Intangible Assets

12 Months Ended

Dec. 31, 2025

Intangible Assets

Intangible Assets

Note 5. Intangible Assets

On June 30, 2025, the Company acquired certain intellectual property rights and trademarks (“IP”) with fair value $8,500,000 from Silver Run Group, LLC and its wholly owned subsidiary, Deer Creek IP, LLC, which are expected to enhance the Company’s development and future commercialization strategy. The total consideration for the acquisition was approximately $5,775,000, consisting of the following components:

	·	Cash consideration of $1,250,000;
	·	Issuance of 16,000 shares of the Company’s Class B common stock (reflecting the March 2026 reverse stock split; 800,000 shares on a pre-split basis, valued at $2.94, totaling $2,352,000, based on the fair value of the shares on the acquisition date);
	·	Issuance of warrants to purchase 14,786 shares of Class B common stock (reflecting the March 2026 reverse stock split; 739,278 shares on a pre-split basis, with an exercise price of $0.01 per share and an expiration date of June 30, 2030. The pre-funded warrants are exercisable on a cash or cashless basis and are subject to a 9.9% beneficial ownership blocker.) The fair value of the warrants on the acquisition date was estimated at $2.94 using the Black-Scholes option pricing model with the following assumptions:

	○	Expected term: 5 years
	○	Expected volatility: 4.43%
	○	Risk-free interest rate: 4.2460%
	○	Dividend yield: 0%

The Company accounts for asset acquisitions in accordance with ASC 805-50, Business Combinations – Related Issues. An asset acquisition occurs when a transaction does not meet the definition of a business under ASC 805-10. In such cases, the total cost of the acquisition, including consideration transferred, transaction costs, and other directly attributable costs. No bargain purchase gain is recognized in an asset acquisition.

All equity securities issued in the transaction are subject to a nine-month lock-up pursuant to a Lock-Up Agreement entered into on the same date. The acquired IP is recorded as an intangible asset and is being amortized over its estimated useful life of 10 years. Amortization expense related to the acquired IP for the year ended December 31, 2025 was $288,773.

During the year ended December 31, 2025, the Company identified indicators of impairment related to the IP. The Company performed a recoverability test by comparing the carrying amount of the IP to the estimated undiscounted future cash flows. As a result of this analysis, the Company determined that the carrying amount was not recoverable.

Accordingly, the Company recorded an impairment loss of $1,460,704, representing the excess of the carrying amount over the estimated fair value of the IP.

The fair value of the Company’s patented technology was determined in accordance with ASC 820 using an income approach, specifically the relief-from-royalty method. Under this method, the fair value was estimated based on the present value of projected future royalty savings attributable to the ownership of the patented technology.

The valuation incorporated significant assumptions, including forecasted revenues provided by management, royalty rates ranging from approximately 5.0% to 12.0% based on comparable licensing transactions, and a discount rate of approximately 23.0%, which reflects the Company’s weighted average cost of capital and the risks associated with achieving the projected cash flows.

The fair value measurement is classified as Level 3 within the fair value hierarchy due to the use of significant unobservable inputs.

As of December 31, 2025, the fair value of the patented technology was determined to be $4,026,000.

Following the impairment, the Company revised the remaining useful life and amortization of the intangible asset. Future amortization is expected to be as follows:

Year ended December 31,
2026		$	423,789
2027			423,789
2028			423,789
Remaining			2,754,632
Total		$	4,026,000