Fair Value Measurements

6 Months Ended

Jun. 30, 2026

12. Fair Value Measurements

The following table sets forth by level within the ASC 820, Fair Value Measurement, fair value hierarchy of the Company’s liabilities that are measured at fair value on a recurring basis as of June 30, 2026:

	June 30, 2026
	Level 1		Level 2		Level 3		Total
Liabilities-
Earnout liability	$	212,934	$	-	$	3,327,318	$	3,540,252
Warrant liability (Public Warrants)		12,270,205		-		-		12,270,205
Warrant liability (Private Warrants)		-		391,400		-		391,400
Total liabilities measured at fair value	$	12,483,139	$	391,400	$	3,327,318	$	16,201,857

	December 31, 2025
	Level 1		Level 2		Level 3		Total
Liabilities-
Earnout liability	$	257,481	$	-	$	2,363,452	$	2,620,933
Warrant liability (Public Warrants)		12,916,006		-		-		12,916,006
Warrant liability (Private Warrants)		-		412,000		-		412,000
Total liabilities measured at fair value	$	13,173,487	$	412,000	$	2,363,452	$	15,948,939

The estimated fair value of the earnout liability was determined using a Monte Carlo Model. The assumptions utilized in the calculation are based on the achievement of certain milestones including projected stock price, volatility, probability of meeting the federal law enforcement agency growth and risk-free rate. The following assumptions were used in the simulation at each valuation date:

	June 30, 2026			December 31, 2025
Stock price	$	2.39		$	2.89
Risk-free interest rate		4.14	%		3.55	%
Expected term (in years)		2.5			3
Expected volatility		76.8	%		55.8	%
Dividend yield		0	%		0	%

The fair value of the 1,250,000 vested shares as of December 31, 2024 of $7,825,000 was determined using the Company’s closing trading price on December 31, 2024. On January 7, 2025, 1,160,906 shares were issued with a fair value of $5,282,125 to applicable personnel and were reclassified to equity as additional paid in capital. The fair value of the remaining 89,094 shares that vested as of September 30, 2024 was determined using the Company’s closing stock price on June 30, 2026.

The initial estimated fair value of the private warrants was measured using a Monte Carlo simulation. The estimated fair value of the public warrants is based on the listed price in an active market for such warrants and the fair value of the private placement warrants continues to be measured based on the public warrants listed price.

There were no transfers of financial instruments between valuation levels during the three and six months ended June 30, 2026 and 2025.