UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
For the quarterly period ended March 31, 2024
or
For the transition period from _________ to _________
Commission file number: 001-40296
| (Exact Name of Registrant as Specified in Its Charter) | ||||||||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
| (Registrant’s telephone number), including area code | ||||||||||||||
| N/A | ||||||||||||||
| (Former name, former address and former fiscal year, if changed since last report) | ||||||||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
xYes o No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | o | Accelerated filer | o | |||||||||||
| x | Smaller reporting company | |||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes x No
As of May 6, 2024, 6,220,621 shares of the issuer’s common stock, par value $0.0001 per share, were issued and outstanding.
NUVVE HOLDING CORP.
FORM 10-Q FOR THE QUARTER ENDED March 31, 2024
TABLE OF CONTENTS
i
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q and other documents incorporated herein by reference contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our financial condition, our products, our business strategy, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases or written statements, or in our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. These forward-looking statements can be identified by the use of words like “anticipates,” “estimates,” “projects,” “expects,” “plans,” “believes,” “intends,” “will,” “could,” “may,” “assumes” and other words of similar meaning. These statements are based on management’s beliefs, assumptions, estimates and observations of future events based on information available to our management at the time the statements are made and include any statements that do not relate to any historical or current fact. These statements are not guarantees of future performance and they involve certain risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed, implied or forecast by our forward-looking statements due in part to the risks, uncertainties and assumptions described in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as well as those discussed elsewhere in this report and other factors described from time to time in our filings with the SEC.
Factors that could cause actual results to differ materially from those in forward-looking statements include, (i) risks related to the rollout of Nuvve's business and the timing of expected business milestones; (ii) Nuvve's dependence on widespread acceptance and adoption of electric vehicles and increased installation of charging stations; (iii) Nuvve's ability to maintain effective internal controls over financial reporting, including the remediation of identified material weaknesses in internal control over financial reporting relating to segregation of duties with respect to, and access controls to, its financial record keeping system, and Nuvve's accounting staffing levels; (iv) Nuvve's current dependence on sales of charging stations for most of its revenues; (v) overall demand for electric vehicle charging and the potential for reduced demand if governmental rebates, tax credits and other financial incentives are reduced, modified or eliminated or governmental mandates to increase the use of electric vehicles or decrease the use of vehicles powered by fossil fuels, either directly or indirectly through mandated limits on carbon emissions, are reduced, modified or eliminated; (vi) potential adverse effects on Nuvve's backlog, revenue and gross margins if customers increasingly claim clean energy credits and, as a result, they are no longer available to be claimed by Nuvve; (vii) the effects of competition on Nuvve's future business; (viii) risks related to Nuvve's dependence on its intellectual property and the risk that Nuvve's technology could have undetected defects or errors; (ix) the risk that we conduct a portion of our operations through a joint venture exposes us to risks and uncertainties, many of which are outside of our control; (x) that our joint venture with Levo Mobility LLC may fail to generate the expected financial results, and the return may be insufficient to justify our investment of effort and/or funds; (xi) changes in applicable laws or regulations; (xii) the COVID-19 pandemic and its effect directly on Nuvve and the economy generally; (xiii) risks related to disruption of management time from ongoing business operations due to our joint ventures; (xiv) risks relating to privacy and data protection laws, privacy or data breaches, or the loss of data; (xv) the possibility that Nuvve may be adversely affected by other economic, business, and/or competitive factors; and (xvi) risks related to the benefits expected from the $1.2 trillion dollar infrastructure bill passed by the U.S. House of Representatives (H.R. 3684), as well as other risks described in this Quarterly Report on Form 10-Q and other factors described from time to time in our filings with the SEC.
Given these risks and uncertainties, you should not rely on forward-looking statements as a prediction of actual results. Any or all of the forward-looking statements contained in this Quarterly Report on Form 10-Q and any other public statement made by us, including by our management, may turn out to be incorrect. We are including this cautionary note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in assumptions or otherwise, except as required under federal securities laws and the rules and regulations of the SEC.
ii
PART I—FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
NUVVE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses | |||||||||||
| Deferred costs | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Investment in equity securities | |||||||||||
| Investment in leases | |||||||||||
| Right-of-use operating lease assets | |||||||||||
| Financing receivables | |||||||||||
| Security deposit, long-term | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities, Mezzanine Equity and Stockholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Deferred revenue | |||||||||||
| Operating lease liabilities - current | |||||||||||
| Other liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Operating lease liabilities - noncurrent | |||||||||||
| Warrants liability | |||||||||||
| Derivative liability - non-controlling redeemable preferred shares | |||||||||||
| Other long-term liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and Contingencies | |||||||||||
| Mezzanine equity | |||||||||||
Redeemable non-controlling interests, preferred shares, | |||||||||||
Class D Incentive units, | |||||||||||
| Stockholders’ equity | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated other comprehensive income | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Nuvve Holding Corp. Stockholders’ Equity | |||||||||||
| Non-controlling interests | ( | ( | |||||||||
| Total stockholders’ equity | |||||||||||
| Total Liabilities, Mezzanine Equity and Stockholders’ Equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
NUVVE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Revenue | ||||||||||||||
| Products | $ | $ | ||||||||||||
| Services | ||||||||||||||
| Grants | ||||||||||||||
| Total revenue | ||||||||||||||
| Operating expenses | ||||||||||||||
| Cost of products | ||||||||||||||
| Cost of services | ||||||||||||||
| Selling, general, and administrative | ||||||||||||||
| Research and development | ||||||||||||||
| Total operating expenses | ||||||||||||||
| Operating loss | ( | ( | ||||||||||||
| Other income (expense) | ||||||||||||||
| Interest income, net | ||||||||||||||
| Change in fair value of warrants liability | ( | |||||||||||||
| Change in fair value of derivative liability | ( | ( | ||||||||||||
| Other, net | ( | |||||||||||||
| Total other income, net | ||||||||||||||
| Loss before taxes | ( | ( | ||||||||||||
