4. Fair Value of Financial Assets and Liabilities

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values:

 Schedule of Financial Assets and Liabilities Measures at Fair Value

During the three months ended March 31, 2026 and 2025, there were no transfers between Level 1, Level 2 and Level 3. The carrying values of other current liabilities approximate fair value in the accompanying condensed consolidated financial statements due to the short-term nature of those instruments.

Valuation of Contingent Consideration

The fair value measurement of the contingent consideration obligations is determined using Level 3 inputs and is based on a probability-weighted income approach. The measurement is based upon unobservable inputs supported by little or no market activity based on the Company’s own assumptions.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using Level 3 inputs for the periods ended March 31, 2026 and December 31, 2025:

 Schedule of Reconciliation of Convertible Note Receivable Measured on Recurring Basis

The fair value of the liability to make potential future milestone and earn-out payments was estimated by the Company at each reporting date based, in part, on the results of a third-party valuation using a discounted cash flow analysis based on various assumptions, including the probability of achieving specified events, discount rates, and the period of time until earn-out payments are payable and the conditions triggering the milestone payments are met. The actual settlement of contingent consideration could differ from current estimates based on the actual occurrence of these specified events.

At each reporting date, the Company revalues the contingent consideration obligation to estimated fair value and records changes in fair value as income or expense in the Company’s consolidated statements of operations and comprehensive loss. Changes in the fair value of the contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving the various contingent consideration obligations. The Company has classified the contingent consideration as a long-term liability in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025.

Valuation of Short-Term Debt –Unaffiliated

The following table presents a reconciliation of short-term debt obligations measured on a recurring basis using Level 3 inputs for the year ended December 31, 2025 and three months ended March 31, 2026:

 Schedule of Reconciliation of Short-term Debt Obligation Measured on Recurring Basis

December 2025 Convertible Note and December 2025 Promissory Note

On December 19, 2025, the Company entered into a series of definitive agreements with an investor whereby the company issued the investor warrants, a senior secured non-convertible promissory note (the “December 2025 Promissory Note”) and a secured convertible note financing (the “December 2025 Convertible Note”).

Due to certain embedded features within the December 2025 Promissory Note and December 2025 Convertible Note, the Company elected to account for both notes and all the embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of non-operating loss in the consolidated statement of operations and comprehensive loss.

The fair values of the December 2025 Promissory Note and December 2025 Convertible Note are based on a PWERM based on various inputs and assumptions, including the likelihood of various possible scenarios, and a yield rate. The fair value of the December 2025 Convertible Note was $2,687 as of March 31, 2026 and December 31, 2025. The fair value of the December 2025 Promissory Note was $0 and $6,876 as of March 31, 2026 and December 31, 2025.

Significant inputs for the December 2025 Promissory Note valuation model were as follows:

 Schedule of Promissory Note Valuation Model

Significant inputs for the December 2025 Convertible Note valuation model were as follows:

 Schedule of Convertible Note Valuation Model

Valuation of Warrant Liability

The warrant liability on March 31, 2026, is comprised of the fair value of warrants to purchase shares of Class A common stock. The Public Warrants are recorded at fair value based on the period-end publicly stated close price, which is a Level 1 input. The Registered Direct, and PIPE Warrants are recorded at their respective closing date fair values based on a Black-Scholes option pricing model that utilizes inputs for: (i) the value of the underlying asset, (ii) the exercise price, (iii) the risk-free rate, (iv) the volatility of the underlying asset, (v) the dividend yield of the underlying asset and (vi) maturity, which are Level 3 inputs. The Black-Scholes option pricing model’s primary unobservable input utilized in determining the fair values of the warrant liabilities is the expected volatility of the Class A common stock. The Company estimates expected volatility based solely on the historical volatility of its common stock. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the estimated remaining term of the warrants. Inputs to the Black-Scholes option pricing models for the warrants are updated each reporting period to reflect fair value.

The following table presents a reconciliation of the warrant liabilities measured on a recurring basis using Level 3 inputs for the three months ended March 31, 2026:

 Schedule of Reconciliation of Warrant Liabilities Measured on Recurring Basis