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FAIR VALUE MEASUREMENTS | 6 Months Ended
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Jun. 30, 2023
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2023:
|  |  | Fair Value Measurements at
|  |  | June 30, 2023
| Total |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |
ABTC restricted common shares | $ | 7,100,000 |  |  | $ | — |  |  | $ | 7,100,000 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |
Ionic convertible debenture derivative | $ | (600,000) |  |  | $ | — |  |  | $ | — |  |  | $ | (600,000) |
LINICO related derivative | (3,278,162) |  |  | — |  |  | (3,278,162) |  |  | — |
Haywood derivative | (605,000) |  |  | — |  |  | (605,000) |  |  | — |
GenMat derivative | (3,303,172) |  |  | — |  |  | (3,303,172) |  |  | — |
Total liabilities measured at fair value | $ | (7,786,334) |  |  | $ | — |  |  | $ | (7,186,334) |  |  | $ | (600,000) |
The following table presents our liabilities at December 31, 2022, measured at fair value on a recurring basis:
|  |  | Fair Value Measurements at
|  |  | December 31, 2022
| Total |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Liabilities: |  |  |  |  |  |  |
Ionic convertible debenture derivative | $ | (420,000) |  |  | $ | — |  |  | $ | — |  |  | $ | (420,000) |
LINICO related derivative | (6,053,162) |  |  | — |  |  | (6,053,162) |  |  | — |
Haywood derivative | (1,480,000) |  |  | — |  |  | (1,480,000) |  |  | — |
GenMat derivative | (6,592,638) |  |  | — |  |  | (6,592,638) |  |  | — |
Total liabilities measured at fair value | $ | (14,545,800) |  |  | $ | — |  |  | $ | (14,125,800) |  |  | $ | (420,000) |
During the six-months ended June 30, 2022, the Company recognized a loss of $605,000 in the fair value measurement of the Note and a $6,650,000 exchange of the note receivable associated with the Tonogold agreement using significant unobservable inputs (Level 3). As of June 30, 2022, the ending balance of investments measured at fair value was $0. During the three and six-months ended June 30, 2023, the Company recognized a loss of $1,416,254 and $1,176,254, respectively, for the change in fair value of the Ionic convertible debenture derivative. For the three and six-months ended June 30, 2023, $840,254 and $996,254, respectively, of the derivative liability was converted and the ending balance of the derivative liability measured at fair value was $600,000 using significant unobservable inputs (Level 3). VALUATION METHODOLOGIES The following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy. American Battery Technology Investment The fair value of our investment in ABTC restricted common shares acquired in connection with the sale of the Facility valued using a Monte Carlo valuation model (see Note 8, Assets Held For Sale). •On April 6, 2023, the initial fair value of the 10 million restricted common shares included a make-whole provision for the deficiency in common stock value if the net cash proceeds from the sale of the stock are less than $6.6 million to be paid by ABTC to the Company; if the net cash proceeds are greater than $7.6 million, the Company will return the excess proceeds to ABTC. The Monte Carlo valuation model determined an initial fair value of $7.0 million of the 10 million restricted shares which included a beginning stock price at $0.78, volatility of 94.0%, and a risk-free rate of 4.80%. •On April 21, 2023, due to an amendment to the underlying agreement, the upper limit cap of $7.6 million was removed which resulted in a new valuation of the shares. The fair value increased by $2.0 million from the Monte Carlo valuation model which included a beginning stock price at $0.86, volatility of 95.0%, and a risk-free rate of 5.00%. •On May 12, 2023, the Company received an additional 1 million restricted common shares from ABTC due to an amendment to the purchase agreement. The initial fair value of these 1 million shares was $365,000 from the Monte Carlo valuation model included a beginning stock price at $0.74, volatility of 95.0%, and a risk-free rate of 5.07%. •On June 30, 2023, in accordance with an amendment to the agreement, the Company returned 1,923,077 of restricted shares of ABTC stock in lieu of $1.5 million of the purchase price previously agreed to be held in escrow to settle indemnification claims based on the original agreement. •As of June 30, 2023, the 9,076,923 shares of restricted ABTC shares held by the Company, had a fair value of $7.1 million. The fair values of the common shares are based on a Monte Carlo valuation model which included a beginning stock price at $0.77, volatility of 89.0%, and a risk-free rate of 5.26%. We recorded an unrealized loss on the change in fair value of the investment in ABTC common shares of $765,000 in the condensed consolidated statements of operations for the three months and six-months ended June 30, 2023. The investment asset is classified within Level 2 of the valuation hierarchy. Ionic Ventures, LLC Conversion Option On December 16, 2022, we recorded a derivative liability on the consolidated balance sheets in connection with the Ionic Note. On that date, the $420,000 fair value of the derivative liability was determined based on bifurcation of the derivative liability from the convertible note. During the three and six-months ended June 30, 2023, the Company recorded a loss of $1,416,254 and $1,176,254, respectively, for the change in fair value of the derivative. At June 30, 2023 and December 31, 2022, the fair value of the derivative liability was $600,000 and $420,000, respectively. At December 31, 2022, the derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90% of the average price capped at $0.50, discount rate of 35%, risk-free rate of 4.40%, and volatility of 60.0%. At June 30, 2023, the derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90% of the average price capped at $0.50, discount rate of 35%, risk free rate of 5.30%, and volatility of 95.0%. The derivative liability is classified within Level 3 of the valuation hierarchy. LINICO Derivative Instrument On December 30, 2021, the Company entered into an agreement to acquire 3,129,081 LINICO common shares from its former chief executive officer and director in exchange for 3,500,000 shares of the Company's common stock ("Comstock Shares"). If and to the extent that the sale of the Company's shares results