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Fair Value Measurements
 6 Months Ended
Jun. 30, 2024
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The Company uses various inputs to measure the outstanding warrants and certain embedded conversion features associated with a convertible debt on a recurring basis to determine the fair value of the liabilities.
The following tables classify the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy:
Fair value measured at June 30, 2024
(in thousands)
Fair value at
June 30, 2024
Quoted prices in
active markets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable inputs
(Level 3)
Warrant liability
$16,864 $- $- $16,864 
Fair value measured at December 31, 2023
(in thousands)
Fair value at
December 31, 2023
Quoted prices in
active markets
(Level 1)
Significant other
observable inputs
(Level 2)
Significant
unobservable inputs
(Level 3)
Warrant liability
$14,447 $- $- $14,447 
Embedded conversion option
93 - - 93 
Total fair value
$14,540 $- $- $14,540 
There were no transfers among Levels 1, 2 or 3 during the three and six months ended June 30, 2024, and 2023. Both observable and unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include
changes in fair value that were attributable to both observable (e.g. changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.
Warrant Liability
The Company’s liability classified warrants as of June 30, 2024, and the value of initial warrant liability from the June financing, were valued using a probability weighted expected value considering the proposed reverse stock split of the Company's common stock (the "Reverse Stock Split") that will effectuate the exchange of Notes and Common Stock Purchase Warrants for shares of the Company's common stock (the "Note and Warrant Exchange"), and the previous Black Scholes valuation model, with significant value stemming from the Note and Warrant Exchange. Significant inputs under the Note and Warrant Exchange included the expected exchange ratio of 0.90 for $0.04 warrants and 0.85 for $0.067 warrants, the value of the Company’s common stock, the expected timing of the closing of the proxy vote for the Reverse Stock Split of a 500:1 to 300:1 reverse split (estimated by August 15, 2024), and the probability of the Note and Warrant Exchange occurring (85% probability).

The Company’s liability classified warrants as of December 31, 2023 and the value of initial warrant liability from the conversion of the ABS Promissory Notes, were valued using a probability weighted expected value considering the Merger Agreement and the previous Black Scholes valuation model, with significant value stemming from the Merger Agreement. Significant inputs under the Merger Agreement valuation included the expected exchange ratio 0.003, the value of SEPA’s Class A Common Stock, the expected timing of the closing of the Merger, and the probability of the Merger closing.
A summary of the warrant liability activity for the six months ended June 30, 2024, is as follows:
(in thousands, except per share data)
Warrants
Outstanding
Fair Value
per Share
Fair Value
(in thousands)
Balance at December 31, 20231,221,308$0.01 $14,447 
Issuance
292,8820.01 3,633 
Exercised warrants
(8,600)$0.01 — 
Gain on remeasurement of warrant liability
-(1,216)
Balance at June 30, 20241,505,590$0.01 $16,864