Fair Value Measurements of Financial Instruments

3 Months Ended

Mar. 31, 2025

Fair Value Measurements of Financial Instruments

3. Fair Value Measurements of Financial Instruments

Summary of Financial Instruments

All of the Company's investments in available-for-sale securities have matured as of March 31, 2025. On January 15, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with ASMedia Technology Inc., a Taiwanese corporation (“Parent”), and Apex Merger Sub Inc., a Delaware corporation (“Merger Sub”). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger (the “Surviving Corporation”) and becoming a wholly owned subsidiary of Parent (the "Proposed Transaction"). Consummation of the Merger is subject to the satisfaction or waiver of certain customary closing conditions. See Part I Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations—Proposed Transaction”. Under the Merger Agreement, the Company is prohibited from issuing or selling any debt securities or rights to acquire debt securities prior to the closing of the Merger, subject to certain exceptions.

The following is a summary of the Company's financial instruments (in thousands) as of December 31, 2024:



	December 31, 2024
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Values
Available-for-sale securities:
Treasury bills	$	4,019	$	1	$	—	$	4,020
Corporate bonds		500		—		—		500
Total available-for-sale securities	$	4,519	$	1	$	—	$	4,520
Reported in:
Cash and cash equivalents							$	—
Short-term investments								4,520
Long-term investments								—
Total available-for-sale securities							$	4,520

The contractual maturities of available-for-sale securities are presented in the following table (in thousands):



	March 31, 2025				December 31, 2024
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	—	$	—	$	4,519	$	4,520
Due between one to two years		—		—		—		—
	$	—	$	—	$	4,519	$	4,520

For investments in available-for-sale debt securities that have unrealized losses, the Company evaluates (i) whether it has the intention to sell any of these investments and (ii) whether it is more likely than not that it will be required to sell any of these investments before recovery of the entire amortized cost basis. Based on this evaluation, the Company determined that there were no other-than-temporary impairments associated with investments as of March 31, 2025.

There were no sales of available-for-sale securities for the three months ended March 31, 2025 and 2024.

Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. A

financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Valuations are based on unadjusted quoted prices in active markets that the Company has the ability to access for identical, unrestricted assets and do not involve any meaningful degree of judgment.

Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The following table sets forth the Company’s financial instruments that were measured at fair value by level within the fair value hierarchy (in thousands) as of :


	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total
As of December 31, 2024
Financial assets - available-for-sale securities
Treasury bills	$	—	$	4,020	$	4,020
Corporate bonds		500		—		500
Total financial assets - available-for-sale securities	$	500	$	4,020	$	4,520

The Company uses a pricing service to assist in determining the fair values of all of its cash equivalents, short-term investments and long-term investments. The pricing service uses inputs from multiple industry standard data providers or other third party sources and applies various acceptable methodologies.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

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+ Details

Techpoint, Inc. 10-Q