v3.26.1
FAIR VALUE MEASURES
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASURES FAIR VALUE MEASURES
The Company’s financial assets are subject to fair value measurements on a recurring basis. The following table presents information about the Company’s financial assets and liabilities measured at fair value and the level of input utilized to determine such fair values (in thousands):
Fair value measurements as of June 30, 2026
TotalLevel 1Level 2Level 3
Assets:
Money market (included in cash and cash equivalents)$95,492 $95,492 $— $— 
Money market (included in restricted cash)886 886 — — 
Total Assets$96,378 $96,378 $— $— 
Liabilities:
Warrant liability for Series A Common Stock$44,616 $— $— $44,616 
Accrued private issuance liability (included in accrued expenses)1,109 1,109 — — 
Total Liabilities$45,725 $1,109 $— $44,616 
Fair value measurements as of December 31, 2025
TotalLevel 1Level 2Level 3
Assets:
Money market (included in cash and cash equivalents)$14,152 $14,152 $— $— 
Money market (included in restricted cash)881 881 — — 
Total Assets$15,033 $15,033 $— $— 
Liabilities:
Warrant liability Series B-1$608 $— $— $608 
Warrant liability Series D2,770 — — 2,770 
Convertible promissory notes – related parties18,889 — — 18,889 
Total Liabilities$22,267 $— $— $22,267 
Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as accounts payable, accrued expenses, and other current liabilities.
Level 3 Financial Instruments
The following table sets forth a summary of the changes in the estimated fair value of the Company’s warrants for Series A Common Stock, redeemable convertible preferred stock warrants, and convertible promissory note, which represents financial instruments with valuations classified as Level 3. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable inputs, observable inputs (that is, components that are actively quoted and can be validated to external sources). Accordingly, the gain or loss in the table below includes changes in fair value due in part to observable factors that are part of the Level 3 methodology recognized in the condensed consolidated statements of operations and comprehensive loss as a component of other income (expense), net as appropriate (in thousands):
Warrant LiabilitiesConvertible Promissory Notes

Series B-1
Series D		Warrants for Series ARelated Party NotesNotes
December 31, 2025$608 $2,770 $— $18,889 $— 
Reclassification of Warrant liability for Series A Common Stock from equity to liability— — 49,354 — — 
Issuance of convertible promissory notes— — — — 5,340 
Change in fair value 1
137 262 (4,738)3,791 1,264 
Conversion to shares of Series A Common Stock(745)(3,032)— (22,680)(6,604)
June 30, 2026$— $— $44,616 $— $— 
1 Upon the closing of the Merger, the conversion price and number of shares issuable for the Series B-1 Warrants, Series D Warrants, Convertible Promissory Notes – Related Parties, and Convertible Promissory Notes were determined based on the price per share paid in the Merger, an observable input, rather than the unobservable inputs used in the PWERM for the warrants and the SBM for the convertible promissory notes as of December 31, 2025. Accordingly, no further Level 3 fair value estimate was required at the conversion date; the final fair value was determined directly from the Merger's per-share price applied to the conversion formula set forth in in Note 7 – Convertible Promissory Notes – Related Parties.
Upon the completion of the Company’s Merger in June 2026, warrants exercised for redeemable convertible preferred stock and convertible promissory notes were automatically exchanged for shares of Series A Common Stock based on the Consideration Ratio. See Note 7 – Convertible Promissory Notes – Related Parties, Note 8 - Convertible Promissory Notes, and Note 12 – Warrants for further details.
Series B-1 and Series D Warrant Liabilities
To estimate the fair value of the Series B-1 and D Warrant Agreements, the Company applied the PWERM. Under this approach, the Company develops multiple scenarios and ascribes a probability weighting to each scenario and related estimated fair value. Key inputs and assumptions in the PWERM include the probability and the estimated value of the security in each liquidity scenario, in addition to scenario specific assumptions. The two scenarios used in the valuation of the Series B-1 and D Warrant Agreements are a SPAC Exit scenario and Option Pricing Method scenario (the “OPM scenario”). The Company applied a 75% weighting to the SPAC Exit Scenario and 25% to the OPM scenario as of December 31, 2025. As of the Merger date there were no further assumptions and the fair market value was equal to the conversion value per the terms of the agreement based on the SPAC redemption value, adjusted by the Consideration Ratio to a value of $10.42 per converted share of Series A Common Stock.
The following are assumptions used in valuing the Series B-1 and D Warrant Agreements in the SPAC Exit scenario, as of December 31, 2025:
Series B-1Series D
Discount rate25%25%
Expected life0.380.38
Future projected price per share$37.76$37.76
Strike price$0.08$27.21
The significant unobservable inputs used in the fair value measurement of the Series B-1 and D warrant liability in the SPAC Exit scenario are the discount rate and the expected life. The future projected price per share is estimated based on the SPAC purchase price as outlined in the Company’s BCA. The discount rate reflects current market assessments of the time of value of money and the risks specific to the Company given its stage of development.
