NOTE 13 — FAIR VALUE MEASUREMENTS

The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1—quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2—observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3—unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

The following table presents information about the Company’s liabilities that are measured at fair value as of September 30, 2026 and December 31, 2025 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:

Forward purchase agreement

The Company used a Monte Carlo analysis to determine the fair value of the FPA, assuming 191,007 FPA Shares, through September 22, 2026, the date the FPA was terminated (see Note 9).

The fair value measurement of the FPA at September 22, 2026 and December 31, 2025 was calculated using the following assumptions:

The model measured the total present value of the Company’s proceeds at approximately $3,788 and the total present value of the Company’s liability at approximately $1,301,386, resulting in a net liability of approximately $1,297,600 as of September 22, 2026. This resulted in a non-cash non-operating gain from the change in fair value of derivatives of $459,100 and $91,100 for the three and nine months ended September 30, 2026, respectively.

On September 22, 2026, the FPA was terminated in connection with a settlement agreement with the Forward Purchase Investors (see Note 9). Upon termination, the FPA derivative liability was derecognized, and no FPA liability was outstanding as of September 30, 2026.

The following table presents the changes in the fair value of the derivative liability associated with the Forward Purchase Agreement, measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the three and nine months ended September 30, 2026:

Warrants – Series A

The Company utilized a Black-Scholes option pricing model to determine the fair value of the Series A Warrants at September 30, 2026, using the following assumptions:

The fair value of the Series A Warrants as of September 30, 2026 was $565,700. This resulted in a non-cash gain from the change in fair value of derivatives of $782,143 and $793,711 for the three and nine months ended September 30, 2026, respectively. During the three months ended September 30, 2026, investors exercised 246,664 Series A Warrants, and the related fair value of $1,667,348 was reclassified from the derivative liability to additional paid-in capital. As of September 30, 2026, investors had exercised 856,140 Series A Warrants and all 114,992 Series B Warrants, resulting in the issuance of 901,262 shares of common stock, and 93,651 Series A Warrants remained outstanding.

The following table presents the changes in the fair value of the derivative liability associated with the Series A Warrants, measured at fair value on a recurring basis using significant unobservable inputs (Level 3), for the three and nine months ended September 30, 2026:

Warrants – Series C and D

The Company’s Series C and Series D Warrants were classified as derivative liabilities and remeasured to fair value each reporting period until their conversion and cancellation in October 2025 (see Note 8).

Non-cash gain (loss) from the change in the fair value of the Series C and Series D Warrants was $(2,175,500) and $2,206,750, for the three and nine months ended September 30, 2025, respectively.

As of December 31, 2025, all Series C and Series D Warrants had been exercised and no warrants remained outstanding. Accordingly, no fair value measurement was required for these instruments as of September 30, 2026, and no gain or loss from change in fair value was recognized for the three and nine months ended September 30, 2026.

Stock-based compensation – Awards with Market-Based Conditions

The Company utilized a Monte Carlo simulation analysis to determine the fair value of the awards with market-based conditions at the date of the Merger, which included the following assumptions: stock price of $226.50, risk free rate of 3.9%, volatility of 72.5%, dividends yield of 0% and duration of 6 years.

Placement Agent Warrants

In connection with the 2026 Private Placement, the Company issued warrants to the placement agent to purchase up to 116,650 shares of common stock (the “Placement Agent Warrants”), which were classified within stockholders’ equity. Because the Placement Agent Warrants are equity-classified, they are measured at fair value only at issuance and are not remeasured in subsequent periods. Accordingly, the Placement Agent Warrants are not included in the recurring fair value measurement table above.

The grant-date fair value of the Placement Agent Warrants of $1,938,014 was measured on a nonrecurring basis using a Black-Scholes option pricing model, which represents a Level 3 measurement given the significant unobservable inputs. The following assumptions were used: stock price of $20.47, exercise price of $17.25, expected term of 5.0 years, expected volatility of 107.5%, risk-free interest rate of 4.26%, and expected dividend yield of 0%. The fair value was recognized as an offering cost of the 2026 Private Placement within additional paid-in capital, with no net effect on total stockholders’ equity. See Note 8 for additional information.