v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The Company follows accounting guidance that emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Fair value is defined as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Fair value measurements are defined on a three-level hierarchy:
•Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets;
•Level 2 inputs: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, whether directly or indirectly, for substantially the full term of the asset or liability; and
•Level 3 inputs: Unobservable inputs in which there is little or no market data available, which requires management to develop its own assumptions in pricing the asset or liability.
As of June 30, 2026 and December 31, 2025, the fair values of cash and cash equivalents, accounts receivable, contract assets and unbilled receivables, prepaid and other assets, accounts payable and accrued expenses approximated their carrying values because of the short-term nature of these assets or liabilities. The value of the long-term funding agreement, related party line item was determined on an amortized cost basis, based on an effective rate of interest.
The fair value of the financial liabilities associated with the March 2025 Warrants and March 2025 Private Placement Warrants (as defined below) are based on cash flow models discounted at current implied market rates representing expected returns by market participants for similar instruments and are based on Level 3 inputs as well the Company’s underlying stock price and associated volatility, expected term and market interest rates (see Note 9 – Financings).
The fair value of the financial liabilities associated with the Notes pursuant to the Note Purchase Agreement represents the present value of estimated future payments, including interest, principal, and Repayment Amount (as defined in the Note Purchase Agreement (see Note 7 – Debt). The fair value measurement is based on significant Level 3 unobservable inputs such as the probability and timing of the Repayment Amount and the discount rate. The Company determined the fair value of the Notes utilizing a discounted cash flow model of estimated future payments including interest, principal, and Repayment Amount utilizing a discount rate calculated as the term matched risk-free rate plus credit spread. At April 21, 2026, the Notes issuance date, the Company utilized a discount rate of 8.9% and determined the fair value of the Notes to be $35.0 million. At June 30, 2026, the Company utilized a discount rate of 9.1%. The fair value of the Notes at June 30, 2026 were $34.9 million which differed from the contractual principal amount of $35.3 million, inclusive of paid-in-kind interest, by $(0.3) million. Significant increases or decreases in any of these inputs in isolation could result in a significantly lower or higher fair value measurement.
There were no transfers between fair value hierarchy levels during the three and six months ended June 30, 2026 and 2025.
The fair value of financial instruments measured on a recurring basis is as follows (in thousands):
As of June 30, 2026
DescriptionTotalLevel 1Level 2Level 3
Financial liabilities:
Warrant liabilities$62,145 $— $— $62,145 
Notes$34,932 $— $— $34,932 
Total financial liabilities at fair value$97,077 $— $— $97,077 
As of December 31, 2025
DescriptionTotalLevel 1Level 2Level 3
Financial liabilities:
Warrant liabilities$25,985 $— $— $25,985 
Notes$— $— $— $— 
Total financial liabilities at fair value$25,985 $— $— $25,985 
The following table provides a roll-forward of the warrant financial liability measured at fair value on a recurring basis using unobservable level 3 inputs for the six months ended June 30, 2026 and 2025 (in thousands):

Six Months Ended
June 30,
20262025
Warrant liabilities
Balance as of beginning of period$25,985 $— 
Issuance of March 2025 Warrants and March 2025 Private Placement Warrants— 15,520 
Warrant exercises(7,817)— 
Change in fair value43,977 (3,720)
Balance as of end of period$62,145 $11,800 
The following table provides a roll-forward of the Notes financial liability measured at fair value on a recurring basis using unobservable level 3 inputs for the period from April 21, 2026 through June 30, 2026 (in thousands):
Fair value at April 21, 2026 (issuance)$35,000 
Fair value change reported in statements of operations213 
Change in fair value reported in other comprehensive loss— 
Interest payments(281)
Fair value at June 30, 2026$34,932 
There were no financial instruments measured on a non-recurring basis for any of the periods presented.