SEC Filing Document

Company: ERock, Inc.
Ticker: 
CIK: 2110029
Filing Type: DRS
Document Type: DRS
Date Filed: 2026-02-17
Accession Number: 0001193125-26-054926
Exchange: 
SIC Code: 3620
SIC Description: Electrical Industrial Apparatus
URL: https://www.sec.gov/Archives/edgar/data/2110029/000119312526054926/filename1.htm

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material impact on its consolidated financial position, results of operations, or cash flows. 3. FAIR VALUE The Company’s financial instruments consist primarily of notes payable and warrants. The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in GAAP. The Company’s contingent warrant liability related to the 2024 Credit Agreement (see Note 11 — Debt — 2024 Credit Agreement), and the warrant liability and derivative liability related to the December 2024 Convertible Note (see Note 11 — Debt — 2024 Note Purchase Agreement), measured at fair value on a recurring basis as of December 31, 2024, were as follows: Level 1 Level 2 Level 3 Current Liabilities Contingent warrant unit liabilities $ — $ — $ 2,727 Total $ — $ — $ 2,727 Noncurrent Liabilities Warrant unit liabilities $ — $ — $ 13,979 Derivative liabilities — — 1,492

Total $	— $	— $	15,471

The estimated fair values of the contingent warrant liability included in other current
liabilities in the consolidated balance sheet and warrant unit liabilities were determined using the Black-Scholes option-pricing model. For this purpose, the Company assumed a risk-free interest rate of 4.36%, time to exit of three years, and 90.0%
volatility.

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Enchanted Rock Holdings, LLC

Notes to Consolidated Financial Statements

December

The estimated fair value of the derivative liability included in other
noncurrent liabilities in the consolidated balance sheet was determined using the with and without method, taking the value of the December 2024 Convertible Note with the conversion option, less the value of the December 2024 Convertible Note
without the conversion option. The estimated fair value of the December 2024 Convertible Note was determined using the discounted cash flow method, assuming a discount rate of 17.25%.

Changes in Level 3 liabilities measured at fair value on a recurring basis for the year ended December 31, 2024,
were as follows:

Contingent warrant liability Warrant liability Derivative liability

Balance at January 1, 2024 $	— $	— $	—

Issuances 1,329 13,979 1,492

Changes in fair value included in earnings 1,398 — —

Balance at December 31, 2024 $	2,727 $	13,979 $	1,492

The Company’s equity-classified warrants included in common units in the consolidated
balance sheet related to the 2024 Credit Agreement (see Note 11 — Debt — 2024 Credit Agreement) measured at fair value on issuance date of February 27, 2024 (see Note 13 — Equity — Warrant Units), are as follows:

Level 1 Level 2 Level 3

Equity

Common unit warrants $	— $	— $	3,207

Total $	— $	— $	3,207

The estimated fair value of the equity-classified warrants was determined using the
Black-Scholes option-pricing model. For this purpose, the Company assumed a risk-free interest rate of 4.70%, a probability weighted time to exit of two years, and 75.0% volatility.

4. REVENUE RECOGNITION

Disaggregation of Revenues

The Company disaggregates revenue from contracts with customers on the basis of the types of power system sales and ongoing
services provided for the year ended December 31, 2024:

Power system sales product revenues $	53,976

Power system sales installation services revenues 38,363

Power system sales revenues 92,339

Ongoing services revenues (1) 36,151

Total revenues $	128,490

(1) Includes service-type warranty revenue.

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Enchanted Rock Holdings, LLC

Notes to Consolidated Financial Statements

December

Remaining Performance Obligations

The following table presents estimated revenue allocated to remaining performance obligations for contracted revenues that are
unsatisfied (or partially satisfied) as of December 31, 2024:

Years ending December 31,

Thereafter 143,118

(1) Performance Obligations include certain services contracts that contain evergreen
renewal terms. For these contracts, the Company assumes renewals through the expected useful life of the generators over 20 years beginning from installation. These renewals account for $83.2 million, approximately 18.6%, of the total remaining
performance obligations. This conclusion is based on historical experience that all customers have consistently exercised their contractual renewal options and management’s assessment that changing service providers would result in significant
economic barriers for customers.

