What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-19 compared with 2021-08-16 · 742 added, 542 removed, 1075 unchanged (54% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS

Cash and cash equivalents

$ 105,391,000

Marketable equity securities

24 unchanged sentences

Warrant liability

Income taxes payable

Other current liabilities

TOTAL CURRENT LIABILITIES

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

September 30,

LONG-TERM LIABILITIES

8 unchanged sentences

$ 0.001 par value – 1,000,000 shares authorized;

issued and outstanding at June 30, 2021 and December 31, 2020

(redemption amount and liquidation preference of $ 176,000

as of June 30, 2021 and December 31, 2020)

issued and outstanding at September 30, 2021 and December 31, 2020

(redemption amount and liquidation preference of $ 176,000 as of

September 30, 2021 and December 31, 2020)

Series B Convertible Preferred Stock, $ 10 stated value per share,

$ 0.001 par value – 500,000 shares authorized;

share, $ 0.001 par value – 500,000 shares authorized;

125,000 shares issued

and outstanding at June 30, 2021 and December 31, 2020 (liquidation

preference of $ 1,250,000 at June 30, 2021 and December 31, 2020)

and outstanding at September 30, 2021 and December 31, 2020 (liquidation

preference of $ 1,250,000 at September 30, 2021 and December 31, 2020)

Class A Common Stock, $ 0.001 par value – 500,000,000 shares authorized;

56,159,963 and 27,753,562 shares issued and outstanding at June 30,

63,346,921 and 27,753,562 shares issued and outstanding at September 30, 2021

and December 31, 2020, respectively

Class B Common Stock, $ 0.001 par value – 25,000,000 shares authorized;

nil shares issued and outstanding at June 30, 2021 and December 31,

nil shares issued and outstanding at September 30, 2021 and December 31, 2020

Additional paid-in capital

2 unchanged sentences

( 121,396,000 )

Accumulated other comprehensive gain (loss)

Accumulated other comprehensive loss

( 9,631,000 )

( 1,718,000 )

Treasury stock, at cost

( 2,773,000 )

TOTAL AULT GLOBAL HOLDINGS STOCKHOLDERS’ EQUITY

3 unchanged sentences

$ 225,721,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME (LOSS) (Unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS (Unaudited)

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Revenue, cryptocurrency mining

Revenue, lending and trading activities

( 38,869,000 )

Total revenue

( 30,794,000 )

Cost of revenue

Gross profit (loss)

( 36,065,000 )

Operating expenses

2 unchanged sentences

General and administrative

Provision for credit losses

( 1,000,000 )

Total operating expenses

Income (loss) from continuing operations

Loss from continuing operations

( 49,874,000 )

( 1,625,000 )

( 2,850,000 )

( 5,324,000 )

Other income (expenses)

Interest income

Accretion of discount on note receivable, related party

Interest expense

( 2,366,000 )

Change in fair value of marketable equity securities

( 4,414,000 )

Change in fair value of marketable equity securities

Realized gain on marketable securities

Gain (loss) on extinguishment of debt

( 12,823,000 )

( 13,298,000 )

Change in fair value of warrant liability

5 unchanged sentences

( 16,741,000 )

Income tax (expense) benefit

( 22,961,000 )

( 3,510,000 )

Income tax (provision) benefit

Net income (loss) from continuing operations

1 unchanged sentence

( 16,735,000 )

( 22,943,000 )

Net loss from discontinued operations, net of taxes

3 unchanged sentences

( 16,735,000 )

( 24,641,000 )

Net loss attributable to non-controlling interest

2 unchanged sentences

( 16,735,000 )

( 24,641,000 )

Preferred dividends

2 unchanged sentences

$ ( 16,738,000 )

$ ( 24,651,000 )

Basic net income (loss) per common share:

8 unchanged sentences

Weighted average diluted common shares outstanding

Comprehensive income (loss)

Comprehensive loss

Net income (loss) available to common stockholders

1 unchanged sentence

$ ( 16,738,000 )

$ ( 24,651,000 )

Other comprehensive income (loss)

6 unchanged sentences

( 7,914,000 )

Total comprehensive income (loss)

Total comprehensive loss

$ ( 47,905,000 )

$ ( 15,133,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

$ ( 6,581,000 )

$ ( 23,579,000 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

2 unchanged sentences

IN STOCKHOLDERS’ EQUITY (Unaudited)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Comprehensive

1 unchanged sentence

Stockholders’

