FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2025

5. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy at December 31, 2025 (no material financial instruments were measured at fair value on a recurring basis at December 31, 2024):


	Fair Value Measurement at December 31, 2025
	Total		Level 1		Level 2		Level 3
Embedded conversion feature liabilities	$	150,000	$	-	$	-	$	150,000

The embedded conversion feature liabilities are included in the convertible notes payable line of the consolidated balance sheets.

The Company assesses the inputs used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable in the market. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks.

The changes in Level 3 fair value hierarchy during the year ended December 31, 2025, were as follows:


	Level 3 Balance at Beginning of Year		Fair Value Adjustments		Sales and Settlement		Grants		Level 3 Balance at End of Year
Embedded conversion feature liabilities	$	-	$	36,000	$	-	$	114,000	$	150,000