Quarterly report pursuant to Section 13 or 15(d)

DERIVATIVES

v3.24.1.1.u2
DERIVATIVES
 3 Months Ended
Mar. 31, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES DERIVATIVES
Derivatives are complex financial instruments. The Company does not use derivatives to manage financial risks or as an economic hedge. The Company’s sole derivative instrument arose as part of the issuance of Series A-1 preferred stock to Searchlight, in which transaction Searchlight was also granted Penny Warrants. The Penny Warrants are considered a freestanding derivative instrument, as they are separable and legally detachable from the Series A-1 preferred stock, were issued for nominal or no apparent consideration, and have the essential characteristics inherent in a derivative instrument of a notional amount, an underlying security, and a mechanism for net settlement.

The following table sets forth the details of the derivative instrument presented on the condensed consolidated balance sheets and notional amount as of March 31, 2024 and December 31, 2023:

March 31, 2024
Derivatives Not Designated as Hedging Instruments Number of Warrants (Notional Amount) Warrant Liability Exercise Price Per Share
($ in thousands, except for per share amounts)
Penny warrants issued to Searchlight 12,024,711  $ 9,343  $ 0.01 

December 31, 2023
Derivatives Not Designated as Hedging Instruments Number of Warrants (Notional Amount) Warrant Liability Exercise Price Per Share
($ in thousands, except for per share amounts)
Penny warrants issued to Searchlight 12,024,711  $ 11,664  $ 0.01 

The gains and losses arising from this derivative instrument in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 (1) is set forth as follows:

Derivatives Not Designated as Hedging Instruments Net Realized Gains (Losses) on Derivative Instruments Net Change in Unrealized Gain (Loss) on Derivative Instruments
(in thousands)
Penny warrants issued to Searchlight $ —  $ 2,321 

(1) No such instruments existed during the three months ended March 31, 2023; therefore, there were no gains or losses from such instruments during that quarter.