BALANCES, April 1, 2021

BALANCES, July 1, 2021

$ 311,759,000

1 unchanged sentence

$ ( 4,600,000 )

$ 231,389,000

Issuance of common stock for restricted stock awards

Stock-based compensation:

Issuance of stock options at Gresham

Restricted stock awards

Issuance of stock options at Gresham Worldwide

Issuance of common stock for cash

Financing cost in connection with sales of

Issuance of common stock for conversion

of convertible notes payable, related

Financing cost in connection with sales of common stock

Adjustment to treasury stock

for holdings in investment

( 2,773,000 )

Comprehensive loss:

( 42,870,000 )

Preferred dividends

Net unrealized loss on derivatives

in related party

Foreign currency translation adjustments

Net income attributable to non-controlling

Net unrealized gain on derivatives in related party

( 4,849,000 )

BALANCES, June 30, 2021

Foreign currency translation adjustments

Net income attributable to non-controlling interest

BALANCES, September 30, 2021

$ 331,886,000

2 unchanged sentences

$ ( 2,773,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

DPW HOLDINGS, INC.

$ 200,981,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY (Unaudited)

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Comprehensive

1 unchanged sentence

Stockholders’

BALANCES, April 1, 2020

BALANCES, July 1, 2020

$ 105,626,000

2 unchanged sentences

Stock-based compensation:

Issuance of common stock in payment of

accrued liabilities

Issuance of common stock for conversion

3 unchanged sentences

with convertible notes

Cash for exchange fees and other financing costs

Comprehensive loss:

4 unchanged sentences

in related party

Foreign currency translation

BALANCES, June 30, 2020

Foreign currency translation adjustments

BALANCES, September 30, 2020

$ 122,244,000

1 unchanged sentence

$ ( 4,439,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

2 unchanged sentences

IN STOCKHOLDERS’ EQUITY (Unaudited)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Comprehensive

5 unchanged sentences

$ ( 1,718,000 )

Issuance of common stock for restricted stock awards

Stock-based compensation:

Issuance of stock options at Gresham

Restricted stock awards

Issuance of stock options at Gresham Worldwide

Issuance of common stock for cash

Financing cost in connection with sales of

Financing cost in connection with sales of common

( 4,952,000 )

Adjustment to treasury stock

for holdings in

investment partnerships

( 2,773,000 )

Issuance of common stock for conversion

1 unchanged sentence

Issuance of common stock for conversion

of convertible notes payable, related

of convertible notes payable, related party

Comprehensive loss:

Preferred dividends

Net unrealized loss on derivatives

in related party

Net unrealized loss on derivatives in related party

( 7,773,000 )

Foreign currency translation adjustments

Net income attributable to non—controlling

BALANCES, June 30, 2021

Net income attributable to non-controlling interest

BALANCES, September 30, 2021

$ 331,886,000

2 unchanged sentences

$ ( 2,773,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

$ 200,981,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

2 unchanged sentences

IN STOCKHOLDERS’ EQUITY (Unaudited)

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Comprehensive

Non-Controlling

Stockholders’

13 unchanged sentences

with convertible notes

Cash for exchange fees and other financing costs

Comprehensive loss:

5 unchanged sentences

Foreign currency translation adjustments

BALANCES, June 30, 2020

BALANCES, September 30, 2020

$ 122,244,000

1 unchanged sentence

$ ( 4,439,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

5 unchanged sentences

( 22,943,000 )

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of right-of-use assets

1 unchanged sentence

Interest expense – debt discount

Gain on extinguishment of debt

(Gain) loss on extinguishment of debt

Change in fair value of warrant liability

Accretion of original issue discount on notes receivable – related party

( 4,213,000 )

Accretion of original issue discount on notes receivable

4 unchanged sentences

( 15,154,000 )

Unrealized gains on marketable equity securities

( 3,483,000 )

Unrealized (gains) losses on equity securities – related party

Unrealized losses on marketable equity securities

Unrealized gains on equity securities – related party

( 6,150,000 )

5 unchanged sentences

Accounts receivable

( 1,270,000 )

Accrued revenue

4 unchanged sentences

Accounts payable, related parties

Income taxes payable

Other current liabilities

17 unchanged sentences

Proceeds from sale of investment in real property, related party

Purchase of marketable equity securities

Sales of marketable equity securities

Purchase of marketable equity securities

( 2,144,000 )

Proceeds from loans receivable

4 unchanged sentences

$ ( 893,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

AULT GLOBAL HOLDINGS, INC.

