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

9. Fair Value Measurements

The carrying amounts of certain financial instruments, including cash and cash equivalents, restricted cash, investments, accounts receivable, prepaid expenses and other current assets, accounts payable, Asset Purchase Agreement payable, and accrued expenses approximate their respective fair values due to the short-term nature of such instruments.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached as of March 31, 2026 and December 31, 2025 for financial instruments measured at fair value on a recurring basis (in thousands):

 

 

 

 

 

Fair Value Hierarchy Classification

 

 

 

Balance

 

 

Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)

 

 

Significant
Other
Observable
Inputs
(Level 2)

 

 

Significant
Unobservable
Inputs (Level 3)

 

March 31, 2026

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

24,233

 

 

$

24,233

 

 

 

—

 

 

 

—

 

Restricted cash

 

 

189

 

 

 

189

 

 

 

—

 

 

 

—

 

Money market funds

 

 

12,438

 

 

 

12,438

 

 

 

—

 

 

 

—

 

Total assets

 

$

36,860

 

 

$

36,860

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liabilities

 

$

18,862

 

 

 

—

 

 

 

—

 

 

$

18,862

 

Total liabilities

 

$

18,862

 

 

 

—

 

 

 

—

 

 

$

18,862

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

1,736

 

 

$

1,736

 

 

 

—

 

 

 

—

 

Restricted cash

 

 

189

 

 

 

189

 

 

 

—

 

 

 

—

 

Money market funds

 

 

19,523

 

 

 

19,523

 

 

 

—

 

 

 

—

 

Total assets

 

$

21,448

 

 

$

21,448

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrant liability

 

$

2,225

 

 

 

—

 

 

 

—

 

 

$

2,225

 

Total liabilities

 

$

2,225

 

 

 

—

 

 

 

—

 

 

$

2,225

 

The Company measures cash equivalents at fair value on a recurring basis. The fair value of cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. As of March 31, 2026, the cash and cash equivalents of $36.7 million and the restricted cash balances of $0.1 million within short term and $0.1 million in long term on the unaudited condensed consolidated balance sheet, sum to the total of $36.9 million as shown in the unaudited condensed consolidated statement of cash flows.

Level 3 financial liabilities consist of the warrant liabilities for which there is no current market such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. The Company uses the Black-Scholes option valuation model to value the Level 3 warrant liabilities at inception and on subsequent valuation dates. This model incorporates transaction details such as the Company’s stock price, contractual terms, maturity, risk free rates, as well as volatility. The unobservable inputs for the Level 3 warrant liabilities include volatility and expected term. The historical and implied volatility of the Company, using its closing common stock prices and market data, is utilized to reflect future volatility over the expected term of the warrants.

At March 31, 2026, the range and weighted average of the Level 3 volatilities utilized in the Black-Scholes model to fair value the warrant liabilities were 72.9% to 86.2% and 76.7%, respectively. At December 31, 2025, the Level 3 volatility utilized in the Black-Scholes model to fair value the warrant liability was 86.1%. The Company utilizes a probability assessment to estimate the expected term for the Common Warrants associated with the March 2026 Private Placement. At March 31, 2026, the estimated expected term for the Common Warrants was 2.36 years.

A reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows (in thousands):

 

 

 

Warrant Liabilities

 

Balance – December 31, 2025

 

 

$

2,225

 

Loss adjustment to fair value

 

 

 

5,249

 

Common Warrants issued for March 2026 Private Placement

 

 

 

11,388

 

Balance – March 31, 2026

 

 

$

18,862