(13) Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The following fair value hierarchy classifies the inputs to valuation techniques that would be used to measure fair value into one of three levels:

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following tables present information about the Company's assets and liabilities that are measured at fair value on a recurring basis at December 31, 2025 and 2024, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:


	As of December 31, 2025
	Total		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Cash equivalents
Money market funds	$	9,128,243	$	9,128,243	$	—	$	—
Short-term investments
Mutual funds		59,129,609		59,129,609		—		—
U.S. treasury securities		24,027,260		24,027,260		—		—
Corporate Bonds		2,932,910		—		2,932,910		—
Long-term investments
U.S. treasury securities		42,783,989		42,783,989		—		—
Corporate Bonds		4,108,893		—		4,108,893		—
Liabilities:
Public Warrant liability	$	179,400	$	179,400	$	—	$	—
Private Placement Warrant liability		6,508		—		—		6,508
Tranche C Preferred Warrants		5,449,204		—		—		5,449,204


	As of December 31, 2024
	Total		Quoted Prices In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)
Assets:
Cash equivalents
Money market funds	$	3,460,221	$	3,460,221	$	—	$	—
U.S. treasury securities		3,248,959		3,248,959		—		—
Short-term investments
Mutual funds		5,638,567		5,638,567		—		—
U.S. treasury securities		6,224,179		6,224,179		—		—
Liabilities:
Public Warrant liability	$	432,975	$	432,975	$	—
Private Placement Warrant liability		15,708		—		—		15,708
Tranche C and B Preferred Warrants		5,940,543		—		—		5,940,543

The following table provides a summary of changes in Level 3 fair value measurements for the Private Placement Warrant Liability:



Balance, December 31, 2024	$	15,708
Change in fair value of Private Placement Warrant liability		(9,200	)
Balance, December 31, 2025	$	6,508

The following table provides a summary of the changes in Level 3 fair value measurements for the Preferred Warrant liabilities:


Balance, December 31, 2024	$	5,940,543
Change in fair value of the Preferred Warrant liabilities		(491,339	)
Balance, December 31, 2025	$	5,449,204

As of December 31, 2025 and 2024, the Company did not have any other assets or liabilities that are recorded at fair value on a recurring basis.

The Company believes that the carrying amounts of its cash and cash equivalents, accrued interest receivable, accounts payable, notes payable, accrued expenses and other current liabilities approximate their fair values due to their near-term maturities.

- 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

SAB Biotherapeutics, Inc. 10-K