NOTE 4 – INVESTMENTS IN PRIVATELY-HELD COMPANIES

Revenue and accounts receivable for Unicorns generally consists of the fair value of stock options or warrants committed from companies that have appeared on the Unicorn Hunters show. The options or warrants underlying the commitments typically have a term of five to ten years and accounts receivable are recorded at the estimated fair value of such options or warrants as determined at contract inception. Subsequent to issuance of the option or warrant certificates to the Company, the related receivables are reclassified to investments in privately-held companies, a long-term asset account representing investments in private company equity securities or rights to acquire private company equity securities.

The Company’s non-cash receivables and the underlying investments in privately-held companies do not have readily determinable fair values. Their initial cost (i.e., estimated fair value at or near contract inception) is subsequently adjusted to fair value on a nonrecurring basis based on observable price changes from orderly transactions of identical or similar securities of the same issuer or upon impairment. These investments are classified within Level 3 of the fair value hierarchy as we estimate the value based on valuation methods using the observable transaction price at the transaction date and other significant unobservable inputs, such as volatility, rights and obligations related to these securities. These valuations require management judgment due to the absence of an observable market price and lack of liquidity.

During the year ended December 31, 2025, the Company identified impairment indicators for two private-company investments and recorded impairment charges totaling $298 thousand, representing the full carrying value of those investments. The impairment charges were recorded within other income (expense), net in the consolidated statements of operations and comprehensive loss. As of December 31, 2025, the Company had not recorded any additional impairment or bad debt expense related to its remaining long-term investments in private companies or non-cash receivables.

During the year ended December 31, 2024, the Company received option and warrant certificates from five customers with an aggregate carrying value and estimated fair value of $1,510 thousand. Upon receipt, these amounts were reclassified from Unicorn Hunters non-cash receivables to investments in privately held companies.