Quarterly report [Sections 13 or 15(d)]

DERIVATIVES

v3.25.1
DERIVATIVES
 3 Months Ended
Mar. 31, 2025
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, $0.0001 par value per share (the “Series A-1 preferred stock”), to Searchlight, in which transaction Searchlight was also granted Penny Warrants, which are exercisable for $0.05 per warrant or by means of a cashless exercise formula. 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 amounts as of March 31, 2025 and December 31, 2024:

March 31, 2025
Derivatives Not Designated as Hedging Instruments Number of Warrants (Notional Amount) Warrant Liability Exercise Price Per Share
($ in thousands, except for exercise price per share)
Penny Warrants issued to Searchlight 12,024,711  $ 5,820  $ 0.05 

December 31, 2024
Derivatives Not Designated as Hedging Instruments Number of Warrants (Notional Amount) Warrant Liability Exercise Price Per Share
($ in thousands, except for exercise per share)
Penny Warrants issued to Searchlight 12,024,711  $ 7,624  $ 0.05 

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, 2025 and 2024 are set forth as follows:

Three Months Ended March 31, 2025
Derivatives Not Designated as Hedging Instruments Net Realized Gains (Losses) on Derivative Instruments
Net Change in Unrealized Gain (Loss) on Derivative Instruments (1)
(in thousands)
Penny Warrants issued to Searchlight $ —  $ 1,804 

Three Months Ended March 31, 2024
Derivatives Not Designated as Hedging Instruments Net Realized Gains (Losses) on Derivative Instruments
Net Change in Unrealized Gain (Loss) on Derivative Instruments (1)
(in thousands)
Penny Warrants issued to Searchlight $ —  $ 2,321 
(1) The condensed consolidated statements of operations and comprehensive loss include the above unrealized loss on the Penny Warrants as well as the immaterial unrealized loss on the Private Placement Warrants in the “change in fair value of warrant liabilities to affiliates”.