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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2024
Fair Value Measurements [Abstract] |
FAIR VALUE MEASUREMENTS | 5. FAIR VALUE MEASUREMENTS Fair value accounting is applied for all financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis. The table below presents the Company’s liabilities measured at fair value on a recurring basis aggregated by the level in the fair value hierarchy as of December 31, 2024 (in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Public placement warrant liability |  | $ | — |  |  | $ | — |  |  | $ | 267 |  |  | $ | 267 |
Related party private placement warrant liability |  |  | — |  |  |  | — |  |  |  | 133 |  |  |  | 133 |
Long-term debt, non-current |  | $ | — |  |  | $ | 13,186 |  |  | $ | — |  |  | $ | 13,186 |
Total liabilities |  | $ | — |  |  | $ | 13,186 |  |  | $ | 400 |  |  | $ | 13,586 |
The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis aggregated by the level in the fair value hierarchy as of December 31, 2023 (in thousands):
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Convertible notes, current |  | $ | — |  |  | $ | — |  |  | $ | 15,604 |  |  | $ | 15,604 |
Related party convertible notes, current |  |  | — |  |  |  | — |  |  |  | 2,133 |  |  |  | 2,133 |
Shared-based termination liability |  |  | — |  |  |  | — |  |  |  | 6,349 |  |  |  | 6,349 |
Convertible preferred stock warrant liability |  |  | — |  |  |  | — |  |  |  | 203 |  |  |  | 203 |
Long-term debt, non-current |  |  | — |  |  | $ | 13,340 |  |  | $ | — |  |  | $ | 13,340 |
Total liabilities |  | $ | — |  |  | $ | 13,340 |  |  | $ | 24,289 |  |  | $ | 37,629 |
The Company’s convertible notes, current, related party convertible notes, current, share-based termination liability, public placement warrant liability, related party private placement liability, and preferred stock warrant liabilities are classified as Level 3 in the fair value hierarchy as the valuations are based on unobservable inputs, which reflect the Company’s own assumptions incorporated in valuation techniques used to determine fair value; further discussion of these assumptions is set forth below. There were no transfers into or out of Level 3 of the fair value hierarchy during the periods presented. Changes in the fair value measurement of Level 3 liabilities are related mainly to unrealized gains (losses) resulting from remeasurement each period and are reflected in the consolidated statements of operations and comprehensive loss. Public Placement Warrant Liability In connection with the Merger, the Company assumed the Public Placement Warrants (see Note 9 – Warrants) to purchase the Company’s Common stock. The Company accounts for the Public Placement Warrants as a liability in accordance with ASC 815-40-15 since the Public Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. This liability is subject to remeasurement at each balance sheet date until exercised. The fair value of the public placement liability at December 31, 2024 was determined using the Monte Carlo simulation model. The public placement warrant liability represents a Level 3 measurement within the fair value hierarchy as it has been valued using some unobservable inputs. Related Party Private Placement Warrant Liability In connection with the Merger, the Company assumed the Private Placement Warrants (see Note 9 – Warrants) to purchase the Company’s Common stock, which were issued to the Sponsor, a related party. The Company accounts for the Private Placement Warrants as a liability in accordance with ASC 815-40-15 since the Private Placement Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. This liability is subject to remeasurement at each balance sheet date until exercised. The fair value of the related party private placement warrant liability at December 31, 2024 was determined using the Monte Carlo simulation model. The related party private placement warrant liability represents a Level 3 measurement within the fair value hierarchy as it has been valued using unobservable inputs. Convertible notes The Company concluded that the Convertible Notes and its related features are within the scope of ASC 825, Financial Instruments, as a combined financial instrument, and the Company elected the fair value option where changes in fair value of the convertible notes are measured through the accompanying consolidated statement of operations and comprehensive loss until settlement. The Convertible Notes liability represents a Level 3 measurement within the fair value hierarchy as it has been valued using certain unobservable inputs. These inputs include the underlying fair value of the equity instrument into which the Convertible Notes are convertible. The fair value is based on significant inputs not observable in the market, namely potential financing scenarios, the likelihood of such scenarios, the expected time for each scenario to occur, and the required market rates of return utilized in modeling these scenarios. Share-based termination liability The fair value of the share-based termination liability at December 31, 2023 was determined based on the expected exchange fair value of the Company’s common stock using the probability weighted expected return method (“PWERM”). The PWERM method is a scenario-based methodology that estimates the fair value of equity securities based upon an analysis of future values of the Company, assuming various outcomes. The significant inputs to the PWERM methodology included rights and preferences of each class of Company’s shares, the Company’s assumptions related to the expected timing of a liquidation event, lack of marketability and the Company’s estimated equity value and volatility on the valuation date, which are based on management’s analysis of comparable publicly traded peer companies. There was no shared-based termination liability as of December 31, 2024. Convertible preferred stock warrant liability The fair value of the convertible preferred stock warrant liability as of December 31, 2023 was determined using the PWERM. There was no convertible preferred stock warrant liability as of December 31, 2024. Change in fair value of Level 3 liabilities The change in the fair value of the Level 3 liabilities during the years ended December 31, 2024 and 2023 was as follows (in thousands):
|  | Public placement warrant liability |
Balance at January 1, 2024 |  | $ | — |
Warrants assumed from the Merger |  |  | 25,174 |
Change in estimated fair value |  |  | (24,907 | )
Balance at December 31, 2024 |  | $ | 267 |
The change in fair value of the Public Placement Warrants is recognized in the consolidated statements of operations and comprehensive loss as the remeasurement of the public placement warrant liability of $24.9 million and zero for the years ended December 31, 2024 and 2023, respectively.
