FAIR VALUE MEASUREMENTSThe tables below present certain assets and liabilities measured at fair value categorized by the level of input used in the valuation of each asset and liability (in thousands):
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| | December 31, 2025 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Cash equivalents: | | | | | | | |
| Money market funds | $ | 172,689 | | | $ | — | | | $ | — | | | $ | 172,689 | |
| Long-term liability: | | | | | | | |
| Warrant liability | $ | — | | | $ | 2,980 | | | — | | $ | 2,980 | |
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| | December 31, 2024 |
| | Level 1 | | Level 2 | | Level 3 | | Total |
| Long-term liability: | | | | | | | |
| Warrant liability | $ | — | | | $ | 5,176 | | | — | | $ | 5,176 | |
Cash and cash equivalents —Money market funds included within cash and cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. As of December 31, 2024, the Company did not have any money market funds included in cash equivalents.
Warrant liability – The warrant liability is classified within Level 2 of the fair value hierarchy because it is valued using inputs which are observable either directly or indirectly. The fair value was calculated using the Black-Scholes option pricing model using the following key inputs: volatility, risk-free rate, dividend yield and expected term.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.