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Fair Value Measurements | 3 Months Ended
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Mar. 31, 2026
Fair Value Measurements [Abstract] |
FAIR VALUE MEASUREMENTS | NOTE 13 – FAIR VALUE MEASUREMENTS Accounting standards define fair value based on an exit price model, establish a framework for measuring fair value for assets and liabilities required to be carried at fair value and provide for certain disclosures related to the valuation methods used within the valuation hierarchy as established within the accounting standards. This hierarchy prioritizes the inputs into three broad levels as follows.
| Level 1 -- | Unadjusted quoted prices in active markets for identical assets or liabilities.
| Level 2 -- | Quoted prices for similar assets or liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
| Level 3 -- | Unobservable inputs for the asset or liability.
A summary of financial assets and liabilities that are measured at fair value on a recurring basis were as follows:
|  | March 31, 2026 Fair Value Measurements |
(dollars in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents (money market funds) |  | $ | 960,188 |  |  | $ | - |  |  | $ | - |  |  | $ | 960,188 |
Short-term investments |  |  |  |  |  |  |  |  |  |  | - |  |  |  |  |
Publicly traded stock |  |  | 20,295 |  |  |  | - |  |  |  | - |  |  |  | 20,295 |
U.S. Treasury securities |  |  | 64,960 |  |  |  | - |  |  |  | - |  |  |  | 64,960 |
Fixed income (corporate fixed income and bonds, agency securities) |  |  | - |  |  |  | 111,660 |  |  |  | - |  |  |  | 111,660 |
Certificates of deposit |  |  | - |  |  |  | 249,937 |  |  |  | - |  |  |  | 249,937 |
Warrants in publicly traded companies |  |  | - |  |  |  | - |  |  |  | 990 |  |  |  | 990 |
Total short-term investments |  |  | 85,255 |  |  |  | 361,597 |  |  |  | 990 |  |  |  | 447,842 |
Convertible promissory note |  |  | - |  |  |  | - |  |  |  | 10,000 |  |  |  | 10,000 |
Equity investment in affiliate |  |  | - |  |  |  | - |  |  |  | 29,289 |  |  |  | 29,289 |
Note receivable from affiliate |  |  | - |  |  |  | - |  |  |  | 8,835 |  |  |  | 8,835 |
Total assets |  | $ | 1,045,443 |  |  | $ | 361,597 |  |  | $ | 49,114 |  |  | $ | 1,456,154 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government grants |  | $ | - |  |  | $ | - |  |  | $ | 3,456 |  |  | $ | 3,456 |
Warrant liabilities |  |  | - |  |  |  | - |  |  |  | 1,058,990 |  |  |  | 1,058,990 |
Contingent consideration |  |  | - |  |  |  | - |  |  |  | 128,102 |  |  |  | 128,102 |
Total liabilities |  | $ | - |  |  | $ | - |  |  | $ | 1,190,548 |  |  | $ | 1,190,548 |
|  | December 31, 2025 Fair Value Measurements |
(dollars in thousands) |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Government grants |  | $ | - |  |  | $ | - |  |  | $ | 3,657 |  |  | $ | 3,657 |
Total liabilities |  | $ | - |  |  | $ | - |  |  | $ | 3,657 |  |  | $ | 3,657 |
Short-term investments The Company classifies its investments in fixed-income securities and certificates of deposit as available-for-sale. Available-for-sale securities are carried at fair value, with unrealized gains and losses, net of tax, recorded in accumulated other comprehensive income (loss). The amortized cost of available-for-sale securities includes the purchase price adjusted for the amortization of premiums and accretion of discounts, which are recognized in interest income using the effective interest method. Certificates of deposit are classified as available-for-sale investments and are recorded at amortized cost, adjusted for unrealized gains and losses to reflect fair value at each reporting date.
|  | As of March 31, 2026 |
(dollars in thousands) |  | Amortized cost basis |  |  | Gross unrealized gains |  |  | Gross unrealized losses |  |  | Fair Value |
U.S. Treasury securities |  | $ | 64,970 |  |  | $ | - |  |  | $ | (10 | ) |  | $ | 64,960 |
Fixed income (corporate fixed income and bonds, agency securities) |  |  | 111,970 |  |  |  | 25 |  |  |  | (335 | ) |  |  | 111,660 |
Certificates of deposit |  |  | 250,000 |  |  |  | - |  |  |  | (63 | ) |  |  | 249,937 |
Total |  | $ | 426,940 |  |  | $ | 25 |  |  | $ | (408 | ) |  | $ | 426,557 |
The Company holds marketable equity securities consisting of publicly traded common stock measured at fair value of $20.3 million as of March 31, 2026. For the three months ended March 31, 2026, we recognized net unrealized losses of $2.5 million on these marketable equity securities, which are included in other income (expense) in the condensed consolidated statements of operations. The Company’s investments are measured at fair value on a recurring basis. There were no transfers between Levels 1 and 2 during the period. Fair value measurements classified as Level 2 primarily include U.S. government agency securities, corporate fixed income securities, and certificates of deposit. These instruments are valued using pricing models and matrix pricing techniques that rely on observable market inputs, including quoted prices for similar instruments, benchmark yield curves, interest rate spreads, and dealer quotations. The valuation models do not rely on significant unobservable inputs. The Company classifies its warrants within Level 3 in the fair value hierarchy because it uses unobservable inputs related to volatility to determine fair value. There were no transfers between Level 1 and Level 3 during the period ended March 31, 2026. The following table summarizes the Company’s Level 3 investments in marketable equity securities:
|  | As of March 31, 2026 |
(dollars in thousands) |  | Fair Value Hierarchy |  |  | Cost Basis |  |  | Accumulated Net Unrealized Gains |  |  | Fair Value |
Warrants exercisable for publicly traded stock |  |  | Level 3 |  |  | $ | 706 |  |  | $ | 284 |  |  | $ | 990 |
Total |  |  |  |  |  | $ | 706 |  |  | $ | 284 |  |  | $ | 990 |
The Company’s investment in warrants exercisable for publicly traded stock allow us to purchase up to 500,000 shares of publicly traded common stock at an exercise price of $6.00 per share. The warrants are exercisable in whole or in part until August 20, 2028 and are required to be measured at fair value as long as the warrants remain outstanding. The fair value of the Company’s investment in warrants in a publicly traded company was determined using a Black-Scholes Model. During the three months ended March 31, 2026, net unrealized losses totaled $133 thousand and is included in other income (expense), net. For the three months ended March 31, 2026, the key assumptions used in the Black-Scholes Model are as follows:
|  | As of March 31, 2026 |
Stock price |  | $ | 3.81 |
Risk-free interest rate |  |  | 3.8 | %
Expected volatility |  |  | 107.7 | %
Remaining contractual life in years |  |  | 2.39 |
Dividend yield |  |  | 0 | %
The following table provides a reconciliation of the beginning and ending balances for the Level 3 warrant assets measured at fair value using significant unobservable inputs.
(dollars in thousands) |  | Warrants |
Balance as of January 1, 2026 |  | $ | 1,123 |
Warrants purchased, adjusted to fair value |  |  | - |
Net unrealized gain (loss) on change in fair value |  |  | (133 | )
Balance as of March 31, 2026 |  | $ | 990 |
Convertible promissory note On February 27, 2026, the Company purchased a $10 million convertible promissory note issued by World View. The convertible promissory note is measured under the fair value option and classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs, including projected cash flows and market-based credit assumptions. The Company elected the fair value option for this instrument upon acquisition. Changes in fair value are recognized in other income (expense), net. Equity investment in affiliate The Company’s equity investment in Ondas Networks is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs. The fair value of the investment was estimated using a combination of income-based and market-based valuation approaches, requiring significant judgment by management. The income-based approach primarily applied a discounted cash flow (“DCF”) method using management-prepared financial projections, a terminal value based on a long-term growth rate, and a discount rate that reflects the risks associated with Ondas Networks’ expected future cash flows and early-stage operating profile. A probability-weighted expected return method (“PWERM”) was also used to allocate value across potential future liquidity scenarios, including assumed sale or liquidation outcomes and continued operations, based on management’s assessment of the probability and timing of each scenario and the contractual rights of the equity holders. A market approach utilizing guideline public company data was used to corroborate the income-based valuation conclusions. Significant unobservable inputs include projected revenue growth, operating margins, discount rates, long-term growth rates, assumed probabilities and timing of liquidity events, and market-based valuation multiples. Changes in these assumptions, particularly revenue forecasts, discount rates, or liquidity assumptions, could materially impact the estimated fair value of the investment. There were no changes in the fair value of the equity investment in affiliate for the three months ended March 31, 2026. Note receivable from affiliate The Company holds a note receivable from Ondas Networks, which is measured at fair value and classified as Level 3 within the fair value hierarchy. The fair value of the note receivable was estimated using a discounted cash flow approach, applying a discount rate that reflects the credit risk of Ondas Networks and the illiquid nature of the instrument. Changes in the discount rate could materially affect the estimated fair value of the note receivable. Government Grants The Company had Level 3 liabilities that are required to be valued at fair value as of March 31, 2026 and December 31, 2025. The fair value of the government grant liability is determined as the sum of 3% royalty payments on forecasted future sales of the products developed using the grant funds, discounted using a discounted cash flow model. As of March 31, 2026 and December 31, 2025, the Company made the following assumptions: (i) royalty payments will be made on certain forecasted future sales through 2031, and (ii) using a discount rate of 19%. The following table provides a reconciliation of the beginning and ending balances for the Level 3 government grant liabilities measured at fair value using significant unobservable inputs.
(dollars in thousands) |  | Government Grant Liability |
Balance as of January 1, 2026 |  | $ | 3,657 |
Government grant liability acquired in Bird Aerosystems Ltd. acquisition |  |  | 58 |
Payments made |  |  | (373 | )
Effect of foreign currency translation |  |  | 10 |
Net loss on change in fair value of liability |  |  | 104 |
Balance as of March 31, 2026 |  | $ | 3,456 |
Warrant Liability The fair value of the warrants was determined using Level 3 inputs in a Black-Scholes Model. Inherent in the valuation were assumptions related to the expected stock-price volatility, expected term, risk-free interest rate, and dividend yield. Estimated volatility is a measure of the amount by which our stock price is expected to fluctuate each year during the expected life of the warrant term. Our estimated volatility is an average of the historical volatility of peer entities whose stock prices were publicly available over a period equal to the expected life of the awards. We used the historical volatility of peer entities due to the lack of sufficient historical data of our stock price. The expected term was assumed to be equivalent to the warrants’ remaining contractual term. The risk-free interest rate was estimated using the yield on actively traded non-inflation-indexed U.S. treasury securities with contract maturities equal to the expected term. The dividend yield was based on the historical rate, which the Company anticipates remaining at zero. The assumptions used to estimate the fair value of warrants during the period were as follows:
|  | Range |  |  | Weighted average |
Risk-free interest rate |  |  | 4 | % |  |  | 4 | %
Expected volatility |  |  | 79-84 | % |  |  | 82 | %
Expected life (in years) |  |  | 6.5-6.8 |  |  |  | 6.7 |
Dividend yield |  |  | 0 | % |  |  | 0- | %
The following table provides a reconciliation of the beginning and ending balances for the Level 3 warrant liabilities measured at fair value using significant unobservable inputs. There was no warrant liability activity during the three months ended March 31, 2025.
(dollars in thousands) |  | Warrant liability |
Balance as of January 1, 2026 |  | $ | 489,434 |
Fair value of warrant liability issued during the period |  |  | 1,194,019 |
Change in fair value of warrant liability |  |  | (624,463 | )
Balance as of March 31, 2026 |  | $ | 1,058,990 |
In connection with the January 2026 Offering, the Company issued liability classified warrants that were measured at fair value on the issuance date. The initial fair value of the warrant liabilities of $1.2 billion exceeded the net proceeds received from the issuance of $959.1 million. As a result, the Company recognized a loss upon issuance equal to the excess of the initial fair value of the warrant liabilities over the net proceeds of $234.9 million. The warrant liabilities are subsequently remeasured to fair value at each reporting date, with changes in fair value recognized in earnings in the period of change. The $389.5 million net gain, consisting of the $234.9 million loss recognized upon issuance and the $624.5 million gain on change in fair value subsequent issuance, are recorded in other income (expense), net in the condensed consolidated statements of operations. Significant increases or decreases in expected volatility or expected term would result in a higher or lower fair value measurement, respectively. Contingent Consideration The Company’s contingent consideration liabilities consist of earn-out and milestone payment arrangements related to business combinations. Earn-out payments are contingent upon the achievement of specified revenue, program win, and financial performance targets over defined post-acquisition periods. Milestone payments are contingent upon the achievement of specified operational, technical, regulatory, or program-related events within defined timeframes. These liabilities are classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs in their valuation. Contingent consideration liabilities are presented as accrued purchase and contingent consideration on the condensed consolidated balance sheets. The fair value of the contingent consideration liabilities is estimated using an income-based approach, primarily a scenario-based methods and discounted cash flow techniques. The valuation incorporates multiple future performance and milestone achievement scenarios, each probability-weighted based on management’s assessment of potential outcomes and discounted to present value using risk-adjusted discount rates. The significant unobservable inputs used in the valuation of the contingent consideration liabilities include projected revenue, probability of achieving performance and milestone targets, discount rates, and the expected timing of payments. These assumptions reflect management’s judgment regarding expected future operating performance, program execution, achievement of specified milestones, market conditions, and the time value of money. Significant increases or decreases in the probability of achieving the underlying earn-out targets or milestone events, or in projected revenue levels, would result in a corresponding increase or decrease in the fair value of the contingent consideration liabilities. Increases in the discount rate would result in a decrease in the estimated fair value of the contingent consideration liabilities. The following table reconciles the beginning and ending balances of the Company’s Level 3 contingent consideration liabilities:
(dollars in thousands) |  | Contingent Consideration |
Balance as of January 1, 2026 |  | $ | - |
Earn-out liabilities acquired at fair value |  |  | 102,682 |
Milestone liabilities acquired at fair value |  |  | 25,420 |
Changes in fair value recognized in earnings |  |  | - |
Payments |  |  | - |
Balance as of March 31, 2026 |  | $ | 128,102 |
Non-recurring fair value measurements In connection with the business combinations completed during the three months ended March 31, 2026 and the year ended December 31, 2025, the Company recognized identifiable intangible assets, including developed technology, customer relationships, trade names, and non-compete agreements. These intangible assets were measured at fair value on a non-recurring basis as of their respective acquisition dates in accordance with ASC 805. These measurements are not subsequently remeasured and the assets are amortized over their estimated useful lives. The fair value of the acquired intangible assets was determined using valuation techniques consistent with the income approach, including discounted cash flow models such as the multi-period excess earnings method for developed technology and customer relationships, the relief-from-royalty method for trade names, and the with-and-without method for non-compete agreements. These fair value measurements are classified within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs, including projected future revenues, operating margins, customer attrition rates, royalty rates, and discount rates, which reflect management’s assumptions regarding the expected economic benefits derived from the acquired assets. The fair value measurements were determined as of the respective acquisition dates and represent non-recurring measurements.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (bbb)(1) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 3: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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