NOTE 4 – INVESTMENT IN DEBT AND EQUITY SECURITIES

INVESTMENT IN FEMASYS, INC.

On November 14, 2023, the Company entered into a Securities Purchase Agreement (the “Femasys Purchase Agreement”) with Femasys Inc. (“Femasys”), pursuant to which it agreed to purchase from Femasys for a sum of $5,000,000 (i) senior unsecured convertible notes (the “Femasys Notes”) in an aggregate principal amount of $5,000,000, convertible into shares of Femasys common stock, par value $0.001 per share (the “Femasys Shares”) at a conversion price of $1.18 per share, (ii) Series A Warrants (the “Series A Warrants”) to purchase up to an aggregate of 4,237,288 Femasys Shares at an exercise price of $1.18 per share, and (iii) Series B Warrants (the “Series B Warrants”, together with the Series A Warrants, the “Femasys Warrants,” and, together with the Notes, the “Femasys Securities”) to purchase up to an aggregate of 4,237,288 Femasys Shares at an exercise price of $1.475 per share (collectively, the “Investment”). The Femasys Notes accrue interest at 6.0% per annum, payable annually, and mature two years after the date of issuance. The Femasys Warrants expire five years from the date of issuance.

Pursuant to the terms of the Femasys Purchase Agreement, the Company’s Interim Chief Executive Officer was appointed to the Femasys board of directors.

The convertible note receivable is not traded in active markets and the fair value was determined using a Monte Carlo simulation. The convertible note receivable is accounted for as available-for-sale debt securities based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset. The Company elected the fair value option for the Femasys Notes, therefore, holding gains and losses are included within change in fair value of the notes in the consolidated statement of operations. The Femasys Warrants are accounted for as an equity security and are valued using a Monte Carlo simulation based on “Level 3” inputs, which consist of unobservable inputs and reflect management’s estimates of assumptions that market participants would use in pricing the asset, recorded at fair value with subsequent changes included within change in fair value of the warrants in the consolidated statement of operations.

The Company recognized the Femasys Note and Femasys Warrants based on their respective fair values on the issuance date of $1,666,000 and $3,334,000, respectively. Subsequent changes in the fair value of the Femasys Note and Femasys Warrants will be recognized in earnings, at each reporting date. During the years ended April 30, 2025 and 2024, the Company recognized a gain in the fair value of the convertible note receivable of $941,000 and $1,089,000, respectively, and change in fair value of the warrant assets decrease of $2,091,000 and an increase of $1,818,000, respectively. The current year decrease of $2,091,000 includes the expiration of the Series B Warrants in the amount of $1,376,000 and carries a zero value. Series A Warrants remain unexercised and there were no Series B Warrants exercised prior to expiration. See Note 14 – Fair value Measurements for further information.

During the years ended April 30, 2025 and 2024, the Company recognized interest income of $300,000 and $137,500, respectively, from the Femasys Note. During the year ended April 30, 2025, the interest income received of $300,000 was paid in Femasys common stock and is presented as marketable equity securities. As of April 30, 2025 and 2024, the Company has accrued interest receivable of $137,500 and $137,500, respectively.

The Femasys Note was determined to meet the definition of a derivative and were required to be recorded at fair value in accordance with ASC 815. Subsequent changes in the fair value of the Note is recognized in earnings at each reporting date. The approximate $1,666,000 issuance date fair value of the Note was determined using the Monte Carlo method with the following assumptions: Femasys stock price of $0.93, time to expiration of 2 years, interest rate of 6.0%, discount rate of 16.7%, risk free rate of 4.80%, equity volatility of 96.0% and probability of default of 27.0%. As of April 30, 2025 and 2024, the fair value of the Note was $3,696,000 and $2,755,000, respectively. For the year ended April 30, 2025, using the following assumptions: stock price of $1.16, time to expiration of 0.54 years, interest rate of 6.0%, discount rate of 16.0%, risk free rate of 4.16%, equity volatility of 72.0% and probability of default of 26.0%. For the year ended April 30, 2024, using the following assumptions: stock price of $1.27, time to expiration of 1.54 years, interest rate of 6.0%, discount rate of 19.7%, risk free rate of 5.14%, equity volatility of 99.0% and probability of default of 27.0%.

The Warrants were determined to meet the definition of a derivative and were required to be recorded at fair value in accordance with ASC 815. Subsequent changes in the fair value of the Warrants are recognized in earnings, at each reporting date. The approximately $3,334,000 issuance date fair value of the Series A and B Warrants was determined utilizing the Black Scholes Merton Method with the following assumptions: Femasys stock price of $0.93, exercise price of $1.18 - $1.48, risk free rate of 4.42%-5.24%, equity volatility of 87.0%-105.0% and remaining term of 1.0-5.0 years. As of April 30, 2025 Series A stock price was $1.16, exercise price of $1.18, risk free rate of 3.62%, equity volatility of 89.0% and the remaining term of 3.54 years. As of April 30, 2024, the Series A and B assumptions: stock price of $1.27, exercise price of $1.18 - $1.48, risk free rate of 4.75%-5.42%, equity volatility of 91.0%-103.0% and remaining term of 0.54-4.54 years.

Below is a summary of activity for the Note and Warrants as of April 30, 2025 and 2024:

MARKETABLE SECURITIES

On November 21, 2024, the Company received from the Femasys Notes a payment in Femasys common stock for interest income in the amount of $300,000. The interest income payment was based on the Femasys average stock price on that date of $0.95, therefore, the Company received 315,790 common stock shares. As of April 30, 2025, the current market value of the Femasys common stock shares was $1.16 that generated an unrealized gain of $66,316.

