Annual report pursuant to Section 13 and 15(d)

Financial Instruments

v3.20.1
Financial Instruments
12 Months Ended
Dec. 31, 2019
Investments All Other Investments [Abstract]  
Financial Instruments

NOTE 5. FINANCIAL INSTRUMENTS

Cash, Cash Equivalents and Marketable Securities

The Company’s money market funds and marketable securities are categorized as Level 1 and 2, respectively, within the fair value hierarchy. The following table shows the cost, gross unrealized losses and fair value, with a breakdown by significant investment category, of the Company’s cash and cash equivalents as of December 31, 2019:

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

Cash and

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

Fair

 

 

Cash

 

 

Marketable

 

 

 

Cost

 

 

Losses

 

 

Value

 

 

Equivalents

 

 

Securities

 

Cash

 

$

23,710

 

 

$

 

 

$

23,710

 

 

$

23,710

 

 

$

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

 

20,355

 

 

 

 

 

 

20,355

 

 

 

20,355

 

 

 

 

Total

 

$

44,065

 

 

$

 

 

$

44,065

 

 

$

44,065

 

 

$

 

 

The following table shows the cost, gross unrealized losses and fair value, with a breakdown by significant investment category, of the Company’s cash, cash equivalents and marketable securities as of December 31, 2018:

 

 

 

 

 

 

 

Gross

 

 

 

 

 

 

Cash and

 

 

 

 

 

 

 

 

 

 

 

Unrealized

 

 

Fair

 

 

Cash

 

 

Marketable

 

 

 

Cost

 

 

Losses

 

 

Value

 

 

Equivalents

 

 

Securities

 

Cash

 

$

13,337

 

 

$

 

 

$

13,337

 

 

$

13,337

 

 

$

 

Level 1:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

 

24,202

 

 

 

 

 

 

24,202

 

 

 

24,202

 

 

 

 

Level 2:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government securities

 

 

2,500

 

 

 

(2

)

 

 

2,498

 

 

 

 

 

 

2,498

 

Corporate debt securities

 

 

11,113

 

 

 

(46

)

 

 

11,067

 

 

 

 

 

 

11,067

 

Subtotal

 

 

13,613

 

 

 

(48

)

 

 

13,565

 

 

 

 

 

 

13,565

 

Total

 

$

51,152

 

 

$

(48

)

 

$

51,104

 

 

$

37,539

 

 

$

13,565

 

 

The following tables show information about the Company’s marketable securities that were in a continuous unrealized loss position for less than 12 months and for 12 months or greater as of December 31, 2018:

 

 

 

December 31, 2018

 

 

 

Continuous Unrealized Losses

 

 

 

Less than

 

 

12 Months

 

 

 

 

 

 

 

12 Months

 

 

or Greater

 

 

Total

 

Fair value of marketable securities

 

$

13,565

 

 

$

 

 

$

13,565

 

Unrealized losses

 

$

(48

)

 

$

 

 

$

(48

)

 

The Company typically invests in highly rated securities, and its investment policy generally limits the amounts that may be invested with any one issuer. The policy generally requires investments to be investment grade, with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security in the securities portfolio.

Stock Warrants

In April 2018, in connection with the advisory agreement between the Company and a financial advisory firm, the Company issued such firm a five-year warrant to purchase up to 20,000 shares of the Company’s common stock (“April 2018 Warrant”). The April 2018 Warrant was fully vested and exercisable upon issuance and has an exercise price of $11.73 per share. The Company recorded this stock warrant at its fair value using the Black-Scholes option-pricing model. The holder is able to redeem the warrant for a number of shares having a value equal to the in-the-money value of the warrant. The Company recorded the fair value of the award as a liability upon issuance, and such fair value is remeasured at the end of each reporting period. The April 2018 Warrant was outstanding at December 31, 2019.

The following table summarizes quantitative information with respect to the significant unobservable inputs that were used to value the April 2018 Warrant:

 

 

 

December 31, 2019

 

 

December 31, 2018

 

Volatility

 

 

70

%

 

 

70

%

Risk-free rate

 

 

1.62

%

 

 

2.51

%

Term

 

3.25 years

 

 

4.25 years

 

 

The following table represents a roll-forward of the fair value of the April 2018 Warrant, which was recorded within other accrued liabilities in the consolidated balance sheets at December 31, 2019 and 2018:

 

Balance, December 31, 2017

 

$

 

Issuance of warrant

 

 

207

 

Change in fair value

 

 

(184

)

Balance, December 31, 2018

 

 

23

 

Change in fair value

 

 

(16

)

Balance, December 31, 2019

 

$

7

 

 

Changes in fair value of the April 2018 Warrant are recorded in other income, net in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2019 and 2018.

There were no transfers between Level 1, Level 2 or Level 3 financial instruments in the years ended December 31, 2019 and 2018.