Note 6.    Fair Value Measurements

The Company measures fair value based on the prices 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.

The carrying value of cash, cash equivalents, accounts payable and accrued liabilities approximate fair value because of the short-term nature of those instruments. The following are other financial assets and liabilities that are measured at fair value on a recurring basis.

Convertible Notes at Fair Value

Due to certain embedded features within the convertible notes, the Company elected the fair value option to account for its convertible notes, including any paid-in-kind principal and interest, and the embedded features.

During the years ended December 31, 2025 and 2024, the Company recognized $22.9 million and $(3.3) million, respectively, of expense (income) related to the increase (decrease) in fair value of the convertible notes. As of December 31, 2025, the principal amount outstanding under the convertible notes was $15.0 million, with an estimated fair value of $34.6 million. See Note 5 Daewoong Convertible Notes for more information.

The fair value of the convertible notes was determined based on Level 3 inputs using a scenario-based analysis that estimated the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various qualified financings, corporate transaction and dissolution scenarios. The significant unobservable input assumptions that can significantly change the fair value included (i) the discount rates, (ii) the timing of payments, and (iii) the probability of certain settlement scenarios.

At December 31, 2025, the significant assumptions applied in the valuation of the convertible notes included discount rates ranging from 15% to 53%, an underlying stock price of $1.10, and probability weightings of 95% for approval of the Exchange transaction and 5% for a hold-to-maturity scenario. At December 31, 2024, the valuation of the convertible notes was based on significant assumptions, including a 60% discount rate and probability-weighted outcomes for the hold-to-maturity, qualified financing, and change-in-control scenarios.

Contingent Consideration and Contingent Founder Shares

As part of the Merger, each share of Priveterra Class B common stock (“Founder Shares”), par value $0.0001 per share, issued and outstanding immediately prior to the Merger converted into one share of common stock totaling 95,842 common shares. In addition, at the Merger, certain holders of common stock in Old AEON (the “Participating Stockholders”) will be issued a portion of up to 222,653 additional shares of common stock. Therefore, the Contingent Founder Shares and Participating Stockholder shares (together, “Contingent Consideration Shares”) contain certain contingent provisions as further discussed below.

Pursuant to the terms of the amended Sponsor Support Agreement, 50% of the Founder Shares (i.e., 47,921 Founder Shares) (the “Contingent Founder Shares”) were unvested and subject to the restrictions and forfeiture provisions set forth in this Sponsor Support Agreement, of which 13,980 of such Contingent Founder Shares were forfeited in the second quarter of 2025 as the result of a vesting event not occurring. The remaining 50% of the Founder Shares were not subject to such restrictions and forfeiture provisions. The remaining Contingent Founder Shares shall vest, and shall become free of the provisions as follows:

The Priveterra Sponsor, LLC (the “Sponsor”) has agreed not to vote the Contingent Founder Shares during any period of time that such Contingent Founder Shares are subject to vesting.

As part of the overall consideration paid in connection with the Merger, certain holders of common stock in Old AEON (the “Participating AEON Stockholders”) will be issued a portion of up to 222,653 additional shares of common stock, as follows:

The Company classifies the Contingent Consideration as a liability on the consolidated balance sheets and remeasures at each reporting period with changes to fair value recorded to the consolidated statements of operations and comprehensive (loss) income.

The Company utilized the Probability-Weighted Expected Return Method (PWERM) model to value the contingent consideration based on earnout milestones, probability of forfeiture and success scenarios. For the years ended December 31, 2025 and 2024, the Company recognized $3.5 million and $100.8 million, respectively, of income related to the change in fair value of contingent consideration on the consolidated statements of operations and comprehensive (loss) income, and relates to the change in probabilities of achieving certain scenarios following the clinical results released in the second quarter of 2024 and changes in the Company’s stock

price during the period. As of December 31, 2025 and 2024, the contingent consideration liability was $42 thousand and $3.5 million, respectively.

Warrants

Public and Private Placement Warrants related to the Closing

Upon the Merger, 201,112 warrants consisting of 127,788 public warrants sold in Priveterra’s initial public offering and 73,334 warrants issued in a concurrent private placement, were outstanding.

Public warrants related to the Closing

Each whole public warrant entitles the holder to purchase one share of the Company’s common stock at a price of $828.00 per share. The public warrants became exercisable 30 days after the completion of the Merger, and will expire on July 21, 2028, the five-year anniversary of the completion of the Merger, or earlier upon redemption or liquidation. Warrant holders may, until such time as there is an effective registration statement and during any period when the Company has failed to maintain an effective registration statement covering the shares of the Company’s common stock issuable upon exercise of the warrants, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exception. When exercised on a cashless basis, the number of shares received per warrant is capped at 1.0.

The Company may call the public warrants for redemption for cash:

The Company may also call the public warrants for redemption:

Private placement warrants related to the Closing

Each private placement warrant was identical to the public warrants initially sold by Priveterra in the IPO, except that the private placement warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company and (ii) may be exercised by the holders on a cashless basis.

Warrant exercises

On March 29, 2024, the Company delivered notice of redemptions to warrant holders with a redemption date of April 29, 2024 for a cashless redemption of the Company’s outstanding public warrants. The number of shares of common stock that each exercising warrant holder received by virtue of the cashless exercise (instead of paying the $828.00 per Public Warrant cash exercise price) was

calculated in accordance with the terms of the Warrant Agreement. Any remaining unexercised public warrants on the redemption date were cancelled and the public warrant holders received the redemption price of $7.20 for each public warrant.

During the year ended December 31, 2024, an aggregate of 142,829 warrants were exercised on a cashless basis for 27,310 shares of common stock, with an impact to additional paid in capital of $15.0 million. Additionally, the Company paid $21,000 in April 2024 related to the cancellation of the remaining 2,881 public warrants on the redemption date.

A summary of activity of the Company’s issued and outstanding public warrants for the year ended December 31, 2025 is as follows:

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The warrants are accounted for as a liability with changes in the fair value recorded to the consolidated statement of operations and comprehensive (loss) income. The fair value of the warrants using the Black-Scholes model (Level 3) was de minimus as of December 31, 2025 and $1.2 million as of December 31, 2024. For the years ended December 31, 2025 and 2024, the income from the change in fair value was $1.2 million and $0.3 million, respectively.

Series A and Series B Warrants

The measurement of fair value for the Series A and Series B Warrants were determined utilizing a Black-Scholes model considering all relevant assumptions at the date of issuance of January 7, 2025 and at December 31, 2025. The fair value on grant date was recorded as a liability on the consolidated balance sheets and changes in fair value are recognized at each reporting period on the consolidated statement of operations and comprehensive (loss) income.

The table below summarizes the significant assumptions:

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The grant date fair values for these warrants were $94.0 million, comprised of $20.7 million and $73.3 million for Series A and Series B Warrants, respectively, on January 7, 2025 and was recorded as a liability as of the grant date due to certain exercise price adjustment provisions occurring in connection with future events. Proceeds were allocated to the warrant liabilities based on the fair value as of grant date of the warrants of $94.0 million. As the fair value of the warrants issued were greater than the proceeds received, the Company recognized a loss on issuance of common shares and the warrants of $75.6 million.

A summary of activity for the Company’s issued and outstanding Series A and Series B Warrants for the year ended December 31, 2025 is as follows:

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Summary of Recurring Fair Value Measurements

The following details the Company’s recurring measurements for assets and liabilities at fair value on the consolidated balance sheets as of December 31, 2025 (in thousands):

The following details the Company’s recurring measurements for assets and liabilities at fair value on the consolidated balance sheets as of December 31, 2024 (in thousands):

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