MOBIX LABS, INC Fair Value Disclosure
Note 17 — Fair Value Measurements
The carrying amounts of the Company’s cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of these instruments. The Company believes the aggregate carrying value of debt approximates its fair value as of September 30, 2025 and 2024 due to the relatively short duration of the notes payable, the 7% promissory notes - related parties and the notes payable - related parties.
Fair Value Hierarchy
Liabilities measured at fair value on a recurring basis as of September 30, 2025 are as follows:
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Earnout liability | $ | $ | $ | 1,240 | $ | 1,240 | ||||||||||
| Liability-classified warrants | 6,859 | 6,859 | ||||||||||||||
| Total | $ | $ | $ | 8,099 | $ | 8,099 | ||||||||||
The Company classifies the earnout liability, the PIPE make-whole liability and the liability-classified warrants and the SAFEs as Level 3 financial instruments due to the judgment required to develop the assumptions used and the significance of those assumptions to the fair value measurement. No financial instruments were transferred between levels of the fair value hierarchy during the years ended September 30, 2025 or 2024.
MOBIX LABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except share and per share amounts)
The following table provides a reconciliation of the balance of financial instruments measured at fair value on a recurring basis using Level 3 inputs:
| Earnout Liability | Liability Classified Warrants | PIPE Make-Whole Liability | SAFEs | |||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | 1,512 | |||||||||||
| Liabilities recognized in the Merger | 33,559 | 150 | 2,071 | |||||||||||||
| Sale of warrants in the July 2024 Private Placement | 6,397 | |||||||||||||||
| Other warrants issued | 732 | |||||||||||||||
| Conversion to Class A Common Stock in the Merger | (1,522 | ) | ||||||||||||||
| Exercise of warrants | (3,393 | ) | ||||||||||||||
| Settlement of liability | (332 | ) | (1,241 | ) | ||||||||||||
| Change in fair value included in net loss | (31,879 | ) | (1,415 | ) | (830 | ) | 10 | |||||||||
| Balance, September 30, 2024 | $ | 1,680 | $ | 2,139 | $ | $ | ||||||||||
| Sale of warrants in the April 2025 Offering | 2,853 | |||||||||||||||
| Issuance of inducement warrants | 5,699 | |||||||||||||||
| Modification of warrants | 1,214 | |||||||||||||||
| Exercise of warrants | (4,242 | ) | ||||||||||||||
| Change in fair value included in net loss | (440 | ) | (804 | ) | ||||||||||||
| Balance, September 30, 2025 | $ | 1,240 | $ | 6,859 | ||||||||||||
Liability-Classified Warrants
The Company estimates the fair value of liability classified warrants, other than the Private Warrants, using the Black-Scholes option pricing model, as described above under Note 2 — Summary of Significant Accounting Policies—Stock-Based Compensation. The following table summarizes the assumptions used in estimating the fair value of liability-classified warrants at the respective dates:
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Stock price | $ | 0.81 | $ | 1.06 | ||||
| Expected volatility | % | % | ||||||
| Risk-free rate | % | – | % | |||||
| Contractual term | – years | – years | ||||||
The Company estimates the fair value of the Private Warrants based on quoted market prices for the Public Warrants, which have substantially the same economic characteristics.
MOBIX LABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(in thousands, except share and per share amounts)
Earnout Liability
The Company estimates the fair value of the earnout liability using a Monte Carlo simulation model that utilizes assumptions, including volatility, expected term and risk-free rate that determine the probability of achieving the earnout conditions. The following table summarizes the assumptions used in estimating the fair value of the earnout liability at the respective dates:
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| Stock price | $ | 0.81 | $ | 1.06 | ||||
| Expected volatility | % | % | ||||||
| Risk-free rate | % | % | ||||||
| Contractual term | years | years | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Jan 13, 2026 | Showing above |
| 2024 | Dec 26, 2024 | |
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.