|  | Related party private placement warrant liability |
Balance at January 1, 2024 |  | $ | — |
Warrants assumed from the Merger |  |  | 13,134 |
Change in estimated fair value |  |  | (13,001 | )
Balance at December 31, 2024 |  | $ | 133 |
The change in fair value of the Private Placement Warrants is recognized in the consolidated statements of operations and comprehensive loss as the remeasurement of the related party private placement warrant liability of $13.0 million and zero for the years ended December 31, 2024 and 2023, respectively.
|  | Convertible notes, current |
Balance at January 1, 2023 |  | $ | — |
Note issuance during the period |  |  | 15,323 |
Change in estimated fair value |  |  | 281 |
Balance at January 1, 2024 |  | $ | 15,604 |
Note issuance during the period |  |  | 17,559 |
Loss on extinguishment |  |  | 22,183 |
Change in estimated fair value |  |  | 31,664 |
Conversion into common stock |  | $ | (87,010 | )
Balance at December 31, 2024 |  | $ | — |
The change in fair value of the convertible notes is recognized in the consolidated statements of operations and comprehensive loss as the remeasurement of the convertible notes totaling loss of $31.7 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. There was no change in fair value attributable to the instrument-specific credit risk for the years ended December 31, 2024 and 2023.
|  | Related party convertible notes, current |
Balance at January 1, 2023 |  | $ | — |
Note issuance during the period |  |  | 2,018 |
Change in estimated fair value |  |  | 115 |
Balance at January 1, 2024 |  | $ | 2,133 |
Note issuance during the period |  |  | 5,084 |
Loss on extinguishment |  |  | 4,176 |
Change in estimated fair value |  |  | 3,752 |
Conversion into common stock |  |  | (15,145 | )
Balance at December 31, 2024 |  | $ | — |
The change in fair value of the related party convertible notes is recognized in the consolidated statements of operations and comprehensive loss as the remeasurement of the related party convertible notes totaling loss of $3.8 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively. There was no change in fair value attributable to the instrument-specific credit risk for the years ended December 31, 2024 and 2023.
|  | Share-based termination liability |
Balance at January 1, 2023 |  | $ | — |
Addition during the period |  |  | 6,053 |
Change in estimated fair value |  |  | 296 |
Balance at January 1, 2024 |  | $ | 6,349 |
Change in estimated fair value |  |  | 979 |
Liability settlement due to issuance of common stock |  | $ | (7,328 | )
Balance at December 31, 2024 |  | $ | — |
The change in fair value of the share-based termination liability is recognized in the consolidated statements of operations and comprehensive loss as the remeasurement of the share-based termination liability totaling loss of $1.0 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively.
|  | Convertible preferred stock warrants liability |
Balance at January 1, 2023 |  | $ | 330 |
Change in estimated fair value |  |  | (127 | )
Balance at January 1, 2024 |  | $ | 203 |
Change in estimated fair value |  |  | (6 | )
Conversion into Private Warrants |  |  | (197 | )
Balance at December 31, 2024 |  |  | — |
The change in fair value of the convertible preferred stock warrants is recognized in the consolidated statements of operations and comprehensive loss as the remeasurement of the convertible preferred stock warrant liability totaling a gain of $0.01 million and $0.1 million for the years ended December 31, 2024 and 2023, respectively.

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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/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 2: 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 3: 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 4: 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 5: 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 6: 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 7: 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 8: 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 9: 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 10: 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 11: 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 12: 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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