Note 11 - Fair Value Measurements

The following table presents assets and liabilities measured at fair value by classification within the fair value hierarchy:

The availability of observable inputs can vary depending on the financial asset and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, and current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires additional judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level III. The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels I, II, and III, as discussed further below.

Transfers to and from Level I, II and III are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. During the three months ended March 31, 2026, certain amounts from the July Investment Agreement Derivative and the CPU Share Allocation Obligation were reclassified out of Level III on the Closing Date.

Reconciliation of Fair Value Measurements Categorized within Level III

The following table provides a reconciliation of the beginning and ending balance associated with the liabilities measured at Level III fair value using significant unobservable inputs for the three months ended March 31, 2026: 

In settlement of certain obligations to issue shares under the July Investment Agreement and the CPU Share Allocation Obligation, during the three months ended March 31, 2026, the Company issued 78,525,847 common shares and 39,520,335 common shares, respectively. The settlements were valued using the Company’s closing share price as of the Closing Date.

Additionally, during the three months ended March 31, 2026, $25.0 million of the July Investment Agreement Derivative payable to the Anchor Investor was reclassified out of Level III as a result of the completion of the Business Combination, removing the uncertainty related to the liability. As of March 31, 2026, $25.0 million is included in accrued expenses and other current liabilities.

Separately, $186.8 million related to the CPU Share Allocation Obligation was reclassified out of Level III and recognized as equity-classified CPU share allocation. This reclassification was due to the number of shares issuable under the CPU Share Allocation Obligation becoming fixed upon the Closing Date, and was valued using the Company’s closing share price as of the Closing Date. For further information, refer to Note 13 - Equity.

Money Market Funds

Money market funds are investments with maturities within three months of their purchase dates held at banks, that approximate fair value based on Level I measurements.

Derivative Liabilities

Prior to December 31, 2025, the Company utilized scenario-based valuation models to value the July Investment Agreement Derivative and the CPU Share Allocation Obligations (collectively, the “Derivative Liabilities”) at issuance and each subsequent reporting period. A key estimate used in the valuations of the July investment agreement derivative is an enterprise valuation of New EM, which included the acquisition of the Four Entities which uses a sum-of-the-parts valuation model that combined the arm’s length purchase prices of the Four Entities pursuant to acquisition agreements signed with the Company on February 10, 2025, and the invested capital of the Company for each measurement date.

As of December 31, 2025, the Company updated its valuation methodology to reflect the advanced stage of the Business Combination and the availability of observable market-based inputs. At that date, substantially all substantive closing conditions had been satisfied, and the only remaining item was final Nasdaq listing approval, which was subsequently obtained on January 2, 2026, with the Business Combination closing on January 5, 2026. Given the proximity to closing and the presence of a publicly traded instrument directly linked to the post-closing equity structure, management determined that a market-based valuation approach more faithfully reflected fair value as of December 31, 2025.

Accordingly, for the December 31, 2025 measurement, the Company first determined the implied equity value of EM&T on a pro forma fully diluted basis at closing. The Company then applied a market-based adjustment derived from the trading price of WTMA Rights, which were publicly traded securities that converted into WTMA common shares at a fixed ratio upon consummation of the Business Combination. The implied ratio between the aggregate conversion value of the Rights and the trading price of WTMA common shares reflected the market’s assessment of both (i) the probability of closing and (ii) expected post-closing share price performance. The final market-based adjustment incorporated the observable Rights pricing, which inherently reflected both closing risk and market expectations regarding post-closing performance.

As a result, the December 31, 2025 valuation of the Derivative Liabilities was based on the implied EM&T equity value at closing, adjusted by the market-derived factor from WTMA Rights pricing, rather than solely on the prior sum-of-the-parts enterprise valuation framework.

July Investment Agreement Derivative:

The Company utilized the following assumptions to value the July Investment Agreement Derivative:

CPU Share Allocation Obligations:

The CPU Share Allocation Obligations were contingent on the closing of the Business Combination and certain convertible preferred unit holders entering into additional convertible preferred unit agreements in increments of $2.0 million or $4.0 million, as defined in an investor’s specific convertible preferred unit agreement.

The Company utilized the following assumptions to value the CPU Share Allocation Obligations as of the balance sheet dates: