v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements
11.
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 2025 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:

 

 

March 31, 2026

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Earnout liability

 

$

—

 

 

$

—

 

 

$

1,963

 

 

$

1,963

 

 

 

 

December 31, 2025

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Earnout liability

 

$

—

 

 

$

—

 

 

$

4,112

 

 

$

4,112

 

There were no movements between levels during the three months ended March 31, 2026.

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 2024 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

 

 

 

March 31, 2026

 

 

December 31, 2025

 

Stock price

 

$

1.35

 

 

$

2.60

 

Risk-free rate

 

 

3.6

%

 

 

3.4

%

Volatility

 

 

72.5

%

 

 

74.1

%

Term (in years)

 

 

1.2

 

 

 

1.4

 

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

 

 

 

March 31, 2026

 

 

December 31, 2025

 

Stock price

 

$

1.35

 

 

$

2.60

 

Risk-free rate

 

 

3.7

%

 

 

3.5

%

Equity volatility

 

 

56.0

%

 

 

64.5

%

Revenue volatility

 

 

57.8

%

 

 

57.0

%

Revenue discount rate

 

 

15.6

%

 

 

14.5

%

Correlation factor

 

 

3.0

%

 

 

3.0

%

Term (in years)

 

 

1.8

 

 

 

2.0

 

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, 2025

 

$

4,112

 

Gain from change in fair value

 

 

(2,149

)

Fair value as of March 31, 2026

 

$

1,963