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Note 11 - Fair Value Measurements
 3 Months Ended
Mar. 31, 2026
Notes to Financial Statements  
Fair Value Disclosures [Text Block]

NOTE 11

       
FAIR VALUE MEASUREMENTS

 

The following table presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2026:

 

      

Fair Value Measurements at

 
      

March 31, 2026

 
      

Quoted Prices in Active Markets

  

Significant Other Observable Inputs

  

Significant Unobservable Inputs

 
  

Total

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Assets:

                

Georges Trust derivative

 $136,114  $—  $136,114  $— 

Total assets measured at fair value

 $136,114  $—  $136,114  $— 
                 

Liabilities:

                

Marathon SAFE Note

 $12,000,000  $—  $—  $12,000,000 

Total liabilities measured at fair value

 $12,000,000  $—  $—  $12,000,000 

 

The following table presents our assets and liabilities measured at fair value on a recurring basis at  December 31, 2025:

 
      

Fair Value Measurements at

 
      

December 31, 2025

 
      

Quoted Prices in Active Markets

  

Significant Other Observable Inputs

  

Significant Unobservable Inputs

 
  

Total

  

(Level 1)

  

(Level 2)

  

(Level 3)

 

Assets:

                

Georges Trust derivative

 $1,201,114  $—  $1,201,114  $— 

Alvin Fund derivative

  759,682   —   759,682   — 

Total assets measured at fair value

 $1,960,796  $—  $1,960,796  $— 
                 

Liabilities:

                

Marathon SAFE Note

 $12,000,000  $—  $—  $12,000,000 

Total liabilities measured at fair value

 $12,000,000  $—  $—  $12,000,000 

 

VALUATION METHODOLOGIES

 

Following is a description of the valuation methodologies used for the Company's financial instruments measured at fair value on a recurring basis as well as the general classification of such instruments pursuant to the valuation hierarchy.

 

Derivatives

 

The Company has several derivatives associated with its common stock including make-whole commitments and debt conversion options. The following tables presents changes in our derivative assets and liabilities for the three-months ended March 31, 2026 and 2025, measured at fair value:

 

  

For the Three-Months Ended March 31, 2026

 
  

As of December 31, 2025

  

(Additions) Deductions

  

Change in Fair Value

  

Proceeds Received and Payments Made for Change in Contractual Stock Consideration

  As of March 31, 2026 

Georges Trust derivative

 $1,201,114  $—  $(1,194,000) $129,000  $136,114 

Alvin Fund derivative

  759,682   —   471,985   (1,231,667)  — 

Total derivative assets (liabilities) at fair value

 $1,960,796  $—  $(722,015) $(1,102,667) $136,114 

 

  

For the Three-Months Ended March 31, 2025

 
  

As of December 31, 2024

  

(Additions) Deductions

  

Change in Fair Value

  

Payments for Decrease in Contractual Stock Consideration

  As of March 31, 2025 

2025 Kips Bay convertible debt derivative

 $—  $(1,421,645) $501,645  $—  $(920,000)

LINICO acquisition-related payable derivative

  —   (340,000)  31,000   —   (309,000)

AST derivative

  —   480,540   (88,540)  —   392,000 

Haywood derivative

  1,529,850   —   (1,634,908)  120,000   14,942 

Total derivative assets (liabilities) at fair value

 $1,529,850  $(1,281,105) $(1,190,803) $120,000  $(822,058)

 

At March 31, 2026 and  December 31, 2025, the fair value of the derivative assets (George's Trust and Alvin Fund) were based on a trading price of the Company’s shares of $3.05, and $3.76, respectively. At  March 31, 2025, fair value of the derivative assets (Decommissioning Services LLC (“Haywood”) and AST) and derivative liabilities (LINICO acquisition-related payable and Kips Bay) were based on a trading price of the Company’s shares of $2.44.

 

Georges Trust Derivative Instrument

 

On August 13, 2025, pursuant to that certain promissory note amendment, dated April 22, 2024, between GHF Inc. and the Company, the Company issued 1,500,000 shares of its common stock to Georges Trust with a fair value of $4,755,000 determined by the closing price per share of our common stock of $3.17. If and to the extent that the sale of the shares results in net proceeds greater than $4,653,886, then Georges Trust is required to pay all of such excess proceeds to the Company. If and to the extent that the sale of the shares results in net proceeds less than $4,653,886, then the Company is required to pay Georges Trust equal to such shortfall. Pursuant to the amendment, a true up provision was recognized as a derivative asset in the amount of $101,114 on the date of the amendment. On March 30, 2026, the Company and the Georges Trust entered into a Second Note Amendment Agreement (the “Second Amendment”), pursuant to which the parties agreed to extend the date by which the Company is required to pay any remaining balance due under the Note from April 15, 2026, to July 15, 2026 and increased the total consideration to $4,782,886. During the three-months ended March 31, 2026, the Company paid Georges Trust $129,000 which resulted in a decrease in contractual stock consideration. During the three-months ended March 31, 2026, the Company recorded a loss of $1,194,000 for the change in the fair value of the derivative. At  March 31, 2026, Georges Trust holds 1,500,000 shares of the Company's stock (see Note 15). The derivative asset is classified within Level 2 fair value measurement within the fair value hierarchy. 

