Note 14 - Fair Value Measurements

9 Months Ended

Sep. 30, 2025

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 14. Fair Value Measurements

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three and nine months ended September 30, 2025 and 2024. The carrying amount of accounts payable approximated fair value as they are short term in nature. The fair value of stock options and warrants issued for services, and warrants issued with the Convertible Notes are estimated based on the Black-Scholes model. The fair value of the convertible notes payable was estimated utilizing a Monte Carlo simulation.

Fair Value on a Recurring Basis

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 estimated fair value of the money market account represents a Level 1 measurement. The estimated fair value of the warrant liabilities and convertible note payable represent Level 3 measurements. The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2025 and December 31, 2024, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

Description	Level		September 30, 2025		December 31, 2024
			(Unaudited)
Assets:
Money Market Account		1	$	403	$	487
Liabilities:
Warrant liabilities (Note 12)		3	$	15,860	$	5,639
Convertible note payable and accrued interest, current (Note 10)		3	$	9,909	$	1,246
Convertible note payable and accrued interest, non-current (Note 10)		3	$	—	$	5,011

Convertible Note Payable - Anson

The significant inputs used in the Monte Carlo simulation to measure the Anson Note liability that is categorized within Level 3 of the fair value hierarchy are as follows:

	September 30,
	2025
Stock price on valuation date	$	3.30
Conversion price	$	1.65
Time to expiration		0.50
Cost of debt		15.50	%
Equity volatility		71.2	%
Risk-free rate		3.83	%
Probability of credit default prior to maturity		1	%

The following table sets forth a summary of the changes in the fair value of the Anson Note categorized within Level 3 of the fair value hierarchy (in thousands):

Fair value of Anson Notes as of December 31, 2024	$	6,257
Fair value of Anson III Note at issuance		2,522
Conversion and repayments of principal and interest (shares)		(1,347	)
Fair value adjustment through earnings		965
Fair value of Anson Notes as of March 31, 2025		8,397
Conversion and repayments of principal and interest (shares)		(4,108	)
Fair value adjustment through earnings		5,565
Fair value of Anson Notes as of June 30, 2025		9,854
Conversion and repayments of principal and interest (shares)		(1,447	)
Fair value adjustment through earnings		1,502
Fair value of Anson Notes as of September 30, 2025	$	9,909
Convertible note payable - current portion as of September 30, 2025	$	9,909
Convertible note payable, net of current portion as of September 30, 2025	$	—

Warrant Liabilities

The Company utilizes a Black-Scholes model approach to value its liability-classified warrants at each reporting period, with changes in fair value recognized in the condensed consolidated statements of operations. The estimated fair value of the warrant liabilities is determined using Level 3 inputs. There were no transfers between levels within the fair value hierarchy during the periods presented. Inherent in a Black Scholes options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its Common Stock based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.

The weighted-average significant inputs used in the Black-Scholes model to measure the warrant liabilities that are categorized within Level 3 of the fair value hierarchy are as follows:

	September 30, 2025					December 31, 2024
Stock price on valuation date	$	3.30				$	2.20
Exercise price per share	$	1.65	–	11.50		$	2.08
Expected life		0.90	–	4.33			4.69
Volatility			124.31		%		111	%
Risk-free rate		3.61	–	3.68	%		4.37	%
Dividend yield			0.00		%		0.0	%
Fair value of warrants	$	0.02	–	2.89		$	1.76

A reconciliation of warrant liabilities is included below (in thousands):

Balance as of December 31, 2023	$	17
Loss upon re-measurement		9
Balance as of March 31, 2024		26
Gain upon re-measurement		(18	)
Balance as of June 30, 2024	$	8
Initial recognition of issuance of warrants		2,059
Gain upon re-measurement		(165	)
Balance as of September 30, 2024	$	1,902

Balance as of December 31, 2024	$	5,639
Initial recognition of issuance of warrants		7,109
Change in fair value of warrant liabilities		(2,896	)
Balance as of March 31, 2025	$	9,852
Change in fair value of warrant liabilities		6,414
Balance as of June 30, 2025	$	16,266
Change in fair value of warrant liabilities		4,963
Fair Value of Anson warrants exercised		(5,369	)
Balance as of September 30, 2025	$	15,860

Fair Value on a Nonrecurring Basis

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to tangible property and equipment, goodwill and other intangible assets, which are remeasured when the derived fair value is below carrying value in the consolidated balance sheets. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. If it is determined that impairment has occurred, the carrying value of the asset is reduced to fair value and the difference is included in impairments and other charges, net in the consolidated statements of operations.

Assets that are measured at fair value and classified as level 3 on a non-recurring basis are as follows (in thousands):

Description	September 8, 2025
Trade name	$	669
Customer relationships	$	605
Non-compete agreements	$	527
Goodwill	$	610

All these assets were measured at the acquisition dates in conjunction with the Dura acquisition.

The significant unobservable inputs used in our level 3 fair value measurements during the nine months ended September 30, 2025 are as follows: 

Areas	Valuation Techniques	Unobservable Inputs	Range (Weighted Average)
Trade name	Relief-from-Royalty Method	Royality Rate		5	%
		Revenue Growth Rate	10% average through FY2030, 8% thereafter
		Discount rate		25	%
		Income tax rate		26.5	%
		Economic useful life	8 yrs
Customer relationship	Multi-Period Excess Earnings Method (MPEEM)	Royalty rate		5	%
		Revenue Growth Rates	10% average through FY2030, 8% thereafter
		Expense Growth Rates		3	%
		Contributory Assets’ Charges as % from revenue		0.2 – 0.7	%
		Business development expense for new customers	4		%
		Distributor EBITA margin for customer relationships		4	%
		Discount rate		27	%
		Income tax rate		26.5	%
		Economic useful life	3 yrs
Non-compete agreements	With-and-without method	Replacement cost growth rate		3	%
		Cap Ex Rates		1	%
		Contributory Assets Rates		40	%
		After tax rate of return		40	%
		Useful life	7 yrs