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INVESTMENTS – RELATED PARTIES | 12 Months Ended
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Dec. 31, 2022
Investments Related Parties |
INVESTMENTS – RELATED PARTIES | 13. INVESTMENTS – RELATED PARTIES Investments in Ault & Company, Inc. (“Ault & Company”) at December 31, 2022 and 2021, were comprised of the following:
Schedule of investment |  |  |  |  |  |  |  |  |  |  |  |
|  | Interest |  | Due |  | December 31, |  |  | December 31, |
|  | Rate |  | Date |  | 2022 |  |  | 2021 |
Promissory note, related party |  | 8% |  | Dec. 31, 2023 |  | $ | 2,500,000 |  |  | $ | 2,500,000 |
Accrued interest receivable, related party |  |  |  |  |  |  | 368,000 |  |  |  | 170,000 |
Other |  |  |  |  |  |  | - |  |  |  | 172,000 |
Total investment in promissory notes and other, related parties – gross |  |  |  |  |  | $ | 2,868,000 |  |  | $ | 2,842,000 |
The Company recorded related party interest income of $0.2 million for each of the years ended December 31, 2022 and 2021 in interest income. Investment in Common Stock, Related Parties
|  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Total investment in common stock of Alzamend |  | $ | 6,449,000 |  |  | $ | 13,230,000 |
The following table summarizes the changes in the Company’s investments in Alzamend during the years ended December 31, 2022 and 2021:
Schedule of investment in warrants and common stock |  |  |  |  |  |  |  |
|  | Investment in common stock of Alzamend |  |  | Investment in promissory notes and advances of Alzamend |
Balance at January 1, 2021 |  | $ | 653,000 |  |  | $ | 796,000 |
Alzamend note and advances converted into common stock |  |  | - |  |  |  | (800,000 | )
Investment in common stock of Alzamend |  |  | 18,181,000 |  |  |  | - |
Unrealized loss in common stock of Alzamend |  |  | (5,604,000 | ) |  |  | - |
Accretion of discount |  |  | - |  |  |  | 4,000 |
Balance at December 31, 2021 |  |  | 13,230,000 |  |  |  | - |
Investment in common stock of Alzamend |  |  | 4,901,000 |  |  |  | - |
Alzamend stock received for marketing services |  |  | 989,000 |  |  |  | - |
Unrealized loss in common stock of Alzamend |  |  | (12,671,000 | ) |  |  | - |
Balance at December 31, 2022 |  | $ | 6,449,000 |  |  | $ | - |
Investments in Alzamend Common Stock The following table summarizes the changes in the Company’s investments in Alzamend common stock during the year ended December 31, 2021:
Schedule of investment of common stock |  |  |  |  |  |  |  |  |  |  |  |
|  | Shares of |  |  | Per Share |  |  | Investment in |
|  | Common Stock |  |  | Price |  |  | Common Stock |
Balance at January 1, 2021 |  |  | 428,000 |  |  | $ | 1.50 |  |  | $ | 642,000 |
Purchase of shares from an Alzamend shareholder |  |  | 62,000 |  |  | $ | 0.81 |  |  |  | 50,000 |
March 9, 2021 securities purchase agreement* |  |  | 4,000,000 |  |  | $ | 1.50 |  |  |  | 6,000,000 |
Investment in Alzamend initial public offering |  |  | 2,000,000 |  |  | $ | 5.00 |  |  |  | 10,000,000 |
Open market purchases after initial public offering |  |  | 457,000 |  |  | $ | 4.67 |  |  |  | 2,132,000 |
Unrealized loss in common stock of Alzamend |  |  |  |  |  |  |  |  |  |  | (5,625,000 | )
Investment in Alzamend common stock |  |  | 6,947,000 |  |  | $ | 1.90 |  |  |  | 13,199,000 |
Investment in Alzamend options |  |  |  |  |  |  |  |  |  |  | 31,000 |
Balance at December 31, 2021 |  |  |  |  |  |  |  |  |  | $ | 13,230,000 |
The following table summarizes the changes in the Company’s investments in Alzamend common stock during the year ended December 31, 2022:
|  | Shares of |  |  | Per Share |  |  | Investment in |
|  | Common Stock |  |  | Price |  |  | Common Stock |
Balance at January 1, 2022 |  |  | 6,947,000 |  |  | $ | 1.90 |  |  | $ | 13,230,000 |
March 9, 2021 securities purchase agreement* |  |  | 2,667,000 |  |  | $ | 1.50 |  |  |  | 4,000,000 |
Alzamend stock received for marketing services |  |  | 933,000 |  |  | $ | 1.06 |  |  |  | 989,000 |
Open market purchases after initial public offering |  |  | 868,000 |  |  | $ | 1.04 |  |  |  | 901,000 |
Unrealized loss in common stock of Alzamend |  |  |  |  |  |  |  |  |  |  | (12,671,000 | )
Investment in Alzamend common stock |  |  | 11,415,000 |  |  | $ | 0.56 |  |  | $ | 6,449,000 |
| * | Pursuant to the March 9, 2021 securities purchase agreement, in aggregate, Alzamend agreed to sell up to 6,666,667 shares of its common stock to Ault Lending for $10.0 million, or $1.50 per share, and issue to Ault Lending warrants to acquire 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per share. As of December 31, 2022, Ault Lending had funded the full $10.0 million.
Alzamend Marketing and Brand Development Services Agreement On November 1, 2022, the Company entered into a contract with Alzamend, a related party, to provide marketing and brand development services. The contract is effective as of August 1, 2022, for a period of one year. The parties to the contract approved the contract on November 1, 2022, which is considered contract inception. Alzamend issued 933,334 shares of its common stock to satisfy payment under the contract. As the transaction consideration received by the Company is non-cash consideration in the form of shares of Alzamend common stock, changes in the fair value of the non-cash consideration due to form of the consideration (changes in the market price of Alzamend stock) are not included in the transaction price and therefore, are not included in revenue. The Company will recognize revenue of approximately $1.0 million over the period from contract inception to the end of the contract term based on the number of shares received and the trading price of Alzamend stock at contract inception. As of December 31, 2022, the Company has recognized approximately $0.2 million in related party revenue and recorded $0.8 million as a contract liability related to this agreement.

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