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FINANCIAL INSTRUMENTS
 9 Months Ended 12 Months Ended
Sep. 30, 2025
Dec. 31, 2024
Investments, All Other Investments [Abstract]    
FINANCIAL INSTRUMENTS

18. FAIR VALUE DISCLOSURES FINANCIAL INSTRUMENTS

 

The Company estimates the fair value of its debt by discounting the future cash flows of each instrument using estimated market rates of debt instruments with similar maturities and credit profiles. These inputs are classified as Level 3 within the fair value hierarchy. As of September 30, 2025 and December 31, 2024, the carrying value reported in the consolidated balance sheet for the Company’s notes payable approximated its fair value.

 

There were no assets or liabilities recorded at fair value on a recurring basis as of September 30, 2025. As of December 31, 2024, the Company had recorded liabilities at fair value on a recurring basis for subordinated convertible promissory notes and Series A Convertible Preferred Stock and equity warrants at fair value on a recurring basis. The subordinated convertible promissory notes carry an interest rate that is indicative of the Company’s overall borrowing cost and the length of time until maturity is not expected to significantly impact their value. The convertible preferred stock, which is akin to debt, has been discounted to its presented carrying value in accordance with the debt discounts and redemption premiums recognized.

 

Assets and liabilities that are measured at fair value on a non-recurring basis include intangible assets and goodwill. These items are recognized at fair value when they are considered to be impaired.

 

There were no fair value adjustments for assets and liabilities measured on a non-recurring basis. The Company discloses fair value information about financial instruments for which it is practicable to estimate that value.

 

 

Table 18: Fair Value Hierarchy - 2024

 

 

   Level 1   Level 2   Level 3   Total 
  As of December 31, 2024 
   Level 1   Level 2   Level 3   Total 
Liabilities:                
Subordinated convertible promissory notes  $-   $-   $5,490,324   $5,490,324 
Series A Convertible Preferred Stock   -    -    1,294,117    1,294,117 
Total liabilities  $-   $-   $6,784,441   $6,784,441 
Equity:                    
Warrants  $-   $-   $2,687,074   $2,687,074 
Total equity  $-   $-   $2,687,074   $2,687,074 

 

NOTE 14 — FINANCIAL INSTRUMENTS

 

The Company classified the following securities as financial instruments:

 

Liabilities:  Level 1   Level 2   Level 3   Total 
   December 31, 2024 
Liabilities:  Level 1   Level 2   Level 3   Total 
Subordinated convertible promissory notes  $-   $-   $5,490,324   $5,490,324 
Series A convertible preferred stock  $-   $-   $1,294,117   $1,294,117 
Equity:                    
Warrants  $-   $-   $3,993,491   $3,993,491 

 

Liabilities:  Level 1   Level 2   Level 3   Total 
   December 31, 2023 
Liabilities:  Level 1   Level 2   Level 3   Total 
Subordinated convertible promissory notes  $-   $-   $4,894,446   $4,894,446 
Series A convertible preferred stock  $-   $-   $1,294,117   $1,294,117 
Equity:                    
Warrants  $-   $-   $2,687,074   $2,687,074 

 

Management believes the carrying values of the above securities approximate their fair values. The subordinated convertible promissory notes carry an interest rate that is indicative of the Company’s overall borrowing cost and the length of time until maturity is not expected to significantly impact their value. The convertible preferred stock, which is akin to debt, has been discounted to its presented carrying value in accordance with the debt discounts and redemption premiums recognized.