NOTE 11         FAIR VALUE MEASUREMENTS

The following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2024:

Changes in the assets and liabilities that include level 3 inputs the following:

Following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy.

Derivatives

The Company has several derivatives associated with its common stock including make-whole commitments and debt conversion options. The following tables presents changes in our derivative liabilities for the three and six-months ended June 30, 2024 and 2023, at fair value:

At June 30, 2024, December 31, 2023 and June 30, 2023, the fair value of the LINICO, the Haywood Property, and GenMat derivatives was based on a trading price of the Company’s shares of $0.16, $0.55 and $0.73, respectively.

Kips Bay Select LP Conversion Option

On December 27, 2023, the Company recorded a derivative liability on the consolidated balance sheets in connection with the Kips Bay Note. On that date, the $1,360,000 fair value of the derivative liability was determined based on bifurcation of the derivative liability from the convertible note. On January 27, 2024, the Company recorded an additional $836,000 associated with the additional borrowings under the Kips Bay Note (see Note 8, Debt Obligations). During the three and six-months ended June 30, 2024, the Company recorded a gain of $539,480 and $1,056,081, respectively, for the change in fair value of the derivative. During the three and six-months ended June 30, 2023, no gain or loss was recorded for the change in fair value of the derivative. At December 31, 2023, the derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90% of the average price capped at $1.00, discount rate of 35%, risk free rate of 4.54%, and volatility of 96.0%. At June 30, 2024, the derivative was valued using a Monte Carlo valuation model with a conversion price equal to 90% of the average price capped at $0.88, discount rate of 35%, risk free rate of 5.08%, and volatility of 64.0%. During three and six-months ended June 30, 2024, $430,520 and $669,919, respectively, of the derivative liability was converted. The derivative liability was classified within Level 3 of the valuation hierarchy.

GenMat Derivative Instrument

On June 24, 2021, the Company recorded a derivative asset on the condensed consolidated balance sheets in connection with the GenMat Membership Interest Purchase Agreement. On that date, the $530,000 fair value of the derivative asset was determined based on the excess of the fair value of 3,000,000 shares of our common stock issued to and held by GenMat over the $10,000,000 contractual stock consideration required under the agreement. The value of the shares was based on the $3.51 closing price per share of our common stock on that date. At December 31, 2023, the fair value of Comstock’s shares held by GenMat of 2,513,451 shares was based on the closing price per share of our common stock of $0.55 with a fair value of the derivative liability of $781,966. On May 17, 2024, Comstock fulfilled our initial funding requirements of $15.0 million which satisfied the make-whole provision and first investment tranche. For the three and six-months ended June 30, 2024, the Company recorded an unrealized loss on the change in fair value of the derivative asset of $209,872 and $687,428, respectively, in the condensed consolidated statements of operations. As of June 30, 2024 and December 31, 2023, the fair value of the derivative liability was $0 and $781,966, respectively. The derivative liability was classified in Level 2 of the valuation hierarchy.

Haywood Derivative Instrument

On April 7, 2022, we recorded a derivative asset on the consolidated balance sheets in connection with the Haywood acquisition and lease from Haywood (see Note 7, Leases). On that date, the $245,000 fair value of the derivative asset was determined based on the excess of the fair value of 1,500,000 shares of our common stock issued to and held by Haywood and a deposit of $50,000 over the initial $2,100,000 contractual stock consideration required under the agreement. The amendment increased the commitment by $100,000 from $2.1 million to $2.2 million (see Note 7, Leases). As of June 30, 2024 and December 31, 2023, the Company paid Haywood $120,000 and $200,000, respectively, which resulted in a decrease in contractual stock consideration. On April 11, 2024, the Company issued an additional 1,500,000 shares of our common stock issued to and held by Haywood with a fair value of $509,850 at the closing price of $0.34 (see Note 7, Leases). At June 30, 2024, the fair value of the 3.0 million shares was based on the closing price per share of our common stock of $0.16 and the fair value of the derivative liability was $678,150. For the three and six-months ended June 30, 2024, we recorded an unrealized loss on the change in fair value of the derivative liability of $48,000 and $333,000, respectively, in the condensed consolidated statements of operations. For the three and six-months ended June 30, 2023, we recorded an unrealized gain on the change in fair value of the derivative liability of $585,000 and $675,000, respectively, in the condensed consolidated statements of operations. The derivative liability is classified within Level 2 of the valuation hierarchy.

Ionic Ventures, LLC Conversion Option

On December 16, 2022, we recorded a derivative liability on the consolidated balance sheets in connection with the Ionic Note. During the three and six-months ended June 30, 2023, the Company recorded a loss of $1,416,254 and $1,176,254, respectively, for the change in fair value of the derivative. In 2023, the derivative was fully converted. The derivative liability was classified within Level 3 of the valuation hierarchy.

American Battery Technology Investment

In connection with the sale of the Facility, the Company received 11 million shares of restricted common stock from the purchaser of the Facility, ABTC, with an initial fair value of $9,365,000. The fair value of our investment in ABTC restricted common shares acquired in connection with the sale of the Facility valued using a Monte Carlo valuation model.

Other Financial Instruments

At June 30, 2024, the carrying amount of cash and cash equivalents, notes receivable and debt carried at amortized costs, approximates fair value because of the short-term maturity of these financial instruments.