The expected life is based upon the fact that the Warrant Agreements would not persist through a liquidity event, and therefore the expected life is based upon management’s estimated holding period to an exit/liquidity event.
The following are the assumptions used in valuing the Series B-1 and D Warrant Agreements in the OPM scenario, as of December 31, 2025:
Series B-1Series D
Share value$18.14$33.71
Assumed volatility90%37%
Assumed risk-free interest rate3.5%3.5%
Expected life22
Expected dividends——
The significant unobservable inputs used in the fair value measurement of the Series B-1 and D warrant liability in the OPM scenario are the equity value of the Company, the expected life and assumed volatility. The equity value of the Company is derived from a discounted cash flow analysis based on the Company’s best estimates of future cash flows. The assumptions underlying these valuations include projected future revenue and cash flows, discount rates, market adjustments and multiples, selection of comparable companies, the lack of marketability of our equity, and probability of possible future events, including the expected time to liquidity. These underlying assumptions represent our best estimates at the time they were made, which involves inherent uncertainty and the application of judgment. Changes to the key assumptions and estimates used in the valuations could result in materially different fair values of our common and preferred stock at each valuation date.
The expected life is based upon the fact that the Warrant Agreements would not persist through a liquidity event, and therefore the expected life is based upon management’s estimated holding period to an exit/liquidity event. The expected volatility is based upon observed historical volatilities of a cohort of guideline public companies. Equity allocation mechanics are based upon the distribution waterfall as outlined in the Company’s operating agreement. Significant increases (decreases) in the equity value, the expected life, or the assumed volatility, could result in significantly higher (lower) fair value measurements.
Warrant Liability for Series A Common Stock
The Private Warrants are valued using a Black-Scholes model, which resulted in a Level 3 fair value measurement. The primary unobservable input utilized in determining the fair value of the Private Warrants is the expected volatility of the Company’s common stock. The expected volatility was estimated based on the historical volatility of a group of comparable publicly traded companies over a period commensurate with the expected remaining term of the warrants, as the Company’s common stock does not have sufficient trading history to estimate volatility on a stand-alone basis.
As of June 30, 2026, the fair value of outstanding Private Warrants of approximately $44.6 million is recorded as warrant liability. The following table presents the changes in the fair value of warrant liability:
June 30, 2026
Warrant liability for Private Placement as of December 31, 2025$— 
Reclassification of Warrant liability for Series A Common Stock from equity to liability49,354 
Change in fair value(4,738)
Warrant liability for Private Placement as of June 30, 2026$44,616 
As of the issuance date, the fair value of the Private Warrants was estimated using the following assumptions:
June 5, 2026
Exercise price$11.50 
Share price$11.90 
Volatility68.5 %
Remaining contractual term4.99
Risk Free Rate4.25 %
Dividend yield— %
As of June 30, 2026, the fair value of the Private Warrants was estimated using the following assumptions:
June 30, 2026
Exercise price$11.50 
Share price$11.09 
Volatility68.7 %
Remaining contractual term4.93
Risk Free Rate4.1 %
Dividend yield— %
Convertible Promissory Notes – Related Parties
To estimate the fair value of the August 2025 Notes, the Company applied the SBM. The fair value of the August 2025 Notes includes an estimate of the value of accrued interest. The significant unobservable inputs used in the fair value measurement of the August 2025 Notes are the underlying share value, the expected life, assumed volatility, assumed discount rate, share value, and the probability of scenarios. As of the Merger date, there were no further assumptions and the fair market value was equal to the conversion value per the terms of the agreement and SPAC redemption value, adjusted by the Consideration Ratio to a value of $10.42.
The assumptions used in determining the fair value of the August 2025 Notes under the SBM as of December 31, 2025, were as follows:
Series D
December 31, 2025
SPAC Exit Scenario75.0%
Qualified Financing Scenario15.0%
Dissolution Scenario10.0%
Assumed volatility40.0%
Assumed risk-free interest rate3.5%
Expected life0.75
Assumed discount rate20.0%
Share value$34.47
To estimate the share value of the Series D redeemable convertible preferred stock at December 31, 2025, we used a PWERM. The two scenarios used in the estimation of the Series D redeemable convertible preferred stock are a SPAC Exit scenario and Option Pricing Method scenario.
Convertible Promissory Notes
To estimate the fair value of the January 2026 Notes, the Company applied the SBM. The fair value of the January 2026 Notes includes an estimate of the value of accrued interest. The significant unobservable inputs used in the fair value measurement of the January 2026 Notes are the expected life, assumed discount rate, and the probability of scenarios. As of the Merger date there were no further assumptions and the fair market value was equal to the conversion value per the terms of the agreement and weighted average PIPE investment price, adjusted by the Consideration Ratio to a value of $10.06.
The assumptions used in determining the fair value of the January 2026 Notes under the SBM were as follows:
January 26, 2026
SPAC Exit Scenario80 %
Qualified Financing Scenario10 %
Dissolution Scenario10 %
Expected life0.68
Assumed discount rate20 %