GPGI, Inc.GPGI
GPGI, Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
In accordance with ASC 820-10, the Company evaluates assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them for each reporting period. This determination requires significant judgments to be made by the Company.
The Company’s financial assets and liabilities measured at fair value on a recurring basis, consisted of the following types of instruments as of the following dates:
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
December 31, 2025 | ||||||||||||||||||||||||||
Assets Carried at Fair Value: | ||||||||||||||||||||||||||
Derivative asset - interest rate swap | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Liabilities Carried at Fair Value: | ||||||||||||||||||||||||||
Warrants | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||
Earnout consideration | — | — | — | — | ||||||||||||||||||||||
December 31, 2024 | ||||||||||||||||||||||||||
Assets Carried at Fair Value: | ||||||||||||||||||||||||||
Derivative asset - interest rate swap | $ | — | $ | 2,749 | $ | — | $ | 2,749 | ||||||||||||||||||
Liabilities Carried at Fair Value: | ||||||||||||||||||||||||||
Warrants | $ | 104,231 | $ | — | $ | — | $ | 104,231 | ||||||||||||||||||
Earnout consideration | — | — | 20,533 | 20,533 | ||||||||||||||||||||||
Derivative liability - redemption with make-whole provision | — | — | — | — | ||||||||||||||||||||||
Derivative asset - interest rate swap
Holdings is exposed to interest rate risk on variable interest rate debt obligations. To manage interest rate risk, Holdings entered into the Interest Rate Swap on January 5, 2022. The Interest Rate Swap matured as scheduled in December 2025. See Note 7.
Warrant Liability
The Company had assumed a warrant liability related to the Warrants. The Warrants were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the consolidated balance sheets. The warrant liabilities were remeasured at December 31, 2024 with changes in fair value presented within revaluation of warrant liabilities in the consolidated statement of operations.
No Warrants remained outstanding as of December 31, 2025, and therefore no warrant liability was subject to remeasurement at December 31, 2025. See Note 9 for additional information on the Warrants.
The following table provides a reconciliation of the ending balances for the warrant liabilities remeasured at fair value:
Warrant Liabilities | ||||||||
Estimated fair value at December 31, 2023 | $ | 8,294 | ||||||
Revaluation of warrant liability | 95,937 | |||||||
Estimated fair value at December 31, 2024 | $ | 104,231 | ||||||
Revaluation of warrant liability | 150,958 | |||||||
Settlement of exercise of warrants | (255,189) | |||||||
Estimated fair value at December 31, 2025 | $ | — | ||||||
The Warrants were valued using the quoted market price as the fair value at the end of each balance sheet date.
Earnout Consideration
Earnout consideration liabilities held by former holders of interests in Holdings (not including the holders under ASC 718) were determined to be derivative instruments in accordance with ASC 815 and were accounted as derivative liabilities. The Earnout consideration liabilities were initially valued at fair value in accordance with ASC 815-40-30-1 and are subsequently remeasured at each reporting period with changes in fair value recorded in earnings in accordance with ASC 815-40-35-4. The Company established the initial fair value for the earnout consideration liabilities at the closing date on December 27, 2021 using a Monte Carlo simulation model.
As a result of both Earnout milestones being achieved and the corresponding issuance of all Earnout consideration shares, the Earnout consideration liabilities were fully settled and extinguished during 2025, and no Earnout consideration liability remained outstanding as of December 31, 2025.
The following table provides a reconciliation of the ending balances for the earnout consideration liabilities remeasured at fair value:
Earnout Consideration Liability | ||||||||
Estimated fair value at December 31, 2023 | $ | 853 | ||||||
Change in fair value of Phase I on achievement date | 56,564 | |||||||
Settlement of Phase I on December 13, 2024 | (56,625) | |||||||
Change in estimated fair value of Phase II | 19,741 | |||||||
Estimated fair value at December 31, 2024 | $ | 20,533 | ||||||
Change in fair value of Phase II on achievement date | 57,101 | |||||||
Settlement of Phase II on September 08, 2025 | (77,634) | |||||||
Estimated fair value at December 31, 2025 | $ | — | ||||||
The fair value of Earnout consideration liabilities have been classified as a Level 3 liability as its valuation requires substantial judgment and estimation of factors that are not currently readily observable in the market. The expected term assumption reflected the period for which the instrument will remain outstanding. To determine volatility, the Company had used the historical closing values of comparable publicly held entities to estimate volatility. The risk-free rate reflected the U.S. Treasury yield curve for a similar expected life instrument in effect at the reporting date. If different assumptions were used for the various inputs to the valuation approach, the estimated fair value could be significantly higher or lower than the fair value determined.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 5, 2025 | |
| 2023 | Mar 12, 2024 | |
| 2022 | Mar 10, 2023 | |
| 2021 | Mar 14, 2022 | |
| 2020 | Mar 29, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.