v3.25.4
Fair Value Measurement
 3 Months Ended 9 Months Ended
Dec. 31, 2024
Sep. 30, 2025
Fair Value Measurement [Abstract]    
FAIR VALUE MEASUREMENT

NOTE 12 – FAIR VALUE MEASUREMENT

 

Customer digital currency assets and liabilities represent the Company’s obligation to safeguard customer digital currencies. Accordingly, the Company has valued the assets and liabilities using quoted market prices for the underlying digital currencies which is based on Level 2 inputs.

 

The Black-Scholes option pricing model is used to estimate fair value of liability-classified stock purchase warrants issued in connection with convertible notes (see Note 9) and the liability-classified pre-funded stock purchase warrants issued in connection with the December 2024 Private Placement (see Note 10). A Monte Carlo simulation model is used to estimate the fair value of liability-classified stock purchase warrants issued in connection with the December 2024 Private Placement (see Note 10). Both models utilize the following assumptions:

 

  ● Risk-free interest rates are derived from the yield on U.S. Treasury debt securities in effect on the date of measurement.

 

  ● Dividend yields are based on our historical dividend payments, which have been zero to date.

 

  ● Volatility is estimated from historical volatility of a peer group over a similar period.

 

  ● The expected term is based on the time to expiration of the warrants from the date of measurement.

 

The Monte Carlo simulation model also incorporates management’s judgments for the occurrence or non-occurrence of certain events as well as the probability of certain scenarios impactful to the valuation of the liability-classified stock purchase warrants issued in connection with the December 2024 Private Placement.

The assumptions used for the Black-Scholes option pricing model for liability-classified stock purchase warrants are as follows:

 

June 2024 Warrants  December 31,
2024		   November
2024
Modification		 
Expected term (years)   4.4 years    4.6 years 
Risk-free interest rate   4.4%   4.4%
Expected volatility   114.2%   113.8%
Expected dividend yield   0.0%   0.0%

 

November 2024 Warrants  December 31,
2024		   November
2024
Issuance		 
Expected term (years)   4.9 years    5.0 years 
Risk-free interest rate   4.2%   4.2%
Expected volatility   114.2%   113.8%
Expected dividend yield   0.0%   0.0%

 

Pre-funded Warrants  December 31,
2024		   December
2024
Issuance		 
Expected term (years)   5.0 years    5.0 years 
Risk-free interest rate   4.3%   4.3%
Expected volatility   114.2%   113.8%
Expected dividend yield   0.0%   0.0%

 

The assumptions used for the Monte Carlo simulation model for liability-classified stock purchase warrants and the embedded derivative liability issued in connection with a convertible note are as follows:

 

December 2024 Warrants  December 31,
2024		   December
2024
Issuance		 
Expected term (years)   5.0 years    5.0 years 
Risk-free interest rate   4.3%   4.3%
Expected volatility   114.2%   113.8%
Expected dividend yield   0.0%   0.0%
Probability of a fundamental event   10.0%   10.0%

 

Embedded Derivative Liability  December 31,
2024		   December
2024
Issuance		 
Expected term (years)   0.9 years    1.0 years 
Risk-free interest rate   4.2%   4.3%
Expected volatility   156.2%   157.5%
Expected dividend yield   0.0%   0.0%
Conversion discount   10.0%   10.0%
Interest rate   10.0%   10.0%
Redemption premium  $50,000   $50,000 

 

The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured and recorded at fair value on a recurring basis as of December 31, 2024:

 

    Quoted
Price in
Active Markets		     Significant
Other
Observable
Inputs		     Significant
Unobservable
Inputs		     Balance at
December 31,		  
    (Level 1)     (Level 2)     (Level 3)     2024  
Liabilities                        
June 2024 Warrant            —            —       5,333,794       5,333,794  
November 2024 Warrant     —       —       12,467,515       12,467,515  
Pre-funded warrant liabilities     —       —       52,682,426       52,682,426  
Private Placement Warrants     —       —       94,286,790       94,286,790  
Embedded derivative liability     —       —       847,753       847,753  
Total liabilities   $ —     $ —     $ 165,618,278     $ 165,618,278  

The Company did not make any transfers into or out of Level 3 of the fair value hierarchy during the three months ended December 31, 2024. The Company had no assets or liabilities measured and recorded at fair value on a recurring basis as of September 30, 2024 and 2023.

 

The following table provides a reconciliation of the warrants measured at fair value using Level 3 inputs:

 

   Embedded
Derivative
Liability		   June
2024
Warrant		   November
2024
Warrant		   Pre-funded
Warrant		   Common
Stock
Warrant		 
                     
Balance at October 1, 2024  $
—
   $
—
   $
—
   $
—
   $
—
 
Additions   222,865    283,293    663,408    5,085,682    18,153,362 
Change in fair value   624,888    5,050,501    11,804,107    47,596,744    76,133,428 
Ending balance, December 31, 2024  $847,753   $5,333,794   $12,467,515   $52,682,426   $94,286,790 

NOTE 11 – FAIR VALUE MEASUREMENT

 

Customer digital currency assets and liabilities represent the Company’s obligation to safeguard customer digital currencies. Accordingly, the Company has valued the assets and liabilities using quoted market prices for the underlying digital currencies which is based on Level 2 inputs.

