Quarterly report [Sections 13 or 15(d)]

FAIR VALUE OF FINANCIAL INSTRUMENTS

v3.26.1
FAIR VALUE OF FINANCIAL INSTRUMENTS
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 3. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, digital asset loan receivable, and accrued expenses and other current liabilities, approximate fair value due to the short-term nature of these instruments.

 

The Company holds digital assets consisting primarily of BERA and BERA-equivalent holdings. Native BERA is measured at fair value using quoted prices in active markets for identical assets. BERA-equivalent holdings, including staked, wrapped, or protocol-based receipt tokens, are valued using observable conversion characteristics from the applicable protocol and quoted market prices for the underlying BERA token as of the measurement date. The Company uses treasury reporting tools to support custody tracking, wallet reconciliation, and conversion-rate documentation; such tools are not the primary pricing source for fair value measurement.

 

The Company classifies digital assets within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement. Native BERA is classified as Level 1 when quoted prices in active markets for identical assets are available. BERA-equivalent holdings are classified based on the observability of the underlying BERA price and the related conversion characteristics used to determine fair value. To the extent quoted prices for identical assets are not available for BERA-equivalent holdings, the Company considers the observability of the underlying BERA price and applicable protocol conversion characteristics in determining the appropriate fair value hierarchy classification.

 

If a Level 1 input is available, it is required to be utilized as a measure of fair value without adjustment, including adjustments that would reflect the size of the Company’s holdings or blockage factors. Due to the inherent volatility of digital asset markets, the fair value of these assets may fluctuate significantly, which could materially impact the Company’s financial position and results of operations.

 

Our financial instruments measured at fair value on a recurring basis were as follows at the dates indicated (in thousands):

 

 

(in thousands)   Caption   Level 1     Level 2     Level 3     Total  
   

Consolidated

Balance Sheet

   Fair Value at March 31, 2026  
(in thousands)   Caption   Level 1     Level 2     Level 3     Total  
Assets:                                    
aUSDC and sUSDe   Stablecoin-related protocol instruments   $ —       3,999       —     $ 3,999  
BERA and BERA-equivalent tokens   Digital assets   34,232       —       —     34,232  
Total Assets       $ 34,232     $ 3,999     $ —     $ 38,231  

 

(in thousands)   Caption   Level 1     Level 2     Level 3     Total  
   

Consolidated

Balance Sheet

   Fair Value at December 31, 2025  
(in thousands)   Caption   Level 1     Level 2     Level 3     Total  
Assets:                                    
BERA and BERA-equivalent tokens   Digital assets   $ 36,555       —       —     $ 36,555  
Total Assets       $ 36,555     $ —     $ —     $ 36,555  

 

Digital assets included in these tables consist of BERA and BERA-equivalent tokens. Stablecoins classified as cash equivalents are excluded from the tables above because they are carried at amounts that approximate fair value due to their short-term nature and redeemability into U.S. dollars. Stablecoin-related instruments that do not qualify as cash equivalents are excluded from these tables unless classified as digital assets measured at fair value.

 

There were no transfers between Level 1 and Level 2 and no transfers to or from Level 3 of the fair value hierarchy during the three months ended March 31, 2026 or the year ended December 31, 2025.

 

Equity Securities Without a Readily Determinable Fair Value

 

The Company’s investment in equity securities without a readily determinable fair value consists of an ownership interest in Airgraft Inc., a private company. The Company determined that its ownership interest does not provide the Company with significant influence over Airgraft Inc.; accordingly, the investment is accounted for as an equity security.

 

Because the equity securities do not have a readily determinable fair value, the Company elected to measure the investment using the measurement alternative under ASC 321, at cost, less impairment, if any, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer.

 

The Company evaluates the investment each reporting period for impairment indicators and observable price changes. The Company did not identify any impairment or observable price changes requiring adjustment during the three months ended March 31, 2026 or the year ended December 31, 2025.

 

As of March 31, 2026 and December 31, 2025, the carrying value of the Company’s investment in Airgraft Inc. was approximately $1.9 million and was included within “Other assets” in the condensed consolidated balance sheets.