2 unchanged sentences

(Unaudited) (continued)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from financing activities:

5 unchanged sentences

Proceeds from notes payable

Proceeds from short-term advances

Payments on short-term advances

Proceeds from short-term advances – related party

4 unchanged sentences

Payments of preferred dividends

Purchase of treasury stock

( 2,773,000 )

Payments on revolving credit facilities, net

4 unchanged sentences

Cash and cash equivalents at end of period

$ 105,391,000

Supplemental disclosures of cash flow information:

11 unchanged sentences

Conversion of loans to debt and equity securities

Conversion of convertible notes payable, related party into shares

Conversion of convertible notes payable, related party, in shares

of common stock

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

DESCRIPTION OF BUSINESS

Ault Global Holdings, Inc., a Delaware corporation (“Ault Global”

or the “Company”), formerly known as DPW Holdings, was incorporated in September 2017.

The Company is a diversified holding

company owning subsidiaries engaged in the following operating businesses:

commercial and defense solutions, commercial lending and advanced

textile technology.

The Company’s wholly-owned operating subsidiaries are Gresham Worldwide, Inc.

(“GWW”), Coolisys

Technologies Corp.

(“Coolisys”), Gresham Power Electronics Ltd.

(f/k/a Digital Power Limited) (“Gresham Power”),

Relec Electronics Ltd.

(“Relec”), Digital Power Lending, LLC (“DP Lending”), Ault Alliance, Inc.

Alliance”), Ault Disruptive Technologies Company, LLC and Tansocial LLC (“Tansocial”).

The Company also has a controlling

interest in Enertec Systems 2001 Ltd (“Enertec”), Microphase Corporation (“Microphase”) and Alliance Cloud Services,

LLC (“Alliance Cloud Services”).

Ault Global Holdings, Inc.,

a Delaware corporation (“Ault Global” or the “Company”), formerly known as DPW Holdings, Inc., was incorporated

in September 2017.

Ault Global is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies

with a global impact.

Through its wholly and majority-owned subsidiaries and strategic investments, the Company owns and operates a data

center at which it mines Bitcoin, and provides mission-critical products that support a diverse range of industries, including defense/aerospace,

industrial, automotive, telecommunications, medical/biopharma, and textiles.

In addition, the Company extends credit to select entrepreneurial

businesses through a licensed lending subsidiary.

Ault Global was founded by Milton “Todd” Ault III, its Executive Chairman

8 unchanged sentences

The Company has three reportable segments:

· GWW – defense solutions with operations

conducted by Microphase, Enertec, Gresham Power and Relec,

· Coolisys – commercial electronics solutions,

· Ault Alliance – commercial lending and

digital learning through DP Lending, Alliance Cloud Services and Tansocial.

In March 2021, the Company

resumed cryptocurrency mining operations due to several factors, which positively affected the number of active miners the Company operated,

including the market prices of digital currencies, and favorable power costs available at the Michigan cloud data center purchased on

January 29, 2021.

· Gresham Worldwide (“GWW”) –

defense solutions,

· TurnOnGreen – commercial electronics solutions,

· Ault Alliance – Bitcoin mining, data

center operations, commercial lending and media.

On January 19, 2021, the Company

2 unchanged sentences

short form merger pursuant to an agreement and plan of merger dated January 7, 2021.

The merger and resulting name change do not affect

The merger and resulting name change did not affect

the rights of security holders of the Company.

2 unchanged sentences

LIQUIDITY AND FINANCIAL CONDITION

As of June 30, 2021, the Company had cash and cash equivalents of $ 105.4

million, working capital of $ 127.9 million and total stockholders’ equity of $ 231.4 million.

In the past, the Company financed

its operations principally through issuances of convertible debt, promissory notes and equity securities.

During the six months ended

June 30, 2021, the Company continued to strengthen its liquidity and financial condition through additional equity financing.

six months ended June 30, 2021, the Company sold an aggregate of 27.9 million shares of common stock pursuant to the 2021 ATM Offering

for gross proceeds of $ 144.0 million.

As of September 30, 2021,

the Company had cash and cash equivalents of $ 44.0 million , working capital of $ 93.9 million and total stockholders’ equity

of $ 201.0 million .

In the past, the Company financed its operations principally through issuances of convertible debt, promissory notes

and equity securities.