| Income tax expense | ||||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Less: Net (loss) income attributable to non-controlling interests | ( | |||||||||||||
| Net loss attributable to Nuvve Holding Corp. | $ | ( | $ | ( | ||||||||||
| Less: Preferred dividends on redeemable non-controlling interests | ||||||||||||||
| Less: Accretion on redeemable non-controlling interests preferred shares | ||||||||||||||
| Net loss attributable to Nuvve Holding Corp. common stockholders | $ | ( | $ | ( | ||||||||||
| Net loss per share attributable to Nuvve Holding Corp. common stockholders, basic and diluted | $ | ( | $ | ( | ||||||||||
| Weighted-average shares used in computing net loss per share attributable to Nuvve Holding Corp. common stockholders, basic and diluted | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
NUVVE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Net loss | $ | ( | $ | ( | ||||||||||
| Other comprehensive (loss) income, net of taxes | ||||||||||||||
| Foreign currency translation adjustments, net of taxes | ( | |||||||||||||
| Total comprehensive loss | $ | ( | $ | ( | ||||||||||
| Less: Comprehensive income (loss) attributable to non-controlling interests | ( | |||||||||||||
| Comprehensive loss attributable to Nuvve Holding Corp. | $ | ( | $ | ( | ||||||||||
| Less: Preferred dividends on redeemable non-controlling interests | ( | ( | ||||||||||||
| Less: Accretion on redeemable non-controlling interests preferred shares | ( | ( | ||||||||||||
| Comprehensive loss attributable to Nuvve Holding Corp. common stockholders | $ | ( | $ | ( | ||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
NUVVE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances December 31, 2023 | ( | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and vesting of restricted stock | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Proceeds from common stock offering, net of offering costs | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of Pre-funded Warrants | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | ( | — | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Preferred dividends - non-controlling interest | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Accretion on redeemable non-controlling interests preferred shares | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Balances March 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
NUVVE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Non-controlling Interests | Total | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||
| Balances December 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options and vesting of restricted stock | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Proceeds from Direct Offering, net of offering costs | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Proceeds from common stock offering, net of offering costs | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Currency translation adjustment | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Preferred dividends - non-controlling interest | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Accretion on redeemable non-controlling interests preferred shares | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| Balances March 31, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
NUVVE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Operating activities | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile to net loss to net cash used in operating activities | |||||||||||
| Depreciation and amortization | |||||||||||
| Stock-based compensation | |||||||||||
| Change in fair value of warrants liability | ( | ||||||||||
| Change in fair value of derivative liability | |||||||||||
| Warrants issuance costs | |||||||||||
| Gains from sale of investments in equity securities | ( | ||||||||||
| Noncash lease expense | |||||||||||
| Change in operating assets and liabilities | |||||||||||
| Accounts receivable | ( | ||||||||||
| Inventory | ( | ||||||||||
| Prepaid expenses and other assets | ( | ||||||||||
| Accounts payable | ( | ( | |||||||||
| Accrued expenses and other liabilities | |||||||||||
| Deferred revenue | ( | ||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Investing activities | |||||||||||
| Purchase of property and equipment | ( | ( | |||||||||
| Proceeds from sale of investments in equity securities | |||||||||||
| Net cash provided (used) in investing activities | ( | ||||||||||
| Financing activities | |||||||||||
| Proceeds from Direct Offering of common stock, net of issuance costs | |||||||||||
| Proceeds from common stock offering, net of issuance costs | |||||||||||
| Payment of finance lease obligations | ( | ( | |||||||||
| Net cash provided in financing activities | |||||||||||
| Effect of exchange rate on cash | |||||||||||
| Net increase (decrease) in cash and restricted cash | ( | ||||||||||
| Cash and restricted cash at beginning of year | |||||||||||
| Cash and restricted cash at end of period | $ | $ | |||||||||
| The accompanying notes are an integral part of these condensed consolidated financial statements. | |||||||||||
6
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization and Description of Business
Description of Business
Nuvve Holding Corp., a Delaware corporation headquartered in San Diego, California (the “Company” or “Nuvve”), was founded on November 10, 2020 under the laws of the state of Delaware. On March 19, 2021, the Company (at the time known as NB Merger Corp.) acquired the outstanding shares of Nuvve Corporation (“Nuvve Corp.”), and the Company changed its name to Nuvve Holding Corp.
Reverse Stock Split
At the Company’s Special Meeting of Stockholders held on January 5, 2024, the Company’s stockholders approved a proposal to authorize a reverse stock split of the Company’s common stock, at a ratio within the range of 1-for-2 to 1-for-40. The Board approved a 1-for-40 reverse split ratio, and on January 19, 2024, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company with the Secretary of State of the State of Delaware to effect the reverse split effective January 19, 2024. The reverse stock split is also applicable to the Company’s outstanding warrants, stock options and restricted stock units. The number of shares of common stock into which these outstanding securities are convertible or exercisable are adjusted proportionately as a result of the reverse stock split. The exercise prices of any outstanding warrants or stock options will also be proportionately adjusted in accordance with the terms of those securities and the Company’s equity incentive plans. The reverse stock split did not affect the number of authorized shares of the Company's common stock or the par value of the common stock. All issued and outstanding common stock, options to purchase common stock, warrants to purchase common stock and per share amounts contained in the condensed consolidated financial statement have been retroactively adjusted to reflect the reverse stock split for all periods presented.
Structure of the Company
Nuvve has two wholly owned subsidiaries, Nuvve Corp. and Nuvve Pennsylvania LLC. Nuvve Corp. has four wholly owned subsidiaries: (1) Nuvve Denmark ApS, (“Nuvve Denmark”), a company registered in Denmark, (2) Nuvve SaS, a company registered in France, (3) Nuvve KK (Nuvve Japan), a company registered in Japan, and (4) Nuvve LTD, a company registered in United Kingdom. Nuvve Norway, a company registered in Norway is a branch of Nuvve Denmark.
On August 4, 2021, the Company formed Levo Mobility LLC, a Delaware limited liability company ("Levo"), with Stonepeak Rocket Holdings LP, a Delaware limited partnership ("Stonepeak"), and Evolve Transition Infrastructure LP, a Delaware limited partnership ("Evolve"). Levo is a consolidated entity of the Company. Please see Note 2 for the principles of consolidation.
