v3.26.3
Fair value measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value measurements Fair value measurements
The Company’s assets and liabilities that are measured at fair value on a recurring basis within the fair value hierarchy are summarized as follows:
March 31, 2026December 31, 2025
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
(As Restated)
Cash equivalents (1):
Money market funds$15,502 $— $— $15,502 $40,120 $— $— $40,120 
Total cash equivalents$15,502 $— $— $15,502 $40,120 $— $— $40,120 
Liabilities
Derivative liabilities$— $14,552 $11,635 $26,187 $— $— $— $— 
Warrant liability— — 6,478 6,478 — — 13,090 13,090 
Total liabilities$— $14,552 $18,113 $32,665 $— $— $13,090 $13,090 
(1)    Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets. Cash balances were $25.2 million and $9.6 million as of March 31, 2026 and December 31, 2025, respectively.
The Company corrected errors in the valuation of the warrant liability, and in the valuation of the derivative liability associated with the Convertible Debentures conversion feature. See Note 1A. Restatement of previously issued consolidated financial statements, for the nature and quantitative effects of these corrections.
Cash equivalents are classified as Level 1 because the Company uses quoted market prices to determine their fair value. As of March 31, 2026 and December 31, 2025, the amortized cost of the Company’s cash equivalents approximated their fair value and there were no material realized or unrealized gains or losses, either individually or in the aggregate. The liability-classified warrants are classified as Level 3 and are valued based on a Black-Scholes option pricing model each reporting period.
The fair value of the warrants was estimated with the following assumptions:
March 31, 2026
Volatility68 %
Risk-free interest rate4.3 %
Dividend yield— %
Expected term (years)9.34
The expected term was corrected from a term of 1.81 years to the remaining contractual term of the warrants through August 1, 2035, which was approximately 9.34 years at March 31, 2026. Expected volatility is based on a blend of historical volatility (90% weighting) and implied volatility (10% weighting). The risk-free interest rate is based on a term-matched U.S. Treasury yield at the valuation date. The dividend yield is zero. As part of the restatement, the Company removed the incorrectly applied illiquidity adjustment to the warrants valuation.
The conversion feature associated with the Convertible Debentures met the criteria for a derivative liability under ASC 815 which required bifurcation. The Company used a lattice model to value the Convertible Debentures, with a Monte Carlo simulation used to estimate the expected conversion price discount and classified the derivative liability as a Level 3 financial instrument. The derivative liability was measured at fair value upon issuance and subsequently remeasured at fair value on a recurring basis. Changes in the fair value of the derivative liability were recorded in other income (expense), net, in the condensed consolidated statements of operations. The fair value of the derivative liability associated with the Convertible Debentures was estimated with the following assumptions:
March 31, 2026
Volatility105 %
Risk-free/credit spread interest rate20.3 %
Dividend yield— %
Conversion price discount92 %
Changes in the fair value of the Level 3 warrant liability and derivative liability related to the conversion feature of the Convertible Debentures during the three months ended March 31, 2026 were as follows:
(in thousands)
Warrant LiabilityDerivative Liability associated with the Convertible Debentures
(As Restated)
Balance as of December 31, 2025$13,090 $— 
Issuance of warrants or derivative liability— 12,054 
Change in fair value(6,612)(419)
Balance as of March 31, 2026$6,478 $11,635 
The IEEPA Claim in the IEEPA Agreement created a derivative liability and the Company used observable transaction prices for identical IEEPA refund rights to determine the fair value. The Company classified the derivative liability associated with the IEEPA Claim as a Level 2 financial instrument as there was a limited number of transactions in the market. The derivative liability was measured at fair value upon issuance and subsequently remeasured at fair value on a recurring basis. Changes in the fair value of the derivative liability were recorded in other income (expense), net, in the condensed consolidated statements of operations.
For certain other financial assets and liabilities, including accounts receivable, accounts payable and other current assets and liabilities, the carrying amounts approximate their fair value primarily due to the relatively short maturity of these balances.
The Company also measures certain non-financial assets at fair value on a nonrecurring basis, primarily goodwill, intangible assets, and operating lease right-of-use assets, in connection with periodic evaluations for potential impairment. In the first quarter of 2025, the fair value of the Company’s single reporting unit was determined based on unobservable (Level 3) inputs, as discussed in Note 1 Summary of business and significant accounting policies.