Company: ARRY
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0001820721-25-000095
Chunk: 69

Company: Array Technologies, Inc.
Filing Date: 2025-11-05
Form: 10-Q
Item: Part I, Item 1
Chunk 69
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3 in the fair value hierarchy.Earnout ConsiderationAs discussed in Note 3 – Acquisition, the Purchase Agreement includes an earnout provision pursuant to which Seller may be granted shares of the Company’s common stock, or equivalent cash value at the Buyer’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending September 30, 2028 (the “Earnout Consideration”). The maximum number of shares payable as Earnout Consideration is 4,686,530 shares of common stock, which was determined by dividing $40 million by the volume weighted average price of the Company’s common stock for the 10 trading days immediately following the Closing Date. The number of shares payable will be subject to reduction if the cumulative value of the Earnout Consideration earned (measured on each date such shares are issued) exceeds $90 million. The Purchase Agreement provides that, to the extent the issuance of any Earnout Consideration or Deferred Consideration Shares would require stockholder approval under Nasdaq Listing Rule 5635(a), the Company will pay cash in lieu of issuing such shares, unless such stockholder approval has been obtained.The Earnout Consideration is accounted for as contingent consideration, and the fair value is estimated each reporting period. As of September 30, 2025, the Earnout Consideration was estimated to have a fair value of approximately $20.4 million using a Monte-Carlo simulation method. Changes in fair value of the contingent liability are recognized in contingent consideration on the condensed consolidated statements of operations. Estimating the amount of payments that may be made under the Earnout Consideration is by nature imprecise. The significant fair value inputs used to estimate the future expected Earnout Consideration payments to Seller include a discount rate, earnings forecasts, and actual and estimated future volatility in the Company’s stock price.

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The following table summarizes the activity related to the estimated Earnout Consideration liability (in thousands):Three Months Ended September 30,Nine Months Ended September 30,2025202420252024Beginning balance$— $— $— $— Additions20,007 — 20,007 — Payments— — — — Fair value adjustment403 — 403 — Ending balance$20,410 $— $20,410 $— The Earnout Consideration liability requires significant judgment and is classified as Level 3 in the fair value hierarchy.Surety BondsAs of