TIGO ENERGY, INC. Fair Value Disclosure
Fair Value Measurements
The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis:
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Fair value measurement at |
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(in thousands) |
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(Level 1) |
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(Level 2) |
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(Level 3) |
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December 31, 2024 |
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Assets: |
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Cash equivalents: |
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Money market accounts |
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$ |
6,839 |
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$ |
— |
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$ |
— |
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U.S. agency securities |
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$ |
— |
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$ |
499 |
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$ |
— |
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Marketable securities: |
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Corporate bonds |
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$ |
— |
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$ |
2,018 |
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$ |
— |
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U.S. agency securities |
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$ |
— |
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$ |
6,138 |
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$ |
— |
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December 31, 2023 |
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Assets: |
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Cash equivalents: |
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Money market accounts |
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$ |
1,646 |
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$ |
— |
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$ |
— |
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Marketable securities: |
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Corporate bonds |
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$ |
— |
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$ |
19,489 |
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$ |
— |
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U.S. agency securities |
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$ |
— |
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$ |
9,294 |
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$ |
— |
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Liabilities: |
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Contingent shares liability from fSight acquisition |
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$ |
527 |
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$ |
— |
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$ |
— |
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The following is a summary of the changes in fair value of the Company’s marketable securities as of December 31, 2024, and 2023, respectively:
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As of December 31, 2024 |
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(in thousands) |
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Amortized cost |
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Unrealized gain |
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Unrealized loss |
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Fair value |
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Available-for-sale marketable securities: |
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Current assets |
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Corporate bonds |
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$ |
2,019 |
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$ |
— |
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$ |
(1 |
) |
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$ |
2,018 |
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U.S. agency securities |
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6,135 |
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3 |
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$ |
— |
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6,138 |
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Total available-for-sale marketable securities |
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$ |
8,154 |
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$ |
3 |
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$ |
(1 |
) |
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$ |
8,156 |
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As of December 31, 2024, all available-for-sale marketable securities consisted of investments that mature within one year.
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As of December 31, 2023 |
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(in thousands) |
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Amortized cost |
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Unrealized gain |
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Unrealized loss |
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Fair value |
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Available-for-sale marketable securities: |
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Current assets |
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Corporate bonds |
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$ |
17,561 |
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$ |
2 |
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$ |
(52 |
) |
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$ |
17,511 |
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U.S. agency securities |
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9,300 |
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2 |
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$ |
(7 |
) |
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9,295 |
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Total |
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26,861 |
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4 |
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(59 |
) |
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26,806 |
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Long-term assets |
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Corporate bonds |
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1,981 |
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3 |
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(7 |
) |
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1,977 |
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Total |
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1,981 |
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3 |
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(7 |
) |
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1,977 |
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Total available-for-sale marketable securities |
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$ |
28,842 |
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$ |
7 |
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$ |
(66 |
) |
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$ |
28,783 |
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The fair value of the preferred stock warrants was calculated using the Black-Scholes option pricing model and was revalued to fair value at the end of each reporting period until the earlier of the exercise or expiration of the preferred stock warrants. As a part of the Business Combination, Legacy Tigo preferred stock warrants were converted into the Legacy Tigo common stock at the conversion rate in effect immediately prior to the consummation of the Business Combination. Please see Note 3, “Merger with Roth CH Acquisition IV Co.” for additional information. The fair value of the warrant liabilities was estimated using the Black-Scholes option pricing model using the following assumptions:
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May 23, 2023 |
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Expected volatility |
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68% - 70% |
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Risk-free interest rate |
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4.10% - 4.28% |
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Expected term (in years) |
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2.0 - 2.6 |
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Expected dividend yield |
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— |
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Fair value of Series C convertible preferred stock |
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$ |
1.89 |
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The table presented below is a summary of the changes in fair value of the Company’s preferred stock warrant liability which was exercised immediately prior to the Business Combination into Legacy Tigo preferred stock and subsequently converted into Legacy Tigo common stock. Upon the consummation of the Business Combination, such shares of Legacy Tigo common stock were converted to shares of common stock. Please see Note 3, “Merger with ROTH CH Acquisition IV Co.” for additional information.
(in thousands) |
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Fair value of |
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Balance at December 31, 2022 |
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1,507 |
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Change in fair value |
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501 |
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Exercise of warrants |
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(2,008 |
) |
Balance at December 31, 2023 |
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$ |
— |
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The table presented below is a summary of the changes in fair value of the Company’s Level 3 financial instruments. The contingent shares from the fSight Acquisition (Note 4) were initially classified as a Level 3 measurement and upon the Merger were transferred out of Level 3 into Level 1, as they were valued on the observable stock price of the Company. In addition, the Company bifurcated the conversion options associated with the convertible promissory notes and separately account for them as a derivative liability. On September 24, 2023, the Company and L1 Energy entered into the Convertible Note Amendment. As a result of the Convertible Note Amendment, the conversion options no longer meet the requirements to be bifurcated into a convertible note derivative liability in accordance with ASC 815, “Derivatives and Hedging”. The carrying value of the convertible note derivative liability was remeasured to fair value immediately prior to the execution of the Convertible Note Amendment and was reclassified to equity. The reclassification was recorded in additional paid-in capital on the
Company’s consolidated balance sheet. Please refer to Note 9 “Long-Term Debt” for additional details regarding the derivative instrument.
(in thousands) |
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Fair value of |
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Fair value of |
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Balance at December 31, 2022 |
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$ |
— |
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$ |
— |
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Fair value at inception |
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2,167 |
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23,525 |
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in fair value |
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29 |
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(12,247 |
) |
Transfer out of level 3 |
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(2,196 |
) |
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(11,278 |
) |
Balance at December 31, 2023 |
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$ |
— |
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$ |
— |
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The fair value of the convertible note derivative liability was estimated using the Black-Scholes option pricing model using the following assumptions:
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As of September 24, 2023 (1) |
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Expected volatility |
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58.6 |
% |
Risk-free interest rate |
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4.9 |
% |
Expected term (in years) |
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2.3 |
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Expected dividend yield |
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— |
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During the year ended December 31, 2024, there were no transfers between Level 1, Level 2 and Level 3.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, accounts payable, and customer deposits approximate fair value due to their short-term nature. As of December 31, 2024, the fair value and carrying value of the Company’s Convertible Promissory Note (Note 9) was $44.0 million and $40.5 million, respectively. The estimated fair value for the Company’s Convertible Promissory Note was based on discounted expected future cash flows using prevailing interest rates which are Level 3 inputs under the fair value hierarchy.
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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.