Fair Value of Financial Instruments

3 Months Ended

12 Months Ended

Mar. 31, 2021

Dec. 31, 2020

Note 6 — Fair Value of Financial Instruments

Items Measured at Fair Value on a Recurring Basis

As of March 31, 2021 and December 31, 2020, the Company held certain assets and liabilities that were required to be measured at fair value on a recurring basis.

The following tables are summaries of fair value measurements and hierarchy level as of:


	March 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	37,449	$	—	$	—	$	37,449
Equity securities		500		—		—		500
Fixed maturity debt securities, including cash equivalents		—		233,193				233,193
Total Assets:	$	37,949	$	233,193	$	—	$	271,142
Liabilities:
Merger warrant liability		16,705		9,962		—		26,667
Earnout shares		—		—		42,438		42,438
Total Liabilities:	$	16,705	$	9,962	$	42,438	$	69,105


	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	405	$	—	$	—	$	405
Equity securities		375		—		—		375
Fixed maturity debt securities		246		411		—		657
Total Assets:	$	1,026	$	411	$	—	$	1,437
Liabilities:
Redeemable convertible preferred stock tranche obligation	$	—	$	—	$	2,832	$	2,832
Historic warrants liability		—		—		144		144
Total Liabilities:	$	—	$	—	$	2,976	$	2,976

Money market funds consist of highly liquid investments with original maturities of three months or less and classified in restricted cash in the accompanying condensed consolidated balance sheets.

The Company recognizes transfers between the levels as of the actual date of the event or change in circumstances that caused the transfer. There were no transfers between the levels during the three months ended March 31, 2021 and 2020.

The following tables set forth a summary of changes in the estimated fair value of the Company’s Level 3 redeemable convertible preferred stock tranche obligation, historic warrants liability and earnout shares for the three months ended March 31, 2021 and 2020:


	January 1,						Change in		March 31,
	2021		Issuances		Settlements		fair value		2021
Redeemable convertible preferred stock tranche obligation	$	2,832	$	—	$	(2,832)	$	—	$	—
Historic warrants liability		144		—		(144)		—		—
Earnout shares		—		74,284		—		(31,846)		42,438
Total	$	2,976	$	74,284	$	(2,976)	$	(31,846)	$	42,438


	January 1,						Change in		March 31,
	2020		Issuances		Settlements		fair value		2020
Redeemable convertible preferred stock tranche obligation	$	3,755	$	—	$	—	$	(284)	$	3,471
Historic warrants liability		115		—		—		(13)		102
Total	$	3,870	$	—	$	—	$	(297)	$	3,573

The fair value of the earnout shares was estimated by utilizing a Monte-Carlo simulation model. The inputs into the Monte-Carlo pricing model included significant unobservable inputs. The table below summarizes the significant inputs used when valuing the earnout shares as of:


	March 31, 2021			January 21, 2021
Expected volatility		80.00	%		80.00	%
Starting stock price	$	7.13		$	11.31
Expected term (in years)		4.7 years			5 years
Risk-free interest rate		0.87	%		0.45	%
Earnout hurdle	$	12.50–$15.00		$	12.50–$15.00

Fair Value of Financial Instruments Not Measured at Fair Value on a Recurring Basis

The carrying amounts of restricted cash, accounts receivable and accounts payable approximate fair value because their respective maturities are less than three months.

Beginning March 10, 2021, the Company entered into a $30,000 floor plan credit facility with Ally Financial. Concurrently, proceeds from the agreement were used to settle outstanding debt obligations on the Company’s preexisting floor plan facility with Automotive Finance Corporation (“AFC”). The carrying value of the Ally Financial floor plan notes payable outstanding as of March 31, 2021 approximates fair value due to its variable interest rate determined to approximate current market rates.

Note 6 — Fair Value of Financial Instruments

Items Measured at Fair Value on a Recurring Basis

As of December 31, 2020 and December 31, 2019, the Company held certain assets and liabilities that were required to be measured at fair value on a recurring basis.

The following tables are summaries of fair value measurements and hierarchy level as of December 31, 2020 and 2019:


	2020
	Level 1		Level 2		Level 3			Total
Assets:
Money market funds	$	405	$	—	$	—	$	405
Equity securities		375		—		—		375
Fixed maturity debt securities		246		411		—		657
Total Assets:		1,026		411		—		1,437

Liabilities:
Redeemable convertible preferred stock tranche obligation		—		—		2,832		2,832
Stock warrants liability		—		—		144		144
Total Liabilities:	$	—	$	—	$	2,976	$	2,976


	2019
	Level 1		Level 2		Level 3			Total
Assets:
Money market funds	$	688	$	—	$	—	$	688
Liabilities:
Redeemable convertible preferred stock tranche obligation		—		—		3,755		3,755
Stock warrants liability		—		—		115		115
Total Liabilities:	$	—	$	—	$	3,870	$	3,870

Money market funds consist of highly liquid investments with original maturities of three months or less and classified in restricted cash in the accompanying consolidated balance sheets.

The following tables set forth a summary of changes in the estimated fair value of the Company’s Level 3 redeemable convertible preferred stock tranche obligation and Level 3 stock warrants liability for the years ended December 31, 2020 and 2019:


							Change in
Year-ended December 31, 2020	January 1,		Issuances		Settlements		Fair Value		December 31,
Redeemable convertible preferred stock tranche obligation	$	3,755	$	—	$	—	$	(923)	$	2,832
Stock warrants liability		115		15		—		14		144
Total	$	3,870	$	15	$	—	$	(909)	$	2,976


							Change in
Year-ended December 31, 2019	January 1,		Issuances		Settlements		Fair Value		December 31,
Redeemable convertible preferred stock tranche obligation	$	3,261	$	—	$	(902)	$	1,396	$	3,755
Stock warrants liability		67		72		—		(24)		115
Total	$	3,328	$	72	$	(902)	$	1,372	$	3,870

The fair value of the obligation to purchase future tranches of Series A Preferred Stock was estimated by utilizing the Black Scholes pricing model. The inputs into the Black Scholes pricing model included significant unobservable inputs. The table below summaries the significant inputs used when valuing the redeemable convertible preferred stock tranche obligation as of December 31, 2020 and 2019:


	2020		2019
Expected volatility	65.00	%	45.00	%
Expected dividend yield	0.00	%	0.00	%
Expected term (in years)	4 years		5 years
Risk-free interest rate	0.27	%	1.69	%
Marketability discount	60.00	%	50.00	%

Fair Value of Financial Instruments Not Measured at Fair Value on a Recurring Basis

The carrying amounts of restricted cash, accounts receivable, and accounts payable approximate fair value because their respective maturities are less than three months. The carrying value of the floor plan notes payable outstanding as of December 31, 2020 and December 31, 2019 approximates its fair value due to its variable interest rate determined to approximate current market rates. The convertible note payable was issued on December 20, 2019 and was entered into at prevailing interest rates on the date of issuance. Given the proximity of the issuance of the convertible note payable to December 31, 2019, the fair value of the convertible note payable was determined to approximate carrying value as of December 31, 2019.

The fair value of the convertible note is $3,264 versus a carrying value of $3,325 as of December 31, 2020. The difference between the carrying value and the fair value of the Paycheck Protection Program (PPP) loan of $1,749 as of December 31, 2020 is immaterial. The Promissory Note with a carrying value of $2,990 was issued on December 2, 2020 and was entered into at prevailing interest rates on the date of issuance. Given the proximity of the issuance of the Promissory Note payable to December 31, 2020, the fair value of the Promissory Note was determined to approximate carrying value as of December 31, 2020.

- Definition

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.

+ References + Details