in net proceeds greater than $7,258,162, then the former chief executive officer is required to pay all of such excess proceeds to the Company. If and to the extent that the sale of the Comstock Shares results in net proceeds less than $7,258,162, then the Company is required to pay the former chief executive officer equal to such shortfall. The fair value of the shares was based on the closing price per share of our common stock of $0.73 and $0.28 at June 30, 2023 and December 31, 2022, respectively. In 2022, the Company paid the former chief executive officer $225,000 representing a decrease in contractual stock consideration. For the three and six-months ended June 30, 2023, the Company paid the former chief executive officer $825,000 and $1,200,000 respectively, representing a decrease in contractual stock consideration. We recorded an unrealized gain on the change in fair value of the derivative liability of $1,365,000 and $1,575,000, respectively, in the condensed consolidated statements of operations for the three and six-months ended June 30, 2023. We recorded an unrealized loss on the change in fair value of the derivative liability of $3,675,000 and $2,345,000, respectively, in the condensed consolidated statements of operations for the three and six-months ended June 30, 2022. The derivative liability is classified within Level 2 of the valuation hierarchy. Haywood Derivative Instrument On April 7, 2022, we recorded a derivative asset on the consolidated balance sheets in connection with the Haywood acquisition and lease from Decommissioning Services (see Note 7, Leases). On that date, the $245,000 fair value of the derivative asset was determined based on the excess of the fair value of 1,500,000 shares of our common stock issued to and held by Decommissioning Services and a deposit of $50,000 over the $2,100,000 contractual stock consideration required under the agreement. During the six-months ended June 30, 2023 and the year ended December 31, 2022, the Company paid Decommissioning Services $200,000 and $150,000, respectively, which resulted in a decrease in contractual stock consideration. At June 30, 2023 and December 31, 2022, the fair value of the shares was based on the closing price per share of our common stock of $0.73 and $0.28, respectively. We recorded an unrealized gain on the change in fair value of the derivative liability of $585,000 and $675,000, respectively, in the condensed consolidated statements of operations for the three and six-months ended June 30, 2023. We recorded an unrealized loss on the change in fair value of the derivative liability of $1,365,000 in the condensed consolidated statements of operations for the three and six-months ended June 30, 2022. The derivative liability is classified within Level 2 of the valuation hierarchy. GenMat Derivative Instrument On June 24, 2021, we recorded a derivative asset on the consolidated balance sheets in connection with the GenMat Membership Interest Purchase Agreement (see Note 2, Investments). At June 30, 2023 and December 31, 2022, the fair value of the shares was based on the closing price per share of our common stock of $0.73 and $0.28. During the six-months ended June 30, 2023, the Company paid GenMat $2,100,000 against the existing derivative liability, representing a payment toward the Company’s investment obligation. In 2022, the Company paid GenMat $2,450,000 against the existing derivative liability, representing a payment toward the Company’s investment obligation. We recorded an unrealized gain on the change in fair value of the derivative liability of $1,030,871 and $1,189,466, respectively, in the condensed consolidated statements of operations for the three and six-months ended June 30, 2023. We recorded an unrealized loss on the change in fair value of the derivative liability of $3,150,000 and $2,010,000, respectively, in the condensed consolidated statements of operations for the three and six-months ended June 30, 2022. The derivative liability is classified within Level 2 of the valuation hierarchy. Tonogold Note Receivable On March 31, 2022, the Company amended an Option Agreement with Tonogold (the “Lucerne Option”). Tonogold re-conveyed 100% of the previously sold membership interests of Comstock Mining LLC, the entity that owns the Lucerne mine, to the Company, in exchange for the Company exchanging Tonogold’s payment obligations under a secured note in the principal amount owed of $6,650,000 to the Company. The Company recorded a loss of $0 and $605,000, respectively, for the change in fair value in other expense in the condensed consolidated statements of operations for the three and six-months ended June 30, 2022. LPB Derivative Instrument On July 23, 2021, we recorded a derivative asset on the consolidated balance sheets in connection with the LPB Contribution Agreement. On that date, the $6,642,000 fair value of the derivative asset was determined based on the excess of the fair value of 3,500,000 shares of our common stock issued to and held by LPB over the $4,173,000 fair value of our contractual consideration under the LPB Partnership Interest Purchase Agreement. The value of the shares was based on the $3.09 closing price per share of our common stock on that date. On February 28, 2022, the Company and the other parties to the LPB transactions mutually agreed to terminate the transaction documents. Prior to settlement, the fair value of the shares was based on the closing price per share of our common stock of $1.46, and we recorded a gain on the change in fair value of the derivative liability of $595,000 in the consolidated statements of operations for the six-months ended June 30, 2022. The fair value of the derivative as of the settlement date of $937,000 was derecognized, along with the value of the investment in LPB, and the fair value of the 3,500,000 shares was $5,110,000 and was recognized as a decrease first to the par value of the common stock returned, and the remainder as a reduction to additional paid in capital. Other Financial Instruments At June 30, 2023, the carrying amount of cash and cash equivalents, notes receivable and debt carried at amortized costs, approximates fair value because of the short-term maturity of these financial instruments.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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