FAIR VALUE MEASUREMENTS
The Company’s financial liabilities subject to fair value measurement on a recurring basis and the level of inputs used for such measurements were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measured on December 31, 2025 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Warrant liability (public) | $ | 1,369 | | | $ | — | | | $ | — | | | $ | 1,369 | |
| Warrant liability (private) | — | | | — | | | 655 | | | 655 | |
| Earn-out liability | — | | | — | | | 2,045 | | | 2,045 | |
| Interest rate collar liability | — | | | 3,498 | | | — | | | 3,498 | |
| Total fair value liabilities | $ | 1,369 | | | $ | 3,498 | | | $ | 2,700 | | | $ | 7,567 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value Measured on December 31, 2024 |
| Level 1 | | Level 2 | | Level 3 | | Total |
| Warrant liability (public) | $ | 548 | | | $ | — | | | $ | — | | | $ | 548 | |
| Warrant liability (private) | — | | | — | | | 265 | | | 265 | |
| Earn-out liability | — | | | — | | | 1,148 | | | 1,148 | |
| Interest rate collar liability | — | | | 60 | | | — | | | 60 | |
| Total fair value liabilities | $ | 548 | | | $ | 60 | | | $ | 1,413 | | | $ | 2,021 | |
On December 31, 2025 and 2024, the Company's liabilities for its Private and Public Warrants, earn-out liability, and Collar are measured at fair value on a recurring basis (see Note 8, “Common Stock Warrants and Earn-Out Liability,” and Note 9, "Derivative Instruments,” for more details). The fair values of the Private Warrants and earn-out liability are determined based on significant inputs not observable in the market (Level 3). These assumptions are believed to be reasonable at the time, but such assumptions are subject to inherent uncertainty. The valuation of the Level 3 liabilities uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. The Company uses a Monte Carlo simulation model to estimate the fair value of its Private Warrants and earn-out liability. The fair value of the Collar, which is included in other noncurrent liabilities on the consolidated balance sheets, is determined based on models that reflect the contractual terms of the derivative, yield curves, and the credit quality of the counterparties. Inputs are generally observable and do not contain a high level of subjectivity (Level 2). The fair value of the Public Warrants is determined using publicly traded prices (Level 1). Changes in the fair value of the derivative liabilities related to Warrants and the earn-out liability are recognized as non-operating expense in the consolidated statements of comprehensive income (loss). Changes in the fair value of the Collar are recognized as an adjustment to interest expense in the consolidated statements of comprehensive income (loss). Changes in the fair value of the Warrants, the earn-out liability, and the Collar, along with cash flows associated with the Collar, are presented in operating activities on the consolidated statements of cash flows.
The fair value of Private Warrants was estimated on December 31, 2025 and 2024 using the Monte Carlo simulation model with the following assumptions:
| | | | | | | | | | | |
| 2025 | | 2024 |
| Valuation date price | $ | 4.13 | | | $ | 3.02 | |
| Strike price | $ | 11.50 | | | $ | 11.50 | |
| Remaining life (in years) | 0.54 | | 1.54 |
| Expected dividend | $ | — | | | $ | — | |
| Risk-free interest rate | 3.52 | % | | 4.12 | % |
| Price threshold | $ | 18.00 | | | $ | 18.00 | |
The fair value of the earn-out liability was estimated on December 31, 2025 and 2024 using the Monte Carlo simulation model with the following assumptions:
| | | | | | | | | | | |
| 2025 | | 2024 |
| Valuation date price | $ | 4.13 | | | $ | 3.02 | |
| Expected term (in years) | 2.54 | | 3.54 |
| Expected volatility | 78.79 | % | | 64.33 | % |
| Risk-free interest rate | 3.45 | % | | 4.21 | % |
| Price hurdle | $ | 15.00 | | | $ | 15.00 | |
On December 31, 2025 and 2024, the Company had accounts receivable, accounts payable and accrued expenses for which the carrying value approximates fair value due to the short-term nature of these instruments. The carrying value of the Company’s long-term debt approximates fair value as the rates used approximate the market rates currently available to the Company. Fair value measurements used in the impairment reviews of goodwill and intangible assets are Level 3 measurements.
The reconciliation of changes in Level 3 during the years ended December 31, 2025 and 2024 is as follows:
| | | | | | | | | | | | | | | | | |
| Private Warrants | | Earn-Out Liability | | Total |
| Balance on December 31, 2023 | $ | 2,903 | | | $ | 3,479 | | | $ | 6,382 | |
| Gains included in earnings | (2,638) | | | (2,331) | | | (4,969) | |
| Balance at December 31, 2024 | 265 | | | 1,148 | | | 1,413 | |
| Losses included in earnings | 390 | | | 897 | | | 1,287 | |
| Balance on December 31, 2025 | $ | 655 | | | $ | 2,045 | | | $ | 2,700 | |