The Company classified its investments in corporate securities of AFII as short-term investments. The investments were carried at fair value, based on quoted market prices. Realized and unrealized gains and losses are recognized in other loss, net on the consolidated statements of operations and comprehensive loss.

As of June 30, 2026, the fair value of the AFII common stock was $0. As of June 30, 2026, the Company continued to hold approximately 2.7 million shares of AFII common stock. During the three and six months ended June 30, 2026, the Company recognized unrealized losses of approximately $2.8 million and $4.3 million, respectively, related to these shares, which are included in other loss, net in the condensed consolidated statements of operations and comprehensive loss. The decline primarily resulted from the decrease in AFII’s quoted market price, including the suspension of trading on Nasdaq and subsequent quotation of the securities on the OTC market. The shares remain restricted securities subject to limitations on resale under Rule 144, and the timing and amount of proceeds that may ultimately be realized from their sale remain uncertain.

The fair value of the investment securities at June 30, 2026 and December 31, 2025 was as follows:

          
         Fair Value Measurements at June 30, 2026

         (Dollars in thousands)

         Level 1

         Level 2

         Level 3

         Total

         Assets at Fair Value

         Short-term investments:

Corporate securities

—

—

—

—

Total Assets at Fair Value

—

—

—

—


	Fair Value Measurements at December 31, 2025
(Dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets at Fair Value
Short-term investments:
Corporate securities	$	4,304	$	—	$	—	$	4,304
Total Assets at Fair Value	$	4,304	$	—	$	—	$	4,304

The Company uses the market approach technique to value its financial instruments and there were no changes in valuation techniques during 2026 and 2025. The Company’s financial instruments consist primarily of cash and cash equivalents, short-term investments, accounts receivable and other receivables, accounts payable and accrued liabilities. For short-term investments, accounts receivable and other receivables and accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of June 30, 2026 and December 31, 2025 were considered representative of their fair values due to their short term to maturity or repayment. Cash equivalents are carried at cost, which approximates their fair value.

The Company’s Level 3 liabilities consist of preferred investment options related to the June 2026 Private Placement, January 2026 Inducement Offer, March 2023 Private Placement and August 2022 Registered Direct Offering.

The preferred investment option liabilities were measured and recorded on a recurring basis using the Black-Scholes Model with the following assumptions as of June 30, 2026 and December 31, 2025:


	June 2026 Options - Series A-1 & June 2026 Placement Agent Options					June 2026 Options - Series A-2					January 2026 Options & January 2026 Placement Agent Options					March 2023 Options - Series A & March 2023 Placement Agent Options						August 2022 Options & August 2022 Placement Agent Options
	June 30, 2026			December 31, 2025		June 30, 2026			December 31, 2025		June 30, 2026			December 31, 2025		June 30, 2026			December 31, 2025			June 30, 2026			December 31, 2025
Remaining term (in years)		5.25			—		2.08			—		2.17			—		1.63			2.13			1.17			1.67
Expected volatility		93.9	%		—		101.8	%		—		102.9	%		—		106.2	%		100.6	%		93.1	%		107.2	%
Risk-free interest rate		4.2	%		—		4.1	%		—		4.1	%		—		4.1	%		3.5	%		4.0	%		3.5	%
Expected dividend yield		—			—		—			—		—			—		—			—			—			—

The significant input used in the fair value measurement of the Company’s Level 3 options liabilities is volatility. A significant increase (decrease) in volatility could result in a significantly higher (lower) fair value measurement.

The following table sets forth the establishment of the Company’s Level 3 assets and liabilities, as well as a summary of the changes in the fair value and other adjustments (in thousands):



(Dollars in thousands)	June 2026 Options - Series A-1			June 2026 Options - Series A-2			June 2026 Placement Agent Options			January 2026 Options			January 2026 Placement Agent Options			March 2023 Options - Series A			March 2023 Placement Agent Options			August 2022 Options			August 2022 Placement Agent Options		Note Receivable Bifurcated Derivatives		Total
Balance as of December 31, 2025	$	—		$	—		$	—		$	—		$	—		$	291		$	12		$	43		$	1	$	—	$	347
Initial recognition		3,055			2,369			201			2,321			71			—			—			—			—		—		8,017
Change in fair value - quarterly remeasurement		(1,189	)		(1,079	)		(80	)		(1,994	)		(62	)		—			(12	)		—			—		—		(4,416	)
Change in fair value - immediately before modification		—			—			—			—			—			124			—			17			—		—		141
Change in fair value - immediately after modification		—			—			—			—			—			457			—			83			—		—		540
Options exercise		—			—			—			—			—			(872	)		—			(143	)		—		—		(1,015	)
Balance as of June 30, 2026	$	1,866		$	1,290		$	121		$	327		$	9		$	—		$	—		$	—		$	1	$	—	$	3,614