v3.26.1
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
NOTE 11 — Fair Value of Financial Instruments

The following table presents assets and liabilities measured at fair value on a recurring basis and indicates the fair value hierarchy of the valuation as follows (dollars in thousands):
June 30, 2026
Level 1Level 2Level 3Total
Liabilities:
Former Owner Loan (Note 10)$— $— $3,600 $3,600 
Contingent Consideration— — 8,999 8,999 
Earnout Shares— — 27,251 27,251 
Deferred Founder Shares— — 9,867 9,867 
Forward Purchase Agreement Liability— — 10,390 10,390 
Total liabilities$— $— $60,107 $60,107 

December 31, 2025
Level 1Level 2Level 3Total
Liabilities:
Contingent Consideration$— $— $9,195 $9,195 
Warrant Liability— — 2,922 2,922 
Total liabilities$— $— $12,117 $12,117 

Earnout Shares and Deferred Founder Shares
Certain former Legacy Teamshares security holders have the contingent right to receive up to 6,000,000 Earnout Shares during the Earnout Period and the Sponsor was issued 1,674,781 Deferred Founder Shares that are subject to vesting and forfeiture during the Founder Share Earnout Period as follows:
Earnout TierShare Price TargetVWAP ConditionEarnout Shares
Deferred Founder Shares
Tier I$12.00
VWAP ≥ $12.00 for 20 out of 30 consecutive trading days (commencing at least 150 days after Closing but prior to the end of the Earnout Period)
2,000,000837,391
Tier II$15.00
VWAP ≥ $15.00 for 20 out of 30 consecutive trading days (commencing at least 150 days after Closing but prior to the end of the Earnout Period)
2,000,000837,390
Tier III$20.00
VWAP ≥ $20.00 for 20 out of 30 consecutive trading days (commencing at least 150 days after Closing but prior to the end of the Earnout Period)
2,000,000N/A
Total6,000,0001,674,781
Upon the Closing, 5,170,903 Earnout Shares were reserved for non-employees of the Company, including holders of Legacy Teamshares Common Stock and Legacy Teamshares Preferred Stock that did not elect a liquidation preference. Earnout Shares reserved for non-employees, and Deferred Founder Shares are classified as liabilities, and the change in the fair value of these awards is recognized in the Condensed Consolidated Statements of Operations. See Note 13 for
disclosure of the 829,097 Earnout Shares that were reserved for employees of the Company that are subject to continuous employment requirements.
The fair value of Earnout Shares and Deferred Founder Shares are classified as Level 3 in the fair value hierarchy due to the use of pricing inputs that are less observable in the marketplace combined with management judgment required for the assumptions underlying the calculation of value. The Company calculated the fair value of these liabilities using a Monte Carlo simulation model.
The tables below summarize the fair value of the Earnout Shares and the Deferred Founder Shares:
Earnout TierEarnout Shares
Deferred Founder Shares
Fair Value Per Share as of the Closing DateFair Value Per Share as of June 30, 2026
Tier I2,000,000837,391$10.36 $6.40 
Tier II2,000,000837,390$9.11 $5.39 
Tier III2,000,000N/A$7.04 $4.02 
Total6,000,0001,674,781
The table below summarizes the inputs used to calculate the fair value of the Earnout Shares and the Deferred Founder Shares as of the Closing Date and as of June 30, 2026:
InputValue as of the Closing DateValue as of
June 30, 2026
Stock Price$11.32 $8.22 
Expected Remaining Term (in years)54.97
Expected Volatility35.0 %40.0 %
Risk-Free Interest Rate4.2 %4.2 %
The following table presents the change in the Earnout Shares liability for the six months ended June 30, 2026 (dollars in thousands):
Fair value as of the Closing Date$45,694 
Change in fair value of Earnout Shares(18,443)
Fair value as of June 30, 2026$27,251 

The following table presents the change in the Deferred Founder Shares liability for the six months ended June 30, 2026 (dollars in thousands):
Fair value as of the Closing Date$16,308 
Change in fair value of Deferred Founder Shares(6,441)
Fair value as of June 30, 2026$9,867 

Forward Purchase Agreement
On June 1, 2026, in anticipation of the Closing, Live Oak entered into the Forward Purchase Agreement with the FPA Investor. Pursuant to the Forward Purchase Agreement, the Prepayment Amount owed to the FPA Investor upon the Closing was calculated as the product of (i) the 4,000,000 FPA Shares purchased on the open market by the FPA Investor and (ii) the per share redemption price of Live Oak common shares determined as of five business days prior to the closing (the “Initial Price”). The Initial Price was determined to be $10.56, and therefore the Prepayment Amount paid to the FPA Investor was $42.2 million.
The Forward Purchase Agreement matures 24 months from the Closing, however, the FPA Investor may terminate the agreement at any time, in whole or in part, with respect to any number of FPA Shares that are subject to the Forward Purchase Agreement. Upon termination, the FPA Investor will deliver to the Company a portion of the Prepayment Amount equal to the product of (i) the number of terminated shares (“Terminated Shares”) multiplied by the Reset Price (as defined below) in effect at the time of termination. The Reset Price is initially equal to the Initial Price, but is subject to reduction (and not increase) at any point prior to the maturity of the Forward Purchase Agreement, at the Company’s discretion, to the lowest daily VWAP over the preceding 10 trading days. Additionally, the Reset Price will automatically adjust in the event the Company issues securities at effective prices lower than the then-current Reset Price, subject to certain exceptions.

