Matinas BioPharma Holdings, Inc. Fair Value Disclosure

Note 5 - Fair Value Measurements

 

The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

 

●	Level 1 – Quoted prices for identical assets or liabilities in active markets.

 

 

●	Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable.
●	Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates.

 

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

 

The carrying amounts of cash equivalents, current portion of restricted cash, prepaid expenses and other current assets, accounts payable, current portion of lease liabilities and accrued expenses approximate fair value due to the short-term nature of these instruments.

 

The Company did not have any financial assets or liabilities that were carried at fair value using the hierarchy as of December 31, 2025 and 2024. During 2025, the Company had liability classified warrants that were carried at fair value. During 2024, the Company did not have any assets or liabilities carried at fair value.

 

The table below presents a summary of changes in fair value of the warrant liability that was measured at fair value on a recurring basis:

 Schedule of Fair Value of Warrant Liability

		Warrant Liability
Balance at December 31, 2024		$	—
Issuance of warrants reported at fair value			2,942
Change in fair value			3,161
Reclassification to equity			(6,103	)
Balance at December 31, 2025		$	—

 

On February 13, 2025, the Company entered into a securities purchase agreement with certain investors and, pursuant to an initial and second closing under the agreement, issued and sold to the investors an aggregate of (i) 3,300 shares of convertible preferred stock and (ii) warrants (the “Warrants”) to purchase up to 11,262,808 shares of the Company’s common stock (see Note 14).

 

The Company classified the Warrants as a liability upon issuance. Accordingly, proceeds from the transaction were first allocated to the Warrants which were recorded at fair value at issuance, and any residual value allocated to preferred stock. Subsequent changes in fair value of the Warrants were recognized in the Company’s consolidated statements of operations and comprehensive loss.

 

On June 26, 2025, the terms of the Warrants were amended to remove the provision that provided for a potential adjustment to the Warrants that did not meet the indexation requirements. The Company determined that the Warrants then satisfied the conditions to be accounted for as equity instruments. The change in fair value of the Warrants until June 26, 2025 was recorded in the income statement and fair value of the Warrants on June 26, 2025, was reclassified to equity. There will be no subsequent measurement for the equity classified Warrants as long as the indexation and equity classification criteria continue to be met.

 

For each reporting period during which the Warrants were classified as a liability, the Company’s warrant liability was measured at fair value utilizing a Monte Carlo simulation model, which required assumptions including the value of the stock on the measurement date, exercise price, expected term, expected volatility, and the risk-free interest rate. Certain assumptions, including the expected term and expected volatility, were subjective and require judgment to develop.

 

 

The warrant liabilities were valued on the various measurement dates during the year ended December 31, 2025 using the following range of assumptions:

 Schedule of Warrant Liability

Expected volatility			54.0% - 61.0	%
Risk-free interest rate			3.77% – 4.39	%
Stock price on valuation date		$	0.52 - 0.94
Exercise price		$	0.64
Dividend yield			0.00	%
Expected term			4.8 - 5.0 years

 

Fair Values Measured on a Non-recurring Basis

 

The Company’s non-financial assets, such as property, plant and equipment, and intangible assets, including IPR&D, are recorded at fair value upon acquisition and are remeasured only if an impairment charge is recognized. The Company remeasured the fair value of its long-lived assets upon the occurrence of triggering events in the fourth quarter of 2024 and in the third quarter of 2025. See Note 12 - Impairment Charges for more information on the impairment losses recorded during the year ended December 31, 2025 and 2024 for assets measured on a non-recurring basis.