Marketable Securities and Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Disclosures [Abstract]

Marketable Securities and Fair Value Measurements

Marketable Securities and Fair Value Measurements

Marketable Securities

The Company accounts for its investment securities as available for sale using the fair value election pursuant to ASC 825, where changes in fair value are recorded in Other, net non-operating income (expense) on the Company's Condensed Consolidated Statements of Operations. The Company’s investments in marketable securities at March 31, 2025 and December 31, 2024 is as follows:

	March 31, 2025
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents:
U.S. Treasury Bills	$	15,995	$	—	$	—	$	15,995

	December 31, 2024
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Cash equivalents:
U.S. Treasury Bills	$	38,657	$	5	$	—	$	38,662

The contractual maturities of the Company's investments in cash equivalents and marketable securities as of March 31, 2025 and December 31, 2024 is as follows:

March 31, 2025 (in thousands)	Due in One Year or Less		Due After One Year through Five Years		Due After Five Years		Total
Cash equivalents:
U.S. Treasury Bills	$	15,995	$	—	$	—	$	15,995

December 31, 2024 (in thousands)	Due in One Year or Less		Due After One Year through Five Years		Due After Five Years		Total
Cash equivalents:
U.S. Treasury Bills	$	38,662	$	—	$	—	$	38,662

The Company recorded a net unrealized loss of $6 for the three months ended March 31, 2025. At March 31, 2025, one security was in an unrealized loss position.

Accrued interest receivable on cash equivalents and marketable securities was $38 and $37, respectively, at March 31, 2025 and December 31, 2024, and is included within other receivables in the Condensed Consolidated Balance Sheets.

Fair Value Measurements

The following table presents the carrying amounts of the Company’s recurring and non-recurring fair value measurements at March 31, 2025 and December 31, 2024:

	March 31, 2025
(in thousands)	Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	15,995	$	—	$	15,995	—
Financial liabilities:
Derivative warrant liabilities	$	59	$	—	$	59	$	—
Conversion option derivative liabilities	3,694		—		—		3,694

There were no transfers between levels for the three months ended March 31, 2025 and twelve months ended December 31, 2024.

	December 31, 2024
(in thousands)	Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	38,662	$	—	$	38,662	$	—
Financial liabilities:
Derivative warrant liabilities	$	17	$	—	$	17	$	—
Conversion option derivative liabilities	385		—		—		385

The carrying amounts of cash, accounts receivable, other receivables, and accounts payable approximate fair value because of the short maturity and high liquidity of these instruments.

The Company measures its investments (including cash equivalents, marketable securities, and non-current investments) at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy. Investment securities, including U.S. Treasury Bills purchased in the secondary market and U.S. Treasury bonds, are classified within Level 2 of the fair value hierarchy because pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined using models or other valuation methodologies.

The Company measures its private derivative warrants at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy because the valuation is based on an observable input of a similar instrument. The Company measures its convertible note warrant derivative liability, optional redemption derivative liability and conversion option derivative liability on a recurring basis and classifies those instruments within Level 3 of the fair value hierarchy because unobservable inputs are used to measure fair value. See Note 2 for a summary of the Company’s policies relating to fair value measurements, and Note 11 for more detail on the convertible note warrant, optional redemption, and conversion option derivative liabilities.

The Company measures goodwill at fair value on a nonrecurring basis and classifies goodwill within Level 3 of the fair value hierarchy. It was concluded in connection with the preparation of these financial statements that, based on the results of

our most recent qualitative assessment performed for the three months ended March 31, 2025, there was no impairment of goodwill recorded for the three months ended March 31, 2025.

The following table presents information about the Company’s financial liabilities that are measured at fair value on a recurring basis at March 31, 2025:

(in thousands)	Conversion Option Derivative Liabilities
Balance at December 31, 2023	3,082
Decrease in fair value included in other expense	(2,697)
Balance at December 31, 2024	$	385
Change in fair value included in other expense	3,309
Balance at March 31, 2025	$	3,694

As of March 31, 2025 and December 31, 2024, the conversion option derivative was valued using a Binomial Lattice, which is considered to be a Level 3 fair value measurement. A summary of the level 3 fair value measurements inputs used in the valuations is as follows:

	March 31, 2025
		Convertible Note Warrant Derivative Liability			Conversion Option Derivative Liabilities
Unit price		$	1.14		$	1.14
Term (in years)		2.36			2.36
Volatility		120.00		%	120.00		%
Risk-free rate		3.89		%	3.89		%
Dividend yield		—			—
Cost of equity		—			—

	December 31, 2024
		Convertible Note Warrant Derivative Liability			Conversion Option Derivative Liability
Unit price		$	0.31		$	0.31
Term (in years)		2.60			2.60
Volatility		112.80		%	112.80		%
Risk-free rate		4.20		%	4.20		%
Dividend yield		—			—
Cost of equity		—			—

Uncertainty of Fair Value Measurement from Use of Significant Unobservable Inputs

The inputs to estimate the fair value of the Company’s earnout, convertible note warrant, and conversion option derivative liabilities were the market price of the Company’s common stock, their remaining expected term, the volatility of the Company’s common stock price and the risk-free interest rate over the expected term. Significant changes in any of those inputs in isolation can result in a significant change in the fair value measurement.

Generally, an increase in the market price of the Company’s shares of common stock, an increase in the volatility of the Company’s shares of common stock, and an increase in the remaining term of the derivative liabilities would each result in a directionally similar change in the estimated fair value of the Company’s derivative liabilities. Such changes would increase the associated liability while decreases in these assumptions would decrease the associated liability. An increase in the risk-free interest rate would result in a decrease in the estimated fair value measurement and thus a decrease in the associated liability. The Company has not, and does not plan to, declare dividends on its common stock and, as such, there is no change in the estimated fair value of the derivative warrant liabilities due to the dividend assumption.