Note 5 - Financial Instruments and Fair Value Measurements

6 Months Ended

Jun. 30, 2026

Notes to Financial Statements

Fair Value Disclosures [Text Block]

5. Financial Instruments and Fair Value Measurements

The Company’s financial instruments consist of money market funds and a derivative liability. The following tables show the Company’s financial instruments' carrying value and fair value at June 30, 2026 and December 31, 2025 (in thousands):

	As of June 30, 2026 (unaudited)
	Carrying Amount		Fair Value		Quoted Priced in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	2,193	$	2,193	$	2,193	$	—	$	—
Total assets	$	2,193	$	2,193	$	2,193	$	—	$	—
Liabilities
Derivative liability	$	212	$	212	$	—	$	—	$	212
Total liabilities	$	212	$	212	$	—	$	—	$	212

	As of December 31, 2025
	Carrying Amount		Fair Value		Quoted Priced in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets
Money market funds	$	12,191	$	12,191	$	12,191	$	—	$	—
Total assets	$	12,191	$	12,191	$	12,191	$	—	$	—
Liabilities
Derivative liability	$	292	$	292	$	—	$	—	$	292
Total liabilities	$	292	$	292	$	—	$	—	$	292

Cash equivalents - Cash equivalents of $2.2 million as of June 30, 2026 and $12.2 million as of December 31, 2025, consisted of money market funds. Money market funds are classified as Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. Of the $2.2 million of cash equivalents as of June 30, 2026, $368 thousand is classified as restricted cash on the balance sheet as it serves as collateral for one of the Company's facility leases.  

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

Recurring Fair Value Measurements

The Company’s derivative liability embedded in the Financing Agreement is measured at fair value using a probability-weighted discounted cash flow model and is classified as a Level 3 liability of the fair value hierarchy due to the use of significant unobservable inputs. The liability is presented as an embedded derivative liability on the consolidated balance sheets and is subject to remeasurement to fair value at the end of each reporting period, with the change in fair value recognized as a component of other income (expense) in its consolidated statements of operations. The assumptions used in the discounted cash flow model include: (1) management's estimates of the probability and timing of future cash flows and related events; (2) the Company's risk-adjusted discount rate that includes a company-specific risk premium; and (3) the Company's cost of debt.

The following table provides a reconciliation for the opening and closing balance of the derivative liability for the six months ended June 30, 2026 (in thousands):

	Amount
Balance as of January 1, 2026	$	292
Issuances		—
Adjustment for net change in fair value		(80	)
Balance as of June 30, 2026	$	212

The following table provides a reconciliation for the opening and closing balance of the derivative liability for the year ended  December 31, 2025 (in thousands):

	Amount
Balance as of January 1, 2025	$	—
Issuances		320
Adjustment for net change in fair value		(28	)
Balance as of December 31, 2025	$	292

There have been no changes to the valuation methodologies utilized by the Company during the six months ended June 30, 2026 compared to the year ended December 31, 2025. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of financial instruments between levels during the six months ended June 30, 2026 and the year ended December 31, 2025.