ASP Isotopes Inc. Fair Value Disclosure
4. Fair Value Measurements
The Company classified its U.S. Treasury securities (Note 3) within Level 2 because their fair values are determined using alternative pricing sources or models that utilized market observable inputs. The Company’s convertible notes payable (Note 9) is measured as a Level 3 fair value on a recurring basis and was $199.3 million and $33.4 million as of December 31, 2025 and 2024, respectively.
The Company holds an equity investment in IsoBio. The Company previously measured the investment at cost because no observable price changes were identified. In October 2025, IsoBio completed a preferred stock financing with unrelated third‑party
investors. The transaction represented an observable price change for an identical or other similar equity security held by the Company. Accordingly, the Company remeasured the investment to fair value and recorded an unrealized gain of $0.6 million within Other income (expense). The resulting carrying value of the IsoBio investment is $5.6 million as of December 31, 2025. Because the valuation incorporates significant unobservable inputs, the investment is classified as a Level 3 fair value measurement.
The Company holds an equity investment in a limited liability company engaged in the critical minerals space. The Company initially measured the investment at cost in October 2025. In December 2025, this company completed a financing with unrelated third‑party investors. The transaction represented an observable price change for an identical or other similar equity security held by the Company. Accordingly, the Company remeasured the investment to fair value and recorded an unrealized gain of $17.3 million within Other income (expense). The resulting carrying value of this investment is $37.3 million as of December 31, 2025. Because the valuation incorporates significant unobservable inputs, the investment is classified as a Level 3 fair value measurement.
There were no transfers among Level 1, Level 2 or Level 3 categories in the year ended December 31, 2025. The carrying amounts of accounts payable, accrued expenses and debt are considered to be representative of their respective fair values because of the short-term nature of those instruments.
A summary of the assets and liabilities that are measured at fair value as of December 31, 2025 is as follows (in thousands):
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Year Ended December 31, 2025 |
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Carrying Value |
|
|
Quoted Price in Active Markets for Identical Assets (Level 1) |
|
|
Significant Other Observable Inputs (Level 2) |
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Significant Unobservable Inputs (Level 3) |
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Assets: |
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|
|
|
|
|
|
|
|
|
|
|
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U.S. Treasury securities |
|
$ |
47,745 |
|
|
$ |
— |
|
|
$ |
47,745 |
|
|
$ |
— |
|
Other investments (ASC 321) |
|
|
45,979 |
|
|
|
— |
|
|
|
— |
|
|
|
45,979 |
|
Total |
|
$ |
93,724 |
|
|
$ |
— |
|
|
$ |
47,745 |
|
|
$ |
45,979 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
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Convertible notes payable |
|
|
199,323 |
|
|
|
— |
|
|
|
— |
|
|
|
199,323 |
|
Total |
|
$ |
199,323 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
199,323 |
|
The Company had no U.S. Treasury securities as of December 31, 2024.
The following table provides a reconciliation of the Company’s assets and liabilities measured as a Level 3 at fair value on a recurring basis using significant unobservable inputs (in thousands):
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Other Investments |
|
|
Convertible |
|
||
Balance as of December 31, 2023 |
|
$ |
— |
|
|
$ |
— |
|
Fair value at issuance |
|
|
— |
|
|
|
26,558 |
|
Fair value adjustment |
|
|
— |
|
|
|
6,875 |
|
Balance as of December 31, 2024 |
|
|
— |
|
|
|
33,433 |
|
Fair value at issuance |
|
|
28,047 |
|
|
|
42,171 |
|
Fair value adjustment |
|
|
17,932 |
|
|
|
123,719 |
|
Balance as of December 31, 2025 |
|
$ |
45,979 |
|
|
$ |
199,323 |
|
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.