Fair Value |
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Mar. 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Fair Value |
Note 5—Fair Value
The Company’s financial instruments consist of cash and cash equivalents and warrants.
Pursuant to the requirements of Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurement,” the Company’s financial assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:
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Level 1 - Financial instruments with unadjusted quoted prices listed on active market exchanges.
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Level 2 - Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. The prices for the financial instruments are determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
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Level 3 - Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.
The fair value of the Company’s common and preferred stock warrant liabilities related to the warrants issued in the October 2022, October 2023, April 2024 and June 2025 public offerings were calculated using a Monte Carlo valuation model and were classified as Level 3 in the fair value hierarchy.
The deferred consideration liability related to the Rendiatech asset acquisition (additional cash payments due in 2026 and 2027) is also classified as Level 3. The liability was initially measured at its fair value of $313 thousand on the acquisition date of March 17, 2026, using a discount rate of 13.38% (Company’s estimated credit risk rate based on a CCC bond yield). The carrying value of the deferred consideration liability approximates its fair value as of March 31, 2026.
The following is a roll-forward of the fair value of the Level 3 liabilities:
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