v3.26.1
Fair Value of Financial Instruments
 12 Months Ended
Dec. 31, 2025
Fair Value of Financial Instruments [Abstract]  
FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 18 – FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their respective fair values due to the short-term nature of such instruments. The Company measures certain financial instruments at fair value on a recurring basis, including certain convertible notes payable and related party loans, which were extinguished and reissued and are therefore subject to fair value measurement, derivative financial instruments arising from conversion features embedded in convertible promissory notes for which the conversion rate was not fixed, and equity-class. All financial instruments carried at fair value fall within Level 3 of the fair value hierarchy as their value is based on unobservable inputs. The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made.

 

The following table summarizes the conclusions reached regarding fair value measurements as of December 31, 2025 and 2024:

 

   As of December 31, 2025   As of December 31, 2024 
   Level 1   Level 2   Level 3   Total   Level 1   Level 2   Level 3   Total 
Assets:                                
Contingent sale consideration receivable  $
–
   $
–
   $1,463,518   $1,463,518   $
–
   $
–
   $1,463,163   $1,463,163 
Liabilities:                                        
Derivative financial instruments   
–
    
–
    23,846    23,846    
–
    
–
    
–
    
–
 
Convertible notes payable to related party   
–
    
–
    4,256,099    4,256,099    
–
    
–
    671,025    671,025 
   $
–
   $
–
   $4,279,945   $4,279,945   $
–
   $
–
   $671,025   $671,025 

 

Certain notes payable to a related party carried at fair value and contingent acquisition consideration payable are each Level 3 financial instrument that are measured at fair value on a recurring basis. Gains (losses) from the change in fair value of Level 3 financial instruments during the years ended December 31, 2025 and 2024were as follows:

 

   Year Ended December 31, 
   2025   2024 
         
Change in fair value of debt  $(618,208)  $84,109 
Contingent acquisition consideration payable   
–
    2,189 
Change in fair value of derivative financial instruments  $8,644   $
–
 
           
Total  $(609,564)  $86,298