The amount above represents the Company’s estimate of total revenues that are
expected to be realized from the remaining portion of executed and legally enforceable contracts related to Power System Sales Installation Services and the Ongoing Services. For purposes of calculating remaining performance obligations from Power
System Sales and Ongoing Services revenues, the Company includes estimated revenues from change orders and claims to the extent they are legally enforceable and it is probable that a significant reversal in the amount of cumulative revenue
recognized will not occur. The generators have an estimated useful life of 20 years, and the Company expects customers to continue service arrangements throughout the generators’ useful lives due to significant economic barriers to changing
service providers. Excluded from remaining performance obligations were variable consideration from ongoing service contracts that the Company has a right to invoice (e.g., usage-based fees) in accordance with performance. Accordingly, the table
above includes only the fixed consideration component of such agreements. Additionally, the Company excludes contracts with an original expected duration of one year or less.

5. CONTRACT ASSETS AND LIABILITIES

The following table reflects contract assets and contract liabilities as of December 31, 2024:

Contract assets $	9,682

Contract liabilities (33,197	)

Contract assets and liabilities fluctuate period to period based on various factors, including
changes in the number and size of projects in progress at period-end and variability in billing and payment terms due to milestone billings.

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Enchanted Rock Holdings, LLC

Notes to Consolidated Financial Statements

December

During the year ended December 31, 2024, the Company recognized revenue
of $25.6 million that was included in contract liabilities at the beginning of the year.

6. INVENTORY

Inventory is stated at the lower of cost or net realizable value. Inventory consists of fully assembled generators and other
major equipment used for Power System Sales Installation Services contracts valued using the specific identification method and spare parts inventory for ongoing service contracts valued using the average cost method.

Inventory consisted of the following as of December 31, 2024:

Natural gas generators $	57,744

Installation equipment 11,393

Spare parts inventory 11,350

Total inventory $	80,487

7. PREPAID EXPENSES

Prepaid expenses consisted of the following as of December 31, 2024:

Prepaid power system sales equipment $	13,845

Prepaid general and administrative expenses 2,838

Total prepaid expenses $	16,683

8. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of December 31, 2024:

Useful Lives (Years) Amount

Equipment 5 - 15 $	11,721

Leasehold improvements 5 - 7 1,375

Trailers 5 53

Furniture and fixtures 5 - 7 347

Computers and software 5 3,016

Construction in progress 13,569

Less accumulated depreciation (3,300	)

Total property and equipment, net $	26,781

Depreciation expense for the year ended December 31, 2024 was $1.8 million.

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Enchanted Rock Holdings, LLC

Notes to Consolidated Financial Statements

December

9. LEASES

The Company has long-term operating leases, comprised primarily of equipment, vehicles, and real estate lease arrangements.
Operating leases have remaining lease terms of one year to seven years.

As of December 31, 2024, the classification
of leases in the consolidated balance sheet was as follows:

Classification 2024

Right-of-use
assets

Operating leases Right-of-use assets, net $	11,670

Lease liabilities

Current

Operating leases Lease liabilities, current 2,773

Noncurrent

Operating leases Lease liabilities, noncurrent 9,361

Total lease liabilities $	12,134

Operating lease liabilities are based on the net present value of the remaining lease payments
over the remaining lease term. In determining the lease liability and the present value of lease payments, management used the incremental borrowing rate.

Operating lease expense for the year ended December 31, 2024 was $4.1 million and is included in cost of power
system sales revenues, cost of ongoing services revenues, and general and administrative expenses in the consolidated statement of operations.

The following is the aggregate future lease payments for operating leases as of December 31, 2024:

Amount

Thereafter 1,214

Total undiscounted lease payments 13,426

Less imputed interest (1,292	)

Lease liabilities $	12,134

Cash paid during 2024 for operating leases was $3.9 million. During 2024, ROU assets
obtained in exchange for the lease obligations for operating leases were $2.2 million.

The weighted-average
remaining lease term of operating leases is approximately five years. The weighted-average discount rate used to determine the operating lease liabilities as of December 31, 2024 was 4.33%.

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Enchanted Rock Holdings, LLC

Notes to Consolidated Financial Statements

December

10. PAYABLES AND ACCRUED LIABILITIES

The following is a summary of payables and accrued liabilities as of December 31, 2024:

Accounts payable

Power system sales payable $	22,228

Ongoing services payable 4,080

General and administrative payable 2,894

Other payable 2,757

Total accounts payable $	31,959

Accrued liabilities and other payables

Accrued salaries $	2,741

Accrued operating expenses 11,423

Accrued commissions and fees 694

Accrued sales tax payable 104

Short term insurance financing note payable 1,347

Total accrued liabilities and other payables $	16,309

11. DEBT

2024 Credit Agreement