Quarterly report [Sections 13 or 15(d)]

DERIVATIVES

v3.26.1
DERIVATIVES
 3 Months Ended
Mar. 31, 2026
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, $0.0001 par value per share (the “Series A-1 Preferred Stock”), to Searchlight Capital Partner, L.P. and its affiliates (“Searchlight”), in which transaction Searchlight was also granted warrants (the “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. Searchlight is an affiliate of the Company (see Note 8 — Related Party Transactions).

The following table sets forth the details of the derivative instrument not designated as a hedging instrument as presented on the condensed consolidated balance sheets and notional amounts and exercise price as of March 31, 2026 and December 31, 2025:

As of: Number of Warrants (Notional Amount)
Warrant Liability (1)
Exercise Price Per Share
($ in thousands, except for exercise price per share)
March 31, 2026 12,024,711  $ 21,573  $ 0.05 
December 31, 2025 12,024,711  $ 10,029  $ 0.05 

(1) The Warrant Liability amounts are presented as “warrant liabilities to affiliates” in the Company’s condensed consolidated balance sheets and these balances are substantially comprised of the Penny Warrants liability. The balance of the Private Placement Warrants is immaterial as of March 31, 2026 and December 31, 2025.
The gains and losses arising from this derivative instrument not designated as a hedging instrument in the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2026 and 2025 are set forth as follows:

Net Realized Gain (Loss) on Derivative Instruments
Net Change in Unrealized Gain (Loss) on Derivative Instruments (1)
Three Months Ended March 31, (in thousands)
2026 $ —  $ (11,544)
2025 $ —  $ 1,804 

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