During the nine months ended September 30, 2021, the Company continued to strengthen its liquidity and financial

condition through additional equity financing from its 2021 At-The-Market Offering (the “2021 ATM Offering”);

see Note 24 for a discussion of the

Company’s 2021 ATM Offering.

The Company believes its current

2 unchanged sentences

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING

The accompanying unaudited

condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and

do not include all the information and disclosures required by generally accepted accounting principles in the United States of America

The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed consolidated

financial statements and the accompanying notes.

The actual results experienced by the Company may differ materially from the Company’s

The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion

of management, necessary to provide a fair statement of results for the interim periods presented.

These condensed consolidated financial

statements should be read in conjunction with the consolidated financial statements in the Company’s Annual Report on Form 10-K

for the year ended December 31, 2020, filed with the Securities and Exchange Commission on April 15, 2021.

The condensed consolidated

balance sheet as of December 31, 2020 was derived from the Company’s audited 2020 financial statements contained in the above referenced

Results of the three and six months ended June 30, 2021, are not necessarily indicative of the results to be expected for the

full year ending December 31, 2021.

The accompanying

unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and

Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the

United States of America (“GAAP”).

The Company has made estimates and judgments affecting the amounts reported in the

Company’s condensed consolidated financial statements and the accompanying notes.

The actual results experienced by the

Company may differ materially from the Company’s estimates.

The condensed consolidated financial information is unaudited but

reflects all normal adjustments that are, in the opinion of management, necessary to provide a fair statement of results for the

interim periods presented.

These condensed consolidated financial statements should be read in conjunction with the consolidated

financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the

Securities and Exchange Commission (the “SEC”) on April 15, 2021.

The condensed consolidated balance sheet as of December

31, 2020 was derived from the Company’s audited 2020 financial statements contained in the above referenced Form 10-K.

of the three and nine months ended September 30, 2021, are not necessarily indicative of the results to be expected for the full

year ending December 31, 2021.

Significant Accounting Policies

1 unchanged sentence

changes in the Company’s significant accounting policies to those previously disclosed in the 2020 Annual Report other than disclosed

Variable Interest Entities

For Variable Interest Entities

(“VIEs”), the Company assesses whether it is the primary beneficiary as prescribed by the accounting guidance on the consolidation

The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the

performance of the entity and the obligation to absorb the losses or the right to receive the benefits that could potentially be significant

to the entity.

The Company evaluates its

business relationships with related parties to identify potential VIEs under ASC 810 “Consolidation”.

The Company consolidates

VIEs in which it is considered to be the primary beneficiary.

Entities are considered to be the primary beneficiary if they have both

of the following characteristics:

(i) the power to direct the activities that, when taken together, most significantly impact the VIE’s

performance, and (ii) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.

The Company’s judgment with respect to its level of influence or control of an entity involves the consideration of various factors

including the form of its ownership interest, its representation in the entity’s governance, the size of its investment, estimates

of future cash flows, its ability to participate in policy making decisions and the rights of the other investors to participate in the

decision making process and to replace the Company as manager and/or liquidate the joint venture, if applicable.

Treasury Stock

The shares of Company stock

attributable to the Company’s limited partner interest in Ault Alpha LP (the “Alpha Fund”) are considered treasury stock

on the consolidated balance sheet and thereby deemed not to be included in the calculation of weighted average common shares outstanding.

However, these shares are legally outstanding.

Recently Adopted Accounting Pronouncements

In December 2019, the Financial

Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income

Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes.

2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent

This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15,

The Company has completed its evaluation process and the January 1, 2021 adoption did not have a material impact to the Company’s

consolidated financial statements.

Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2019-12, Income Taxes (Topic

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects

related to accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies

and amends existing guidance to improve consistent application.

This guidance is effective for fiscal years, and interim periods within

those fiscal years, beginning after December 15, 2020.

The Company has completed its evaluation process and the January 1, 2021 adoption

did not have a material impact to the Company’s consolidated financial statements.

Revenue Disaggregation

The following tables summarize disaggregated customer

contract revenues and the source of the revenue for the six months ended June 30, 2021 and 2020.

Revenues from lending and trading activities

included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to be revenues

from contracts with customers under GAAP.

T he Company’s disaggregated revenues consist

of the following for the six months ended June 30, 2021 and 2020:

Six Months ended June 30, 2021

contract revenues and the source of the revenue for the three and nine months ended September 30, 2021 and 2020.

