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Contingent Consideration

9 Months Ended

Sep. 30, 2023

The following table summarizes information about the Company’s financial instruments measured at fair value on a recurring basis, grouped into Level 1 to 3 based on the degree to which the input to fair value is observable (in thousands):


	September 30, 2023
	Level I		Level II		Level III		Total
DBOT - Contingent consideration1	$	—	$	—	$	—	$	—
Tree Technology - Contingent consideration2	—		—		78		78

Solectrac - Contingent consideration3	—		—		—		—
VIA - Contingent consideration4	$	—	$	—	$	—	$	—
Total	$	—	$	—	$	78	$	78



	December 31, 2022
	Level I		Level II		Level III		Total
DBOT - Contingent consideration1	$	—	$	—	$	649	$	649
Tree Technology - Contingent consideration2	—		—		118		118

Solectrac - Contingent consideration3	—		—		$	100	100
Total	$	—	$	—	$	867	$	867

1 This represents the liability incurred in connection with the acquisition of DBOT shares during the three months ended September 30, 2019 and as remeasured as of April 17, 2020. The contractual period which required periodic remeasurement expired at that time, and therefore the Company did not remeasure this liability after that. During the three months ended September 30, 2023, The Company did not believe it has any remaining obligation related to this and reversed the remaining liabilities.

2 This represents the liability incurred in connection with the acquisition of Tree Technology shares during the three months ended December 31, 2019 and as subsequently remeasured as of June 30 2023. The contractual period which required periodic remeasurement expired at that time, and therefore the Company did not remeasure this liability after that.

3 This represents the liability incurred in connection with the acquisition of Solectrac. The liability represents the fair value of the three contingent considerations that were entered into at closing. The fair value was determined using Monte-Carlo simulations as of December 31, 2022. The fair value was reduced to zero as of September 30, 2023 due to the change of projection.

4 This represents the liability incurred in connection with the acquisition of VIA. The liability represents the fair value of the three contingent considerations that were entered into at closing. The fair value was determined using Monte-Carlo simulations.The fair value was reduced to zero as of September 30, 2023 due to the change of projection.

DBOT Contingent Consideration

The fair value of the DBOT contingent consideration was valued using the Black-Scholes-Merton model.

The contractual period which required periodic remeasurement has expired as of April 17, 2020, and therefore the Company

will not remeasure this liability in the future. The significant unobservable inputs used in the fair value measurement of the contingent consideration includes the risk-free interest rate, expected volatility, expected term and expected dividend yield. The following table summarizes the significant inputs and assumptions used in the model:


	December 31, 2022
Risk-free interest rate	0.1%
Expected volatility	30%
Expected term (years)	0.08
Expected dividend yield	—	%

Tree Technologies Contingent Consideration

The fair value of the Tree Technologies contingent consideration as of December 31, 2022 was valued using a probability-weighted discounted cash flow approach which incorporates various estimates, including projected gross revenue for the periods, probability estimates, discount rates and other factors. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

The following table summarizes the significant inputs and assumptions used in the probability-weighted discounted cash flow approach :


			December 31, 2022
Weighted-average cost of capital			15.0%
Probability			5%-20%

The fair value of the Tree Technologies contingent consideration as of September 30, 2023 represents the actual liabilities calculated in accordance with the acquisition agreement.

Solectrac Contingent Consideration

The fair value of the Solectrac contingent consideration as of December 31, 2022 was valued using a Monte-Carlo simulation model. The significant unobservable inputs include volatility, discount rate and the risk free rate, Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. The following table summarizes the significant inputs and assumptions used in the model:


			December 31, 2022
Risk-free interest rate			3.4%
Expected volatility			25.0%
Expected discount rate			13.1%

VIA Contingent Consideration

The fair value of the VIA contingent consideration at the acquisition date, January 31 2023, was 73.6 million and valued using a Monte-Carlo simulation model. The significant unobservable inputs include volatility, discount rate and the risk free rate. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. In the nine months ended September 30, 2023, the Company recorded the remeasurement gain 73.6 million due to the change of projections based on current EV market conditions. The following table summarizes the significant inputs and assumptions used in the model:


	January 31, 2023
Risk-free interest rate	3.7	%
Expected volatility	65.0	%
Expected discount rate	13.9	%

The following table summarizes the reconciliation of Level 3 fair value measurements (in thousands):


	Contingent Consideration
January 1, 2023	$	867



Addition	73,628
Remeasurement loss/(gain) recognized in the statement of operations	(74,417)
September 30, 2023	$	78

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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