NOTE 3—EQUITY METHOD INVESTMENTS

Investment in NewStem

In 2018, the Company entered into a Share Purchase Agreement with NewStem and other related parties to provide aggregate funding of up to $4,000,000 to NewStem. This funding was to be provided through the sale of up to 50,000 common shares of NewStem to the Company representing 33% of NewStem’s outstanding shares. In 2018, the Company purchased 25,000 shares of NewStem for $2,000,000 acquiring an ownership interest of 20%. The Company made additional investments in 2019 and 2020 purchasing 12,500 shares each year for a $1,000,000 investment each year resulting in an ownership interest of 30.51% as of June 30, 2025 and December 31, 2024.

The Company accounts for its investment in NewStem under the equity method.

NewStem is a development stage company which has incurred losses since its inception and has generated only minimal revenues under a licensing agreement. NewStem is currently in liquidation.

The Company assesses its investment in NewStem for impairment on an annual basis or more frequently if indicators of impairment exist. During the year ended December 31, 2024, indicators of impairment became evident due to the inability of NewStem to raise funds. Due to the inability to raise funds, NewStem has been unable to continue operations and is in the process of liquidation. The intangible assets of NewStem, including license agreements, have reverted to the licensor, Yissum (the commercial division of Hebrew University). The Company has reached an agreement with Yissum regarding the potential monetization of these intangible assets which provides for the Company to receive up to $3,750,000 in the event of re-licensing or monetizing the licenses or related technology developed by NewStem. Due to the current uncertainty of the timing of recovery of any value from these intangible assets and the liquidation status of NewStem, the Company has fully impaired the investment in NewStem and reduced the carrying value to zero ($0) at June 30, 2025 and December 31, 2024.

During the year ended December 31, 2024, the Company signed an agreement (the “Purchase Agreement”) to acquire the remainder of NewStem in exchange for shares of Company stock as well as funding for NewStem operations. In anticipation of this transaction, the Company advanced $250,000 to NewStem in December 2023 and an additional $250,000 in March 2024. The related note agreement bears no interest and was payable on December 30, 2024. The agreement provided for discharge of the note upon the closing of the anticipated acquisition transaction. The Purchase Agreement was not fully consummated, and no Company shares were issued to NewStem shareholders in exchange for NewStem shares, therefore the note was not discharged. The Company determined that collection of the note was unlikely due to NewStem’s liquidation status and lack of assets. As such, the Company wrote the note off as a bad debt during the year ended December 31, 2024.

During the six and three months ended June 30, 2024, the Company recorded a reimbursement due to NewStem of approximately $44,000 and $8,000, respectively, for audit and accounting related costs which was offset against the note receivable from NewStem.

The following table represents the Company’s investment in NewStem:

 SCHEDULE OF INVESTMENTS

The results of operations of the Company’s investment in NewStem is summarized below (unaudited):

 SCHEDULE OF OPERATIONS AND FINANCIAL POSITION INVESTMENT

The financial position of the Company’s investment in NewStem is summarized below:

Investment in NetCo

As of December 31, 2024, NovelStem owned a 50% interest in NetCo, a joint venture that owns the Net Force publishing franchise. On May 9, 2025, the Company entered into a Settlement Agreement and Release whereby the investment in NetCo was sold to the Company’s JV partner for $1,300,000 to settle the related litigation funding liability to Omni Bridgeway in full. This transaction was fully consummated as funds were received by Omni Bridgeway from CP Partners pursuant to the terms of the agreement.

The Company accounted for its investment in NetCo under the equity method and recognized nominal royalties and administrative fees from this arrangement. The Company assessed its investment in NetCo for impairment on an annual basis or more frequently if indicators of impairment exist.

The following table represents the Company’s investment in NetCo:

  SCHEDULE OF INVESTMENTS

The results of operations of the Company’s investment in NetCo is summarized below (unaudited):

 SCHEDULE OF OPERATIONS AND FINANCIAL POSITION INVESTMENT

The financial position of the Company’s investment in NetCo is summarized below: