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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Sep. 30, 2024
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | NOTE 4 — FAIR VALUE MEASUREMENTS The Company accounts for fair value measurements for financial assets and financial liabilities in accordance with FASB ASC Topic 820, “Fair Value Measurements”. The authoritative guidance among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as the exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| ● | Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;
| ● | Level 2. Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
| ● | Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
There were no Level 1, 2 or 3 assets, nor any Level 1 or 2 liabilities as of September 30, 2024. Unless otherwise disclosed, the fair value of the Company’s financial instruments including cash, accounts receivable, prepaid expenses, accounts payable, accrued expenses, lease obligations and notes payable approximate their recorded values due to their short-term maturities. Level 3 liabilities held as of September 30, 2024, consisted of a contingent consideration liability related to the February 13, 2014 acquisition of Renovaro Cube, (the “Acquisition”). As consideration for the Acquisition, the stockholders of Renovaro Cube received (i) 70,834,183 shares of Common Stock, (ii) the right to receive contingent shares pro rata upon the exercise of convertible notes, options, and warrants, which were outstanding at closing less (iii) an as of yet undefined discount of the number of shares to be issued as a result of any such exercise. The Company and the stockholders of Renovaro Cube have not determined or agreed on the amount of any such discount which may be applied towards future exercises. The contingent consideration liability was recorded at fair value of $20,557,500 at the time of the Acquisition and is subsequently remeasured to fair value at the end of each reporting period. As of September 30, 2024, there were 7,613,301 contingent shares issuable in connection with the Acquisition. The fair value of the contingent consideration liability is estimated using a Black-Scholes option-pricing model and a Monte-Carlo option pricing model. The key inputs to the model are all contractual or observable with the exception being volatility, which is computed based on the volatility of the Company’s underlying stock. The key inputs to valuing the contingent consideration liability as of September 30, 2024, were:
Schedule of contingent consideration liability |  |  |  |
Stock Price |  | $ | 0.48 |
Exercise Price |  |  | $0.46 - $8.23 |
Volatility |  |  | 113% - 134% |
Risk Free Rate |  |  | 3.52% - 4.31% |
Expected Dividends |  |  | 0 | %
Expected Term (years) |  |  | 0.48 – 9.25 |
The following table sets forth the Level 3 liability at September 30, 2024, which is recorded on the consolidated balance sheet at fair value on a recurring basis. As required, this liability is classified based on the lowest level of input that is significant to the fair value measurement:
Schedule of fair value measurement on recurring basis |  |  |  |  |  |
|  | Fair Value Measurements at Reporting Date Using
|  | Quoted Prices in Active Markets for Identical Assets Inputs |  | Significant Other Observable Inputs |  | Significant Other Unobservable Inputs
|  | (Level 1) |  | (Level 2) |  | (Level 3)
The roll forward of the contingent consideration liability is as follows: |  |  |  |  |  |  |  |  |  |  |  |
Balance June 30, 2024 |  |  | — |  |  |  | — |  |  | $ | 12,310,000 |
Fair value adjustment |  |  | — |  |  |  | — |  |  |  | (9,250,000 | )
Contingent Consideration Liability at September 30, 2024 |  |  | — |  |  |  | — |  |  | $ | 3,060,000 |

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- Definition The entire disclosure of the fair value measurement of assets and liabilities, which includes financial instruments measured at fair value that are classified in shareholders' equity, which may be measured on a recurring or nonrecurring basis. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 820 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/820/tableOfContent + Details
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