| FAIR VALUE MEASUREMENTS |
NOTE
10 – FAIR VALUE MEASUREMENTS
The
following tables summarize the Company’s assets and liabilities that are measured at fair value in the unaudited condensed consolidated
financial statements:
SCHEDULE
OF ASSETS AND LIABILITIES ARE MEASURED AT FAIR VALUE
| | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| | |
Fair Value Measurements as at December
31, 2024 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Other noncurrent assets: | |
| | | |
| | | |
| | | |
| | |
| Investment in equity securities (a) | |
$ | 1,496,422 | | |
$ | - | | |
$ | - | | |
$ | 1,496,422 | |
| Total financial assets | |
$ | 1,496,422 | | |
$ | - | | |
$ | - | | |
$ | 1,496,422 | |
| | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| | |
Fair Value Measurements as at June
30, 2025 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Other noncurrent assets: | |
| | | |
| | | |
| | | |
| | |
| Investment in equity securities (a) | |
$ | 594,799 | | |
$ | - | | |
$ | - | | |
$ | 594,799 | |
| Total financial assets | |
$ | 594,799 | | |
$ | - | | |
$ | - | | |
$ | 594,799 | |
| | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| | |
Fair Value Measurements as at December
31, 2024 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Liabilities | |
| | |
| | |
| | |
| |
| Total financial liabilities | |
$ | - | | |
$ | - | | |
$ | 532,700 | | |
$ | 532,700 | |
| | |
Level
1 | | |
Level
2 | | |
Level
3 | | |
Total | |
| | |
Fair Value Measurements as at June
30, 2025 | |
| | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total | |
| Liabilities | |
| | | |
| | | |
| | | |
| | |
| Total financial liabilities | |
$ | - | | |
$ | - | | |
$ | 4,700 | | |
$ | 4,700 | |
| (a) |
These
represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance
with ASC 321, Investments-Equity Securities, based on quoted prices in active markets. |
| (b) |
For
Level 3 earnout liability, the Company assesses the fair value of expected earnout liability
at each reporting period using the Monte Carlo Method, which is consistent with the initial
measurement of the expected earnout consideration. This fair value measurement is considered
a Level 3 measurement because the Company estimates projections during the earnout period
utilizing various potential pay-out scenarios. The Monte Carlo simulation method repeats
a process thousands of times in an attempt to predict all the possible future outcomes. At
the end of the simulation, several random trials produce a distribution of outcomes that
are then analyzed to determine the average present value of earnout. Change in the fair value
of earnout liability is reflected in our unaudited condensed consolidated statements of operations.
The
make-whole obligation liability related to the Purchase Agreement is measured at fair value categorized within Level 1 of the fair
value hierarchy. See Note 4. |
The
following table provides a reconciliation of activity and changes in fair value for the Company’s SAFE notes, convertible notes
and sponsor earnout liability:
SCHEDULE
OF RECONCILIATION OF ACTIVITY AND CHANGES IN FAIR VALUE
| |
| SAFE
notes at fair value | | |
| Convertible
notes at fair value | | |
| Sponsor
earnout liability at fair value | |
| Balance
as at December 31, 2023 | |
$ | 5,212,200 | | |
$ | - | | |
$ | |
| Issuance
of notes | |
| 200,000 | | |
| - | | |
| |
| Change
in fair value | |
| 107,900 | | |
| - | | |
| |
| Balance
as at March 31, 2024 | |
$ | 5,520,100 | | |
$ | - | | |
$ | |
| Issuance
of notes | |
| - | | |
| 2,100,000 | | |
| |
| Change
in fair value | |
| 847,100 | | |
| 471,400 | | |
| |
| Balance
as at June 30, 2024 | |
$ | 6,367,200 | | |
$ | 2,571,400 | | |
$ | |
| Issuance
of common stock upon conversion | |
| (6,367,200 | ) | |
| (2,571,400 | ) | |
| |
| Sponsor
earnout liability recognized on closing of Business Combination | |
| - | | |
| - | | |
| |
| Change
in fair value | |
| - | | |
| - | | |
| ) |
| Balance
as at September 30, 2024 | |
$ | - | | |
$ | - | | |
$ | |
| Change
in fair value | |
| - | | |
| - | | |
| ) |
| Balance
as at December 31, 2024 | |
$ | - | | |
$ | - | | |
$ | |
| Change
in fair value | |
| - | | |
| - | | |
| ) |
| Balance
as at March 31, 2025 | |
$ | - | | |
$ | - | | |
$ | |
| Change
in fair value | |
| - | | |
| - | | |
| |
| Balance
as at June 30, 2025 | |
$ | - | | |
$ | - | | |
$ | |
The
valuation of the Level 3 measurement for SAFE notes considered the probabilities of the occurrence of the scenarios as discussed in Note
2 of the audited consolidated financial statements and notes thereto for the period March 16, 2023 (inception) to December 31, 2023,
included in the Company’s Registration Statement on Form S-4/A filed with the SEC on May 8, 2024. The Company valued the SAFE notes
based on the occurrence of the preferred financing or a SPAC transaction. As of the date of initial measurement and December 31, 2023,
the management has assigned zero probability for a change in control event or a dissolution event. Pursuant to the consummation of the
Business Combination and in accordance with the terms of the SAFE note agreements, the SAFE notes and convertible notes converted into
636,916
and 257,216
shares of the Company’s Common Stock.
|