v3.26.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Fair Value Disclosures [Abstract]  
Fair Value Measurements

NOTE 10 – FAIR VALUE MEASUREMENTS

 

The Company did not have any financial assets measured on a recurring basis. The following tables summarize our fair value hierarchy for our financial liabilities measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025.

 

 

 

 

Fair Value at

 

 

 

Level

 

March 31, 2026

 

 

December 31, 2025

 

Liabilities

 

 

 

 

 

 

 

 

Litigation financing

 

3

 

$

65,406,154

 

 

$

63,287,048

 

2022 Warrants

 

3

 

 

886,206

 

 

 

7,833,301

 

March 2023 Warrants

 

3

 

 

—

 

 

 

2,217,838

 

December 2023 Warrants

 

3

 

 

302,247

 

 

 

2,099,221

 

Total of fair valued liabilities

 

 

 

$

66,594,607

 

 

$

75,437,408

 

 

The Litigation financing valuation was based on the following assumptions: amounts funded by the Funder, the corresponding IRR calculation, percentage applicable to the recovery percentage calculation and management’s good-faith estimates for estimated outcome probabilities and estimated debt repayment dates.

The 2022 Warrants, March 2023 Warrants and the December 2023 Warrants are measured using a Black-Scholes valuation model. The assumptions used in this model included the use of key inputs, including expected stock volatility, the risk–free interest rate, the expected life of the warrants and the expected dividend yield. Expected volatility is calculated based on the historical volatility of our Common Stock over the term of the warrant. Risk–free interest rates are calculated based on risk–free rates for the appropriate term. The expected life is estimated based on contractual terms and the remaining term to maturity. The dividend yield is based on the historical dividends issued by the Company. If the volatility rate or risk-free interest rate were to change, the value of the warrants would be impacted.

Items not included in the above disclosures include cash and cash equivalents, accounts and other related party receivables, other current assets and accounts payable. The carrying values of those items, as reflected in the condensed consolidated balance sheets, approximate their fair value at March 31, 2026 and December 31, 2025. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs, with the exception of cash and cash equivalents, which is determined using Level 1.

 

Changes in our Level 3 fair value measurements were as follows:

 

 

 

March 2023
Warrants

 

 

December 2023
Warrants

 

 

March 2023
Conversion Option

 

 

December 2023
Conversion Option

 

 

Litigation
financing

 

 

2022 Warrants

 

 

Total

 

Balance as of December 31, 2025

 

$

2,217,838

 

 

$

2,099,221

 

 

$

—

 

 

$

—

 

 

$

63,287,048

 

 

$

7,833,301

 

 

$

75,437,408

 

Debt conversion to equity

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Warrants Exercised

 

 

(1,247,388

)

 

 

(120,912

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,368,300

)

Issuance of new funding

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13,704

 

 

 

—

 

 

 

13,704

 

Change in fair value

 

 

(970,450

)

 

 

(1,676,062

)

 

 

—

 

 

 

—

 

 

 

2,105,402

 

 

 

(6,947,095

)

 

 

(7,488,205

)

Balance as of March 31, 2026

 

$

—

 

 

$

302,247

 

 

$

—

 

 

$

—

 

 

$

65,406,154

 

 

$

886,206

 

 

$

66,594,607

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2024

 

$

1,910,950

 

 

$

827,036

 

 

$

2,745,000

 

 

$

307,000

 

 

$

56,950,377

 

 

$

2,060,773

 

 

$

64,801,136

 

Change in fair value

 

 

(967,708

)

 

 

(420,606

)

 

 

(2,317,000

)

 

 

(141,000

)

 

 

1,713,439

 

 

 

(1,090,063

)

 

 

(3,222,938

)

Balance as of March 31, 2025

 

$

943,242

 

 

$

406,430

 

 

$

428,000

 

 

$

166,000

 

 

$

58,663,816

 

 

$

970,710

 

 

$

61,578,198

 

 

Additional information about the litigation financing liability is included in Note 11 – Derivative Financial Instruments.