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INVESTMENTS – RELATED PARTIES
 3 Months Ended
Mar. 31, 2025
SEC Schedule, 12-15, Insurance Companies, Summary of Investments, Other than Investments in Related Parties [Abstract]  
INVESTMENTS – RELATED PARTIES

11. INVESTMENTS – RELATED PARTIES

 

Investments in Alzamend Neuro, Inc. (“Alzamend”), Ault & Company, Inc. (“Ault & Company”) and GIGA at March 31, 2025 and December 31, 2024, were comprised of the following:

 

Investment in Promissory Notes, Related Parties – Ault & Company and GIGA

                   
    Interest       March 31,     December 31,  
    Rate   Due Date   2025     2024  
Promissory note and accrued interest receivable, Ault & Company, in default   8%   December 31, 2024   $ 541,000     $ 2,468,000  
Promissory note and accrued interest receivable, GIGA   6% - 12%   In bankruptcy     19,440,000       18,499,000  
Other             335,000       335,000  
Allowance for credit losses             (500,000 )     (500,000 )
Total investment in promissory notes and other, related parties           $ 19,816,000     $ 20,802,000  

Summary of interest income, related party, recorded within interest and other income on the condensed consolidated statement of operations:

 

        
   For the Three Months Ended March 31, 
   2025   2024 
 Interest income, related party  $579,000   $209,000 

 

At each reporting date, the Company applies its judgment to evaluate the collectability of the note receivable and makes a provision based on the assessed amount of expected credit loss. This judgment is based on parameters such as interest rates, market conditions and creditworthiness of the creditor.

 

The Company determined that the collectability of certain notes receivables is doubtful based on information available.

 

Investment in Alzamend Series B Convertible Preferred Stock, Warrants and Common Stock, Related Parties – Alzamend

    
   Investments in Common Stock, Related Parties at March 31, 2025 
   Cost   Gross Unrealized Losses   Fair value 
Common shares  $24,705,000   $(24,624,000)  $81,000 
Alzamend series B convertible preferred stock, warrants   2,100,000    -    2,100,000 
   $26,805,000   $(24,624,000)  $2,181,000 

 

   Investments in Common Stock, Related Parties at December 31, 2024 
   Cost   Gross Unrealized Losses   Fair value 
Common shares  $24,697,000   $(24,607,000)  $90,000 
Alzamend series B convertible preferred stock, warrants   2,100,000    -    2,100,000 
   $26,797,000   $(24,607,000)  $2,190,000 

 

 

The following tables summarize the changes in the Company’s investments in Alzamend common stock during the three months ended March 31, 2025 and 2024:

        
   For the Three Months Ended March 31, 
   2025   2024 
Balance at January 1  $90,000   $679,000 
Investment in common stock of Alzamend   8000    5,000 
Unrealized loss in common stock of Alzamend   (17,000)   84,000 
Balance at March 31  $81,000   $768,000 

 

Ault Lending, LLC (“Ault Lending”) Investment in Alzamend Series B Convertible Preferred Stock and Warrants

        
   March 31,   December 31, 
   2025   2024 
Investment in Alzamend preferred stock  $2,100,000   $2,100,000 
Total investment in other investments securities, related party  $2,100,000   $2,100,000 

 

In connection with a securities purchase agreement entered into with Alzamend in January 2024, Ault Lending purchased 2,100 shares of Alzamend Series B Convertible Preferred Stock and warrants to purchase 0.2 million shares of Alzamend common stock with a five-year term and an exercise price of $12.00 per share for a total purchase price of $2.1 million.

 

The Company has elected to account for investment in other investments securities, related party, using a measurement alternative under which they are measured at cost and adjusted for observable price changes and impairments.

 

Messrs. Ault, Horne and Nisser are each paid $50,000 annually by Alzamend.