Fair Value Measurements

3 Months Ended

Mar. 31, 2025

Fair Value Measurements

Fair Value Measurements

7. Fair Value Measurements

The Company records the fair value of assets and liabilities in accordance with ASC 820, Fair Value Measurement (“ASC 820”). ASC 820 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.

In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety.

These levels are:

● Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities.

● Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.

● Level 3 — unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability at fair value.

There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2025. Financial instruments not recorded at fair value on a recurring basis include equity method investments that have not been remeasured or impaired in the current period, such as our investments in AccionaPlug S.L., SK Plug Hyverse and Clean H2 Infra Fund.

The following table summarizes the carrying amount and estimated fair value of the Company’s financial instruments as of March 31, 2025 and December 31, 2024 (in thousands):

	As of March 31, 2025
	Carrying		Fair		Fair Value Measurements
	Amount		Value		Level 1		Level 2		Level 3
Liabilities
6.00% Convertible Debenture	$	108,650	$	108,650	$	—	$	—	$	108,650
Contingent consideration		43,379		43,379		—		—		43,379

	As of December 31, 2024
	Carrying		Fair		Fair Value Measurements
	Amount		Value		Level 1		Level 2		Level 3
Liabilities
6.00% Convertible Debenture	$	173,150	$	173,150	$	—	$	—	$	173,150
Contingent consideration		60,746		60,746		—		—		60,746

The liabilities measured at fair value on a recurring basis that have unobservable inputs and are therefore categorized as Level 3 are related to the 6.00% Convertible Debenture.

6.00% Convertible Debenture

The fair value of the 6.00% Convertible Debenture as of March 31, 2025 is comprised of a single financial liability in which the Company elected the fair value option under ASC 825, Financial Instruments (“ASC 825”), with changes in fair value recorded in gain/loss from changes in fair value of 6.00% Convertible Debenture in the unaudited interim condensed consolidated statements of operations. There was no change in the instrument-specific credit risk during the three months ended March 31, 2025.

The fair value of the 6.00% Convertible Debenture as of March 31, 2025 was based on a Monte Carlo simulation of stock price of the Company on a daily basis and a discounted cash flow model that incorporates the amortization schedule, contingent on the daily simulated stock price. The valuation utilized significant Level 3 unobservable inputs, including implied yield, volatility, and risky discount rate. Other significant assumptions include risk-free rate, principal value, the Company’s common stock price, maturity date and the various conversion features and prices per the agreement. Significant judgment is required in selecting the significant inputs and assumptions. Actual assumptions may differ from our current estimates and such differences could materially impact fair value of the convertible note.

Refer to Note 9, “Convertible Debt Instruments”, for the change in the carrying amount of the 6.00% Convertible Debenture for the three months ended March 31, 2025.

Contingent consideration

The fair value of contingent consideration as of March 31, 2025 and December 31, 2024 is related to the Joule Processing LLC (“Joule”) acquisition in 2022 and the Frames Holding B.V. (“Frames”) acquisition in 2021.

In the unaudited interim condensed consolidated balance sheets, contingent consideration was recorded in the contingent consideration, loss accrual for service contracts, and other current liabilities and contingent consideration, loss accrual for service contracts, and other liabilities financial statement line items and was comprised of the following unobservable inputs as of March 31, 2025:

Financial Instrument	Fair Value		Valuation Technique	Unobservable Input	Range (weighted average)
Contingent consideration	$	43,379	Scenario-based method	Credit spread	13.22%
				Discount rate	17.03% - 17.38%
		43,379

In the unaudited interim condensed consolidated balance sheets, contingent consideration was recorded in the contingent consideration, loss accrual for service contracts, and other current liabilities and contingent consideration, loss accrual for service contracts, and other liabilities financial statement line items and was comprised of the following unobservable inputs as of December 31, 2024:

Financial Instrument	Fair Value		Valuation Technique	Unobservable Input	Range (weighted average)
Contingent consideration	$	60,746	Scenario-based method	Credit spread	11.83%
				Discount rate	15.91% - 16.00%
		60,746

The change in the carrying amount of contingent consideration for the three months ended March 31, 2025 was as follows (in thousands):

	Three months ended
	March 31, 2025
Beginning balance as of December 31, 2024	$	60,746
Cash payments		(6,024)
Change in fair value of contingent consideration		(11,819)
Foreign currency translation adjustment		476
Ending balance as of March 31, 2025	$	43,379