v3.26.1
Fair Value Measurements
 6 Months Ended
Jun. 30, 2026
Fair Value Measurements [Abstract]  
FAIR VALUE MEASUREMENTS

Note 8 — FAIR VALUE MEASUREMENTS

Items Measured at Fair Value on a Recurring Basis:

The Company accounts for certain liabilities at fair value on a recurring basis and classifies these liabilities within the fair value hierarchy (Level 1, Level 2, or Level 3). Assumptions such as risk-free rate, stock price, volatility and discount rate were based on market data. Management used a single point estimate for the risk-free rate, volatility and discount rate.

Liabilities subject to fair value measurements that are valued on a recurring basis are as follows:

 

 

As of June 30, 2026

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Earnout Shares liability

 

$

—

 

 

$

—

 

 

$

7,161,000

 

 

$

7,161,000

 

Subject Vesting Shares liability

 

 

—

 

 

 

—

 

 

 

3,469,000

 

 

 

3,469,000

 

Total liabilities

 

$

—

 

 

$

—

 

 

$

10,630,000

 

 

$

10,630,000

 

 

Earnout Shares

The estimated fair value of the Earnout Shares was determined with a Monte Carlo simulation using a distribution of potential outcomes for expected EBITDA and stock price at expected commission dates, utilizing a correlation coefficient for EBITDA and stock price, and assuming $50.0 million of Annualized EBITDA per production line, with each of the production lines commissioned over a five-year period. EBITDA was discounted to the valuation date with a weighted average cost of capital estimate and forecasted to each estimated commission date. Earnout mechanics at each estimated commission date were assessed, and if the earnout thresholds were achieved, the future value of the Earnout Shares was discounted to the valuation date utilizing a risk-free rate commensurate with the overall term. The commission dates used reflected management’s best estimates regarding the time to complete full construction and operational viability of a production line, including all permitting, regulatory approvals and necessary or useful inspections. The earnout term of 5 years and the earnout mechanics which impact the timing of expected future cash flows represent contractual inputs. See the following summary of key inputs:

 

 

As of
June 30,
2026

 

 

As of
December 31,
2025

 

Stock Price

 

$

5.54

 

 

$

3.94

 

Volatility

 

 

52.0

%

 

 

39.0

%

Risk free rate of return

 

 

4.2

%

 

 

3.6

%

Discount rate

 

 

22.5

%

 

 

20.5

%

Expected term (in years)

 

 

2.7

 

 

 

3.2

 

 

The following table presents the changes in the fair value of the Earnout Shares liability:

 

 

Six Months Ended
June 30,
2026

 

Earnout Shares liability as of December 31, 2025

 

$

6,196,000

 

Change in fair value

 

 

965,000

 

Balance as of June 30, 2026

 

$

7,161,000

 

 

As of June 30, 2026 and December 31, 2025, the estimated fair value of all the Earnout Shares, $7.2 million and $6.2 million, respectively, represents 922,264 and 1,291,813 Earnout Shares, respectively. The Earnout Shares liability in the preceding table represents the fair value of the contingent obligation to issue Earnout Shares to equity holders (excluding the shares to employees accounted for under ASC 718) upon the achievement of certain earnout milestones.

True Up Shares liability

During the year ended December 31, 2024, the Company’s volume-weighted average price of the Class A common stock on the Nasdaq as reported by Bloomberg L.P. was less than $8.50 for 15 consecutive trading days. As a result of this triggering event, the Company issued to the investor 275,880 shares of Class A common stock on March 18, 2025. The difference between the fair value of True Up Shares as reported on the triggering event date and the fair value calculated using the Company’s stock price at close of business on the triggering event date was recognized as a gain in the condensed consolidated statements of operations.

Subject Vesting Shares liability

The following table presents the changes in the fair value of the Subject Vesting Shares liability:

 

 

Six Months Ended
June 30,
2026

 

Subject Vesting Shares liability as of December 31, 2025

 

$

1,180,000

 

Change in fair value

 

 

2,289,000

 

Balance as of June 30, 2026

 

$

3,469,000

 

 

The estimated fair value of the Subject Vesting Share liability was determined utilizing a Monte Carlo simulation, with underlying forecast mathematics based on geometric Brownian motion in a risk-neutral framework. The calculation of the value of the Subject Vesting Shares considered the $12.00 and $14.00 vesting conditions in addition to the vesting related to the earnout milestone amount.

Items Measured at Fair Value on a Nonrecurring Basis

In addition to items that are measured at fair value on a recurring basis, the Company measures certain liabilities at fair value on a nonrecurring basis which are not included in the tables above, which includes our Equity Line Obligation liability. Nonrecurring fair value measurements are generally determined using unobservable inputs and are classified within Level 3 of the fair value hierarchy. The Company assesses the need to calculate the change in fair value of the Equity Line Obligation liability depending on how material the change is and the associated impact to the financials. During the three months ended March 31, 2026, the Company remeasured the fair value of the Equity Line Obligation liability resulting in a change in fair value of $35,598. During the three months ended June 30, 2026, the Company assessed the need to calculate the change in fair value of the Equity Line Obligation liability depending on how material the change is and the associated impact to the financials and concluded no remeasurement was needed.