v3.26.1
Fair Value of Financial Assets and Liabilities
 3 Months Ended
Mar. 31, 2026
Fair Value of Financial Assets and Liabilities [Abstract]  
Fair Value of Financial Assets and Liabilities

Note 7. Fair Value of Financial Assets and Liabilities

 

Financial instruments, including cash and cash equivalents, accounts payable and accrued expenses and accrued compensation and commissions are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

 

The Company uses three levels of inputs that may be used to measure fair value:

 

Level 1 - quoted prices in active markets for identical assets or liabilities

 

Level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable

 

Level 3 - inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

 

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

 

The following table presents the Company’s assets and liabilities that are measured at fair value as of March 31, 2026 and December 31, 2025 ($ in thousands):

 

   Fair value measured as of March 31, 2026 
       Quoted   Significant     
   Total at   prices in
Active		   other
observable 		   Significant
unobservable		 
   March 31,   Markets   inputs   inputs 
   2026   (Level 1)   (Level 2)   (Level 3) 
Assets                
Securities owned  $11,118   $
—
   $9,467   $1,651 
Marketable securities  $6,901   $5,494   $1,407   $
—
 

 

   Fair value measured as of December 31, 2025 
       Quoted   Significant     
   Total at   prices in active   other observable   Significant unobservable 
   December 31,   markets   inputs   inputs 
   2025   (Level 1)   (Level 2)   (Level 3) 
Assets                
Securities owned  $9,756   $
—
   $8,014   $1,742 
Marketable securities  $46,516   $45,049   $1,467   $
—
 

 

The fair value of level 3 securities owned totaling $1.7 million shown above at March 31, 2026 are subject to an initial lock-up period until approximately June 30, 2026, and further restrictions to which the Company cannot liquidate its investment until such restrictions are met. Additionally, approximately $1.1 million of fair value of level 2 securities owned shown above at March 31, 2026 represents warrants that are subject to lock-up periods that will end by June 30, 2026 and another $4.3 million of fair value of warrant securities with lock-up periods that will end by September 30, 2026 as well.

Level 3 Measurement

 

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial assets that are measured at fair value on a recurring basis ($ in thousands):

 

Securities owned at fair value as of December 31, 2025  $1,741 
      
Unrealized loss included in principal transactions  $(90)
Securities owned at fair value as of March 31, 2026  $1,651 

 

The Company’s Level 3 fair value measurements at March 31, 2026 were determined by the following quantitative inputs:

 

●The underlying stock price of $10.01 per share as of the measurement date.

 

●Implied success rates of similar type instruments from other comparable entities’ recent historical results of 15% of the underlying value of the stock price.