v3.26.1
Fair Value Measures
 3 Months Ended
Mar. 31, 2026
Fair Value Measures [Abstract]  
Fair Value Measures

Note 4 — Fair Value Measures

 

Fair Values of Assets and Liabilities

 

In accordance with ASC Topic 820, Fair Value Measurement, the Company measures fair value at the price 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. In determining fair value, the assumptions that market participants would use in pricing an asset or liability (the inputs) are based on a tiered fair value hierarchy consisting of three levels, as follows:

 

Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets.

 

Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar instruments in active markets or for similar markets that are not active.

 

Level 3: Unobservable inputs for which there is little or no market data which require the Company to develop its own assumptions about how market participants would price the asset or liability.

The Company has certain financial instruments which consist of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, operating lease liabilities, long-term debt, related party debt, and warrant liabilities. Fair value information for each of these instruments as well as other balances of the Company are as follows:

 

  ● Cash and cash equivalents, accounts payable, and accrued expenses approximate their fair value based on the short-term nature of these instruments.

 

  ● Accounts receivable are presented net of an allowance for estimated credit losses, which approximates fair value.

 

  ● The carrying value of lease liabilities approximates fair value due to the implicit discount rates used in the determination of the lease liabilities being consistent with the Company’s incremental borrowing rates at the time of lease inception and accounting for the duration of the leases.

 

  ● Long-term debt and related party debt, including the debt that has undergone troubled debt restructuring, is carried at amortized cost, dictated by the prevailing market interest rates at the time of each transaction in accordance with ASC Topic 470, Debt (“ASC 470”).

 

  ● The Company’s warrant liabilities are marked-to-market for each reporting period with the changes in fair value of warrant liabilities recorded in other income (expense), net in the accompanying unaudited condensed consolidated statements of operations until the warrants are exercised. The fair value of the warrant liabilities are estimated using a Black-Scholes option-pricing model.

 

At March 31, 2026 and December 31, 2025, the Company’s assets and liabilities measured at fair value on a recurring basis were as follows:

 

   March 31, 2026   December 31, 2025 
   Fair Value Measurements Using Input Types   Fair Value Measurements Using Input Types 
(In thousands)  Level 1   Level 2   Level 3   Total   Level 1   Level 2   Level 3   Total 
Liabilities:                                
Warrant liabilities  $
—
   $
—
   $592   $592   $
—
   $
—
   $697   $697 
Total liabilities  $
—
   $
—
   $592   $592   $
—
   $
—
   $697   $697 

Warrant Liabilities

 

The estimated fair value of the warrant liabilities on March 31, 2026 and December 31, 2025 is determined using Level 3 inputs. Inherent in a Black-Scholes option-pricing model are assumptions used in calculating the estimated fair values that represent the Company’s best estimate. The volatility rate is determined utilizing the Company’s own share price and the share price of competitors over time. However, inherent uncertainties are involved. If factors or assumptions change, the estimated fair values could be materially different.

 

The following table summarizes the Company’s assumptions used in the valuations as of March 31, 2026 and December 31, 2025:

 

   March 31,
2026		   December 31,
2025		 
Stock price   $18.30    $21.34 
Exercise price    $0.14 - $22,440      $0.14 - $22,440  
Expected term (in Years)    0.83 - 1.89      1.08 - 2.14  
Volatility   160.7%    163.0% 
Discount rate - treasury yield    3.68 - 3.79%      3.47 - 3.48%  

 

The following table sets forth a summary of the changes in the fair value of the Level 3 warrant liabilities for the three months ended March 31, 2026 and for the year ended December 31, 2025:

 

   Three months
ended
March 31, 2026		   For the year
ended
December 31, 2025		 
Warrant liabilities - beginning of period  $697   $996 
Change in estimated fair value   (105)   (299)
Warrant liabilities end of period  $592   $697 

 

As of March 31, 2026 and December 31, 2025, the number of outstanding warrants subject to liability classification was 40,017, of which 15,394 are held by RSLGH, LLC, a related party and wholly-owned subsidiary of Green Thumb.