Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following tables represent the financial instruments measured at fair value on a recurring basis in the financial statements of the Company and the valuation approach applied to each class of financial instruments at June 30, 2022 and December 31, 2021 (in thousands):


	June 30, 2022
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash and cash equivalents:
Money market funds	$	118	$	—	$	—	$	118
Total cash and cash equivalents	118		—		—		118
Equity investments:
Mutual funds	793		—		—		793
Total equity investments	793		—		—		793
Debt securities available-for-sale:
Certificates of deposit	—		5,242		—		5,242
U.S. Treasury securities	13,218		—		—		13,218
Commercial paper	—		5,044		—		5,044
Corporate notes and bonds	—		7,894		—		7,894
Debt securities available-for-sale	13,218		18,180		—		31,398
Total assets measured at fair value	$	14,129	$	18,180	$	—	$	32,309


	December 31, 2021
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Cash and cash equivalents:
Money market funds	$	5,563	$	—	$	—	$	5,563
Commercial paper	—		200		—		200
Total cash and cash equivalents	5,563		200		—		5,763
Equity investments:
Mutual funds	841		—		—		841
Total equity investments	841		—		—		841
Debt securities available-for-sale:
Certificates of deposit	—		1,351		—		1,351
U.S. Treasury securities	250		—		—		250
Commercial paper	—		8,046		—		8,046
Corporate notes and bonds	—		13,232		—		13,232
Debt securities available-for-sale	250		22,629		—		22,879
Total assets measured at fair value	$	6,654	$	22,829	$	—	$	29,483

Highly liquid investments with an original maturity of three months or less at time of purchase are included in cash and cash equivalents on the condensed consolidated balance sheet.

Level 1 assets are priced using quoted prices in active markets for identical assets which include money market funds, U.S. Treasury securities and mutual funds as these specific assets are liquid.

Level 2 available-for-sale securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs.

At June 30, 2022, the Notes had an outstanding principal amount of $106.5 million with a fair value of $70.7 million. At December 31, 2021, the Notes had an outstanding principal amount of $120.5 million with a fair value of $89.4 million. The fair value of the Notes represents a Level 2 measurement.

The fair value of the Notes is typically correlated to the Company’s stock price and as a result, significant changes to the Company’s stock price will have a significant impact on the calculated fair value.

See Note 10, Convertible Notes for further detail on the Notes.

- 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.

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