v3.26.1
Fair Value of Financial Instruments
 6 Months Ended
Jun. 27, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments Fair Value of Financial Instruments
There were no transfers of financial assets or liabilities into or out of Level 1, Level 2 or Level 3 in the three and six months ended June 27, 2026 and June 28, 2025.
Valuation of Delayed Draw Term Loan Warrant Liability
The Company remeasured the fair value of the total delayed draw term loan warrant liability as of June 27, 2026, marking it to market, and recognized an increase in fair value in the amount of $0.1 million for the three months ended June 27, 2026 in the Company’s unaudited condensed consolidated statements of operations in
Other income (expense), net. For the six months ended June 27, 2026, the Company recognized a $1.2 million reduction in fair value. The following were the assumptions used in the Black-Scholes option-pricing model to mark-to-market the fair value of the total delayed draw term loan warrant liability as of June 26, 2026, the last trading day of the period:
Risk-free interest rate4.11%
Average expected term (years)4.0
Expected volatility113.10%
Dividend yield—
Exercise price$1.95
The following table sets forth a summary of the changes in the fair value of the total delayed draw term loan warrant liability for the periods indicated (in thousands):
Three Months Ended
Six Months Ended
June 27, 2026June 28, 2025June 27, 2026June 28, 2025
Beginning balance$3,766 $— $5,066 $— 
Fair value of delayed draw term loan warrants issued during the period— 7,983 — 7,983 
Fair value of contingently issued delayed draw term loan warrants— 12,160 — 12,160 
Remeasurement of delayed draw term loan warrants liability76 — (1,224)— 
Ending balance$3,842 $20,143 $3,842 $20,143 
Valuation of 2030 Notes Embedded Derivative
The Company determined that the conversion option embedded within the 2030 Notes required bifurcation as a derivative liability under ASC 815. The sensitivity of the fair value calculation to these methods, assumptions and estimates included could create materially different results under different conditions or using different assumptions. The mandatory conversion feature along with the make whole interest, the mandatory equitization feature along with the make whole interest and the holder’s optional conversion feature with the make whole interest require bifurcation and therefore, these embedded derivatives were bifurcated, along with the conversion option, from the debt host as a single, compound derivative liability.
The Company uses a binomial lattice valuation model in order to estimate the fair value of the 2030 Notes Embedded Derivative at inception, on each subsequent conversion date and period end dates. The fair value of the 2030 Notes Embedded Derivative at the issuance date was $26.9 million, recorded as a debt discount to the 2030 Notes and is being amortized to interest expense over the term of the debt. The debt discount carrying value is also reduced, on a pro rata basis, on each 2030 Notes conversion settlement date further discussed under the heading 2030 Notes Conversions and Gain on Debt Extinguishment (see Note 9). For the three and six months ended June 27, 2026, the Company recognized $1.0 million and $2.2 million, respectively, in interest expense related to the amortization of this discount, and a reduction of the carrying value of the debt discount of $8.0 million related to settled conversions to equity.
The following table sets forth a summary of activity of the 2030 Notes Embedded Derivative liability for the periods indicated. (in thousands):
Three Month EndedSix Months Ended
June 27, 2026June 27, 2026
Beginning balance, at fair value$26,137 $39,152 
Pro rata reduction of liability due to partial conversions(15,379)(16,503)
Change in fair value from remeasurement3,838 (8,053)
Ending balance as of June 27, 2026, at fair value$14,596 $14,596 
There was no 2030 Notes Embedded Derivative liability outstanding for the three and six months ended June 28, 2025.
As of June 27, 2026 and December 31, 2025, the 2030 Notes Embedded Derivative liability was $14.6 million and $39.2 million, respectively, shown above. See Note 9.
Due to the use of a qualitative adjustment for estimating volatility, the binomial lattice valuation used is considered Level 3 in the valuation hierarchy.
The following table sets forth selected inputs to the binomial lattice valuation model used to value the 2030 Notes Embedded Derivative as of the respective dates indicated:
InputsJune 27, 2026December 31, 2025
Term (years)4.34.8
Continuous risk free rate4.07%3.68%
Volatility40.0%40.0%
Stock price on valuation date$0.66$0.82
Discount rate (continuous)24.51%19.71%