10. Contingent Consideration

Pursuant to the Ceres Purchase Agreement, up to $225,000 of additional consideration is payable in 2030, contingent upon Ceres achieving a CAGR in revenue of 12% to 22% during the earnout measurement period of January 1, 2025 through December 31, 2029, as follows:

If the revenue CAGR for the earnout period is equal to or less than 12%, then the aggregate amount of the earnout consideration will be $0;

If the revenue CAGR for the earnout period is greater than 12% but less than 22%, then the aggregate amount of the earnout consideration will be pro-rated using straight-line interpolation between $0 and $225,000; and

If the revenue CAGR for the earnout period is equal to or greater than 22%, then the aggregate amount of the earnout consideration will be $225,000.

The Company has determined that the earnout should be classified as contingent consideration as (i) continuing employment is not a condition for payment (except as described below), (ii) non-employee sellers are entitled to similar payments based upon their relative ownership percentages and (iii) the payment formula described above is tied to the valuation of the acquired business. Under ASC 805, contingent consideration must be recognized at the acquisition date as part of the consideration transferred for the acquired business.

The fair value of the contingent consideration was $14,406 and $11,844 at March 31, 2026 and December 31, 2025, respectively. During the three months ended March 31, 2026, the Company recognized a loss on remeasurement of $2,562 which was recognized in the Consolidated Statements of Operations. The fair value measurement of the contingent consideration is classified within Level 3 of the fair value hierarchy due to the valuation incorporating significant unobservable inputs. The actual amount payable may differ from the assumptions used to estimate fair value, which could result in material changes to the amount ultimately paid.

The table below presents the inputs used in the remeasurement of contingent consideration:

	Inputs
	March 31, 2026		December 31, 2025
Revenue CAGR through December 31, 2029		10.2%		8.4%
Revenue volatility		30%		30%
Revenue discount rate		13.0%		11.9%

In connection with the Ceres Acquisition, the sellers established a retention bonus plan for certain Ceres employees pursuant to which the greater of $3,050 or 10% of any earnout consideration in excess of $50,000 will be forfeited by the sellers and paid to participating employees, contingent upon their continued employment through earnout payment date. Any amounts forfeited due to employee attrition revert to the sellers. This compensation will be recognized over the service period with an equal and offsetting receivable from the sellers. Accrued compensation totaled $353 at March 31, 2026.