Annual report [Section 13 and 15(d), not S-K Item 405]

Warrants

v3.25.1
Warrants
12 Months Ended
Dec. 31, 2024
Warrants  
Warrants
As of December 31, 2024 and 2023, there were an aggregate of 246.5 million and 81.9 million warrants outstanding, respectively, which include the 2021 Public Warrants, 2021 Private Placement Warrants, VGS Warrants, VGS 3 Warrants, March 2023 Warrants, May 2024 Common Warrants, and May 2024 Pre-Funded Warrants (each as defined below). No warrants were exercised during the years ended December 31, 2024 and 2023.
Liability-classified
Public Offering and Private Placement
The 2021 Public Warrants and 2021 Private Placement Warrants entitle the holders to purchase an aggregate of 10.8 million shares of Class A common stock at a price of $11.50 per share. The 2021 Public Warrants will expire five years after the completion of the Business Combinations. The Company has the right to redeem the 2021 Public Warrants when the price per share of Class A common stock equals or exceeds $18.00 for 20 days within a 30-day trading period. The 2021 Private Placement Warrants are identical to the 2021 Public Warrants, except that the 2021 Private Placement Warrants are subject to certain transfer restrictions, are not redeemable by the Company if they are held by sponsors, and are exercisable on a cashless basis.
May 2024 Common Warrants
In connection with the May 2024 Private Placement (see Note 14 “Capitalization”), the Company issued warrants to purchase an aggregate of 67.4 million shares of Class A common stock at a price of $0.5020 per share (the “May 2024 Common Warrants”). Pursuant to the warrant agreements, the May 2024 Common Warrants and the right to purchase securities upon the exercise of the May 2024 Warrants will terminate upon the earliest to occur of the following: (a) May 22, 2031; and (b) the consummation of (i) a sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company. The May 2024 Common Warrants were recorded as liability-classified financial instruments for an initial amount of $31.3 million.
The key Level 3 inputs into the option pricing model related to the May 2024 Warrants at inception were as follows:
Volatility 95.0  %
Risk-free interest rate 4.5  %
Exercise price $ 0.50 
Expected term 7.0 years
The 2021 Public Warrants, 2021 Private Placement Warrants, and May 2024 Warrants are recorded as liabilities on the consolidated balance sheets with a balance of $10.3 million and $1.1 million as of December 31, 2024 and 2023, respectively.
Equity-classified
VGS Warrants
In connection with the VGS Promissory Note issued in December 2022 (see Note 10 “Debt”), the Company and VGS entered into a warrant agreement (the “VGS Warrant Agreement”) pursuant to which the Company issued warrants to purchase 0.4 million shares of Class A common stock of the Company at an exercise price of $4.26 per share to VGS (the “VGS Warrants”). The number of shares of common stock for which the VGS Warrants is exercisable and the exercise price may be adjusted upon any event involving subdivisions, combinations, distributions, recapitalizations, and similar transactions. Pursuant to the VGS Warrant Agreement, the warrants and the right to purchase securities upon the exercise of the warrants will terminate upon the earliest to occur of the following: (a) December 13, 2027; and (b) the consummation of (i) a sale, conveyance, consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company or P3 LLC is disposed.
VGS 3 Warrants
In connection with the VGS 3 Promissory Note issued in December 2024 (see Note 10 “Debt”), the Company and VGS 3 entered into a warrant agreement (the “VGS 3 Warrant Agreement”) pursuant to which the Company issued warrants to purchase 71.4 million shares of Class A common stock of the Company at an exercise price of $0.21 per share to VGS 3 (the “VGS 3 Warrants”). The number of shares of common stock for which the VGS 3 Warrants is exercisable and the exercise price may be adjusted upon any event involving subdivisions, combinations, distributions, recapitalizations, and similar transactions. Pursuant to the VGS 3 Warrant Agreement, the warrants and the right to purchase securities upon the exercise of the warrants will terminate upon the earliest to occur of the following: (a) December 12, 2031; and (b) the consummation of (i) a sale, conveyance, consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company or P3 LLC is disposed. The Company recorded the fair value of the VGS 3 Warrants of $12.1 million as an increase to additional paid in capital during the year ended December 31, 2024.
The key Level 3 inputs into the option pricing model related to the VGS 3 Warrants were as follows:
Volatility 91.6  %
Risk-free interest rate 4.2  %
Exercise price $ 0.21 
Expected term 6.8 years
May 2024 Pre-Funded Warrants
In connection with the May 2024 Private Placement (see Note 14 “Capitalization”), the Company issued pre-funded warrants to purchase an aggregate of 25.8 million shares of Class A common stock at a price of $0.0001 per share (the “May 2024 Pre-Funded Warrants”). Pursuant to the warrant agreements, the May 2024 Pre-Funded Warrants and the right to purchase securities upon the exercise of the May 2024 Pre-Funded Warrants will terminate upon the consummation of (i) a sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company. The May 2024 Pre-Funded Warrants were recorded as equity-classified financial instruments totaling $6.6 million.
March 2023 Warrants
In connection with the March 2023 Private Placement (see Note 14 “Capitalization”), the Company issued warrants to purchase an aggregate of 59.9 million shares of Class A common stock at a price of $1.13 per share (the “March 2023 Common Warrants”), and pre-funded warrants to purchase an aggregate of 10.8 million shares of Class A common stock at a price of $0.0001 per share (the “March 2023 Pre-Funded Warrants” and, together with the March 2023 Common Warrants, the “March 2023 Warrants”). Pursuant to the warrant agreements, the March 2023 Warrants and the right to purchase securities upon the exercise of the March 2023 Warrants will terminate upon the earliest to occur of the following: (a) April 5, 2028, with respect to the March 2023 Common Warrants only; and (b) the consummation of (i) a
sale, conveyance, disposal, or encumbrance of all or substantially all of the Company’s property or business or the Company’s merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or (ii) any other transaction or series of related transactions in which more than 50% of the voting power of which the Company is disposed and the proceeds thereof are paid to the then-existing stockholders of the Company.