12. INVESTMENTS – RELATED PARTIES

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

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

Amounts above are recorded in “Investment in promissory notes and other, related party” on the consolidated balance sheets.

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

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.

Upon the deconsolidation of Gresham, the Company established an allowance for credit losses of $2.6 million related to notes receivable from Gresham included in net gain (loss) from discontinued operations. As of December 31, 2024, the Company performed an analysis of the allowance for credit losses of the Gresham notes receivable resulting in a $2.1 million reduction in the allowance, which was recorded within cost of revenue from lending and trading activities.

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

Amounts above are recorded in “Investments in common stock and equity securities, related party” on the consolidated balance sheets.

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

Ault Lending Investment in Alzamend Series B Convertible Preferred Stock and Warrants

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.

During the year ended December 31, 2025, Ault Lending converted its Alzamend Series B convertible preferred stock into Alzamend common stock. Following the conversion and related fair value adjustments, the carrying value of the investment was fully reduced from $2.1 million at December 31, 2024.

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

Messrs. Horne and Nisser are each paid $50,000 annually by Alzamend. Mr. Ault is paid $25,000 annually by Alzamend.

VIE Considerations for Ault Lending’s Investments in Alzamend

Alzamend is considered a VIE based on the Ault Lending’s investment in Alzamend common stock, Series B convertible preferred stock and warrants. However, Ault Lending is not deemed to be the primary beneficiary of Alzamend and therefore does not consolidate Alzamend in its financial statements. Ault Lending’s maximum exposure to loss as a result of its involvement with Alzamend is limited to the $15,000 carrying value of its investments.