Drugs Made In America Acquisition Corp. Fair Value Disclosure
NOTE 8 — FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
| Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
| Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
| Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following table presents information about the Company’s financial instruments that are measured at fair value as of December 31, 2025 and January 29, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value. There were no assets or liabilities measured at fair value as of December 31, 2024.
| Level | December 31, 2025 | |||||||
| Assets: | ||||||||
| Cash and investments held in Trust Account | 1 | $ | 239,906,656 | |||||
| Level | January 29, 2025 | |||||||
| Assets: | ||||||||
| Cash and investments held in Trust Account | 1 | $ | 201,000,000 | |||||
| Liabilities: | ||||||||
| Over-allotment option | 3 | $ | 305,179 | |||||
| Equity: | ||||||||
| Fair value of Public Rights for ordinary shares subject to possible redemption allocation | 3 | $ | 2,978,000 | |||||
The over-allotment option was accounted for as a liability in accordance with ASC 815-40 and is measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of over-allotment liability in the statement of operations. In February 2025 the over-allotment option was exercised in full by the underwriters and ceased to exist thereafter.
The Company used a Black-Scholes model to value the over-allotment option. The over-allotment option liability was classified within Level 3 of the fair value hierarchy at the measurement date due to the use of unobservable inputs inherent in pricing models are assumptions related to expected share-price volatility, expected life and risk-free interest rate. The Company estimates the volatility of its ordinary share based on historical volatility that matches the expected remaining life of the option. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the option. The expected life of the option is assumed to be equivalent to their remaining contractual term.
The rights were valued using an iterative analysis based on market comparable. The following criteria was utilized to select comparable Special Purpose Acquisition Companies who were pre-business combination and included rights as part of their units that were publicly trading with significant time remaining to complete their initial business combination:
| Criteria | Low | High | ||||||
| IPO Proceeds | 60 | 250 | ||||||
| Warrant Coverage | 0.5 | |||||||
| Rights Coverage (per unit) | 0.05 | 0.13 | ||||||
| Remaining Months to Complete | 7 | 21 | ||||||
Additionally, the Company recorded the fair value of 200,000 ordinary shares issued on March 11, 2025, which amounted to $1,996,000, or $9.98 per ordinary share. The fair value measurement is classified as a Level 1 measurement as the price per ordinary share is based on the value of the ordinary shares that are publicly traded. The fair value of such shares was recorded through the statement of operations as the ordinary shares were issued for no consideration and through equity.
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.