FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

6 Months Ended

Jun. 30, 2025

FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE

Financial Instruments Measured at Fair Value and Financial Statement Presentation

The accounting guidance establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as of the measurement date as follows:

Level 1: Fair values are based on unadjusted quoted prices in active trading markets for identical assets and liabilities.

Level 2: Fair values are based on observable quoted prices other than those in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3: Fair values are based on at least one significant unobservable input for the asset or liability.

The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 3 during the six months ended June 30, 2025, and 2024.

Fair Value Measurements and Financial Statement Presentation

The Company’s financial instruments measured at fair value and their respective levels in the fair value hierarchy as of June 30, 2025, and December 31, 2024, were as follows:


	June 30, 2025								December 31, 2024
	Fair Value of Assets								Fair Value of Assets
In Thousands	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market funds (1)	$	10,082	$	—	$	—	$	10,082	$	1,058	$	—	$	—	$	1,058
Total	$	10,082	$	—	$	—	$	10,082	$	1,058	$	—	$	—	$	1,058

________________________________________________
(1) Included in cash and cash equivalents on the accompanying condensed consolidated balance sheets.


	June 30, 2025								December 31, 2024
	Fair Value of Liabilities								Fair Value of Liabilities
In Thousands	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Common Warrants	$	—	$	—	$	71	$	71	$	—	$	—	$	2,268	$	2,268
Total	$	—	$	—	$	71	$	71	$	—	$	—	$	2,268	$	2,268

The following table summarizes the Common Warrants activity for the six months ended June 30, 2025:


In Thousands	Level 3 Fair Value of Liabilities
Balance as of December 31, 2024	$	2,268
Issued	—
Reclassified to stockholders' equity	(1,742)
Change in fair value	(455)
Balance as of June 30, 2025	$	71

In January 2025, as a result of the Warrant Amendment Agreement, the Company reclassified the fair value of 1,100,000 2024 Common Warrants of $1.6 million from Class A common stock warrants liability to a component of stockholders’ equity within additional paid-in capital in the accompanying condensed consolidated balance sheets. The change in fair value of the Class A common stock warrants liability related to these 2024 Common Warrants of $0.3 million between December 31, 2024, and January 24, 2025, is reflected in non-operating income (expense), net in the Company’s condensed consolidated statements of operations for the six months ended June 30, 2025.

Furthermore, as a result of the Company obtaining the requisite approval from its stockholders on May 22, 2025, with respect to those 2024 Common Warrants held by Mr. Riggs, the Company reclassified the fair value of 98,040 2024 Common Warrants of $0.1 million from Class A common stock warrants liability to a component of stockholders’ equity within additional paid-in capital in the accompanying condensed consolidated balance sheets. The change in fair value of the Class A common stock warrants liability related to these 2024 Common Warrants of $0.1 million between March 31, 2025, and May 23, 2025, is reflected in non-operating income (expense), net in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2025.

The following table summarizes the Common Warrants activity for the six months ended June 30, 2024:


In Thousands	Level 3 Fair Value of Liabilities
Balance as of December 31, 2023	$	1,418
Issued	10,151
Change in fair value	(1,190)
Balance as of June 30, 2024	$	10,379

The Company estimates the fair value of the liability classified Common Warrants as of the date of issuance and at the end of every reporting period using a Black-Scholes option pricing model, which requires it to make assumptions regarding future stock price volatility and dividend yield. The Company estimates the risk-free interest rate based on the United States Treasury zero-coupon yield curve for the remaining life of the Common Warrants. Prior to the fourth quarter of 2024, the Company estimated its future stock price volatility using a weighted average historical volatility which took into consideration the Company’s historical volatility and historical volatility from a group of guideline companies, over the remaining life of the Common Warrants. Beginning in the fourth quarter of 2024, the Company began using its own historical stock price volatility, over the remaining life of the Common Warrants. The Company does not pay dividends and does not expect to pay dividends in the foreseeable future.

The estimated fair values of the Common Warrants, and the assumptions used for the Black-Scholes option pricing model were as follows:



	As of June 30, 2025	As of December 31, 2024
Estimated fair value of common warrants per share	$0.04 - $0.65	$0.39 - $1.70
Assumptions:
Risk-free interest rate	3.7%	4.2% - 4.3%
Expected volatility	113.2% - 114.7%	111.0% - 118.1%
Expected term to liquidation (in years)	2.1 - 4.0	2.6 - 4.5

The estimated fair values of the 2024 Common Warrants on the January 2025 and May 2025 reclassification dates, and the assumptions used for the Black-Scholes option pricing model were as follows:


	May 2025 Modification		January 2025 Modifications
Estimated fair value of common warrants per share (1) (2)	$1.55		$1.34 - $1.55
Assumptions:
Risk-free interest rate	4.0	%	4.4	%
Expected volatility	111.9	%	111.4	%
Expected term to liquidation (in years)	4.1		4.4

________________________________________________
(1) The May 23, 2025 Modification represents the 98,040 2024 Common Warrants held by Mr. Riggs, which were amended on May 23, 2025. The stock price immediately prior to the May 2025 Modification was $2.72 per share of Class A Common Stock.
(2) For the January 2025 Modifications, the $1.34 fair value per share represents the 550,000 2024 Common Warrants amended on January 22, 2025, and the $1.55 fair value per share represents 550,000 2024 Common Warrants amended on January 24, 2025. The stock price immediately prior to the January 2025 Modifications was $2.31 per share of Class A Common Stock and $2.60 per share of Class A Common Stock, respectively.

As of June 30, 2025, the Company had no other financial instruments measured at fair value.

- 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

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+ Details

Cibus, Inc. 10-Q