Quarterly report [Sections 13 or 15(d)]

Fair Value Measurements

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

The accounting guidance establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows:

Level 1 – Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access at the measurement date.

Level 2 – Observable inputs such as quoted prices for similar instruments and quoted prices in markets that are not active, and inputs that are directly observable or can be corroborated by observable market data. The types of assets and liabilities included in Level 2 are typically either comparable to actively traded securities or contracts, such as treasury securities with pricing interpolated from recent trades of similar securities, or priced with models using highly observable inputs, such as commodity options priced using observable forward prices and volatilities.

Level 3 – Significant inputs to pricing that have little or no observability as of the reporting date. The types of assets and liabilities included in Level 3 are those with inputs requiring significant management judgment or estimation, such as the complex and subjective models and forecasts used to determine the fair value of financial instruments.

Financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 are summarized below.

June 30, 2025

Level 1

Level 2

Level 3

Total Fair Value

Cash equivalents:

Money market funds

$

1,535,022

$

—

$

—

$

1,535,022

Subtotal

1,535,022

—

—

1,535,022

Liabilities:

Contingent value rights

—

—

(286,630)

(286,630)

Subtotal

—

—

(286,630)

(286,630)

Total

$

1,535,022

$

—

$

(286,630)

$

1,248,392

December 31, 2024

Level 1

Level 2

Level 3

Total Fair Value

Cash equivalents:

Money market funds

$

368,138

$

—

$

—

$

368,138

Subtotal

368,138

—

—

368,138

Current Liabilities:

Contingent value rights

—

—

(312,080)

(312,080)

Embedded derivative liability

(82,281)

(82,281)

Earnout consideration

—

(2,500,000)

—

(2,500,000)

Subtotal

—

(2,500,000)

(394,361)

(2,894,361)

Total

$

368,138

$

(2,500,000)

$

(394,361)

$

(2,526,223)

The following tables present reconciliations of recurring fair value measurements that use significant unobservable inputs (Level 3):

Three Months Ended June 30, 2025

Contingent value rights

Warrant liability

Contingent forward contract

Total

March 31, 2025

$

(292,901)

$

—

$

(5,406,033)

$

(5,698,934)

Additions

—

(9,399,054)

—

(9,399,054)

Warrant exercise

—

16,662,707

—

16,662,707

Fair value adjustments

6,271

(7,531,044)

789,588

(6,735,185)

Settlement

—

267,391

4,616,445

4,883,836

June 30, 2025

$

(286,630)

$

—

$

—

$

(286,630)

Three Months Ended June 30, 2024

Contingent value rights

Warrant liability

Embedded derivative liability

Earnout consideration

Total

March 31, 2024

$

(1,314,987)

$

(6,863,627)

$

—

$

(3,150,000)

$

(11,328,614)

Warrant exercise

—

324,789

—

—

324,789

Fair value adjustments

116,775

(3,267,571)

(1,055,600)

450,000

(3,756,396)

June 30, 2024

$

(1,198,212)

$

(9,806,409)

$

(1,055,600)

$

(2,700,000)

$

(14,760,221)

Six Months Ended June 30, 2025

Contingent value rights

Warrant liability

Embedded derivative liability

Contingent forward contract

Total

December 31, 2024

$

(312,080)

$

—

$

(82,281)

$

—

$

(394,361)

Additions

—

(9,399,054)

—

(5,515,525)

(14,914,579)

Extinguishment of debt

—

—

82,281

—

82,281

Warrant exercise

—

16,662,707

—

—

16,662,707

Fair value adjustments

25,450

(7,531,044)

—

899,080

(6,606,514)

Settlement

—

267,391

—

4,616,445

4,883,836

June 30, 2025

$

(286,630)

$

—

$

—

$

—

$

(286,630)

Six Months Ended June 30, 2024

Contingent value rights

Warrant liability

Embedded derivative liability

Earnout consideration

Total

December 31, 2023

$

(1,691,072)

$

—

$

—

$

(3,500,000)

$

(5,191,072)

Reclassification from equity

—

(10,592,220)

—

—

(10,592,220)

Warrant exercise

—

324,789

—

324,789

Fair value adjustments

492,860

461,022

(1,055,600)

800,000

698,282

June 30, 2024

$

(1,198,212)

$

(9,806,409)

$

(1,055,600)

$

(2,700,000)

$

(14,760,221)

The estimated fair value of the CVRs as of June 30, 2025 and December 31, 2024 was $286,630 and $312,080, respectively, as noted above. The Company recorded a $25,450 gain on the fair value remeasurement of the CVRs during the six months ended June 30, 2025 and a $492,860 gain on the fair value of the remeasurement of the CVRs during the six months ended June 30, 2024.

The estimated fair value of the contingent forward contract was $5,406,033 as of March 31, 2025 and as of June 30, 2025 was $0, as noted above. The estimated fair value was considered a Level 3 measurement and the fair value of the contingent forward contract is determined using a Monte Carlo simulation. As a result of the fair value remeasurement, the Company recorded a remeasurement gain of $789,588 and $899,080 in the three and six months ended June 30, 2025, respectively. See Note 9, Equity, for further information.

The estimated fair value of earnout consideration related to the acquisition of SUNation as of December 31, 2024 was $2,500,000. The Company paid $2,500,000 against the earnout consideration during the six months ended June 30, 2025 related to the first earnout period. The estimated fair value was considered a Level 2 measurement at December 31, 2024 because the earnout amounts had been established and there was no longer a reliance on unobservable inputs. The fair

value was considered a Level 3 measurement at December 31, 2023 and June 30, 2024. In order to update the fair value of the earnout consideration, the Company utilized a Monte Carlo simulation, which included the following significant assumptions: the expected probability and timing of achievement of milestone events. As a result of the fair value remeasurement, the Company recorded a remeasurement gain of $450,000 and $800,000 during the three and six months ended June 30, 2024, respectively.

As noted in Note 9, the PIPE Warrants were classified as a liability during the first quarter of 2024, resulting in a $10,592,202 reclassification from equity. During the third quarter of 2024, the PIPE Warrants met equity classification requirements upon the shareholder approval of an increase in authorized outstanding shares and reclassified the fair value liability totaling $11,242,254 back to equity. As discussed in Note 9, Equity, during the second quarter of 2025, the Company issued Series A and Series B warrants. The estimated fair value is considered a Level 3 measurement and the fair value of the warrant liability is determined using a Monte Carlo simulation to model future movement of the stock price. As a result of the fair value remeasurement, the Company recorded a remeasurement loss of $7,531,044 for the three and six months ended June 30, 2025, and a loss of $3,267,571 for the three months ended June 30, 2024 and a gain of $461,022 during the six months ended June 30, 2024. All warrants had been settled as of June 30, 2025.

The estimated fair value of the embedded derivative liability was $82,281 as of December 31, 2024. As noted in Note 6, Commitments and Contingencies, the Company repaid the debt associated with the embedded derivative liabilities and the embedded derivative balance was included within the debt extinguishment. The estimated fair value is considered a Level 3 measurement and the fair value of the embedded derivative liability is determined based on a comparison of the present value of cash flows with and without the embedded derivative. This analysis includes management estimates of the likelihood of events of prepayment and default on the Decathlon, MBB and Conduit loans.

The fair value remeasurement related to the SUNation earnout was recorded within operating expenses. The other fair value remeasurements noted above were recorded within other (expense) income in the condensed consolidated statements of operations.

We record transfers between levels of the fair value hierarchy, if necessary, at the end of the reporting period. There were no transfers between levels during the six months ended June 30, 2025.