v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements
12.
FAIR VALUE MEASUREMENTS

The Company has established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. Levels within the hierarchy are defined in Note 2 to the consolidated financial statements in the 2024 Form 10-K.

The Company’s financial instruments consist of accounts receivable, accounts payable, accrued expenses, and short- and long-term debt. The carrying value of accounts receivable, accounts payable, accrued expenses and short-term debt are considered a reasonable estimate of their fair value, due to the short-term maturity of these instruments.

The Company’s debt instruments are carried at amortized cost in its unaudited condensed consolidated balance sheets, which may differ from their respective fair values. The fair values of the Company’s Term Loan and Revolving Loans generally approximate their carrying values.

The following table presents information regarding the Company’s financial liabilities that were measured at fair value on a recurring basis:

 

 

June 30, 2025

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Earnout liability

 

$

—

 

 

$

—

 

 

$

8,279

 

 

$

8,279

 

 

 

 

December 31, 2024

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Earnout liability

 

$

—

 

 

$

—

 

 

$

17,235

 

 

$

17,235

 

There were no movements between levels during the three and six months ended June 30, 2025.

Level 3 Disclosures

Earnout Liabilities

The earnout liability related to the Business Combination Agreement was valued using a Monte Carlo simulation in order to project the future path of the Company’s stock price over the earnout period. The earnout liability related to the acquisition of Simpatra was valued using a Monte Carlo simulation in order to project the future path of Simpatra’s revenue and the Company’s stock price over the earnout period. The carrying amount of these liabilities may fluctuate significantly, and actual amounts paid may be materially different from the liability’s estimated fair value.

The following table provides the significant inputs used to measure the fair value of the level 3 earnout liability related to the Business Combination Agreement:

 

 

As of

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Stock price

 

$

4.02

 

 

$

6.18

 

Risk-free rate

 

 

3.7

%

 

 

4.2

%

Volatility

 

 

71.6

%

 

 

75.0

%

Term (in years)

 

 

1.9

 

 

 

2.4

 

 

The following table provides the significant inputs used to measure the fair value of the level 3 earnout liability related to the acquisition of Simpatra:

 

 

As of

 

 

 

June 30, 2025

 

 

December 31, 2024

 

Stock price

 

$

4.02

 

 

$

6.18

 

Risk-free rate

 

 

3.7

%

 

 

4.3

%

Equity volatility

 

 

63.0

%

 

 

68.5

%

Revenue volatility

 

 

54.8

%

 

 

53.9

%

Revenue discount rate

 

 

14.8

%

 

 

14.6

%

Correlation factor

 

 

5.0

%

 

 

5.0

%

Term (in years)

 

 

2.5

 

 

 

3.0

 

Changes in the fair value of the Company’s Level 3 financial instruments were as follows:

(in thousands)

 

Earnout Liability

 

Fair value as of December 31, 2024

 

$

17,235

 

Settlement

 

 

(75

)

Gain on asset acquisition

 

 

(25

)

Gain from change in fair value

 

 

(8,856

)

Fair value as of June 30, 2025

 

$

8,279