Newsmax Inc.NMAX

Newsmax Inc. Fair Value Disclosure

10-KFiled Mar 26, 20263 min read
NOTE 3. FAIR VALUE MEASUREMENTS
The Company accounts for its investments at fair value and classifies these assets within the fair value hierarchy (Level 1, Level 2, or Level 3). Assets and liabilities subject to fair value measurements are as follows:
As of December 31, 2025
Level 1Level 2Level 3Total
Assets
Cash and cash equivalents
   U.S. Treasury securities$— $— $— $— 
   Money market10,625,821 — — 10,625,821 
   Certificates of deposit— — — — 
Total cash and cash equivalents$10,625,821 $— $— $10,625,821 
Investments
   Equity securities$20,201,411 $— $— $20,201,411 
   U.S. Treasury securities— 87,808,288 — 87,808,288 
   Certificates of deposit— 2,506,845 — 2,506,845 
   Crypto assets379,149 — — 379,149 
Total investments$20,580,561 $90,315,133 $— $110,895,693 
   Total assets$31,206,382 $90,315,133 $— $121,521,514 

As of December 31, 2024
Level 1Level 2Level 3Total
Assets
   Cash and cash equivalents
   U.S. Treasury securities$— $4,959,350 $— $4,959,350 
   Money market12,615,549 — — 12,615,549 
   Certificates of deposit2,250,628 — 2,250,628 
Total cash and cash equivalents$12,615,549 $7,209,978 $— $19,825,527 
Investments
   Equity securities$7,553,725 $— $— $7,553,725 
   U.S. Treasury securities9,923,100 36,580,580 — 46,503,680 
   Certificates of deposit4,253,550 — 4,253,550 
Total investments$17,476,825 $40,834,130 $— $58,310,955 
   Total assets$30,092,374 $48,044,108 $— $78,136,483 
Liabilities
   Warrant liability$— $— $6,499,821 $6,499,821 
   Derivative liability— — 41,459,418 41,459,418 
   Total liabilities$— $— $47,959,239 $47,959,239 
The Company’s Level 2 investments are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. U.S. treasury notes and bills are considered Level 2 investments when they were issued before the most recent issue and were still outstanding at measurement day (off-the-run). There were no transfers in or out of Level 3 investments for the year ended December 31, 2025. In connection with the Company's IPO, previously outstanding Level 3 warrant and derivative liabilities were settled and derecognized.

The valuation methodologies and significant unobservable inputs for Level 3 investments are disclosed in the following tables. For the warrant liability that was revalued and then reclassified during 2025, the fair value inputs are as of the date of revaluation. For the derivative liability that was revalued and then reclassified during 2025, the fair value was equivalent to its intrinsic value.

As of March 28, 2025
Fair ValueValuation MethodologySignificant Unobservable InputsRangeWeighted Average
Warrant liability$8,324,000 Modified Black ScholesExpected volatility65 %65 %
Risk-free interest rate
3.89% - 4.38%
3.91 %
Expected term
2.5 - 4.8 years
4.6 years


As of December 31, 2024
Fair ValueValuation MethodologySignificant Unobservable InputsRangeWeighted Average
Warrant liability$6,499,821 Modified Black ScholesExpected volatility65 %65 %
Risk-free interest rate
4.17% - 4.28%
4.18 %
Expected term
2.5 - 4.8 years
2.7 years
Derivative liability$41,459,418 Scenario-based discounted cash flowTiming of conversion
0.2 - 4.8 years
0.7 years
Discount rate20 %20 %
Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2025 were as follows:

As of December 31, 2025
Warrant LiabilityDerivative Liability
Opening Balance$6,499,821 $41,459,418 
Total losses for the period
   Change in fair value included in earnings1,824,179 6,104,230 
Purchases, issues, sales, and settlements
   Issuances— 27,436,352 
Settlement of derivative liability— (75,000,000)
Reclassification of warrant liability to equity(8,324,000)— 
Closing Balance$— $— 
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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.

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