Levo is a sustainable infrastructure company focused on rapidly advancing the electrification of transportation by funding vehicle-to-grid ("V2G") enabled Electric Vehicle ("EV") fleet deployments. Levo utilizes Nuvve’s V2G technology and conditional capital contribution commitments from Stonepeak and Evolve to offer Fleet-as-a-Service ("FaaS") for school buses, last-mile delivery, ride hailing and ride sharing, municipal services, and more to eliminate the primary barriers to EV fleet adoption including large upfront capital investments and lack of expertise in securing and managing EVs and associated charging infrastructure.
Levo's turnkey solution simplifies and streamlines electrification, can lower the total cost of EV operation for fleet owners, and supports the grid when the EVs are not in use. For a fixed monthly payment with no upfront cost, Levo will provide the EVs, such as electric school buses, charging infrastructure powered by Nuvve’s V2G platform, EV and charging station maintenance, energy management, and technical advice.
Levo focuses on electrifying school buses, providing associated charging infrastructure, and delivering V2G services to enable safer and healthier transportation for children while supporting carbon dioxide emission reduction, renewable energy integration, and improved grid resiliency.
7
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 2 – Summary of Significant Accounting Policies
For a detailed discussion about the Company’s significant accounting policies, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).
During the three months ended March 31, 2024, there were no significant updates made to the Company’s significant accounting policies.
Basis of Presentation
The accompanying (i) unaudited condensed consolidated balance sheet as of December 31, 2023, which has been derived from audited financial statements, and (ii) unaudited interim condensed consolidated financial statements have been prepared in accordance pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. Therefore, it is recommended that these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes in the 2023 Form 10-K, filed with the SEC on March 28, 2024.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, cash flows, and stockholders’ equity for the interim periods, but are not necessarily indicative of the results to be anticipated for the full year 2024 or any future period.
In accordance with the related Going Concern accounting standards, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the consolidated financial statements are issued. Since inception, the Company has incurred recurring losses and negative cash flows from operations and has an accumulated deficit of $155.0 million and $148.2 million as of March 31, 2024 and December 31, 2023, respectively. The Company incurred operating losses of approximately $7.2 million as of the three months ended March 31, 2024, and $32.1 million and $36.9 million for the years ended December 31, 2023, and 2022, respectively. The Company cash used in operations were $4.7 million for the three months ended March 31, 2024, and $21.3 million and $34.1 million for the years ended December 31, 2023, and 2022, respectively. As of March 31, 2024, the Company had a cash balance, working capital, and stockholders’ equity of $5.3 million, $7.3 million and $1.5 million, respectively. The Company continues to expect to generate operating losses and negative cash flows and will need additional funding to support its planned operating activities through profitability. The transition to profitability is dependent upon the successful expanded commercialization of the Company's GIVe platform and the achievement of a level of revenues adequate to support its cost structure.
Management plans to fund current operations through increased revenues and raising additional capital. Management's expectations with respect to the Company’s ability to fund current planned operations is based on estimates that are subject to risks and uncertainties. There is an inherent risk that the Company may not achieve such financial projections and if so, cash outflows could be higher than currently anticipated. However, as such plans are not solely within management’s control management cannot conclude as of the date of this filing that the plans are probable of being successfully implemented and as such has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for twelve months from the date of issuance of our financial statements.
The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
8
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Principles of Consolidation
Variable Interest Entities
Pursuant to the consolidation guidance, the Company first evaluates whether it holds a variable interest in an entity in which it has a financial relationship and, if so, whether or not that entity is a variable interest entity ("VIE"). A VIE is an entity with insufficient equity at risk for the entity to finance its activities without additional subordinated financial support or in which equity investors lack the characteristics of a controlling financial interest. If an entity is determined to be a VIE, the Company evaluates whether the Company is the primary beneficiary. The primary beneficiary analysis is a qualitative analysis based on power and economics. The Company concludes that it is the primary beneficiary and consolidates the VIE if the Company has both (i) the power to direct the activities of the VIE that most significantly influence the VIE's economic performance, and (ii) the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.
The Company formed Levo with Stonepeak and Evolve, in which the Company owns 51 % of Levo's common units. The Company has determined that Levo is a VIE in which the Company is the primary beneficiary. Accordingly, the Company consolidates Levo and records a non-controlling interest for the share of the entity owned by Stonepeak and Evolve.
Assets and Liabilities of Consolidated VIEs
The Company's condensed consolidated financial statements include the assets, liabilities and results of operations of VIEs for which the Company is the primary beneficiary. The other equity holders’ interests are reflected in "Net income (loss) attributable to non-controlling interests" in the condensed consolidated statements of operations and "Non-controlling interests" in the condensed consolidated balance sheets. See Note 18 for details of non-controlling interests. The Company began consolidating the assets, liabilities and results of operations of Levo during the quarter ended September 30, 2021.
| March 31, 2024 | December 31, 2023 | ||||||||||
| Assets | |||||||||||
| Cash | $ | $ | |||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total Assets | $ | $ | |||||||||
| Liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and dividend payable | |||||||||||
| Derivative liability - non-controlling redeemable preferred shares | |||||||||||
| Total Liabilities | $ | $ | |||||||||
Redeemable Non-Controlling Interest - Mezzanine Equity
Redeemable non-controlling interest represents the shares of the preferred stock issued by Levo to Stonepeak and Evolve (the "preferred shareholders"), who own 49 % of Levo common units. The preferred stock is not mandatorily redeemable or currently redeemable, but it could be redeemable with the passage of time at the election of Levo, the preferred shareholders or a triggering event as defined in the preferred stock agreement. As a result of the contingent put right available to the preferred shareholders, the redeemable non-controlling interests in Levo are classified as mezzanine equity in the Company’s unaudited condensed consolidated balance sheets. The initial carrying value of the redeemable non-controlling interest is reported at the initial proceeds received on issuance date, reduced by the fair value of embedded derivatives resulting in an adjusted initial carrying value. The adjusted initial carrying value is further adjusted for the accretion of the difference with the redemption price value using the effective interest method. The accretion amount is a deemed dividend recorded against retained earnings or, in its absence, to additional paid-in-capital. The carrying amount of the redeemable non-controlling interest is measured at the higher of the carrying amount adjusted each reporting period for income (or loss) attributable to the non-controlling interest, or the carrying amount adjusted each reporting period by the accretion amount. See Note 18 for details.