If the Forward Purchase Agreement is not fully terminated by the FPA Investor prior to the maturity date, then on the maturity date the FPA Investor shall deliver to the Company the FPA Shares, reduced by any Terminated Shares. The FPA Investor will retain a portion of the Prepayment Amount equal to the product of (i) the FPA Shares reduced by any Terminated Shares and (ii) the Initial Price.

The substance of the Prepayment Amount is akin to a subscription receivable for Company Common Stock, and therefore the payment of the Prepayment Amount has been presented as a reduction of Additional Paid-In Capital. Additionally, the Company recognized a derivative liability (the “Forward Purchase Agreement Liability”) that represents the estimated fair value of the Company’s settlement obligations under the Forward Purchase Agreement. The change in the fair value of the Forward Purchase Agreement Liability is recognized in the Condensed Consolidated Statements of Operations.

The fair value of the Forward Purchase Agreement Liability is classified as Level 3 in the fair value hierarchy due to the use of pricing inputs that are less observable in the marketplace combined with management judgment required for the assumptions underlying the calculation of value. The Company determined the estimated fair value of the Forward Purchase Agreement Liability using the Black-Scholes option-pricing model.

The table below summarizes the inputs used to calculate the fair value of the Forward Purchase Agreement Liability as of the Closing Date and as of June 30, 2026:
InputValue as of the Closing DateValue as of
June 30, 2026
Stock Price$11.32 $8.22 
Expected Remaining term (in years)21.97
Expected Volatility35.0 %35.0 %
Risk-free interest rate4.2 %4.1 %

The following table presents the change in the Forward Purchase Agreement liability for the six months ended June 30, 2026 (dollars in thousands):
Fair value as of the Closing Date$5,386 
Change in fair value of Forward Purchase Agreement Liability5,003 
Fair value as of June 30, 2026$10,390 

Simple Agreements for Future Equity

During the period between December 2025 and May 2026, Legacy Teamshares entered into SAFE Notes for aggregate proceeds of approximately $6.3 million. All SAFE Notes issued by Legacy Teamshares automatically converted into 688,043 shares of Company Common Stock on the Closing Date. An additional 63,300 Incentive Founder Shares were delivered to holders of SAFE Notes upon the Closing. The Company recognized a loss of $2.2 million in the Condensed
Consolidated Statements of Operations for the three months ended June 30, 2026 related to the conversion of SAFE Notes to Company Common Stock.

Legacy Teamshares Warrants
In connection with the SPAC Merger, holders of 77,258 Series B Warrants issued by Legacy Teamshares exercised their option to convert their Series B Warrants into 48,990 shares of Legacy Teamshares Common Stock. The Legacy Teamshares Common Stock was then converted to Company Common Stock at the Exchange Ratio. The Company recognized a $0.2 million loss in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2026 related to the conversion of Series B Warrants to Legacy Teamshares Common Stock.

All Series C, Series D, and Series E Warrants issued by Legacy Teamshares were terminated and did not receive any consideration in connection with the SPAC Merger because these warrants were out-of-the-money at the Closing. The Company recognized a $0.6 million gain in the Condensed Consolidated Statements of Operations for the three months ended June 30, 2026 related to the expiration of the Series C, Series D, and Series E Warrants.
Contingent Consideration

The Company has contingent consideration clauses embedded within certain purchase agreements for acquired Operating Subsidiaries. The consideration is contingent on certain future financial metrics being achieved for a certain period of time. The contingent consideration liabilities are recorded at fair value as Contingent Consideration in the Condensed Consolidated Balance Sheets with the changes in fair value recognized in earnings each reporting period. For additional detail regarding the contingent consideration agreements, see Note 5.

The fair value of contingent consideration is classified as Level 3 in the fair value hierarchy due to the use of pricing inputs that are less observable in the marketplace combined with management judgment required for the assumptions underlying the calculation of value. The Company determined the estimated fair value of the contingent consideration using a Monte Carlo simulation model.
The following table presents changes in contingent consideration liabilities for the three and six months ended June 30, 2026 (dollars in thousands):
Three Months Ended June 30, 2026Six Months Ended June 30, 2026
Balance of period$8,417 $9,195 
Contingent consideration for 2026 business combinations194 372 
Change in fair value of earnout consideration889 886 
Foreign currency impact on earnout consideration(76)(183)
Earnout payments made in period(424)(1,271)
Balance at June 30, 2026$8,999 $8,999 
There were no transfers of financial instruments between the three levels of the fair value hierarchy during the three and six months ended June 30, 2026.