NOTE K – EQUITY INVESTMENTS

During the period December 2018 through August 2022, the Company made aggregate investments of $7,000,000 in ILiAD, a privately held clinical stage biotechnology company dedicated to the prevention and treatment of human disease caused by Bordetella pertussis. ILiAD is focused on validating its proprietary intranasal vaccine, BPZE1, for the prevention of pertussis (whooping cough). In connection with its initial investment, the Company’s Chairman and Chief Executive Officer obtained a seat on ILiAD’s Board of Managers. These investments were accounted for under the equity method of accounting in accordance with ASC 323 (See Note B[3]).

On February 5, 2026, ILiAD completed a $115,000,000 Series B preferred stock financing (the “Financing”). As part of the Financing, ILiAD converted from a limited liability company to a corporation. Following the closing of the Financing, ILiAD’s Board was reconstituted and the Company’s Chairman and Chief Executive officer no longer serves on the Board of ILiAD.

As a result of ILiAD’s closing of the Financing and the conversion to a corporation, as of February 5, 2026 the Company no longer accounted for its investment in ILiAD using the equity method, under which the Company recorded its proportionate share of ILiAD’s losses each reporting period, and adopted the cost value method of accounting in accordance with ASC 321. Under this guidance, investments in equity securities in privately-held companies without readily determinable fair values are generally recorded at cost, plus or minus subsequent observable price changes in identical or similar investments, less impairments. (see Note B[3] hereof.)

As a result of an observable price change due to the Financing discussed above, the equity investment was remeasured during the three month period ended March 31, 2026 and the Company recorded an increase of $1,052,000 in the carrying value of its equity investment in ILiAD and recognized a corresponding gain of $1,052,000, which is included in “Other income – Gain on equity investment” in its unaudited condensed consolidated statements of operations.

After the closing of the Financing, the Company holds 2,054,507 shares of common stock, 262,908 shares of Series A preferred stock and 319,789 shares of Series A-1 preferred stock, representing 2.5% of the outstanding securities of ILiAD on a fully diluted basis. The Company evaluated the Financing and determined that it represented an orderly transaction for a similar investment of the same issuer. To estimate the fair value of its common stock, Series A preferred stock and Series A-1 preferred stock for purpose of remeasuring the carrying value of the investment, the Company considered the transaction price of the Series B preferred stock in the Financing and made adjustments, as necessary, to reflect differences in liquidation preferences, dividend rights, conversion features and other terms as compared to the classes of equity held by the Company. The Company applied a valuation model consistent with a market approach, which included the use of an option pricing model to allocate enterprise value among ILiAD’s various classes of equity (see Note F).

The Company has elected the practical expedient permitted by ASC 321, recorded the above equity investment on a cost basis and will continue to monitor the equity investment for impairment and additional observable price changes in future reporting periods.