9
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Non-controlling interests
The Company presents non-controlling interests as a component of equity on its condensed consolidated balance sheets and reports the portion of its earnings or loss for non-controlling interest as net earnings or loss attributable to non-controlling interests in the condensed consolidated statements of operations.
Emerging Growth Company
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by management include the impairment of intangible assets, the net realizable value of inventory, the fair value of share-based payments, lease incremental borrowing rate, derivative liability associated with redeemable preferred shares, revenue recognition, the fair value of warrants, annual bonus accrual, and the recognition and disclosure of contingent liabilities.
Management evaluates its estimates on an ongoing basis. Actual results could materially vary from those estimates.
Cash and Restricted Cash
The Company maintains cash balances that can, at times, exceed amounts insured by the Federal Deposit Insurance Corporation, which is up to $250,000. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit risk in this area. In connection with a new office lease agreement, the Company was required to provide an irrevocable, unconditional letter of credit to the landlord upon execution of the lease. The amount securing the letter of credit was recorded as restricted cash as of March 31, 2024 and December 31, 2023 was $480,000
Concentrations of Credit Risk
At March 31, 2024 and December 31, 2023, the financial instruments which potentially expose the Company to concentration of credit risk consist of cash in financial institutions (in excess of federally insured limits) and trade receivables.
The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable, as follows:
For the three months ended March 31, 2024 three customers accounted for 53.9 % of revenue. For the three months ended March 31, 2023 one customer accounted for 58.9 % of revenue.
During the three months ended March 31, 2024, the Company's top five customers accounted for approximately 70.0 % of the Company’s total revenue. During the three months ended March 31, 2023, the Company's top five customers accounted for approximately 76.5 % of the Company’s total revenue.
At March 31, 2024, three customers accounted for 83.0 % of accounts receivable. At December 31, 2023, three customers accounted for 60.9 % of accounts receivable.
Approximately 89.3 % and 74.0 % of the Company’s trade accounts receivable balance was with five customers at March 31, 2024 and December 31, 2023, respectively. The Company estimates its maximum credit risk for accounts receivable at the
10
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
amount recorded on the balance sheet. The trade accounts receivables are generally short-term and all probable bad debt losses have been appropriately considered in establishing the allowance for doubtful accounts.
Recently adopted accounting pronouncements
None Applicable
Recently issued accounting pronouncements not yet adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the Company’s CODM. The amendments in this update also provide new segment disclosure requirements for entities with a single reportable segment, and expand the interim segment disclosure requirements. ASU 2023-07 is effective for the fiscal year ending December 31, 2024. Early adoption is permitted and the amendments in this update are required to be applied on a retrospective basis. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures. ASU 2023-09 requires disclosure of disaggregated income taxes paid in both U.S. and foreign jurisdictions, prescribes standard categories for the components of the effective tax rate reconciliation and modifies other income tax-related disclosures. ASU 2023-09 is effective for the Company’s fiscal year ending December 31, 2025. Early adoption is permitted and the amendments in this update should be applied on a prospective basis, though retrospective adoption is permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
11
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 3 – Revenue Recognition
The disclosures below discuss the Company’s material revenue contracts.
The following table provides information regarding disaggregated revenue:
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Revenue recognized over time: | ||||||||||||||
| Services - engineering and others | $ | $ | ||||||||||||
| Grid services | ||||||||||||||
| Grants | ||||||||||||||
| Revenue recognized at point in time: | ||||||||||||||
| Products | ||||||||||||||
| Total revenue | $ | $ | ||||||||||||
The aggregate amount of revenue for the Company’s existing contracts and grants with customers as of March 31, 2024 expected to be recognized in the future, and classified as deferred revenue on the condensed consolidated balance sheet, for year ended December 31, is as follows (this disclosure does not include revenue related to contracts whose original expected duration is one year or less):
| 2024 (remaining nine months) | |||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| Thereafter | |||||
| Total (1) | $ | ||||
__________________
(1) The revenue recognition is subject to the completion of construction and commissioning of the EV infrastructure.
The Company operates in a single business segment, which is the EV V2G Charging segment. The following table summarizes the Company’s revenues by geography:
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Revenues: | ||||||||||||||
| United States | $ | $ | ||||||||||||
| United Kingdom | ||||||||||||||
| Denmark | ||||||||||||||
| $ | $ | |||||||||||||
The following table summarizes the Company’s intangible assets and property, plant and equipment in different geographic locations:
| March 31, 2024 | December 31, 2023 | ||||||||||
| Long-lived assets: | |||||||||||
| United States | $ | $ | |||||||||
| United Kingdom | |||||||||||
| Denmark | |||||||||||
| $ | $ | ||||||||||
12
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 4 – Fair Value Measurements
The following are the liabilities measured at fair value on the condensed consolidated balance sheet at March 31, 2024 and December 31, 2023 using quoted price in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3):
| Level 1: Quoted Prices in Active Markets for Identical Assets | Level 2: Significant Other Observable Inputs | Level 3: Significant Unobservable Inputs | Total at March 31, 2024 | Total Gains (Losses) For The Three Months Ended March 31, 2024 | |||||||||||||||||||||||||||||||
| Recurring fair value measurements | |||||||||||||||||||||||||||||||||||
| Private warrants | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Stonepeak and Evolve unvested warrants | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| 2022 July Institutional/Accredited Investor warrants | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| 2024 February Institutional/Accredited Investor warrants | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Derivative liability - non-controlling redeemable preferred shares | $ | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||
| Total recurring fair value measurements | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Level 1: Quoted Prices in Active Markets for Identical Assets | Level 2: Significant Other Observable Inputs | Level 3: Significant Unobservable Inputs | Total at December 31, 2023 | Total Gains (Losses) For The Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||
| Recurring fair value measurements | ||||||||||||||||||||||||||||||||
| Private warrants | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Stonepeak and Evolve unvested warrants | $ | $ | $ | $ | ||||||||||||||||||||||||||||
| 2022 July Institutional/Accredited Investor warrants | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||
| Derivative liability - non-controlling redeemable preferred shares | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||
| Total recurring fair value measurements | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||
The following is a reconciliation of the opening and closing balances for the liabilities related to the warrants (Note 11) and derivative liability - non-controlling redeemable preferred shares measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2024:
| Private warrants | Stonepeak and Evolve unvested warrants | 2022 July Institutional/Accredited Investor warrants | 2024 February Institutional/Accredited Investor warrants | Non-controlling redeemable preferred shares - derivative liability | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Initial fair value | |||||||||||||||||||||||||||||
| Balance at Total (gains) losses for period included in earnings | ( | ( | |||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
The fair value of the level 3 Private Warrants was estimated at March 31, 2024 using the Black-Scholes model which used the following inputs: term of 1.97 years, risk free rate of 4.60 %, no dividends, volatility of 53.0 %, and strike price of $460.00 .
13
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The fair value of the level 3 Private Warrants was estimated at December 31, 2023 using the Black-Scholes model which used the following inputs: term of 2.22 years, risk free rate of 4.20 %, no dividends, volatility of 60.0 %, and strike price of $460.00 .
The fair value of the level 3 2022 July Institutional/Accredited Investor warrants was estimated at March 31, 2024 using the Black-Scholes model which used the following inputs: term of 3.80 years, risk free rate of 4.32 %, no dividends, volatility of 57.0 %, common stock price of $1.10 , and strike price of $150.00 .
The fair value of the level 3 2022 July Institutional/Accredited Investor warrants was estimated at December 31, 2023 using the Black-Scholes model which used the following inputs: term of 4.10 years, risk free rate of 3.92 %, no dividends, volatility of 63.0 %, common stock price of $0.12 , and strike price of $150.00 .
The fair value of the level 3 2024 February Institutional/Accredited Investor warrants was estimated at March 31, 2024 using the Black-Scholes model which used the following inputs: term of 4.85 years, risk free rate of 4.22 %, no dividends, volatility of 99.0 %, common stock price of $1.10 , and strike price of $2.00 .
The following table presents the significant unobservable inputs and valuation methodologies used for the Company’s fair value measurements of non-recurring (level 3) Stonepeak and Evolve unvested warrants at March 31, 2024:
| Series C Unvested Warrants | Series D Unvested Warrants | Series E Unvested Warrants | Series F Unvested Warrants | ||||||||||||||||||||
| Fair value (in millions) | $ | $ | $ | $ | |||||||||||||||||||
| Valuation methodology | Monte Carlo Simulation & Black Scholes | Monte Carlo Simulation & Black Scholes | Monte Carlo Simulation & Black Scholes | Monte Carlo Simulation & Black Scholes | |||||||||||||||||||
| Capital expenditure forecast (in millions) | $ | $ | $ | $ | |||||||||||||||||||
| Probability of warrants vesting (a) | |||||||||||||||||||||||
__________________
(a) During the second quarter ended June 30, 2022, the Company significantly lowered its forecast of Levo's capital deployments due to the passage by the United States Congress of the Infrastructure Investment and Jobs Act bill, and the related unveiling of the Environmental Protection Agency’s 2022 Clean School Bus rebates. The resulting lower forecast of capital deployments reduced the probabilities of the future vesting of the unvested warrants. Therefore, at March 31, 2024, the Company has determined that it is unlikely that the unvested warrants will vest.
The following table presents the significant unobservable inputs and valuation methodologies used for the Company’s fair value measurements of non-recurring (level 3) Stonepeak and Evolve unvested warrants at December 31, 2023:
| Series C Unvested Warrants | Series D Unvested Warrants | Series E Unvested Warrants | Series F Unvested Warrants | ||||||||||||||||||||
| Fair value (in millions) | $ | $ | $ | $ | |||||||||||||||||||
| Valuation methodology | Monte Carlo Simulation & Black Scholes | Monte Carlo Simulation & Black Scholes | Monte Carlo Simulation & Black Scholes | Monte Carlo Simulation & Black Scholes | |||||||||||||||||||
| Capital expenditure forecast (in millions) | $ | $ | $ | $ | |||||||||||||||||||
| Probability of warrants vesting (a) | |||||||||||||||||||||||
__________________
The fair value of the level 3 derivative liability - non-controlling redeemable preferred shares are estimated at March 31, 2024 using the Monte Carlo Simulation model which used the following inputs: terms range from 0.34 years to 7.0 years, risk free rate of 4.3 %, no dividends, volatility of 83.0 % and probability of redemptions triggered of 75.0 %.
The fair value of the level 3 derivative liability - non-controlling redeemable preferred shares are estimated at December 31, 2023 using the Monte Carlo Simulation model which used the following inputs: terms range from 0.60 years to 7.0 years, risk free rate of 3.9 %, no dividends, volatility of 79.0 % and probability of redemptions triggered of 75.0 %.
There were no transfers between Level 1 and Level 2 of the fair value hierarchy in 2024 and 2023.
Cash, accounts receivable, accounts payable, and accrued expenses are generally carried on the cost basis, which management believes approximates fair value due to the short-term maturity of these instruments.
14
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 5 - Derivative Liability - Non-Controlling Redeemable Preferred Stock
The Company has determined that the redemption features embedded in the non-controlling redeemable preferred stock is required to be accounted for separately from the redeemable preferred stock as a derivative liability. Separation of the redemption features as a derivative liability is required because its economic characteristics and risks are considered more akin to a debt instrument, and therefore, not considered to be clearly and closely related to the economic characteristics of the redeemable preferred stock. The economic characteristics of the redemption features are considered more akin to a debt instrument because the minimum redemption value could be greater than the face amount, the redemption features are contingently exercisable, and the shares carry a fixed mandatory dividend.
Accordingly, the Company has recorded an embedded derivative liability representing the estimated fair value of the right of the holders to exercise their redemption option upon the occurrence of a redemption event. The embedded derivative liability is adjusted to reflect fair value at each period end with changes in fair value recorded in the “
liability” financial statement line item of the Company’s condensed . For additional information on the non-controlling redeemable preferred stock, see Note 18.
The following table displays the fair value of derivatives by balance sheet line item:
| March 31, 2024 | December 31, 2023 | ||||||||||
| Derivative liability - non-controlling redeemable preferred shares | $ | $ | |||||||||
Note 6 – Investments
The Company accounts for its 13 % equity ownership in Dreev as an investment in equity securities without a readily determinable fair value subject to impairment. The Company has a consulting services agreement with Dreev related to software development and operations. The consulting services were zero zero
Note 7 – Account Receivables, Net
The following tables summarizes the Company's accounts receivable:
| March 31, 2024 | December 31, 2023 | |||||||||||||
| Trade receivables | $ | $ | ||||||||||||
| Less: allowance for credit losses | ( | ( | ||||||||||||
| Accounts receivable, net | $ | $ | ||||||||||||
| Allowance for doubtful accounts: | ||||||||||||||
| Balance December 31, 2023 | $ | ( | ||||||||||||
| Provision | ( | |||||||||||||
| Write-off | ||||||||||||||
| Recoveries | ||||||||||||||
| Balance at March 31, 2024 | $ | ( | ||||||||||||
15
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 8 – Inventories
The following table summarizes the Company’s inventories balance by category:
| March 31, 2024 | December 31, 2023 | ||||||||||
| DC Chargers | $ | $ | |||||||||
| AC Chargers | |||||||||||
| Component parts | |||||||||||
| Total | $ | $ | |||||||||
Note 9 – Property, Plant and Equipment
The following table summarizes the Company’s property, plant and equipment balance:
| Useful Lives | March 31, 2024 | December 31, 2023 | ||||||||||||||||||
| Computers & Servers | to | $ | $ | |||||||||||||||||
| Vehicles | to | |||||||||||||||||||
| Office furniture and equipment | to | |||||||||||||||||||
| Test units and loaned chargers (1) | to | |||||||||||||||||||
| Total | ||||||||||||||||||||
| Less: Accumulated Depreciation | ( | ( | ||||||||||||||||||
| Property, plant and equipment, net | $ | $ | ||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Depreciation expense | $ | $ | ||||||||||||
Note 10 – Intangible Assets
At both March 31, 2024 and December 31, 2023, the Company had recorded a gross intangible asset balance of $2,091,556 34,860 924,212 and $889,353 at March 31, 2024 and December 31, 2023, respectively.
The net amount of intangible assets of $1,167,343 at March 31, 2024, will be amortized over the weighted average remaining life of 8.6 years.
Total estimated future amortization expense is as follows:
| 2024 (remaining nine months) | $ | ||||
| 2025 | |||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| Thereafter | |||||
| $ | |||||
16
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 11 – Stockholders’ Equity
Reverse Stock Split
The reverse stock split did not affect the number of authorized shares of the Company's common stock or the par value of the common stock. Following the reverse stock split effectiveness on January 19, 2024, all references in the condensed consolidated financial statements to number of common shares issued or outstanding, price per share and weighted average number of shares outstanding prior to the 1 for 40 reverse split have been adjusted to reflect the stock split on a retroactive basis as of the earliest period presented.
Authorized Shares
As of March 31, 2024, the Company has authorized two classes of stock, Common Stock, and Preferred Stock. The total number of shares of all classes of capital stock which the Company has authority to issue is 101,000,000 , of which 100,000,000 authorized shares are Common Stock with a par value of $0.0001 per share (“Common Stock”), and 1,000,000 authorized shares are Preferred Stock of the par value of $0.0001 per share (“Preferred Stock”). Please see Note 11, “Stockholders' Equity,” in the Notes to Consolidated Financial Statements included in the Company’s 2023 Form 10-K for a detailed discussion of the Company’s stockholders' equity.
February 2024 Public Offering
On January 31, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Craig-Hallum Capital Group LLC (“Craig-Hallum”) regarding an underwritten public offering of its securities (the “Offering”). The Offering was conducted pursuant to our Registration Statement on Form S-1 filed with the SEC, which was declared effective as of January 31, 2024. On February 2, 2024, the Company completed the Offering and received gross proceeds of approximately $9.6 million prior to deducting underwriting discounts and commissions and offering expenses. Craig-Hallum received underwriting discounts and commissions equal to 7.0 % of the gross proceeds of the Offering, and is further entitled to receive 7.0 % of the gross proceeds received by the Company in connection with the exercise of any of the outstanding Series B Warrants issued in the Offering.
As noted above, on January 31, 2024, the Company entered into an Underwriting Agreement regarding the Offering which was comprised of the followings:
1.3,035,000 shares of common stock;
2.1,765,000 pre-funded warrants (“Pre-Funded Warrants”) to purchase shares of common stock;
3.4,800,000 Series A Warrants (“Series A Warrants”) to purchase shares of common stock, with an initial exercise price of $2.00 per share and a term of five years following the issuance date;
4.4,800,000 Series B Warrants (“Series B Warrants”) to purchase shares of common stock with an exercise price of $2.00 per share and a term of nine months following the issuance date; and
5.4,800,000 Series C Warrants (“Series C Warrants”) to purchase shares of common stock with an exercise price of $2.00 per share and a term of five years following the issuance date, subject to early expiration as described below.
Each share of common stock and Pre-Funded Warrant issued in the Offering was accompanied by a Series A Warrant to purchase one share of common stock, a Series B Warrant to purchase one share of common stock and a Series C Warrant to purchase one share of common stock. The combined price per share of Common Stock and the accompanying Series A Warrant, Series B Warrant and Series C Warrant was $2.00 . The combined price per share of each Pre-Funded Warrant and accompanying Series A Warrant, Series B Warrant, and Series C Warrant was equal to $1.9999 , and the exercise price of each Pre-Funded Warrant is $0.0001 per share. The Series C Warrants may only be exercised to the extent and in proportion to a holder of the Series C Warrants exercising its Series B Warrants, and are subject to an early expiration of nine months, in proportion and only to the extent any Series C Warrants expire unexercised. In addition, Craig-Hallum was granted warrants to purchase up to 480,000 shares of common stock (the “Underwriter Warrants”) at an exercise price of $2.00 per share. The Underwriter Warrants have a term of five years and are immediately exercisable, provided that 240,000 of the shares of common stock underlying the Underwriter Warrants shall only be exercisable pro rata upon the exercise of the Series B Warrants issued in the Offering.