Cost and fair value of marketable equity securities at April 30, 2025 are as follows:

The fair value of equity securities has been measured on a recurring basis using Level 1 inputs, which are based on unadjusted quoted market prices within active markets. There have been no changes in valuation approaches or techniques and related inputs.

INVESTMENT IN TNF PHARMACEUTICALS, INC.

On May 20, 2024, the Company entered into a Securities Purchase Agreement (the “SPA”) with a public company operating in the medical industry, MyMD Pharmaceuticals, Inc. which subsequently changed its name to TNF Pharmaceuticals, Inc., (“TNF”). Pursuant to the SPA, the Company purchased (i) 7,000 shares of TNF’s Series G Convertible Preferred Stock (the “Preferred Shares” or “Series G Preferred Stock”), representing approximately 33% of TNF’s issued and outstanding share capital on an as-converted basis (and approximately 78% of all shares of Series G Preferred Stock outstanding), at a price of $1.816 per Preferred Share, which are convertible into 3,854,626 shares of Common Stock (as defined below); (ii) warrants to purchase up to 3,854,626 shares of TNF’s Common Stock with a five-year term (“Long-Term Warrant”); and (iii) warrants to purchase up to 3,854,626 shares of TNF’s Common Stock with a 18-month term (“Short-Term Warrant”) (collectively, the “TNF warrants”), for an aggregate purchase price of $7,000,000.

Pursuant to the SPA, the Company has the right to participate in future sales of TNF’s equity and equity-linked securities until the second anniversary of the Closing or the date on which no TNF Preferred Shares remain outstanding, whichever is earlier. Additionally, the Company has the right to nominate one individual to serve on TNF’s board of directors until PharmaCyte no longer beneficially owns at least 20% of TNF’s common stock on an as-converted basis. The Company’s Interim Chief Executive Officer serves on the board of directors of TNF.

The Company has determined that TNF is a VIE, since TNF does not have sufficient equity at risk to finance its own operations without additional subordinated financial support. However, the Company has determined that it is not the primary beneficiary of TNF. Furthermore, TNF’s Series G Preferred Stock is not considered in substance common stock, and as such, equity method accounting does not apply. The Company recorded its investment in TNF Series G Preferred Stock at its fair value of approximately $17,410,000 on May 23, 2024 as the Company did not elect the measurement alternative to account for the investment at cost less impairment. Subsequent changes in fair value of the TNF Series G Preferred Stock are recognized in earnings at each reporting period. The initial fair value of the TNF Series G Preferred Stock was estimated utilizing a Monte Carlo simulation with the following assumptions: TNF stock price of $2.00, price floor of $0.40, expected time to settlement of 5.00 years, dividend rate of 10%, discounted market interest rate of 9.8%, risk free rate of 4.52%, equity volatility of 115.0% and probability of default of 18.3%.

The Warrants were determined to meet the definition of a derivative and were required to be recorded at fair value in accordance with ASC 815. Subsequent changes in the fair value of the Warrants are recognized in earnings, at each reporting date. The approximately $10,986,000 issuance date fair value of the Warrants was determined utilizing the Black Scholes Merton Method with the following assumptions: TNF stock price of $2.00, exercise price of $1.82, risk free rate of 4.52%-5.05%, equity volatility of 115.0%-125.0% and remaining term of 1.5-5.0 years. As the fair value of the TNF Series G Preferred Stock and Warrants exceeded the Company’s total investment in TNF, the Company recognized an approximately $21,396,000 gain on investment on the condensed consolidated statements of operations for the excess of the fair value of the Warrants over the investment amount.

On April 11, 2025, TNF, in connection with an issuance of stock options to certain TNF officers, the Series G conversion price was adjusted to $0.1832 per share pursuant to the full ratchet anti-dilution provisions in the Certificate of Designations and the Series G exercise price was adjusted to $0.1832 per share and the number of shares of common stock issuable upon exercise of such warrants was adjusted proportionally pursuant to the full ratchet anti-dilution provisions contained in the applicable warrants. As of April 30, 2025, there were 38,209,611 short-warrants and 38,209,611 long-term warrants.

The Series G Preferred Stock shares include a 10% dividend, the Company has elected to receive the shares as Payment in Kind (“PIK”). As of April 30, 2025, the Company owns 7,831 Series G Preferred Stock shares of which 831 shares relate to accrued dividends.

During the year ending April 30, 2025, the Company recognized a gain for the change in fair value of the TNF Series G Preferred Stock of approximately $5,063,950. The approximately $22,474,000 fair value of the TNF Series G Preferred Stock was estimated utilizing a Monte Carlo simulation with the following assumptions on April 30, 2025: TNF stock price of $0.19, price floor of $0.36, expected time to settlement of 5.00 years, dividend rate of 10.0%, discount market interest rate of 17.6%, risk free rate of 3.72%, equity volatility of 105.0% and probability of default of 47%. The Company recognized a loss for the change in fair value of the TNF Warrants of approximately $2,367,684. The approximately $8,618,000 fair value of the Warrants was determined utilizing the Black Scholes Merton Method with the following assumptions on April 30, 2025: TNF stock price of $0.19, exercise price of $0.18, risk free rate of 3.65%-4.14%, equity volatility of 115.0%-130.0% and remaining term of 0.57-4.07 years.

Below is a summary of activity for the Series G Preferred Stock as of April 30, 2025:

Below is a summary of activity for the Preferred Stock Warrants as of April 30, 2025: