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Note 3 - Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 3. FAIR VALUE MEASUREMENTS

 

The following tables present the Company’s financial instruments measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 (in thousands):

 

           

Fair Value Measurements Using

  
           

Quoted

                  
           

Prices in

                 
           

Active

                  
           

Markets

    

Significant

          
           

for

    

Other

    

Significant

  
   

Balance at

    

Identical

   

Observable

   

Unobservable

  
   

March 31,

    

Items

   

Inputs

   

Inputs

  
   

2026

    

(Level 1)

    

(Level 2)

    

(Level 3)

  

Assets

                                

Restricted cash held as a certificate of deposit

   $ 435     $ 435     $ —     $ —  

SKY digital assets

   $ 160,086     $ 160,086     $ —     $ —  
                                 
Liabilities                                
Warrant liability   $ 33,715     $ —     $ 33,715     $ —  

 

 

           

Fair Value Measurements Using

  
           

Quoted

                  
           

Prices in

                 
           

Active

                  
           

Markets

    

Significant

          
           

for

    

Other

    

Significant

  
   

Balance at

    

Identical

   

Observable

   

Unobservable

  
   

December 31,

    

Items

   

Inputs

   

Inputs

  
   

2025

    

(Level 1)

    

(Level 2)

    

(Level 3)

  

Assets

                                

Restricted cash held as a certificate of deposit

   $ 267     $ 267     $ —     $ —  
                                 

Liabilities

                                

Warrant liability

   $ 639,071     $ —     $ 639,071     $ —  

 

The Company's restricted cash held as a deposit is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices in active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

 

SKY digital assets are measured at fair value on a recurring basis using quoted prices in the Company's principal market (Level 1 inputs) in accordance with ASC 820. The Company did not hold any digital assets as of December 31, 2025.

 

The Company determines its principal market as the market with the greatest volume and level of activity for SKY that is accessible to the Company. In making this determination, the Company considers factors including (i) its ability to legally and operationally transact in the market, (ii) observed trading volume and liquidity, (iii) pricing transparency and reliability, and (iv) the market in which the Company primarily executes its transactions.

 

Although certain global exchanges may report higher aggregate trading volumes, those markets are not considered accessible to the Company due to regulatory and operational constraints. Accordingly, the Company has concluded that Coinbase Exchange represents its principal market, as it exhibits the greatest volume and level of activity for SKY among markets accessible to the Company and provides observable, orderly pricing in USD-denominated markets.

 

The warrant liabilities as of March 31, 2026 and December 31, 2025 were measured at fair value based on the intrinsic value of the warrants, determined using the quoted market price of the Company's common stock at the measurement date. Because the warrants themselves were not actively traded and the valuation relied on observable market inputs other than quoted prices for identical instruments, the liabilities were classified within Level 2 of the fair value hierarchy.

 

Warrant Liabilities

 

Pre-funded warrants with a nominal exercise price are economically similar to common stock and are measured based on intrinsic value, calculated as the market price of the Company's common stock less the nominal exercise price, multiplied by the number of warrant shares outstanding. The October 2025 Pre-Funded Warrants remain classified as a liability as of March 31, 2026 and are measured at intrinsic value based on the closing price of the Company's common stock as of the reporting date. The Company had no warrant liabilities outstanding as of March 31, 2025.

 

The fair value of the January 2026 Pre-Funded Warrants (as defined in Note 8, “Financing Activities”) at issuance was determined using the closing price of the Company's common stock on January 20, 2026 (the first trading day following the announcement of the January 2026 Private Placement, which was made after market close on January 16, 2026).

 

See Note 10, “Common Stock Warrants and Warrant Liabilities” for additional information and the definitions related to the Company's warrants.