 

The Black-Scholes option pricing model is used to estimate fair value of liability-classified stock purchase warrants issued in connection with convertible notes (see Note 8) and the liability-classified pre-funded stock purchase warrants issued in connection with the December 2024 Private Placement (see Note 9). A Monte Carlo simulation model is used to estimate the fair value of liability-classified stock purchase warrants issued in connection with the December 2024 Private Placement and the September 2025 Private Placement (see Note 9). Both models utilize the following assumptions:

 

  ● Risk-free interest rates are derived from the yield on U.S. Treasury debt securities in effect on the date of measurement.

 

  ● Dividend yields are based on our historical dividend payments, which have been zero to date.

 

  ● Volatility is estimated from historical volatility of a peer group over a similar period.

 

  ● The expected term is based on the time to expiration of the warrants from the date of measurement.

 

The Monte Carlo simulation model also incorporates management’s judgments for the occurrence or non-occurrence of certain events as well as the probability of certain scenarios impactful to the valuation of the liability-classified stock purchase warrants issued in connection with the December 2024 Private Placement and the September 2025 Private Placement.

 

The assumptions used for the Black-Scholes option pricing model for liability-classified stock purchase warrants are as follows:

 

June 2024 Warrants  September 30,
2025		   November 2024
Modification		 
Expected term (years)    3.7 years     4.6 years 
Risk-free interest rate   3.74%   4.4%
Expected volatility   110.0%   113.8%
Expected dividend yield   0.0%   0.0%

 

November 2024 Warrants  September 30,
2025		   November 2024
Issuance		 
Expected term (years)    4.1 years     5.0 years 
Risk-free interest rate   3.74%   4.2%
Expected volatility   110.0%   113.8%
Expected dividend yield   0.0%   0.0%

 

The assumptions used for the Monte Carlo simulation model for liability-classified stock purchase warrants are as follows:

 

August 2025 Warrants  September 30,
2025		   August
2025
Issuance		 
Expected term (years)    4.9 years     5.0 years 
Risk-free interest rate   3.73%   3.65%
Expected volatility   108.3%   110.1%
Expected dividend yield   0.0%   0.0%
Probability of a fundamental event   10.0%   10.0%
September 2025 Private Placement Warrants  September 30,
2025		   September 2025
Issuance		 
Expected term (years)    4.9 years     5.0 years 
Risk-free interest rate   3.74%   3.65%
Expected volatility   158.4%   156.9%
Expected dividend yield   0.0%   0.0%
Probability of a fundamental event   10.0%   10.0%

 

The following table sets forth by level, within the fair value hierarchy, the Company’s assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2025:

 

   Quoted
Price in
Active Markets		   Significant
Other
Observable
Inputs		   Significant
Unobservable
Inputs		   Balance at
September 30,		 
   (Level 1)   (Level 2)   (Level 3)   2025 
Liabilities                
June 2024 Warrant   
—
    
—
    914,583    914,583 
November 2024 Warrant   
—
    
—
    2,133,949    2,133,949 
August 2025 Warrant   
—
    
—
    2,210,729    2,210,729 
Private Placement Warrants   
—
    
—
    35,480,932    35,480,932 
Embedded derivative liability   
—
    
—
    
—
    
— 
Total liabilities  $
—
   $
—
   $40,740,193   $40,740,193 

 

The Company did not make any transfers into or out of Level 3 of the fair value hierarchy during the nine months ended September 30, 2025.

 

The following table provides a reconciliation of the warrants measured at fair value using Level 3 inputs:

 

   Embedded
Derivative		   June 2024   November 2024   Pre-funded   Common
Stock		   August 2025   September 2025 
   Liability   Warrant   Warrant   Warrant   Warrant   Warrant   Warrant 
                             
Balance at January 1, 2025  $847,753   $5,333,794   $12,467,515   $52,682,426   $94,286,790   $
-
   $
-
 
Additions   
-
    
-
    
-
    
-
    
-
    1,672,686    29,605,956 
Subtractions   (259,963)   
-
    
-
    (12,421,864)   (19,517,415)   
-
    
-
 
Change in fair value   (587,790)   (4,419,211)   (10,333,566)   (40,260,562)   (74,769,375)   538,043    5,874,976 
Ending balance, September 30, 2025  $
-
   $914,583   $2,133,949   $
-
   $
-
   $2,210,729   $35,480,932