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Warrant Liabilities | 9 Months Ended
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Sep. 30, 2024
Warrant Liabilities [Abstract] |
Warrant Liabilities | 12. Warrant Liabilities On January 23, 2024, in connection with the Amended and Restated Credit Agreement, the Company issued 20.0 million warrants to the Lenders (the “Warrants”). Each Warrant entitles the registered holder to purchase one share of the Company’s Class A common stock at a price of $1.50 per share, subject to adjustment. The Warrants will expire on the 10-year anniversary of issuance, or earlier upon redemption. The holders do not have the rights or privileges of holders of Class A common stock or any voting rights until they exercise their Warrants. After the issuance of shares of Class A common stock upon exercise of the Warrants, each holder will be entitled to one vote for each share of Class A common stock held on all matters to be voted on by stockholders generally. A holder of the Warrants will not have the right to exercise its Warrants, to the extent that after giving effect to such exercise, the holder (together with its affiliates) would beneficially own in excess of 49.9% of the shares of Class A common stock outstanding immediately after giving effect to such exercise. The Warrants contain a repurchase provision which, upon an occurrence of a fundamental transaction as defined in the warrant agreement, could give rise to an obligation of the Company to pay cash to the warrant holders. In addition, other provisions may lead to a reduction in the exercise price of the Warrants. The Company determined the fundamental transaction provisions require the Warrants to be accounted for as a liability at fair value on the date of the transaction, with changes in fair value recognized in earnings in the period of change. As a result, the liability for these Warrants was recorded at fair value on the date of issuance with the offset included in debt issuance costs. This liability is subsequently re-measured to fair value at each reporting date or exercise date with changes in the fair value included in earnings. The Company used a Monte Carlo Simulation model to determine the fair value of the liability associated with the Warrants. The model used key assumptions and inputs, such as exercise price, fair market value of common stock, risk free interest rate, warrant life, expected volatility and the probability of a warrant re-price event. The following are the assumptions used in calculating fair value of the Warrants on the date of issuance:
Trading price of common stock on measurement date |  | $ | 0.82 |
Exercise price |  | $ | 1.50 |
Risk free interest rate |  |  | 4.14 | %
Warrant life in years |  |  | 10.0 |
Expected volatility |  |  | 88.62 | %
Expected dividend yield |  |  | — |
Probability of an event causing a warrant re-price |  |  | 25.0 | %
The following are the assumptions used in calculating fair value of the Warrants on September 30, 2024:
Trading price of common stock on measurement date |  | $ | 0.99 |
Exercise price |  | $ | 1.50 |
Risk free interest rate |  |  | 3.71 | %
Warrant life in years |  |  | 9.3 |
Expected volatility |  |  | 89.00 | %
Expected dividend yield |  |  | — |
Probability of an event causing a warrant re-price |  |  | 25.0 | %
The Warrants had a fair value of $19.7 million as of September 30, 2024. The Company recognized a gain of $4.8 million in its condensed consolidated statement of operations for the three months ended September 30, 2024 related to a decrease in the fair value of the Warrants outstanding at the end of the period compared to the fair value of the Warrants outstanding at the end of the second quarter of 2024. For the nine months ended September 30, 2024, the Company recognized a loss of $0.1 million in its condensed consolidated statement of operations related to an increase in the fair value of the Warrants outstanding at the end of the period compared to the fair value of the Warrants on the date of issuance.

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- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 815 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/815/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent + Details
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