NOTE 12         FAIR VALUE MEASUREMENTS

The following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2026: 

The following table presents our assets and liabilities measured at fair value on a recurring basis at  December 31, 2025:

VALUATION METHODOLOGIES

Following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy.

Derivatives

The Company has several derivatives associated with its common stock including make-whole commitments and debt conversion options. The following tables present changes in our derivative assets and liabilities for the six-months ended June 30, 2026 and 2025, measured at fair value: 

Georges Trust Derivative Instrument

On August 13, 2025, pursuant to that certain promissory note amendment, dated April 22, 2024, between GHF Inc. and the Company, the Company issued 1,500,000 shares of its common stock to Georges Trust with a fair value of $4,755,000 determined by the closing price per share of our common stock of $3.17. If and to the extent that the sale of the shares results in net proceeds greater than $4,653,886, then Georges Trust is required to pay all of such excess proceeds to the Company. If and to the extent that the sale of the shares results in net proceeds less than $4,653,886, then the Company is required to pay Georges Trust equal to such shortfall. Pursuant to the amendment, a true up provision was recognized as a derivative asset in the amount of $101,114 on the date of the amendment. On March 30, 2026, the Company and the Georges Trust entered into a Second Note Amendment Agreement (the “Second Amendment”), pursuant to which the parties agreed to extend the date by which the Company is required to pay any remaining balance due under the Note from April 15, 2026, to July 15, 2026 and increased the total consideration to $4,782,886. During the six-months ended June 30, 2026, the Company paid Georges Trust $129,000 which resulted in a decrease in contractual stock consideration. During the three and six-months ended June 30, 2026, the Company recorded a gain of $372,838 and a loss of $821,162, respectively, for the change in the fair value of the derivative. In the second quarter of 2026, Georges Trust sold 1,500,000 shares of the Company's stock for net proceeds of $4,834,429. The Company received cash of $508,952 representing cash from the sale of the common shares in excess of amounts owed. The derivative asset was classified within Level 2 fair value measurement within the fair value hierarchy. At  June 30, 2026, the Company fulfilled our commitment requirements on the make-whole provision and the derivative and the accounting thereto.

Alvin Fund Derivative Instruments 

On August 12, 2025, pursuant to that certain short-term promissory note, the Company issued 1,400,000 shares of its common stock to Alvin Fund with a fair value of $4,438,000 determined by the closing price per share of our common stock of $3.17. If and to the extent that the sale of the shares results in net proceeds greater than $4,504,318, then Alvin Fund is required to pay all of such excess proceeds to the Company. If and to the extent that the sale of the shares results in net proceeds less than $4,504,318, then the Company is required to pay Alvin Fund equal to such shortfall. Pursuant to the amendment, a true up provision was recognized as a derivative liability in the amount of $66,318 on the date of the amendment. During the three and six-months ended June 30, 2026, the Company recorded a gain of $0 and $471,985, respectively, for the change in the fair value of the derivative. In the first quarter of 2026, Alvin Fund sold 1,400,000 shares of the Company's stock for net proceeds of $5,592,009. The Company received cash of $1,231,667 representing cash from the sale of the common shares in excess of amounts owed. The derivative asset was classified within Level 2 fair value measurement within the fair value hierarchy. At March 31, 2026, the Company fulfilled our commitment requirements on the make-whole provision and the derivative and the accounting thereto.

Flux Photon Instrument

On April 6, 2026, the Company issued Flux Photon 1,750,000 shares of common stock of the Company with a fair value of $6,055,000 determined by the closing price per share of our common stock of $3.46, to settle the remaining obligations of the Earn Out of $5,273,813 (see Notes 10 and 16). If and to the extent that the sale of the shares results in net proceeds greater than $5,273,813, then Flux Photon is required to pay all of such excess proceeds to the Company. If and to the extent that the sale of the shares results in net proceeds less than $5,273,813, then the Company is required to pay Flux Photon equal to such shortfall. On April 6, 2026, the Company recognized a true up provision as a derivative asset in the amount of $781,187. During the three and six-months ended June 30, 2026, the Company recorded a gain of $1,225,000 for the change in the fair value of the derivative. At  June 30, 2026, Flux Photon holds 1,750,000 shares of the Company's stock. The derivative asset was classified within Level 2 fair value measurement within the fair value hierarchy. 

Marathon SAFE Note Instrument 

On February 28, 2025, Bioleum, the Company's subsidiary, entered into a series of definitive agreements with Virent, which have been assigned to Bioleum and involve the purchase of Bioleum equity as part of Bioleum’s planned Series A Financing (see Note 9). As of February 28, 2025, the Company recognized the Marathon SAFE Note liability of $12.0 million on the condensed consolidated balance sheets in connection with the agreement with Virent and elected to account the Marathon SAFE Note liability under the fair value option. The Marathon SAFE Note liability was estimated with assistance from third-party valuation specialists and valued using a probability weighted present value of the Marathon SAFE Note with the discount factor based on published venture capital rate of returns of 35% and a discounting period range of 0.25 to 0.84 years. At June 30, 2026, the fair value of the Marathon SAFE Note liability was estimated at $10.9 million and valued using a probability weighted present value of the Marathon SAFE Note with the discount factor based on published venture capital rate of returns of 35% and a discounting period range of 0.50 to 1.0 years. The Marathon SAFE Note liability was classified as a Level 3 fair value measurement within the fair value hierarchy. 

For the six-months ended June 30, 2026, the range of variables used to calculate the original fair value of the Marathon SAFE Note and the fair value on the dates of conversion are as follows.

For the six-months ended June 30, 2025, the range of variables used to calculate the original fair value of the Marathon SAFE Note and the fair value on the dates of conversion are as follows.

Great Basin Guarantee

On March 31, 2026, the Company and Great Basin executed the Great Basin Guaranty (see Note 9). As of June 30, 2026, the Company recorded a guarantee liability of $475,000 and a corresponding guarantee long-term asset, measured at fair value at the time the guaranty was executed, on the condensed consolidated balance sheets. The Great Basin Guaranty liability was estimated with the assistance of third-party valuation specialists and valued using a Probability‑Weighted Expected Return Method (“PWERM”), which considers multiple discrete future outcomes and probability‑weights the expected discounted cash flow approach associated with each scenario using a probability weighted present value with the discount factor based on published venture capital rate of returns of 35%. The scenarios used in the valuation included a base case, late failure case and early failure case with probabilities of 95%, 4% and 1%, respectively, with each case scenario reflecting the surety payments anticipated and anticipated repayments. The Great Basin Guaranty liability was recorded at fair value upon execution of the guaranty agreement and was classified as a Level 3 measurement within the fair value hierarchy.

Other Financial Instruments

At June 30, 2026, the carrying amount of cash and cash equivalents, Flux Photon payable, and reclamation bond approximates fair value because of the short-term maturity of these financial instruments.