RUM Group Inc.
For the period ended Dec 31, 2024. Filed Mar 25, 2025.
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FY2024 · Filed Mar 25, 2025
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17. Fair Value Measurements
| 17. | Fair Value Measurements |
The following table summarizes the liabilities measured at fair value on a recurring basis:
| Level 1 · Level 2 · Level 3 · Level 3 | |||||||
|---|---|---|---|---|---|---|---|
| Warrant Liability · Marketable Securities · Derivative Liability · Contingent Consideration | |||||||
| December 31, 2023 | $7,696,605 | $1,135,200 | $ | - | $1,569,360 | ||
| Settlement by issuance of shares | - | - | - | (1,404,753) | |||
| Reclassification to equity | - | - | - | (1,334,516) | |||
| Reclassification to accounts payable and accrued liabilities | - | - | - | (184,448) | |||
| Sales and maturities of marketable securities | - | (1,135,200) | - | - | |||
| Recognition of a derivative asset | - | - | (9,200,000) | - | |||
| Change in fair value | 32,694,697 | - | 193,899,998 | 1,354,357 | |||
| December 31, 2024 | $40,391,302 | $ | - | $184,699,998 | $ | - | |
| Level 1 · Level 2 · Level 3 | ||||
|---|---|---|---|---|
| Warrant Liability · Marketable Securities · Contingent Consideration | ||||
| December 31, 2022 | $10,062,500 | $1,100,000 | $ | - |
| Recognized in the Callin acquisition | - | - | 3,491,741 | |
| Change in fair value | (2,365,895) | 35,200 | (1,922,381) | |
| December 31, 2023 | $7,696,605 | $1,135,200 | $1,569,360 | |
Warrant liability
Warrant liability consists of warrants issued by the Company in public offerings, private placements, and forward purchase contracts. As of December 31, 2024 and 2023, the number of warrants outstanding was 8,046,076 and 8,050,000, respectively, with a weighted-average exercise price of $11.50. The warrants are exercisable and will expire on September 16, 2027, or earlier upon redemption or liquidation. All warrants are publicly traded.
Derivative liability
The derivative liability relates to the net new shares from the Tether transaction. Refer to Note 11. The derivative has been valued using the Monte Carlo simulation methodology that included simulating the stock price using a risk-neutral Geometric Brownian Motion-based pricing model. The key inputs used in the model include:
| Valuation Date | December 20, 2024 | December 31, 2024 |
|---|---|---|
| Number of shares | 33,333,333 | 33,333,333 |
| Expected term (months) | 1.25 | 1.00 |
| Risk-free interest rate | 4.36% | 4.35% |
| Expected volatility | 104% | 238% |
Contingent consideration
The contingent consideration liability arose in May 2023 from the Callin acquisition. Refer to Note 3. The increase in fair value during the year is attributable to changes in the Company’s stock price and the increased probability of each contingency being met. On May 15, 2024, the contingent consideration liability was derecognized. One of the contingent payments was settled through the issuance of shares and the remaining contingent payment was reclassified to equity and accounts payable.
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