Note 5 - Investment in Preferred Securities

During the year ended December 31, 2025, in connection with the issuance of 1,875 shares of Series B Convertible Preferred Stock and accompanying Series B Warrants at $800 per share, the Company received, as non-cash consideration, preferred shares of ADTX. No cash was exchanged in this transaction. The ADTX preferred shares had an estimated fair value and carrying value of $1.5 million at the date of receipt.

The investment represented less than 20% of the voting interests in ADTX, and the Company did not have the ability to exercise significant influence or control over ADTX. Accordingly, the investment was accounted for under ASC 321, Investments – Equity Securities. Because the ADTX preferred shares are not actively traded and lack a readily determinable fair value, the Company elected to measure the investment at cost, less any impairment, adjusted for observable price changes in orderly transactions for identical or similar instruments, as permitted under ASC 321-10-35-2. No impairments or other observable price changes were identified during the year ended December 31, 2025.

During the year ended December 31, 2025, ADTX redeemed 43 shares of its preferred stock held by the Company, resulting in cash proceeds of approximately $0.05 million, all of which was collected during the period. No loss was recognized on this redemption.

During the six months ended June 30, 2026, ADTX redeemed approximately 23 shares of its preferred stock held by the Company in accordance with the terms of the preferred shares. These redemptions resulted in cash proceeds of approximately $0.03 million. During the three and six months ended June 30, 2026, the Company converted approximately 829 preferred ADTX shares into common shares and sold them for net proceeds of approximately $0.6 million. In addition, the Company sold approximately 606 preferred ADTX shares to an institutional investor for approximately $0.5 million. The combined proceeds totaled approximately $1.1 million, of which approximately $0.5 million remained receivable as of June 30, 2026, and is included in other current assets in the condensed unaudited consolidated balance sheet as of June 30, 2026. In connection with these redemptions and sales of shares, the Company recognized a loss of $0.3 million for the three and six months ended June 30, 2026 within the unaudited condensed consolidated statements of operations.

The following table summarizes the activity in the investment during the six months ended June 30, 2026, and for the year ended December 31, 2025:

 Schedule of Activity in Investment