Intuitive Machines, Inc.LUNR
Intuitive Machines, Inc. Fair Value Disclosure
NOTE 13 - FAIR VALUE MEASUREMENTS
The following tables summarize the fair value of assets and liabilities that are recorded in the Company’s consolidated balance sheets as of December 31, 2025 and 2024 at fair value on a recurring basis (in thousands).
| December 31, 2025 | |||||||||||||||||||||||||||||
| Frequency of Measurement | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Warrant liabilities - Series A | Recurring | 60,394 | — | — | 60,394 | ||||||||||||||||||||||||
| Warrant liabilities - Series B | Recurring | — | — | — | — | ||||||||||||||||||||||||
| Warrant liabilities | 60,394 | — | — | 60,394 | |||||||||||||||||||||||||
Contingent consideration liabilities | Recurring | 5,353 | — | — | 5,353 | ||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | 65,747 | $ | — | $ | — | $ | 65,747 | |||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Frequency of Measurement | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Earn-out liabilities | Recurring | $ | 134,156 | $ | — | $ | — | $ | 134,156 | ||||||||||||||||||||
| Warrant liabilities - Series A | Recurring | 68,778 | — | — | 68,778 | ||||||||||||||||||||||||
| Warrant liabilities - Series B | Recurring | — | — | — | — | ||||||||||||||||||||||||
| Warrant liabilities | 68,778 | — | — | 68,778 | |||||||||||||||||||||||||
| Total liabilities measured at fair value | $ | 202,934 | $ | — | $ | — | $ | 202,934 | |||||||||||||||||||||
The following table provides a roll-forward of the Company’s Level 3 liabilities (in thousands):
| Earn-out liabilities | Warrant liabilities Series A | Warrant liabilities Series B | Total Warrant liabilities | Contingent consideration liabilities | |||||||||||||||||||||||||
| Balance, December 31, 2023 | 14,032 | 8,612 | 2,682 | 11,294 | — | ||||||||||||||||||||||||
| Additions | — | 20,827 | 11,262 | 32,089 | — | ||||||||||||||||||||||||
| Change in fair value | 120,124 | 59,810 | 17,841 | 77,651 | — | ||||||||||||||||||||||||
| Converted to equity | — | (20,471) | (31,785) | (52,256) | — | ||||||||||||||||||||||||
| Balance, December 31, 2024 | 134,156 | 68,778 | — | 68,778 | — | ||||||||||||||||||||||||
| Additions | — | — | — | — | 3,499 | ||||||||||||||||||||||||
| Change in fair value | 33,369 | (8,384) | — | (8,384) | 1,854 | ||||||||||||||||||||||||
| Converted to equity | (167,525) | — | — | — | — | ||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | — | $ | 60,394 | $ | — | $ | 60,394 | $ | 5,353 | |||||||||||||||||||
Earn-out Liabilities
As a result of the Business Combination, certain Intuitive Machines, LLC members received 10,000,000 earn out units of Intuitive Machines, LLC (“Earn Out Units”) subject to certain triggering events. Upon the vesting of any Earn Out Units, each of the certain Intuitive Machines, LLC members will be issued (i) by Intuitive Machines, LLC an equal number of Intuitive Machines, LLC Common Units and (ii) by Intuitive Machines, an equal number of shares of Class C Common Stock, in exchange for surrender of the applicable Earn Out Units and the payment to Intuitive Machines, Inc. of a per-share price equal to the par value per share of the Class C Common Stock. Under the earn out agreement, Earn Out Units of 2,500,000 vested for the year ended December 31, 2023, and the remaining 7,500,000 Earn Out Units vested during the year ended December 31, 2025.
Warrant Liabilities
Conversion Warrants
Pursuant to the Letter Agreement and the issuance of warrants on January 29, 2024 as described further in Notes 8 and 11, the fair values of the Conversion Series A Warrant and the Conversion Series B Warrant liabilities were estimated at $10.0 million and $5.1 million, respectively, utilizing the Black-Scholes-Merton model. The significant assumptions utilized in estimating the fair value of the Conversion Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $3.05; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 3.97%; and (iv) expected volatility of 102%. The significant assumptions utilized in estimating the fair value of the Conversion Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $3.05; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.53%; and (iv) expected volatility of 76%.
The fair value of the Conversion Series A Warrant liabilities as of December 31, 2025 was estimated using a Black-Scholes-Merton model. The significant assumptions utilized in estimating the fair value of the Conversion Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $16.23; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 3.56%; and (iv) expected volatility of 104%.
During June 2024 and November 2024, the investor fully exercised and converted to equity the Conversion Series B Warrants. As of December 31, 2025, the Conversion Series A Warrants remain outstanding. Refer to Note 11 for more information on the Conversion Warrants.
Initial Warrants
Pursuant to the Warrant Exercise Agreement on January 10, 2024 (as further described in Note 11 and discussed below), the terms of the Initial Warrants were modified, and the Initial Series B Warrant was exercised in full and converted to equity. The pre-modification fair value of the Initial Warrant liabilities was estimated using a Black-Scholes-Merton model. The significant assumptions utilized in estimating the pre-modification fair value of the Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 3.99%; and (iv) expected volatility of 104%. The significant assumptions utilized in estimating the pre-modification fair value of the Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.75%; and (iv) expected volatility of 85%.
During February 2024, the investor also fully exercised and converted to equity the Initial Series A Warrant. Refer to Note 11 for more information on the warrant exercises.
New Warrants
Pursuant to the Warrant Exercise Agreement on January 10, 2024 as described further in Note 11, the fair values of the New Series A Warrant and the New Series B Warrant liabilities were estimated at $10.8 million and $5.7 million, respectively, utilizing the Black-Scholes-Merton model. The significant assumptions utilized in estimating the fair value of the New Series A Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.00%; and (iv) expected volatility of 105%. The significant assumptions utilized in estimating the fair value of the New Series B Warrant liabilities include: (i) a per share price of the Class A Common Stock of $2.83; (ii) a dividend yield of 0.0%; (iii) a risk-free rate of 4.55%; and (iv) expected volatility of 83%.
During February 2024, the investor fully exercised and converted to equity the New Warrants. Refer to Note 11 for more information on the warrant exercises.
Contingent Consideration Liability
On October 1, 2025 and in connection with the purchase consideration related to our recent acquisition of KinetX, approximately 329,827 shares of Class A Common Stock was held back in escrow to fund post-closing adjustments, in the amount of $3.5 million, based on the acquisition date closing stock price of $10.61, and recorded as a contingent consideration liability in our consolidated balance sheets. The fair value of the contingent consideration liability as of December 31, 2025 was estimated based on our Class A Common Stock closing stock price of $16.23. See Note 3 - Acquisitions for additional information on the acquisition of KinetX,Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 19, 2026 | Showing above |
| 2024 | Mar 25, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Apr 14, 2022 | |
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.