Aspire Biopharma Holdings, Inc. Fair Value Disclosure
NOTE 12. FAIR VALUE MEASUREMENTS
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2025 and 2024 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
| Quoted Prices in Active Markets | Significant Other Observable Inputs | Significant Other Unbservable Inputs | ||||||||||||
| December 31, 2025 | Level | (Level 1) | (Level 2) | (Level 3) | ||||||||||
| Liabilities: | ||||||||||||||
| Convertible Notes | 3 | $ | 1,146,236 | |||||||||||
| Forward Purchase Agreement liabilities | 3 | 95,662 | ||||||||||||
| Derivative liability | 3 | $ | 40,954 | |||||||||||
Convertible Notes
As discussed in Note 7 - Convertible Notes, the February 2025 Convertible Debentures are classified and accounted for as a financial liability which is measured at fair value on a recurring basis (one of the instruments is accounted for at fair value on a recurring basis under ASC 480-10, as a derivative instrument under ASC 815).
The financial liabilities are valued under a Monte Carlo Model. The estimated fair value of the financial liabilities component is determined using Level 3 inputs. Inherent in the pricing models are assumptions related to expected share-price volatility, expected life and risk-free interest rate.
The key inputs of the models used to value the Company’s February 2025 Convertible Debentures as of December 31, 2025 were:
| Inputs | December 31, 2025 | |||
| Term remaining - years | 0.13 | |||
| Share price | 0.13 | |||
| Debt rate | 12.49 | % | ||
The change in the fair value of the convertible notes measured using Level 3 inputs is summarized as follow:
| February Notes | ||||
| Balance, December 31, 2024 | $ | |||
| Fair value at issuance | 3,000,000 | |||
| Paid-in-kind interest | 217,438 | |||
| OID amortized | 711,996 | |||
| Repayment of Note | (3,032,645 | ) | ||
| Change in fair value | 249,447 | |||
| Balance, December 31, 2025 | $ | 1,146,236 | ||
Forward purchase agreement liabilities
As discussed in Note 9 - Commitment and Contingencies, the forward purchase agreement liabilities are classified and accounted for as financial liabilities which will be measured at fair value on a recurring basis.
The forward purchase agreements liabilities are valued under a Probability Weighted Expected Return Model (“PWERM”) which fair values repayable capital investment and uses a Black Scholes Model that fair values the conversion features within the convertible debt. The PWERM is a multistep process in which value is estimated based on the probability-weighted present value of various future outcomes. The estimated fair value of the forward purchase agreements liabilities are determined using Level 3 inputs. Inherent in the pricing models are assumptions related to expected share-price volatility, expected life and risk-free interest rate. There were no draws for the year ended December 31, 2025; therefore, no valuation was required.
The change in the fair value of the forward purchase agreement liabilities measured using Level 3 inputs is summarized as follows:
Forward purchase agreement liabilities - ELOC Agreement
| Balance, December 31, 2024 | $ | |||
| Assumed in Reverse Recapitalization | 49,034 | |||
| Change in fair value | (39,133 | ) | ||
| Termination of agreement | (9,901 | ) | ||
| Forward purchase agreement at December 31, 2025 | $ |
Forward purchase agreement liabilities - Second ELOC Agreement
| Balance, December 31, 2024 | $ | |||
| Initial recognition of liability | 95,062 | |||
| Change in fair value | 600 | |||
| Forward purchase agreement liability at December 31, 2025 | $ | 95,662 |
Derivative liability
As discussed in Note 7 - Convertible Notes, the Company accounted for the August 2025 Notes under ASC 470 and ASC 815 and concluded that bifurcation of multiple embedded features was necessary under ASC 815-15-25-1. As a result, the Company separately accounted for as a single compound derivative. The initial fair value of the derivative liability at issuance was $4,101,583 and estimated using a Monte Carlo Model. For the year ended December 31, 2025, change in fair value of the derivative liability of $75,482 was recorded as an income on the consolidated statements of operations. At December 31, 2025, the fair value of the derivative of $40,954 was included in derivative liability on the accompanying 2025 consolidated balance sheet.
The key inputs of the models used to value the Company’s derivative liability as of December 31, 2025 were:
| Inputs | December 31, 2025 | |||
| Term Remaining - Years | 0.14 - 0.39 | |||
| Share Price | $- $ | |||
| Risk Free Rate | 3.52% - 3.92% | |||
The change in the fair value of the derivative liability measured using Level 3 inputs is summarized as follows
| For the Year ended | ||||
| December 31, 2025 | ||||
| Balance, December 31, 2024 | $ | |||
| Initial recognition | 4,101,583 | |||
| Conversion of shares | (3,985,147 | ) | ||
| Change in fair value | (75,482 | ) | ||
| Derivative liability at December 31, 2025 | $ | 40,954 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 30, 2026 | Showing above |
| 2024 | Apr 7, 2025 | |
| 2023 | Mar 11, 2024 | |
| 2022 | Mar 21, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.