v3.26.1
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments

6. Fair Value of Financial Instruments

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy. Cash equivalents include instruments such as money market accounts and other short-term treasuries.

 

 

Fair Value Measurement as of June 30, 2026

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

892

 

 

$

—

 

 

$

—

 

 

$

892

 

Total assets fair value

 

$

892

 

 

$

—

 

 

$

—

 

 

$

892

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

SEPA put option liability

 

$

—

 

 

$

—

 

 

$

10

 

 

$

10

 

Total liabilities fair value

 

$

—

 

 

$

—

 

 

$

10

 

 

$

10

 

 

 

Fair Value Measurement as of December 31, 2025

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

2,860

 

 

$

—

 

 

$

—

 

 

$

2,860

 

Total assets fair value

 

$

2,860

 

 

$

—

 

 

$

—

 

 

$

2,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

SEPA put option liability

 

$

—

 

 

$

—

 

 

$

108

 

 

$

108

 

Total liabilities fair value

 

$

—

 

 

$

—

 

 

$

108

 

 

$

108

 

 

The following table summarizes the activity related to Level 3 financial liabilities for the six months ended June 30, 2026:

 

(in thousands)

 

SEPA Put
Option Liability

 

Fair value at December 31, 2025

 

$

108

 

Change in fair value of SEPA put option liability

 

 

(54

)

Sales under SEPA Agreement

 

 

(44

)

Conversions of convertible debt into shares of common stock

 

 

—

 

Change in fair value of convertible debt

 

 

—

 

Fair value at June 30, 2026

 

$

10

 

 

The following table summarizes the activity related to Level 3 financial liabilities for the six months ended June 30, 2025:

 

(in thousands)

 

Short-term
Convertible
Debt

 

 

SEPA Put
Option Liability

 

Fair value at December 31, 2024

 

$

9,168

 

 

$

460

 

Change in fair value of SEPA put option liability

 

 

—

 

 

 

10

 

Addition of short-term convertible debt

 

 

5,000

 

 

 

—

 

Conversions of convertible debt into shares of common stock

 

 

(6,219

)

 

 

—

 

Change in fair value of convertible debt

 

 

117

 

 

 

—

 

Fair value at June 30, 2025

 

$

8,066

 

 

$

470

 

 

As further described in Note 8, the Company issued short-term convertible debt on December 20, 2024 and December 30, 2024 with a total principal balance of $10.0 million and recorded those notes at their initial fair values totaling $9.3 million. On June 16, 2025, the Company issued short-term convertible debt with a principal balance of $5.0 million and recorded those notes at their initial fair value of $4.5 million. The December 30, 2024 note was repaid in June 2025, the June 16, 2025 note was repaid in October 2025, and the December 20, 2024 note was paid off in November 2025 and the total of the fair values of these notes at June 30, 2025 was $8.1 million. Assumptions used in the valuation model at June 30, 2025 for these notes included the closing bid price of $0.62, a term of 0.47 year, an annual risk-free rate of 4.3%, and a volatility of 60%, and at December 31, 2024 for both notes included the closing bid price of $2.00, a term of one year, an annual risk free rate of 4.1%, and a volatility of 60%.

As further described in Note 8, the Company entered into the SEPA on December 20, 2024 and recorded a put option liability for the Company’s right, subject to the satisfaction of the conditions to the investor's purchase obligations set forth therein, to require the investor to purchase up to an additional $10.0 million of shares of Common Stock by delivering written notice to the investor.

The carrying amounts of cash, prepaid expenses, other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term maturities.

There were no transfers in or out of Level 1, Level 2 or Level 3 assets and liabilities for the six months ended June 30, 2026.