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5. Fair Value Measurements
The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Each level of input has different levels of subjectivity and difficulty involved in determining fair value.
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Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Therefore, determining fair value for Level 1 investments generally does not require significant judgment, and the estimation is not difficult. |
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Level 2 – Pricing is provided by third-party sources of market information obtained through investment advisors. The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors. |
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Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity. |
5. Fair Value Measurements, continued
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 by level within the fair value hierarchy, are as follows:
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(in thousands) |
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June 30, 2022 |
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Significant |
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Quoted prices |
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other |
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Significant |
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in active |
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observable |
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unobservable |
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markets |
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inputs |
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inputs |
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(Level 1) |
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(Level 2) |
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(Level 3) |
Liabilities: |
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Warrant liability |
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$ |
— |
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$ |
— |
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$ |
8 |
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(in thousands) |
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December 31, 2021 |
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Significant |
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Quoted prices |
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other |
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Significant |
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in active |
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observable |
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unobservable |
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markets |
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inputs |
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inputs |
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(Level 1) |
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(Level 2) |
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(Level 3) |
Liabilities: |
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Warrant liability |
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$ |
— |
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$ |
— |
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$ |
8 |
There were no transfers between Level 1, 2 or 3 during the three and six months ended June 30, 2022 or June 30, 2021.
There were no changes in fair value of the Company’s warrant liability measured at fair value using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2022 and 2021.
The warrant liability is not significant at June 30, 2022 and there are no material changes to the significant unobservable inputs from December 31, 2021.
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