 

Alvin Fund Derivative Instruments 

 

On August 12, 2025, pursuant to that certain short-term promissory note, the Company issued 1,400,000 shares of its common stock to Alvin Fund with a fair value of $4,438,000 determined by the closing price per share of our common stock of $3.17. If and to the extent that the sale of the shares results in net proceeds greater than $4,504,318, then Alvin Fund is required to pay all of such excess proceeds to the Company. If and to the extent that the sale of the shares results in net proceeds less than $4,504,318, then the Company is required to pay Alvin Fund equal to such shortfall. Pursuant to the amendment, a true up provision was recognized as a derivative liability in the amount of $66,318 on the date of the amendment. During the three-months ended March 31, 2026, the Company recorded a gain of $471,985 for the change in the fair value of the derivative. In the first quarter of 2026, Alvin Fund sold 1,400,000 shares of the Company's stock for net proceeds of $5,592,009. The Company received cash of $1,231,667 representing cash from the sale of the common shares in excess of amounts owed. The derivative asset was classified within Level 2 fair value measurement within the fair value hierarchy. At  March 31, 2026, the Company fulfilled our commitment requirements on the make-whole provision and the derivative and the accounting thereto.

 

Marathon SAFE Note Instrument

 

On February 28, 2025, Bioleum, the Company's subsidiary, entered into a series of definitive agreements with Virent, which have been assigned to Bioleum and involve the purchase of Bioleum equity as part of Bioleum’s planned Series A Financing (see Note 9). As of February 28, 2025, the Company recognized the Marathon SAFE Note liability of $12.0 million on the condensed consolidated balance sheets in connection with the agreement with Virent and elected to account the Marathon SAFE Note liability under the fair value option. The Marathon SAFE Note liability was estimated with assistance from third-party valuation specialists and valued using a probability weighted present value of the Marathon SAFE Note with the discount factor based on published venture capital rate of returns of 35% and a discounting period range of 0.25 to 0.84 years. At March 31, 2026, the fair value of the Marathon SAFE Note liability was estimated at $12.0 million and valued using a probability weighted present value of the Marathon SAFE Note with the discount factor based on published venture capital rate of returns of 35% and a discounting period range of 0.25 to 0.75 years. The Marathon SAFE Note liability was classified as a Level 3 fair value measurement within the fair value hierarchy.

 

For the three-months ended March 31, 2026, the range of variables used to calculate the original fair value of the Marathon SAFE Note and the fair value on the dates of conversion are as follows.

 

Present Value of Marathon SAFE Note

Discount Rate

Period Range

$12.0 million

35%

0.25 years to 0.75 years

 

For the three-months ended March 31, 2025, the range of variables used to calculate the original fair value of the Marathon SAFE Note and the fair value on the dates of conversion are as follows.

 

Present Value of Marathon SAFE Note

Discount Rate

Period Range

$12.0 million

35%

0.25 years to 0.84 years

 

Great Basin Guarantee

 

On March 31, 2026, the Company and Great Basin executed the Great Basin Guaranty (see Note 9). As of March 31, 2026, the Company recorded a guarantee liability of $475,000 and a corresponding guarantee long-term asset, measured at fair value at the time the guaranty was executed, on the condensed consolidated balance sheets. The Great Basin Guaranty liability was estimated with the assistance of third-party valuation specialists and valued using a Probability‑Weighted Expected Return Method (“PWERM”), which considers multiple discrete future outcomes and probability‑weights the expected discounted cash flow approach associated with each scenario using a probability weighted present value with the discount factor based on published venture capital rate of returns of 35%. The scenarios used in the valuation included a base case, late failure case and early failure case with probabilities of 95%, 4% and 1%, respectively, with each case scenario reflecting the surety payments anticipated and anticipated repayments. The Great Basin Guaranty liability was classified as a Level 3 fair value measurement within the fair value hierarchy.

 

Other Financial Instruments

 

At March 31, 2026, the carrying amount of cash and cash equivalents, notes receivable, equipment deposits, Flux Photon payable, and reclamation bond approximates fair value because of the short-term maturity of these financial instruments.