v3.26.1
Note 4 - Fair-value Measurements
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

Note 4—Fair-Value Measurements 

 

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. The accounting standard establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required:

 

Level 1—Observable inputs for identical assets or liabilities, such as quoted prices in active markets;

 

Level 2—Inputs other than quoted prices in active markets that are either directly or indirectly observable; and

 

Level 3—Unobservable inputs in which little or no market data exists, therefore they are developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

 

We review the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. There have been no transfers of assets or liabilities between fair value measurement classifications during the three months ended June 30, 2026.

 

Our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis are as follows:

 

   

June 30, 2026

  
   

Level 1

    

Level 2

    

Level 3

    

Total

  
   

(In thousands)

  

Assets:

                          

Cash and cash equivalents:

                                

Certificate of deposit classified as non-current restricted investments

   $ 1,054     $ —     $ —     $ 1,054  

Short-term investments:

                                

Money-market funds

     129,965       —       —       129,965  

Total Assets

   $ 131,019     $ —     $ —     $ 131,019  
                                 
                                 

Liabilities:

                                

2029 Notes:

                                

2029 Notes conversion option derivative

   $ —     $ —     $ (55,216 )   $ (55,216 )

2029 Notes repurchase obligation, net

     —       (31,259 )     —       (31,259 )

Total Liabilities

   $ —     $ (31,259 )   $ (55,216 )   $ (86,475 )

 

   

December 31, 2025

  
   

Level 1

    

Level 3

    

Total

  
   

(In thousands)

  

Assets:

                  

Cash and cash equivalents:

                        

Certificate of deposit classified as non-current restricted investments

   $ 1,054     $ —     $ 1,054  

Short-term investment

                        

Money-market funds

     162,144       —       162,144  

Total Assets

   $ 163,198     $ —     $ 163,198  
                         

Liabilities:

                        

2029 Notes:

                        

2029 Notes conversion option derivative

   $ —     $ (157,171 )   $ (157,171 )

Total Liabilities

   $ —     $ (157,171 )   $ (157,171 )

 

 

Cash held in demand deposit accounts of $2.0 million and $9.7 million is excluded from our fair-value hierarchy disclosure as of June 30, 2026 and December 31, 2025, respectively. The carrying amounts reported in the accompanying condensed consolidated balance sheets for receivables, accounts payable and accrued liabilities, and other current monetary assets and liabilities approximate fair value.

 

All our investments, which are classified as Level 1 assets, are short-term and held in our name. Money market funds are classified as available-for-sale.

 

Our embedded derivative is classified as a Level 3 liability. (For further details see “Note 6 – Debt”).

 

The fair value of our embedded derivative was determined using the Discounted Cash Flow model with the following key assumptions:

 

   

June 30,

    

December 31,

  
   

2026

    

2025

  

2029 Note conversion option derivative

                
                 

Stock price (per share)

   $ 9.51     $ 17.18  

Unsecuritized discount rate

     18.32 %     18.03 %

Risk-free rate

     4.07 %     3.53 %

Stock price volatility

     70 %     75 %

Dividend yield

     — %     — %

Term (in years)

     3.0       3.5  

 

Changes in valuation assumptions could have a significant impact on the 2029 Note conversion option derivative. We can provide no assurance that changes in yield or in our stock price would not have a significant impact on the derivative in the future. An increase in our stock price volatility could increase the valuation of the 2029 Note conversion option derivative, whereas an increase in interest rates could decrease the valuation of the 2029 Note conversion option derivative. (For further details see “Note 6 — Debt”).

 

The following table sets forth the change in the fair value of the 2029 Note conversion option derivative for the six months ended June 30, 2026:

 

   

Balance as of

                            

Balance as of

  
   

December 31,

                    

Conversions and

    

June 30,

  
   

2025

    

Additions

    

Change in Fair Value

    

Extinguishments

    

2026

  
   

(In thousands)   

  
                                         

Liabilities

                                        

2029 Notes

                                        

2029 Notes conversion option derivative

   $ (157,171 )   $ —     $ 85,266     $ 16,689 (1)     (55,216 )

2029 Notes repurchase obligation, net

     —       (30,586 )     (673 )     —       (31,259 )(2)

Total

   $ (157,171 )   $ (30,586 )   $ 84,593     $ 16,689     $ (86,475 )

 

  (1) In June 2026, the Company entered into agreements to repurchase a portion of its 2029 Notes, which settled in July 2026. The derivative liability associated with the repurchased notes was derecognized upon signing of the note repurchase agreements with the noteholders. 
  (2) The current payment obligation related to the 2029 Notes repurchase obligation is classified as a Level 2 liability. The fair value was determined using the contractual settlement formula in the note repurchase agreements and observable volume weighted average price data for the Company's common stock during the measurement period. Accordingly, the fair value at June 30, 2026 approximated the contractual settlement amount. (See “Note 6 — Debt” for additional information regarding the repurchase transaction.)