Fair Value Measurements

The Company's liabilities measured at fair value on a recurring basis consist of its warrant liabilities,and the Tranche Liability prior to their settlement in the second quarter of 2026. All recurring fair value measurements are categorized within Level 3 of the fair value hierarchy, as the valuations are based on significant unobservable inputs. There were no

transfers into or out of Level 3 during the periods presented, other than as described below. The following table presents the Company's liabilities measured at fair value on a recurring basis (in thousands):


	June 30, 2026		December 31, 2025
	(unaudited)
Merger Warrant Liability	$	113	$	283
Contingent Warrant Liability	—		88
Total	$	113	$	371

The Company classifies the Contingent Warrants and Merger Warrants (as defined in Note 4, Related Party Transactions, and Note 6, Stockholders' Equity (Deficit), respectively) as liabilities. At the end of each reporting period, changes in fair value during the period are recognized as a component of other (expense) income, net within the condensed consolidated statements of operations and comprehensive loss. The change in fair value of these warrant liabilities recognized during the three and six months ending June 30, 2026 amounted to $0.1 million and $0.2 million gain, respectively and a $1.0 million and an immaterial loss for the three and six months ending June 30, 2025, respectively. The Company will continue adjusting the warrant liability for changes in fair value until the earlier of a) the exercise or expiration of the warrants or b) when the conditions for equity classification are met, at which time the warrant liabilities will be derecognized. In July 2025, the remaining unexercised Post-Merger Warrants (as defined in Note 6, Stockholders' Equity (Deficit)) and the corresponding Incentive Warrants expired, resulting in a gain of $0.7 million. In September 2025, in connection with the First Tranche drawdown of the 2025 Convertible Note, the Contingent Warrant related to the First Tranche met equity classification criteria and was remeasured at its estimated fair value of $2.0 million and reclassified to additional paid-in capital. In March 2026, in connection with the March 2026 PIPE, the Company remeasured the remaining Contingent Warrant liability to fair value immediately prior to extinguishment, resulting in a gain of $0.1 million. See Note 6, Stockholders' Equity (Deficit).

The following is a reconciliation of the beginning and ending balances of the Merger Warrant and Contingent Warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2026 and 2025 (in thousands):


	Merger Warrants		Contingent Warrants		Total
Balance as of December 31, 2025	$	283	$	88	$	371

Change in fair value	(170)		16		(154)
Extinguishment	—		(104)		(104)
Balance as of June 30, 2026	$	113	$	—	$	113

Balance as of December 31, 2024	$	3,582	$	—	$	3,582

Change in fair value	(33)		—		(33)

Balance as of June 30, 2025	$	3,549	$	—	$	3,549

The Company estimates the fair value of these warrants using the Black-Scholes-Merton option pricing model with the following assumptions:


	Six months ended June 30,
	2026	2025
Expected volatility	93.6% - 94.3%	65.1% - 99.5%
Expected term (in years)	1.7 - 2.0	1.1 - 2.7
Risk-free interest rate	3.8% - 4.1%	3.7% - 4.4%
Expected dividend yield	0.00%	0.00%

Expected volatility is estimated using the historical volatilities of comparable publicly traded companies over a period equal to the expected term of the warrants if the Company does not have sufficient trading history. The Company estimates the expected term using time to expiration of the warrant. The risk-free interest rate is the yield on a U.S. Treasury zero-coupon issue with a remaining term equal to or approximating the expected term of the warrant.

The Company recognized a Tranche Liability for its contingently issuable common shares, pre-funded warrants and redeemable warrants. The Tranche Liability was remeasured to fair value at each reporting period, with changes in fair value recognized as the change in fair value of tranche liability within the unaudited condensed consolidated statements of operations. The Company adjusted the Tranche Liability for changes in fair value until the settlement of the Tranche Liability. See Note 6, Stockholders' Equity (Deficit).

The following is a reconciliation of the beginning and ending balances of Tranche Liability measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the six months ended June 30, 2026 (in thousands):


	Tranche Liability
	(unaudited)
Balance as of December 31, 2025	$	—
Fair value at inception	3,282
Change in fair value	(1,377)
Settlement of Tranche Liability	(1,905)
Balance as of June 30, 2026	$	—

The Company estimated the fair value of the Tranche Liability using an option pricing model, that considered the probability of issuance of the instruments, and for the contingently issuable redeemable warrants, the probability of exercise of the redemption call option is factored into the expected term. The Company estimated the fair value of the Tranche Liability with the following assumptions:


	Six months ended June 30, 2026
	Pre-Funded Warrants	Redeemable Warrants
Expected volatility	85.81% - 126.48%	95.70% - 99.13%
Expected term (in years)	0.1	4.1
Risk-free interest rate	3.71% - 3.72%	3.78% - 3.87%
Expected dividend yield	0.00%	0.00%