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FAIR VALUE MEASUREMENT
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENT

NOTE 10. FAIR VALUE MEASUREMENT

 

In accordance with ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), the Company measures certain financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the income approach to measure the fair value of its derivative liabilities, using option pricing models that incorporate observable market data and management’s estimates of significant unobservable inputs.

 

ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

 

● Level 1 — Quoted prices in active markets for identical assets and liabilities
   
● Level 2 — Other significant observable inputs (including quoted prices in active markets for similar assets or liabilities)
   
● Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value)

 

 

The following table represents the Company’s hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:

 

   June 30, 2026 
   Level 1   Level 2   Level 3   Total 
Liabilities:                    
Warrant derivative liabilities  $—   $—   $14   $14 
                     
   $—   $—   $14   $14 

 

   December 31, 2025 
   Level 1   Level 2   Level 3   Total 
Liabilities:                    
Warrant derivative liabilities  $—   $—   $852,844   $852,844 
                     
   $—   $—   $852,844   $852,844 

 

Level 3 Rollforward

 

The Company’s Level 3 liabilities consist of (i) the bifurcated conversion feature associated with the 2025 Senior Secured Convertible Notes (the “2025 Secured Notes”), which was fully extinguished upon conversion during the six months ended June 30, 2026, and (ii) 184 warrants originally issued in 2023, which remained outstanding as of June 30, 2026 and had a fair value of $14 at period end. The following table summarizes changes in Level 3 liabilities during the six months ended June 30, 2026:

 

   Warrant
Derivative
Liabilities		 
Balance, December 31, 2025  $852,844 
Change in fair value recognized in earnings   289,361 
Reclassification to additional paid-in capital upon conversion of 2025 Secured Notes   (1,142,191)
Balance, June 30, 2026  $14 

 

The $289,361 change in fair value recognized in earnings during the six months ended June 30, 2026 relates to the bifurcated conversion feature of the 2025 Secured Notes and is included in change in fair value of derivative liabilities in the condensed consolidated statement of operations. Upon conversion of the 2025 Secured Notes, the bifurcated conversion feature derivative liability with an aggregate fair value of $1,142,191 at the dates of conversion was reclassified to additional paid-in capital. See Note 9, Debt Obligations, and the condensed consolidated statements of stockholders’ equity for additional information.

 

There were no transfers between Level 1, Level 2, or Level 3 of the fair value hierarchy during the six months ended June 30, 2026.

 

Non-Recurring Fair Value Measurements

 

In connection with the disposition of Nobility Healthcare in January 2026, the Company received a note receivable initially recorded at its estimated fair value of $1,117,303, a Level 3 non-recurring measurement based on the present value of expected cash flows. During the six months ended June 30, 2026, the contractual earn-out mechanism reduced the principal amount of the note, and the adjustment to carrying value was measured using the same present-value methodology based on the revised expected cash flows, with the resulting loss of $81,134 recognized within loss from discontinued operations, of which $81,134 was recognized during the three months ended June 30, 2026. See Note 3, Notes Receivable, and Note 22, Discontinued Operations.