evaluated the terms of each warrant to determine the appropriate accounting and classification pursuant to FASB ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”), and FASB Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”). Based on the Company’s evaluation and due to certain terms in the warrant agreements, it concluded the Prefunded Warrants, and the stock purchase warrants should be classified as liability with subsequent remeasurement as long as such warrants continue to be classified as liabilities.

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.

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