Annual report [Section 13 and 15(d), not S-K Item 405]

DERIVATIVES

v3.26.1
DERIVATIVES
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES DERIVATIVES
The Company does not use derivatives to manage financial risks or as an economic hedge. The Company’s sole recorded 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 which are exercisable for $0.05 per warrant or by means of a cashless exercise formula (see Note 10 — Warrants on Common Stock). 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 tables set forth the details of the derivative instrument not designed as a hedging instrument as presented on the consolidated balance sheets and notional amounts and exercise price as of December 31, 2025 and 2024 :

As of Number of Warrants (Notional Amount)
Warrant Liability (1)
Exercise Price Per Share
($ in thousands, except for per share amounts)
December 31, 2025 12,024,711  $ 10,029  $ 0.05 
December 31, 2024 12,024,711  $ 7,624  $ 0.05 

(1) The Warrant Liability amounts are presented as “warrant liabilities to affiliates” in the Company’s consolidated balance sheets and these balances are substantially comprised of the Penny Warrants liability. The balance of the Private Placement Warrants is immaterial at December 31, 2025 and has been immaterial since January 1, 2024.

The gains and losses arising from this derivative instrument not designed as a hedging instrument in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024 are set forth as follows:

Net Realized Gain (Loss) on Derivative Instruments
Net Change in Unrealized Gain (Loss) on Derivative Instruments (1)
For the Year Ended December 31, (in thousands)
2025 $ —  $ (2,405)
2024 $ —  $ 4,040 

(1) The amounts set forth above as presented in the consolidated statements of operations and comprehensive loss are substantially comprised of the unrealized gain/(loss) on the Penny Warrants reflected as “change in fair value of warrant liabilities to affiliates”.