v3.26.1
Fair Value Measures and Disclosures
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Disclosures
Note 12: Fair Value Measurements
A summary of the activities of Level 3 fair value measurements is as follows:
March 31, 2026
Circle8 Benelux WarrantPreferred Stock Purchase WarrantBifurcated DerivativesShare Settled EarnoutCircle8 Contingent ConsiderationTotal
Beginning balance$— $— $— $— $— $— 
Assumed during Circle8 Acquisition1,795,491 — — — — 1,795,491 
Issuance— 5,970,000 2,260,000 5,600,000 2,098,574 15,928,574 
Change in fair value(28,976)(1,520,000)160,000 — — (1,388,976)
Ending balance$1,766,515 $4,450,000 $2,420,000 $5,600,000 $2,098,574 $16,335,089 

The Circle8 Benelux Warrant and the Preferred Stock Purchase Warrant are recorded in “warrant liabilities, non-current”, the Bifurcated Derivatives are recorded in “other liabilities”, the Share Settled Earnout and the Circle8 Contingent Consideration are recorded in “contingent consideration liabilities, current portion - related parties” on the accompanying condensed consolidated balance sheets. The income statement impact of changes in fair value of all items in the table above are recorded in the “other expenses, gains and losses” line item of the unaudited condensed consolidated statements of operations and comprehensive loss. See Note 15: Warrants, Mezzanine Preferred Stock and Mezzanine Equity for further discussion regarding the warrants.
Valuation Methodology and Assumptions
Circle8 Benelux Warrant
The provisionally recognized fair value of the Circle8 Benelux Warrant amounts to Circle8’s pre-acquisition carrying value for the liability on the Circle8 Acquisition Date. This carrying value represented Circle8’s estimated fair value of the instrument as measured at December 31, 2025. The Circle8 Benelux Warrant is categorized as a Level 3 fair value measurement because the Company utilized significant unobservable inputs, including expected volatility, expected term, probability weighting of exit and non-exit scenarios, discount for lack of marketability, discount for lack of control, and timing of expected liquidity events.
The provisional fair value and March 31, 2026 fair value of the Circle8 Benelux Warrant were determined using a Monte Carlo simulation model that simulated the equity value based on a Geometric Brownian Motion framework.
Significant inputs used in the model to derive the provisional fair value used as of December 31, 2025 are as follows:
Estimated term1 year
Estimated annual volatility of underlying stock46 %
Risk-free interest rate3.5 %
Significant inputs used in the model at March 31, 2026 are as follows:
Estimated term1 year
Estimated annual volatility of underlying stock50 %
Risk-free interest rate3.7 %
Circle8 Contingent Consideration
The provisional fair value of the Circle8 Contingent Consideration was determined using a Monte Carlo simulation model. This valuation technique incorporates significant unobservable inputs, including expected volatility, forecasted financial performance, and a risk-adjusted discount rate. Changes in any of these assumptions could result in a materially higher or lower fair value measurement. Accordingly, the fair value of the Circle8 Contingent Consideration is classified as a Level 3 measurement within the fair value hierarchy. Significant inputs used in the model at January 23, 2026 are as follows:
Expected revenue volatility4.8 %
Revenue discount rate4.5 %
Risk-free interest rate3.4 %
Series B Preferred Stock, Bifurcated Derivatives and Preferred Stock Purchase Warrant
The fair value of the Preferred Stock Purchase Warrant was determined using a Black-Scholes model that incorporates the use of a Monte Carlo simulation to determine the input representing the value of the underlying Series B Preferred Stock. The result was equivalent to a fair value of $795 for each of the 5,600 separately exercisable units of the warrant as of March 31, 2026. The Preferred Stock Purchase Warrant is categorized as a Level 3 fair value measurement because the Company utilizes significant unobservable inputs, including the estimated fair value of the underlying Series B Preferred Stock, estimated volatility and expected term. Significant inputs used in the model at March 31, 2026 are as follows:
Estimated term1 year
Estimated annual volatility60 %
Annual variance36 %
Risk-free interest rate3.6 %
Strike price for each underlying share$1,000 
The underlying per share fair value of the Series B Preferred Stock as of March 31, 2026 was determined as follows:
Common Stock prices were simulated using Geometric Brownian Motion on a daily basis through the end of the term. Then the Series B Preferred Stock was determined to either convert to Common Stock or receive its stated value plus accrued but unpaid dividends, whichever was more economically advantageous. Significant inputs used in the model at March 31, 2026 are as follows:
Common Stock price$3.03 
Simulation Term5 years
Risk-free interest rate3.87 %
Expected annual volatility60 %
Annual dividend rate
5% - 18%
The initial fair value of the Series B Preferred Stock was also measured at March 20, 2026 using the same methodology employed at March 31, 2026 which resulted in a per share fair value of $2,002. Significant inputs used in to the model at March 20, 2026 are as follows:
Common Stock price$4.38 
Simulation Term5 years
Risk-free interest rate3.96 %
Expected annual volatility60 %
Annual dividend rate
5% - 18%
For the Series B Preferred Stock, the Company concluded that the host instrument is equity-like. The Company further concluded that certain embedded features were not clearly and closely related to that equity-like host and therefore required bifurcation. These bifurcated features include: (i) the contingent increase in the dividend rate, and (ii) embedded redemption features, which include certain terms labeled in the governing documents as “conversion features” but functioning economically in a manner akin to share-settled redemption features, as well as the redemption features
described in Note 15: Warrants, Mezzanine Preferred Stock and Mezzanine Equity. These features were bifurcated and accounted for together as a single compound derivative liability (the “Bifurcated Derivatives”).
The fair value of the Bifurcated Derivatives at issuance was determined using a Monte Carlo simulation model applying a “with and without” valuation method. Under this approach, the Company estimated the fair value of the Series B Preferred Stock including the Bifurcated Derivatives (the “with” scenario) and compared it to the fair value of an otherwise similar instrument excluding those features (the “without” scenario). The difference between these two scenarios represented the fair value of the Bifurcated Derivatives. The Monte Carlo simulation utilized Geometric Brownian Motion to model the Company’s common stock price on a daily basis over the expected term of approximately 5.28 years and incorporated 100,000 simulation trials. The March 20, 2026 issuance-date fair value of the Bifurcated Derivatives was $2,260,000.
The “with” scenario at March 20, 2026 produced an estimated per share fair value of the Series B Preferred Stock of approximately $2,002 resulting in an aggregate fair value of approximately $11,210,000 for the Series B Preferred Stock. The corresponding “without” scenario produced an estimated per share fair value of the Series B Preferred Stock of approximately $1,598, resulting in aggregate fair values of approximately $8,950,000 for the Series B Preferred Stock. The approximate $2,260,000 difference between the “with” and “without” scenarios was recorded as the initial fair value of the Bifurcated Derivatives. The Company subsequently remeasured the bifurcated Derivatives at March 31, 2026 using a consistent valuation methodology, resulting in a fair value of $2,420,000. The increase in fair value during the period was primarily due to changes in the Company’s common stock price and the resulting effect on the expected economic outcomes of the bifurcated features.
Because the valuation relies on significant unobservable inputs and simulation-based techniques, the bifurcated derivative liability is classified as a Level 3 fair value measurement