The fair value of the Series A, B and C Warrants are recorded as a liability in the condensed consolidated balance sheets with changes in fair value recorded in the condensed consolidated statements of operations as the warrants are deemed not to be indexed to the Company’s common stock. See Note 4 for details of changes in fair value of the warrants recorded in the condensed consolidated statement of operations.
17
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Warrants - Stonepeak and Evolve
On May 17, 2021, in connection with the signing of a letter of agreement, relating to the formation of Levo (the "Letter Agreement"), the Company issued to Stonepeak and Evolve ten year warrants to purchase common stock (allocated 90 % to Stonepeak and 10 % to Evolve). See below for details. The grant-date fair value of the warrants issued to Stonepeak and Evolve were: series B $12.8 million, series C $5.6 million, series D $4.8 million, series E $3.8 million and series F $3.2 million. The fair values of the vested warrants are recorded in the condensed consolidated balance sheets in additional paid-in capital in stockholders' equity as the vested warrants are indexed to the Company’s common stock and meet the conditions for equity classification. The unvested warrants are recorded as a liability in the condensed consolidated balance sheets at fair value, with changes in fair value recorded in the condensed consolidated statements of operations as the unvested warrants are deemed not to be indexed to the Company’s common stock. See Note 4 for details of changes in fair value of the unvested warrants recorded in the condensed consolidated statement of operations.
The Company issued to Stonepeak and Evolve the following ten year warrants to purchase common stock (allocated 90 % to Stonepeak and 10 % to Evolve):
•Series B warrants to purchase 50,000 shares of the Company’s common stock, at an exercise price of $400.00 per share, which are fully vested upon issuance,
•Series C warrants to purchase 25,000 shares of the Company’s common stock, at an exercise price of $600.00 per share, which are vested as to 50 % of the shares upon issuance and vest as to the remaining 50 % when Levo has entered into contracts with third parties for $125 million in aggregate capital expenditures,
•Series D warrants to purchase 25,000 shares of the Company’s common stock, at an exercise price of $800.00 per share, which are vested as to 50 % of the shares upon issuance and vest as to the remaining 50 % when Levo has entered into contracts with third parties for $250 million in aggregate capital expenditures,
•Series E warrants to purchase 25,000 shares of the Company’s common stock, at an exercise price of $1,200.00 per share, which are vested as to 50 % of the shares upon issuance and vest as to the remaining 50 % when Levo has entered into contracts with third parties for $375 million in aggregate capital expenditures, and
•Series F warrants to purchase 25,000 shares of the Company’s common stock, at an exercise price of $1,600.00 per share, which are vested as to 50 % of the shares upon issuance and vest as to the remaining 50 % when Levo has entered into contracts with third parties for $500 million in aggregate capital expenditures.
The warrants may be exercised at any time on or after the date that is 180 days after the applicable vesting date.
Securities Purchase Agreement
On May 17, 2021, in connection with the signing of the Letter Agreement, the Company entered into a Securities Purchase Agreement with Stonepeak and Evolve which provide them from time to time between November 13, 2021 and November 17, 2028, in their sole discretion, to purchase up to an aggregate of $250 million in shares of the Company’s common stock at a purchase price of $2,000.00 per share (allocated 90 % to Stonepeak and 10 % to Evolve). See below for details. The grant-date fair value of the Securities Purchase Agreement to purchase shares of the Company’s common stock was $12.6 million, and is recorded in the condensed consolidated balance sheets as equity in additional-paid-in capital as it is indexed to the Company’s common stock and meets the conditions for equity classification.
In connection with the signing of the Letter Agreement, as referenced above, the Company also entered into a Securities Purchase Agreement (the “SPA”) and a Registration Rights Agreement (the “RRA”) with Stonepeak and Evolve.
•The SPA includes customary representations and warranties and closing conditions and customary indemnification provisions. In addition, Stonepeak and Evolve may elect to purchase shares under the SPA on a cashless basis in the event of a change of control of the Company.
Warrants - Public and Private
In connection with its initial public offering on February 19, 2020, Newborn sold 143,750 units, which included one warrant to purchase Newborn’s common stock (the “Public Warrants”). Also, on February 19, 2020, NeoGenesis Holding Co., Ltd., Newborn’s sponsor (“the Sponsor”), purchased an aggregate of 6,813 private units, each of which included one warrant (the “Private Warrants”), which have the same terms as the Public Warrants. Upon completion of the merger between Nuvve and Newborn, the Public Warrants and Private Warrants were automatically converted to warrants to purchase Common Stock of the Company.
18
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The terms of the Private Warrants are identical to the Public Warrants as described above, except that the Private Warrants are not redeemable so long as they are held by the Sponsor or its permitted transferees. Concurrently with the execution of the Merger Agreement on November 11, 2020, Newborn entered into subscription agreements with certain accredited investors pursuant to which the investors agreed to purchase 35,625 of Newborn’s common stock, at a purchase price of $400.00 per share, for an aggregate purchase price of $14,250,000 (the "PIPE"). Upon closing of the PIPE immediately prior to the closing of the Business Combination, the PIPE investors also received 1.9 PIPE Warrants to purchase the Company’s Common Stock for each share of Common Stock purchased. The PIPE Warrants are each exercisable for one-half of a common share at $460.00 per share and have the same terms as described above for the Public Warrants. The PIPE investors received demand and piggyback registration rights in connection with the securities issued to them.
Because the Private Warrants have dissimilar terms with respect to the Company’s redemption rights depending on the holder of the Private Warrants, the Company determined that the Private Warrants are required to be carried as a liability in the condensed consolidated balance sheet at fair value, with changes in fair value recorded in the condensed consolidated statement of operations. The Private Warrants are reflected as a liability in the condensed consolidated balance sheet as of March 31, 2024 and the change in the fair value of the Private Warrants is reflected in the condensed consolidated statement of operations. See Note 4 for details of changes in fair value of the Private Warrants recorded in the condensed consolidated statement of operations.
