11. Warrant Liabilities

Private Warrants to Acquire Common Stock

On July 1, 2021, the Company granted 405,000 private placement warrants with a 5-year term and an exercise price of $11.50 per share. Management has determined that the private placement warrants are to be classified as liabilities to be marked to market at each reporting period.

The private placement warrants are non-transferable and any transfer to an unrelated party would cause the warrants to be converted into public warrants. Consequently, the fair value of the private placement warrants is equivalent to the quoted price of the publicly traded warrants. Under this approach, the fair value of the private placement warrants on July 1, 2021, was determined to be $1.4 million. The fair value was remeasured as of March 31, 2025 and December 31, 2024, and was determined to be $1.4 million and $1.9 million, respectively, and included in other liabilities in the condensed consolidated balance sheets. As a result, a $0.5 million gain was recognized during the three months ended March 31, 2025, and a $0.1 million loss was recognized during the three months ended  March 31, 2024, and included as other income, net in the condensed consolidated statements of income (loss).

As of March 31, 2025, 328,750 private placement warrants remained outstanding.