FAIR VALUE MEASUREMENTS |
3 Months Ended | |||||||||||||||||||||||||||
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Mar. 31, 2026 | ||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||
| FAIR VALUE MEASUREMENTS |
NOTE F – FAIR VALUE MEASUREMENTS ASC Topic 820 - Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1: Observable inputs such as quoted prices (unadjusted) in an active market for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs that are supported by little or no market activity; therefore, the inputs are developed by the Company using estimates and assumptions that the Company expects a market participant would use, including pricing models, discounted cash flow methodologies, or similar techniques. The carrying value of the Company’s financial instruments, including cash and cash equivalents and accounts payable, approximates fair value because of the short-term nature of these financial instruments. The Company’s marketable securities are classified within Level 1 because they are valued using quoted market prices in an active market.
The Company’s equity investment in ILiAD is measured on a non-recurring basis and is classified within Level 3 as it does not have a readily determinable value and is valued using observable price transactions for identical or similar investments of the same issuer and applying an option pricing model to adjust for differences and allocate enterprise value among ILiAD’s various classes of securities (see Note B[3] and Note K hereof).
The Company estimates the fair value of its equity investment in ILiAD using an option pricing model. Volatility is a significant unobservable input because the ILiAD’s equity is not publicly traded. The volatility assumption was developed using guideline public companies in similar industries, adjusted for size and illiquidity. The expected time to a liquidity event is estimated based on management’s assessment of potential scenarios. The risk-free rate corresponds to the U.S. Treasury yield with a term matching the expected time to liquidity. A discount for lack of marketability was applied, reflecting the restricted nature of the ILiAD shares held by the Company. The resulting fair value per-share range was estimated based on scenario weighting. Increases in volatility or the expected time to liquidity, or reductions in the marketability discount, would result in a higher fair value measurement under the option pricing model.
The
following assumptions were used to calculate the fair value of the Company’s equity investment in ILiAD as of February 5, 2026:
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