The following table is a summary of the number of shares of the Company’s Common Stock issuable upon exercise of warrants outstanding at March 31, 2024:
| Number of Warrants | Number of Warrants Exercised | Number of Warrants Exercisable | Exercise Price | Expiration Date | |||||||||||||||||||||||||
| Public Warrants | $ | March 19, 2026 | |||||||||||||||||||||||||||
| Private Warrants | $ | March 19, 2026 | |||||||||||||||||||||||||||
| PIPE Warrants | $ | March 19, 2026 | |||||||||||||||||||||||||||
| Stonepeak/Evolve Warrants - series B | $ | May 17, 2031 | |||||||||||||||||||||||||||
| Stonepeak/Evolve Warrants - series C | $ | May 17, 2031 | |||||||||||||||||||||||||||
| Stonepeak/Evolve Warrants - series D | $ | May 17, 2031 | |||||||||||||||||||||||||||
| Stonepeak/Evolve Warrants - series E | $ | May 17, 2031 | |||||||||||||||||||||||||||
| Stonepeak/Evolve Warrants - series F | $ | May 17, 2031 | |||||||||||||||||||||||||||
| 2022 July Institutional/Accredited Investor Warrants | $ | January 29, 2028 | |||||||||||||||||||||||||||
| 2024 February Institutional/Accredited Investor Pre-Funded Warrants | $ | February 2, 2029 | |||||||||||||||||||||||||||
| 2024 February Institutional/Accredited Investor Warrants - series A | $ | February 2, 2029 | |||||||||||||||||||||||||||
| 2024 February Institutional/Accredited Investor Warrants - series B | $ | November 2, 2024 | |||||||||||||||||||||||||||
| 2024 February Institutional/Accredited Investor Warrants - series C | $ | February 2, 2029 | |||||||||||||||||||||||||||
Unit Purchase Option
19
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Note 12 – Stock Option Plan
In 2010, the Company adopted the 2010 Equity Incentive Plan (the “2010 Plan”), which provides for the grant of restricted stock awards, stock options, and other share-based awards to employees, consultants, and directors. In November 2020, the Company’s Board of Directors extended the term of the 2010 Plan to July 1, 2021. In 2021, the Company adopted the 2020 Equity Incentive Plan (the “2020 Plan”), which provides for the grant of restricted stock awards, incentive and non-statutory stock options, and other share-based awards to employees, consultants, and directors. In June 2023, the 2020 Plan was amended, as approved by shareholders, to increase the common shares reserved for issuance under the plan by 100,000 shares. As of March 31, 2024, there is an aggregate of 182,500 common shares reserved for issuance under the 2020 Plan. All options granted to date have a ten year contractual life and vesting terms of four years . In general, vested options expire if not exercised 90 days after termination of service. A total of 59,727 shares of common stock remained available for future issuance under the 2020 Plan as of May 6, 2024. Forfeitures are accounted for as they occur.
Stock-based compensation expense recognized in selling, general, and administrative, and research and development are as follows:
| Three Months Ended March 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Options | $ | $ | ||||||||||||
| Restricted stock | ||||||||||||||
| Stock options - modified options | ||||||||||||||
| Profit interest units | ( | |||||||||||||
| Total | $ | $ | ||||||||||||
The following is a summary of the stock option activity under the 2010 Plan for the three months ended March 31, 2024:
| Shares | Weighted- Average Exercise Price per Share($) | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value($) | ||||||||||||||||||||
| Outstanding - December 31, 2023 | |||||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | — | — | |||||||||||||||||||||
| Forfeited | ( | — | — | ||||||||||||||||||||
| Expired/Cancelled | ( | — | — | ||||||||||||||||||||
| Outstanding - March 31, 2024 | |||||||||||||||||||||||
| Options Exercisable at March 31, 2024 | |||||||||||||||||||||||
Options Vested at March 31, 2024 | |||||||||||||||||||||||
The weighted-average grant-date fair value of options granted during the three months ended March 31, 2024 was zero .
20
NUVVE HOLDING CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following is a summary of the stock option activity under the 2020 Plan for the three months ended March 31, 2024:
| Shares | Weighted- Average Exercise Price per Share ($) | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value($) | ||||||||||||||||||||
| Outstanding - December 31, 2023 | |||||||||||||||||||||||
| Granted | — | — | |||||||||||||||||||||
| Exercised | — | — | |||||||||||||||||||||
| Forfeited | ( | — | — | ||||||||||||||||||||
| Expired/Cancelled | ( | — | — | ||||||||||||||||||||
| Outstanding - March 31, 2024 | |||||||||||||||||||||||
| Options Exercisable at March 31, 2024 | |||||||||||||||||||||||
Options Vested at March 31, 2024 | |||||||||||||||||||||||
The weighted-average grant-date fair value of options granted during the three months ended March 31, 2024 was zero .
During the year ended December 31, 2021, 41,000 options were modified to lower the exercise price by $24.00 per share, which resulted in $246,000 of incremental compensation cost to be recognized over the remaining vesting period. The amount of additional compensation expense for the three months ended March 31, 2024, was $169 . The amount of additional compensation expense for the three months ended March 31, 2023, was $12,632 .
Other Information:
| Three Months Ended March 31, | ||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||
| Amount received from option exercised | $ | $ | ||||||||||||||||||
| March 31, 2024 | Weighted average remaining recognition period | |||||||||||||||||||
| Total unrecognized options compensation costs | $ | |||||||||||||||||||
No amounts relating to the 2010 Plan or 2020 Plan have been capitalized. Compensation cost is recognized over the requisite service period based on the fair value of the options.
A summary of the status of the Company’s nonvested restricted stock units as of December 31, 2023, and changes during the three months ended March 31, 2024, is presented below:
| Shares | Weighted- Average Grant Date Fair Value($) | ||||||||||
| Nonvested at December 31, 2023 | |||||||||||