v3.25.2
SAFE Agreements and Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
SAFE Agreements and Fair Value Measurements [Abstract]  
SAFE Agreements and Fair Value Measurements

Note 8 - SAFE Agreements and Fair Value Measurements

 

Prior to the Closing, SEE ID had issued Simple Agreements for Future Equity (the “SAFE agreements”) to investors for proceeds totaling $8,480,217. Under the terms of these SAFE agreements, which had stated discount rates ranging from 67% to 80%, the following would happen upon the occurrence of these events (all capitalized terms are as defined in the SAFE agreements):

 

a)Equity Financing - the SAFE agreements will automatically convert into the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Discount Price with certain SAFE agreements subject to a post-money valuation cap of $30,000,000.

 

b)Liquidity Event - the SAFE agreements will automatically be entitled to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with, the consumption of such Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price.

 

c)Dissolution Event - the Investor will automatically be entitled to receive a portion of Proceeds equal to the Cash-Out Amount, due and payable to the Investor immediately prior to the consummation of the Dissolution Event.

 

In accordance with FASB ASC 815-40, Contracts in Entity’s Own Equity, the Company determined that the SAFE agreements represented freestanding financial instruments and, accordingly, classified them as derivative liabilities in the accompanying condensed consolidated balance sheets. The SAFE agreements were carried at estimated fair value, which was determined by the Company via a probability-weighted expected return method.

 

The Business Combination, which closed on June 18, 2025, as described in Note 3, qualified as an “Equity Financing” under the terms of the Company’s SAFE agreements. As a result, all outstanding SAFE notes were converted into 2,909,057 shares of Common Stock. The Company recognized a fair value change in the SAFE notes of $17,368,415, based on the fair value of the Common Stock at Closing of $14.00 per share. Accordingly, no SAFE notes remained outstanding as of June 30, 2025.

 

For the three and six-months ended June 30, 2025 and 2024, the SAFE note activity was as follows:

 

   For the three months ended
June 30,		   For the six months ended
June 30,		 
   2025   2024
(As restated)		   2025   2024
(As restated)		 
Fair Value - beginning of period  $22,746,675   $18,904,905   $23,334,626   $4,602,950 
Addition   -    1,634,500    23,752    3,134,500 
Change in fair value   17,980,118    660,755    17,368,415    13,462,710 
SAFE notes converted into shares   (40,726,793)   -    (40,726,793)   - 
Fair Value - end of period  $-   $21,200,160   $-   $21,200,160 

 

Derivative Instruments: Derivative instruments that are not traded on an exchange are valued using conventional calculations/models that are primarily based on unobservable inputs such as private company unit price and volatilities, and therefore, such derivative instruments are included in Level 3.

Upon the completion of the Business Combination, all outstanding derivatives were converted into shares of the Company’s Common Stock. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

 

Description  Level   June 30,
2025		   December 31,
2024		 
Derivative liabilities   3   $-   $23,334,626