Fair Value Measurements |
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Jul. 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | (12) Fair Value Measurements
ASC 820 - Fair Value Measurements states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable input and minimizes the use of unobservable inputs. The following is a description of the three hierarchy levels.
ASC 825 – Financial Instruments allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (the fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date.
Disclosure of Fair Values
The Company’s financial instruments that are not re-measured at fair value include cash, cash equivalents, restricted cash, accounts receivable, other assets, contract assets and liabilities, deposits, accounts payable, and accrued expenses. The carrying value is equal to their fair value due to the short-term nature of these accounts.
The following tables sets forth the Company’s financial instruments that are measured at fair value on a recurring basis by level within the fair value hierarchy (amounts in thousands):
The Company elected the fair value option for the April 2026 convertible note issuances. Management determined that the fair value option would be elected for these convertible notes as they are required to be measured at fair value as part of the determination of the extinguishment of the previously issued convertible notes. At July 31, 2026, the fair value of these convertibles notes was $8.1 million, as compared to the aggregate unpaid principal and premium balance of $8.6 million at that same date. The fair value of the convertible notes, including the conversion option and all embedded features, was determined using a simulation model. Key inputs to the model include the initial conversion price of $12.00 per share, the common stock value as of the issuance date of $, the risk-free rate of 3.68%, and probability of settlement options, and the equity volatility of 150%. The equity volatility was determined using the Company’s historical volatility. Interest expense of approximately $278,000 was recorded during the three-month period ended July 31, 2026. This amount is included within “Interest (expense)/income, net” within the Company’s Consolidated Statements of Operations.
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