NOTE 11         FAIR VALUE MEASUREMENTS

The following table presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2025:

VALUATION METHODOLOGIES

Following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy.

Derivatives

The Company has several derivatives associated with its common stock including make-whole commitments and debt conversion options. The following tables presents changes in our derivative assets and liabilities for the three-months ended March 31, 2025 and 2024, measured at fair value:

At March 31, 2025 and   December 31, 2024, the fair value of the derivative assets (Haywood and AST) and derivative liabilities (LINICO acquisition-related payable and Kips Bay) were based on a trading price of the Company’s shares of $2.44, and $8.00, respectively. At  March 31, 2024, fair value of the LINICO, the Haywood, and GenMat derivatives were based on a trading price of the Company’s shares of $3.60.

2025 Kips Bay Select LP Conversion Option

On January 10, 2025, the Company recorded a derivative liability on the condensed consolidated balance sheets in connection with the Kips Bay Note. On that date, the $1,700,000 fair value of the derivative liability was determined based on the bifurcation of the derivative liability from the convertible note. The derivative was valued using a Monte Carlo valuation model with a conversion price equal to 88% of the 7-day minimum VWAP, discount rate of 35%, risk free rate of 4.24%, and volatility of 103.0%. On March 11, 2025, the Company bifurcated the conversion feature for the second $5.0 million tranche and recorded a derivative liability with a corresponding additional to debt discount of $220,000 reflected in our condensed consolidated balance sheet. The derivative for the second tranche was valued using a Monte Carlo valuation model with a conversion price equal to 88% of the 7-day minimum VWAP, discount rate of 35% risk free rate of 3.98%, and volatility of 126.0%.

During three-months ended March 31, 2025, the Company recorded a gain of $501,645 for the change in the fair value of the derivative. During three-months ended March 31, 2025, $498,355 of the derivative liability decreased in connection with the conversion of the related debt into shares of common stock. The derivative liability was classified within Level 3 of the valuation hierarchy.

In 2025, the range of variables used to calculate the original fair value of the conversion option derivative and the fair value on the dates of conversion are as follows.

LINICO Acquisition-Related Payable Derivative Instrument

On February 28, 2025, the Company agreed to make cash payments of $148,853 and issue common shares of the Company valued at $2,200,000 to settle all amounts payable for the acquisition of LINICO to the Former LINICO CEO in full (see Note 6). The Company agreed to make up any shortfall if the proceeds from the sale of the shares are less than $2.2 million, and Former LINICO CEO agreed to refund any excess proceeds. In March 2025, the Company issued to Former LINICO CEO 775,000 shares of its common stock with a fair value $1,860,000 and recorded a derivative liability of $340,000. The Company further agreed to register the Company's common stock for resale by Former LINICO CEO under the Securities Act of 1933, as amended, which became effective on March 28, 2025. The settlement is designed to fully satisfy the existing obligation of over $3.2 million and resulted in an estimated gain of $845,000 reflected in gain on extinguishment of liability on our condensed consolidated statement of operations. During three-months ended March 31, 2025, the Company recorded a gain of $31,000 for the change in the fair value of the derivative. The derivative liability was classified within Level 2 of the valuation hierarchy.

AST Derivative Instrument

On March 20, 2025, the Company recognized a derivative asset on the condensed consolidated balance sheets in connection with the Second License Agreement Amendments (see Note 7). On that date, the $480,540 fair value of the derivative asset was determined based on the excess of the fair value of 1,207,166 shares of our common stock issued to and held by AST over the $3.5 million contractual stock consideration required under the agreement. The value of the shares was based on the $2.52 closing price per share of our common stock on that date. The Company further agreed to register the Company's common stock for resale by AST under the Securities Act of 1933, as amended, which became effective on April 7, 2025. At March 31, 2025, the fair value of Comstock’s shares held by AST of 1,167,166 shares was based on the closing price per share of our common stock of $2.44 with a fair value of the derivative asset of $392,000. During three-months ended March 31, 2025, the Company recorded a loss of $88,540 for the change in the fair value of the derivative. The derivative asset was classified in Level 2 of the valuation hierarchy.

Haywood Derivative Instrument

On April 7, 2022, the Company recognized a derivative asset on the condensed consolidated balance sheets in connection with the lease from Haywood (see Note 7). On that date, the $245,000 fair value of the derivative asset was determined based on the excess of the fair value of 150,000 shares of our common stock issued to and held by Haywood and a deposit of $50,000 over the initial $2,100,000 contractual stock consideration required under the agreement. The agreement was amended in 2024 (see Note 7) increasing the commitment by $100,000 from $2.1 million to $2.2 million. On April 11, 2024, the Company issued an additional 150,000 shares of our common stock to Haywood in accordance with the amendment which has a fair value of $509,850 at the closing price of $3.40 (see Note 7). During the three-months ended  March 31, 2025 and the year-ended  December 31, 2024, the Company paid Haywood $120,000 and $420,000, respectively, which resulted in a decrease in contractual stock consideration. As of  March 31, 2025, Decommissioning Services sold 49,552 shares of the Company's stock for net proceeds of $153,999. At March 31, 2025, the fair value of the 250,448 shares was based on the closing price per share of our common stock of $2.44 and the fair value of the derivative asset was $14,942. During three-months ended March 31, 2025, the Company recorded a loss of $1,634,908 for the change in the fair value of the derivative. The derivative asset is classified within Level 2 of the valuation hierarchy.

Marathon SAFE Note Instrument

On February 28, 2025, Comstock Fuels entered into a series of definitive agreements with Virent, involving the purchase of Comstock Fuels equity as part of Comstock Fuels’ planned Series A Financing (see Notes 4 and 9). At March 31, 2025, the Company recognized the Marathon SAFE Note liability of $12.0 million on the condensed consolidated balance sheets in connection with the agreement with Virent and elected to account the Marathon SAFE Note liability under the fair value option. The Marathon SAFE Note liability was estimated with assistance from third-party valuation specialists and valued using a probability weighted present value of the Marathon SAFE Note with the discount factor based on published venture capital rate of returns of 35% and a discounting period range of 0.25 to 0.84 years. The Marathon SAFE Note liability was classified within Level 3 of the valuation hierarchy.

Other Financial Instruments

At March 31, 2025, the carrying amount of cash and cash equivalents, notes receivable and debt carried at amortized costs, approximates fair value because of the short-term maturity of these financial instruments.