Note 5. Fair Value Measurements

The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. The FASB has issued guidance that defines fair value as the exchange price that would be received for an asset (or paid to transfer a liability) in the principal, or most advantageous market in an orderly transaction between market participants. This guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance categorizes assets and liabilities at fair value into one of three different levels depending on the observation of the inputs employed in the measurements, as follows:

Forward Purchase Agreement

In May 2026, the Company entered into an Assignment and Novation Agreement with Atsion Opportunity Fund LLC – Series 2 (“Atsion”), FGMC and BOXABL, Inc. (“BOXABL”) (the “Forward Purchase Agreement”) pursuant to which the Company assumed 50% of certain rights and obligations under an OTC Equity Prepaid Forward Transaction originally entered into between Atsion, FGMC and BOXABL. Prior to its merger with BOXABL in July 2026, FGMC was a SPAC.

The Forward Purchase Agreement relates to shares of FGMC’s Class A common stock prior to the consummation of the business combination with BOXABL and, following consummation of the business combination, shares of Class A common stock of the combined company. The maximum number of shares subject to the Forward Purchase Agreement allocated to the Company is 1.5 million shares.

Following consummation of the business combination, the Forward Purchase Agreement is subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustment and other provisions of the Forward Purchase Agreement.

The Forward Purchase Agreement is accounted for as a derivative financial instrument under ASC 815 and is measured at fair value with changes in fair value recognized in earnings. The Company evaluates the derivative at each reporting date and recognizes changes in fair value in its condensed consolidated statement of operations. During the three and nine months ended September 30, 2026, the Company recorded a $0.2 million and $0.9 million gain, respectively, on the derivative, which is included in Gain on financial instruments on the condensed consolidated statements of operations. As of September 30, 2026, the Company recorded a derivative asset of $0.6 million related to the Forward Purchase Agreement, which is included in Other assets on the condensed consolidated balance sheet. The derivative was classified as a Level 3 financial instrument within the fair value hierarchy since its valuation incorporates significant inputs that are not directly observable in the market.  

The Company applies ASC 820 in the valuation of the derivative related to the Forward Purchase Agreement for financial statement purposes. The fair value of the derivative asset was determined using a Monte Carlo simulation model that incorporates the reference price (as defined in the Forward Purchase Agreement) as of September 30, 2026 ($3.25), the closing price of BOXABL common stock as of September 30, 2026 ($3.27), and the projected volatility of BOXABL common stock (122.6%). Accordingly, the asset is classified within Level 3 of the fair value hierarchy.

ETH Digital Assets

The Company applies ASC 820 in the valuation of ETH held by the Company for financial statement purposes. The fair value of ETH uses Level 1 inputs to reflect the price that would be received for ETH in a current sale, which assumes an orderly transaction between market participants on the measurement date in the Company’s principal market, or in the absence of a principal market, the most advantageous market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. The Company determines its principal market (or in the absence of a principal market, the most advantageous market) on a periodic basis to determine which market is its principal market for the purpose of calculating fair value for the creation of quarterly and annual financial statements. Issuer-specific events, market trends, bid/ask quotes of brokers and information providers and other data may be reviewed in the course of making a good faith determination of the digital asset’s fair value.

Financial instruments measured, on a recurring basis, at fair value in accordance with the guidance promulgated by the FASB as of September 30, 2026 and December 31, 2025 are as follows (in thousands):

Schedule of Financial Instruments Measured on Recurring Basis at Fair Value 

A rollforward of the assets classified within Level 3 of the fair value hierarchy for the nine months ended September 30, 2026 is as follows (in thousands):

 Schedule of Fair Value Hierarchy of Roll-forward of Assets