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Note 9 - Warrants

3 Months Ended

Mar. 31, 2025

9.	Warrants

SHG's legal predecessor, Yellowstone Acquisition Company (“YAC”), issued to third-party investors 6,799,439 warrants which entitled the holder to purchase one share of Class A Common Stock at an exercise price of $11.50 per share (the “Public Warrants”). In addition, 7,719,779 private placement warrants were sold to BOC Yellowstone LLC (the “Sponsor”). Each Private Warrant allows the Sponsor to purchase one share of Class A Common Stock at an exercise price of $11.50 per share. The Public Warrants and Private Warrants remain outstanding under the same terms and conditions to purchase shares of the Company’s Class A Common Stock. The terms of the Private Warrants are identical to those of the Public Warrants, except for that so long as the Private Warrants are held by the Sponsor or its permitted transferees, they may be exercised on a cashless basis.

In connection with the Securities Purchase Agreement (the “2023 Purchase Agreement”) entered into on November 1, 2023 with certain investors, the Company issued to third-party investors 1,541,600 warrants (the “PIPE Warrants”, and together with the Public Warrants and the Private Warrants, the “Warrants”). The PIPE Warrants are equivalent in form and substance to the Company’s Public Warrants.

The Warrants contain an exercise price of $11.50 per share and expire on January 25, 2027. The Company determined the fair value of its Public Warrants and PIPE Warrants based on the publicly listed trading price as of the valuation date. Accordingly, these warrants are classified as Level 1 financial instruments. As the terms of the Private Warrants are identical to those of the Public Warrants, the Company determined the fair value of its Private Warrants based on the publicly listed trading price of the Public Warrants as of the valuation date and have classified the Private Warrants as Level 2 financial instruments.

No Warrants were exercised during the three months ended March 31, 2025. During the three months ended March 31, 2024, 253,703 Warrants were exercised, resulting in approximately $2.9 million of proceeds, of which approximately $1.4 million was receivable by the Company as of March 31, 2024. As of March 31, 2025, 15,798,155 Warrants remain outstanding.

The closing price of the Warrants was $3.08 and $2.92 per warrant on March 31, 2025 and December 31, 2024, respectively. The aggregate fair value of the outstanding Warrants was approximately $48.7 million and $46.1 million as of March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025 and 2024, the Company recorded an unrealized loss associated with the change in fair value of the Warrants of approximately $2.5 million and $16.2 million, respectively.