Revenues from lending and trading

activities included in consolidated revenues were primarily interest, dividend and other investment income, which are not considered to

be revenues from contracts with customers under GAAP.

The Company’s disaggregated revenues consist

of the following for the three months ended September 30, 2021:

Three Months ended September 30, 2021

Ault Alliance

3 unchanged sentences

Revenue, lending and trading activities

( 38,869,000 )

Total revenue

$ ( 38,261,000 )

$ ( 30,794,000 )

RF/microwave filters

7 unchanged sentences

Revenue, lending and trading activities

(38,869,000 )

Total revenue

$ (38,261,000 )

$ (30,794,000 )

Timing of Revenue Recognition

2 unchanged sentences

Revenue from contracts with customers

Six Months ended June 30, 2020

The Company’s disaggregated revenues consist

of the following for the three months ended September 30, 2020:

Three Months ended September 30, 2020

Ault Alliance

3 unchanged sentences

Revenue, lending and trading activities

Total revenue

RF/microwave filters

5 unchanged sentences

Revenue from contracts with customers

Lending and trading activities

Revenue, lending and trading activities

Total revenue

2 unchanged sentences

Services transferred over time

Revenue from contracts with customers

The Company’s disaggregated revenues consisted

of the following for the nine months ended September 30, 2021:

Nine Months Ended September 30, 2021

Ault Alliance

Primary Geographical Markets

North America

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units

Power supply systems

Healthcare diagnostic systems

Defense systems

Digital currency mining

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred over time

Revenue from contracts with customers

The Company’s disaggregated revenues consisted

of the following for the nine months ended September 30, 2020:

Nine Months ended September 30, 2020

Ault Alliance

Primary Geographical Markets

North America

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units

Power supply systems

Healthcare diagnostic systems

Defense systems

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred over time

Revenue from contracts with customers

Sales of Products

The Company generates revenues from the sale of its products through

a direct and indirect sales force.

The Company’s performance obligations to deliver products are satisfied at the point in

time when title transfers to the customer.

Generally products are shipped FOB shipping point and title transfers to the customer at the

time the products are placed on a common carrier.

The Company provides standard assurance warranties, which are not separately priced,

that the products function as intended.

The Company generates revenues

from the sale of its products through a direct and indirect sales force.

The Company’s performance obligations to deliver products

are satisfied at the point in time when title transfers to the customer.

Generally products are shipped FOB shipping point and title transfers

to the customer at the time the products are placed on a common carrier.

The Company provides standard assurance warranties, which are

not separately priced, that the products function as intended.

The Company primarily receives fixed consideration for sales of product.

Some of the Company’s

contracts with distributors include stock rotation rights after six months for slow moving inventory, which represents variable consideration.

The Company uses an expected value method to estimate variable consideration and constrains revenue for estimated stock rotations until

it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

Some of the Company’s contracts with distributors include stock rotation rights after six months for slow moving inventory, which

represents variable consideration.

The Company uses an expected value method to estimate variable consideration and constrains revenue

for estimated stock rotations until it is probable that a significant reversal in the amount of cumulative revenue recognized will not

To date, returns have been insignificant.

4 unchanged sentences

Manufacturing Services

For manufacturing services, which include revenues generated by Enertec

and in certain instances revenues generated by Gresham Power, the Company’s performance obligation for manufacturing services is

satisfied over time as the Company creates or enhances an asset based on criteria that are unique to the customer and that the customer

controls as the asset is created or enhanced.

Generally, the Company recognizes revenue based upon proportional performance over time

using a cost-to-cost method which measures progress based on the costs incurred to total expected costs in satisfying its performance

For manufacturing services,

which include revenues generated by the Company’s subsidiary, Enertec Systems 2001 Ltd (“Enertec”), and in certain instances,

revenues generated by the Company’s subsidiary, Gresham Power Electronics Ltd., the Company’s performance obligation for manufacturing

services is satisfied over time as the Company creates or enhances an asset based on criteria that are unique to the customer and that

the customer controls as the asset is created or enhanced.

Generally, the Company recognizes revenue based upon proportional performance

over time using a cost-to-cost method which measures progress based on the costs incurred to total expected costs in satisfying its performance

This method provides a depiction of the progress in providing the manufacturing service because there is a direct relationship

10 unchanged sentences

Lending Activities

Ault Alliance, through DP Lending, generates

revenue from lending activities primarily through interest, origination fees and late/other fees.

Interest income on these products is

calculated based on the contractual interest rate and recorded as interest income as earned.

