NOTE 15: FAIR VALUE MEASUREMENT

Fair value measurements

At June 30, 2026 and 2025, the fair value of the Company’s convertible-note derivative liabilities was estimated using a Cox, Ross & Rubinstein Binomial Tree valuation model using inputs that include expected volatility, the risk-free interest rate, expected term, and expected dividend rate. The convertible-note derivative liabilities are the Company’s only recurring Level 3 fair value measures. The equity-classified Talos and FirstFire warrants are not included in the derivative-liability balance. See Notes 2, 3, and 7.

At June 30, 2026, the estimated fair values of the liabilities measured on a recurring basis are as follows:

At June 30, 2025, the estimated fair values of the liabilities measured on a recurring basis are as follows:

The following is the Level 3 activity for the Company’s convertible-note derivative liabilities:

In April 2026, the Company also measured the Series D Convertible Preferred Stock issued in debt-for-equity exchanges at a nonrecurring Level 3 fair value of $0.058 per share, or $83,802 in the aggregate. Management used conversion parity based on a $0.0029 eight-trading-day VWAP for the period ended April 14, 2026 (the date the Board adopted the Certificate of Designation; management considers these inputs appropriate for the April 16, 2026 exchange date because the market price of the common stock did not change significantly between April 14 and April 16, 2026 and the initial 20 Common Stock shares issuable for each Series D share. A $0.001 change in the VWAP would change the aggregate conversion-parity measurement by approximately $28,897. Management considered the Series D dividend, liquidation preference, anti-dilution feature and issuer call right and concluded that none warranted a separately measurable premium or discount as of the measurement date. See Note 7.