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Note 8 - Derivative Instruments
 9 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Derivative Instruments and Hedging Activities Disclosure [Text Block]

NOTE 8.

DERIVATIVE INSTRUMENTS

 

Evaluation of Embedded Features

 

The Company evaluated the price protection provisions contained in the Note under ASC 815, Derivatives and Hedging. These provisions expose the Company to potential cash settlement based on equity pricing, which is not clearly and closely related to the host loan receivable.

 

Preliminary Conclusion

 

The Company has preliminarily concluded that the provisions may meet the definition of a derivative and may require bifurcation and separate accounting.

 

Expected Accounting Treatment

 

If the Company concludes that bifurcation is required, a derivative asset or liability will be recorded at fair value. Subsequent changes in fair value will be recognized in earnings.

 

Valuation Considerations

 

The fair value of any such derivative is expected to be determined using a valuation model incorporating significant unobservable inputs, including, expected term, risk-free interest rate, and the probability of triggering contingent payment provisions. Accordingly, any derivative instrument would be classified as a Level 3 fair value measurement under ASC 820. Due to the absence of observable market inputs, significant judgement will be required in estimating the fair value of any such derivative instrument.