Quarterly report [Sections 13 or 15(d)]

Fair Value Measurements

v3.25.3
Fair Value Measurements
 9 Months Ended
Sep. 30, 2025
Fair Value Measurements  
Fair Value Measurements

6.

Fair Value Measurements

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. Each level of input has different levels of subjectivity and difficulty involved in determining fair value.

● Level 1 – Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date. Therefore, determining fair value for Level 1 investments generally does not require significant judgment, and the estimation is not difficult.
● Level 2 – Pricing is provided by third-party sources of market information obtained through investment advisors. The Company does not adjust for or apply any additional assumptions or estimates to the pricing information received from its advisors.
● Level 3 – Inputs used to measure fair value are unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 instruments involves the most management judgment and subjectivity. The Company’s financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2025 and December 31, 2024 by level within the fair value hierarchy, are as follows:

​

​

​

​

​

​

​

​

​

​

​

(in thousands)

​

September 30, 2025

​

​

​

​

Significant

​

​

​

​

​

Quoted prices

​

other

​

Significant

​

​

in active

​

observable

​

unobservable

​

​

markets

​

inputs

​

inputs

​

    

(Level 1)

    

(Level 2)

    

(Level 3)

Liabilities:

​

​

  

​

​

  

​

​

  

Convertible note payable

​

$

—

​

$

—

​

$

16,668

Warrant liabilities

​

$

—

​

$

—

​

$

9

​

6.Fair Value Measurements, continued

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s 2025 Notes that are categorized within Level 3 of the fair value hierarchy as of September 30, 2025 is as follows:

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​

​

​

Inputs

    

September 30, 2025

 

Stock price

 

1.09

​

Conversion price

​

$1.00

​

Conversion discount

​

80%

​

Volatility (annual)

​

155.06%

​

Risk-free rate

​

3.94%

​

Dividend rate

​

—

​

Years to maturity

​

.25

​

Estimated future financing amount

​

$150 million

​

Discount rate

​

13.52%

​

​

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s DV Note that are categorized within Level 3 of the fair value hierarchy as of September 30, 2025 is as follows:

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​

​

​

​

Inputs

    

September 30, 2025

 

Stock price

 

0.31

​

Conversion price

​

$1.12

​

Volatility (annual)

​

103.98%

​

Risk-free rate

​

3.94%

​

Dividend rate

​

—

​

Years to maturity

​

.31

​

Estimated future financing amount

​

$150 million

​

Discount rate

​

15.42%

​

​

​

6.Fair Value Measurements, continued

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​

​

​

​

​

​

​

​

​

(in thousands)

​

December 31, 2024

​

​

​

​

Significant

​

​

​

​

​

Quoted prices

​

other

​

Significant

​

​

in active

​

observable

​

unobservable

​

​

markets

​

inputs

​

inputs

Liabilities:

    

(Level 1)

    

(Level 2)

    

(Level 3)

Convertible note payable

​

$

—

​

$

—

​

$

10,000

Warrant liabilities

​

$

—

​

$

—

​

$

664

​

There were no transfers between Level 1, 2 or 3 during the three and nine months ended September 30, 2025 or 2024.

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Warrant Liabilities

On March 26, 2024, the Company amended the terms of certain warrant agreements to remove certain exercise price reset, right to reprice and/or share adjustment provisions (“Reset Provisions”) following a reverse split, in addition to other revisions to the warrants. In April 2024, the Company effected the April 2024 Reverse Stock Split thereby removing the Reset Provisions (“Reset Amendment Effective Date”) and in accordance with provisions in certain of the warrants issued warrants to purchase an additional 5,602,693 shares of common stock. Accordingly, the Company remeasured the warrant liability for each of the amended warrants following the Reset Amendment Effective Date and recorded that amount to change in fair value of warrant liabilities with a corresponding increase to warrant liabilities. Following the Reset Amendment Effective Date, such warrants were no longer deemed to be liability warrants but were now classified as equity warrants. In connection with this reclassification the Company reclassed approximately $41.9 million from warrant liabilities to additional paid in capital.

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The following table includes a summary of changes in fair value of the Company’s warrant liabilities measured at fair value using significant unobservable inputs (Level 3) as of September 30, 2025 and 2024. For September 30, 2025, the fair value of the common warrants was determined using the Black-Scholes Model based on the following key inputs and assumptions: common stock price of $1.09; exercise price of $3.20 to $1,574; expected yield of 0.0%; expected volatility of 162.8%; risk-free interest rate of 3.68% and expected life of 2.2 to 2.3 years.

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​

​

​

​

​

​

​

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For the nine months ended September 30, 

(in thousands)

    

2025

​

2024

Beginning balance

​

$

664

    

$

5,460

Additions

​

 

—

​

 

8,701

Change in fair value

​

 

(19)

​

 

29,120

Exercise of warrant liabilities

​

 

—

​

 

(587)

Repurchase

​

​

(621)

​

​

(824)

Conversion of liability warrants to equity warrants

​

​

(15)

​

​

(41,851)

Ending balance

​

$

9

​

$

19

​

The changes in fair value of the warrant liabilities are recorded in change in fair value of warrant liabilities in the condensed consolidated statements of operations.

Convertible Notes

As described in Note 5, the Company elected the fair value option on the DV Convertible Note issued on December 31, 2024. The Company uses level 3 inputs to measure the fair value in subsequent periods. The Company recorded a $1.1 million loss and a $0.2 million gain on the DV Convertible Note for the three and nine months ended September 30, 2025, respectively.

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As described in Note 5, the Company elected the fair value option on the 2025 Convertible Notes and Q3 2025 Convertible Notes and recorded a net loss of $10.8 million and $19.6 million for the three and nine months ended September 30, 2025, respectively. The Company uses level 3 inputs to measure the fair value in subsequent periods.

6.Fair Value Measurements, continued

The following table includes a summary of changes in fair value of the Company’s convertible notes.

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​

​

​

​

​

​

​

    

For the nine months ended September 30, 

(in thousands)

​

2025

​

2024

Beginning balance

​

$

10,000

​

$

—

Additions

​

 

25,557

​

 

—

Change in fair value recorded in interest expense

​

 

19,339

​

 

—

Amounts settled on DV note

​

​

(2,499)

​

​

—

Debt extinguishment

​

​

2,139

​

​

—

Partial conversion on DV note

​

 

(3,100)

​

 

—

Conversion of 10% notes

​

 

(34,768)

​

 

—

Ending balance

​

$

16,668

​

$

—

​

Fair Value of Crypto Assets

The following table summarizes Crypto assets held for operations (in thousands, except units):

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​

​

​

​

​

​

​

​

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September 30, 2025

​

    

Units

    

Cost Basis

    

Fair Value

Bitcoin

​

71

​

$

7,838

​

$

8,148

​

​

​

​

​

​

​

​

​

​

​

    

December 31, 2024

​

    

Units

    

Cost Basis

    

Fair Value

Bitcoin

​

—

​

$

—

​

$

—

​

The Bitcoin remains contractually restricted and cannot be used or converted until the restriction period ends without permission from the September Purchaser (defined below), which restriction period is expected to end in November 2025.