Redwire CorpRDW
Redwire Corp Fair Value Disclosure
Note D – Fair Value of Financial Instruments
Cash, cash equivalents and restricted cash, accounts receivable, contract assets, inventories, prepaid expenses and other current assets, accounts payable, accrued expenses, deferred revenue and other current liabilities are reflected on the consolidated balance sheets at amounts that approximate fair value because of the short-term nature of these financial assets and liabilities.
The fair value of the Company’s debt approximates its carrying value and is classified as Level 2 within the fair value hierarchy as it is based on discounted cash flows using a current borrowing rate.
Private Warrants
In September 2021, the Company issued 7,732,168 private warrants in a transaction exempt from registration under securities regulations. The warrants, which are not listed for trading on a stock exchange, entitle the holder to purchase one share of the Company’s common stock at an exercise price of $11.50 per share, subject to adjustment. The warrants will expire on September 2, 2026, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The private warrants were established as a liability at issuance. Classification of the private warrants as liability instruments was based on an analysis of the guidance in accordance with U.S. GAAP and a statement issued by the Staff of the SEC regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” The Company considered whether the private warrants display the three characteristics of a derivative, and concluded the private warrants meet the definition of a derivative. However, the private warrants fail to meet the equity scope exception and thus are classified as a liability measured at fair value, subject to remeasurement at each reporting period. The changes in fair value of the private warrant liability were a decrease of $16.1 million and an increase of $52.0 million for the years ended December 31, 2025 and 2024, respectively. These changes in fair value are recognized as in the consolidated statements of operations and comprehensive income (loss).
During the year ended December 31, 2025, 4,631,799 private warrants were exercised on a cashless basis for 2,293,739 shares of the Company’s common stock. Additionally, during the year ended December 31, 2025, 467,174 private warrants were exercised and converted into 467,174 shares of the Company’s common stock at the exercise price of $11.50 per share for proceeds of $5.4 million. Upon exercise, the Company remeasured the fair value of the related private warrants, which was recognized as in the consolidated statements of operations and comprehensive income (loss), and then released the associated liability upon issuance of the Company’s common stock. Refer to Note K – Warrants and Capital Stock Transactions for additional information.
The private warrants were valued using a modified Black-Scholes OPM. As certain inputs are not observable in the market, the private warrants are classified as Level 3 instruments within the fair value hierarchy. The table below presents the fair value per warrant and the valuation assumptions under the Black-Scholes OPM:
| December 31, 2025 | February 25, 2025 | December 31, 2024 | |||||||||||||||
| Fair value per share | $ | 1.60 | $ | 6.84 | $ | 7.15 | |||||||||||
| Warrants outstanding | 2,633,195 | 5,098,978 | 7,732,168 | ||||||||||||||
| Exercise price | $ | 11.50 | $ | 11.50 | $ | 11.50 | |||||||||||
| Common stock price | $ | 7.60 | $ | 14.34 | $ | 16.46 | |||||||||||
| Expected option term | 0.7 years | 1.5 years | 1.7 years | ||||||||||||||
| Expected volatility | 104.60 | % | 82.90 | % | 52.70 | % | |||||||||||
| Risk-free rate of return | 3.52 | % | 4.05 | % | 4.18 | % | |||||||||||
| Expected annual dividend yield | — | % | — | % | — | % | |||||||||||
The table below presents the Company’s financial instruments measured at fair value on a recurring basis:
| December 31, 2025 | |||||||||||||||||||||||||||||
| Balance Sheet Location | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
| Private warrants | Warrant liabilities | $ | — | $ | — | $ | 4,213 | $ | 4,213 | ||||||||||||||||||||
| Total liabilities | $ | — | $ | — | $ | 4,213 | $ | 4,213 | |||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||
| Balance Sheet Location | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
| Private warrants | Warrant liabilities | $ | — | $ | — | $ | 55,285 | $ | 55,285 | ||||||||||||||||||||
| Total liabilities | $ | — | $ | — | $ | 55,285 | $ | 55,285 | |||||||||||||||||||||
Changes in the fair value of Level 3 financial liabilities were as follows:
| Liabilities: | Private Warrants | Total Level 3 | |||||||||
| December 31, 2023 | $ | 3,325 | $ | 3,325 | |||||||
Changes in fair value | 51,960 | 51,960 | |||||||||
| December 31, 2024 | $ | 55,285 | $ | 55,285 | |||||||
Changes in fair value | (16,109) | (16,109) | |||||||||
Settlements | (34,963) | (34,963) | |||||||||
| December 31, 2025 | $ | 4,213 | $ | 4,213 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2021 | Apr 11, 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.