v3.26.1
Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2026
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]  
Schedule of Liabilities Recorded at Fair Value

The Company’s financial liabilities measured at fair value on a recurring basis consist of warrant liabilities, valued using Level 1 (quoted market prices) or Level 3 (internally developed option-pricing models) inputs. The Company holds no Level 2 instruments. The following table presents these liabilities by level of the fair value hierarchy as of June 30, 2026 and December 31, 2025.:

  

                              
   June 30, 2026   December 31, 2025 
Liability (in thousands)  Total Fair Value  

Level 1

  

Level 3

   Total Fair Value  

Level 1

  

Level 3

 
PIPE warrants  $—   $—   $—   $280   $—   $280 
Public warrants   7,734    7,734    —    10,896    10,896    — 
Private placement warrants   —    —    —    14    —    14 
Abaca warrants   689    —    689    28,430    —    28,430 
Total liabilities  $8,423   $7,734   $689   $39,620   $10,896   $28,724 
Schedule of Non-Recurring Fair Value Measurement

Schedule of Non-Recurring Fair Value Measurement

 

Liability (as of initial recognition, October 1, 2025)  Carrying Amount   Fair Value   Level 3 Input 
Stand-ready guarantee liability  $2,135,000   $2,135,000   $2,135,000 
Schedule of Carrying Amount and Fair Value of Financial Instruments

The following tables present the carrying amounts and fair values of the Company’s financial instruments, by level of the fair value hierarchy, as of June 30, 2026 and December 31, 2025. In each case, carrying value approximates fair value.

 

June 30, 2026  Carrying Amount   Fair Value   Level
Assets           
Cash and cash equivalents  $5,729,576   $5,729,576   Level 1
Liabilities             
Deferred consideration   3,000,000    3,000,000   Level 1
Public warrants   7,734    7,734   Level 1
Abaca warrants   689    689   Level 3

 

December 31, 2025  Carrying Amount   Fair Value   Level
Assets           
Cash and cash equivalents  $6,779,040   $6,779,040   Level 1
Investment in preferred securities   1,450,000    1,450,000   Level 3
Liabilities             
Deferred consideration   3,000,000    3,000,000   Level 1
Public warrants   10,896    10,896   Level 1
Private placement warrants   14    14   Level 3
PIPE warrants   280    280   Level 3
Abaca warrants   28,430    28,430   Level 3
Schedule of Fair Value Assets Measured on Recurring Basis

The following tables present the changes in the Company’s Level 3 liabilities measured at fair value on a recurring basis for the six months ended June 30, 2026 and June 30, 2025. All changes during each period were attributable to fair value adjustments, with no purchases, issuances, or settlements:

 

Six Months Ended June 30, 2026  PIPE Warrants   Abaca Warrants   Private Placement Warrants 
Balance, January 1, 2026  $280   $28,430   $14 
Fair value adjustment   (280)   (27,741)   (14)
Balance, June 30, 2026  $-   $689   $- 

 

Six Months Ended June 30, 2025  PIPE Warrants   Abaca Warrants   Private Placement Warrants   Third Anniversary Payment Consideration   Forward Purchase Derivative 
Balance, January 1, 2025  $79,512   $1,024,900   $9,632   $322,000   $7,309,580 
Fair value adjustment   (75,072)   (929,827)   (9,248)   (235,000)   - 
Balance, June 30, 2025  $4,440   $95,073   $384   $87,000   $7,309,580 
Schedule of Valuation Methodology and Significant Unobservable Inputs

  

Input  Value Used  Sensitivity
Probability of Default -Tranches A & B (Ratings 2–5, pooled)  7.25%, derived from loan level analysis of the portfolio.  An increase raises fair value
Probability of Default - Tranche C (Rating 9, individually evaluated)  35%, based on Rating 9 definition, past-maturity status, and personal guarantees  An increase raises fair value
Loss Given Default - Tranches A & B  25.00% for Tranche A and 35% for Tranche B, inclusive of 13% cannabis-specific qualitative premium reflecting court access limitations, collateral possession restrictions, and refinancing risk  An increase raises fair value
Loss Given Default - Tranche C (uncollateralized gap)  50%, representing the midpoint of the Rating 9 anticipated loss range applied to the uncollateralized exposure  An increase raises fair value
Stand-Ready Risk Premium  120% loading applied to total expected loss, reflecting compensation for uncapped exposure, cannabis concentration risk, portfolio illiquidity, and six-year guarantee term commitment  An increase raises fair value
Discount Rate  4.0% risk-free rate (6-year Treasury)  An increase reduces fair value
Weighted Average Payout Timing  Tranche A: 4 years; Tranche B: 3 years; Tranche C: 2 years; Stand-ready premium: 3 years — based on the portfolio’s contractual maturity profile  A longer weighted average payout timing reduces fair value
Schedule of Financial Instruments

 

Origination Quarter  # Loans   PD   LGD (incl. cannabis qualitative premium)   Stand-Ready Risk Premium Loading  Discount Rate   Weighted Avg Payout
June 30, 2026   2    7.25%   25%  120% of expected loss   4.4%  5 years
Warrant [Member]  
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]  
Schedule of Level 3 Fair Value Measurements Inputs

The PIPE warrants, private placement warrants, and Abaca warrants are valued using the Black-Scholes-Merton option pricing model. The following tables present the significant unobservable inputs used in these valuations as of June 30, 2026 and December 31, 2025:

 

As of June 30, 2026  PIPE Warrants   Private Placement Warrants   Abaca Warrants 
Exercise price  $100.00   $230.00   $40.00 
Share price  $0.24   $0.24   $0.24 
Expected term (years)   1.25    1.25    2.32 
Volatility   117%   117%   117%
Risk-free rate   3.7%   3.7%   3.7%

 

As of December 31, 2025  PIPE Warrants   Private Placement Warrants   Abaca Warrants 
Exercise price  $100.00   $230.00   $40.00 
Share price  $1.06   $1.06   $1.06 
Expected term (years)   1.74    1.74    2.82 
Volatility   115%   115%   115%
Risk-free rate   3.5%   3.5%   3.5%