The origination fees or original issue discounts

are recognized over the life of the loan using the effective interest method.

Ault Alliance, Inc.

(“Ault Alliance”),

through its wholly owned subsidiary Digital Power Lending, LLC (“DP Lending”), generates revenue from lending activities primarily

through interest, origination fees and late/other fees.

Interest income on these products is calculated based on the contractual interest

rate and recorded as interest income as earned.

The origination fees or original issue discounts are recognized over the life of the loan

using the effective interest method.

Trading Activities

45 unchanged sentences

consolidated financial position and results from operations.

Expenses associated with running the cryptocurrency mining business,

such as equipment depreciation and electricity cost are recorded as a component of cost of revenues.

Expenses associated with running

the cryptocurrency mining business, such as equipment depreciation and electricity costs are recorded as a component of cost of revenues.

fair value of financial instruments

3 unchanged sentences

the fair value hierarchy:

Fair Value Measurement at June 30, 2021

Investments in convertible and term promissory

notes of Avalanche International, Corp.

(“AVLP”) and Ault and Company, Inc.

Company”) – related parties

Investments in common stock and warrants of

AVLP – a related party

Fair Value Measurement at September 30, 2021

Investments in convertible promissory notes

of Avalanche International, Corp.

– a related party

Investment in term promissory note of Ault &

Company, Inc.

(“Ault & Company”) – a

related party

Investments in common stock of AVLP – a

related party

Investment in common stock and warrants of

Alzamend Neuro, Inc.

(“Alzamend”) – a related

(“Alzamend”) – a

related party

Investments in marketable equity securities

3 unchanged sentences

Fair Value Measurement at December 31, 2020

Investments in convertible promissory notes and

advances of AVLP and Alzamend – related

Investments in convertible promissory notes

and advances of AVLP and Alzamend –

related parties

Investments in common stock and warrants of

8 unchanged sentences

in the market.

The Company measures equity

investments without readily determinable fair values on a nonrecurring basis.

The fair values of these investments are determined based

on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted

cash flow projections.

The Company’s other current financial assets and current financial liabilities have fair values that approximate

their carrying values.

The Company assesses the inputs

used to measure fair value using the three-tier hierarchy based on the extent to which inputs used in measuring fair value are observable

in the market.

The Company considers all

9 unchanged sentences

The Company made an irrevocable

election to record available-for-sale debt investments at fair value utilizing the fair value option available under U.S.

election to record available-for-sale debt investments at fair value utilizing the fair value option available under GAAP.

believed that carrying these investments at fair value better portrayed the economic substance of the investments.

16 unchanged sentences

Company’s marketable equity securities, non-marketable equity securities, gains and losses on marketable and non-marketable equity

Our marketable equity securities

are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy because the

Company uses quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar instruments

in active markets.

Our non-marketable equity

securities are investments in privately held companies without readily determinable market values.

The Company’s marketable

equity securities are publicly traded stocks or funds measured at fair value and classified within Level 1 and 2 in the fair value hierarchy

because the Company uses quoted prices for identical assets in active markets or inputs that are based upon quoted prices for similar

instruments in active markets.

The Company’s non-marketable

equity securities are investments in privately held companies without readily determinable market values.

The carrying value of the Company’s

19 unchanged sentences

the changes in investments in debt and equity securities measured and carried at fair value on a recurring basis with the use of significant

unobservable inputs (Level 3) for the six months ended June 30, 2021:

unobservable inputs (Level 3) for the nine months ended September 30, 2021:

Investments in

3 unchanged sentences

Investment in convertible preferred stock

Investment in warrants

Initial valuation of acquired warrants

Change in fair value of warrants

Accretion of discount

Conversion of loans to debt and equity securities

Unrealized gains on debt and equity securities

Conversion to marketable securities

( 2,656,000 )

Balance at June 30, 2021

Investments in debt and equity

securities in the preceding table include the Company’s investments in certain preferred stocks and common stock warrants that do

not have readily determinable market values as defined under GAAP.

The Company applied standard valuation techniques in valuing the preferred

stock and made assumptions regarding the expected duration of the investment and the effects of subordination in liquidation.

value of the Company’s holdings warrants was estimated using the Black-Scholes option-pricing method and the following assumptions:

Exercise price

Remaining contractual term (in years)

Weighted average risk free interest rate

Expected dividend yield

The volatility factor was

determined based on historical stock prices for similar technology companies with market capitalizations under $ 100 million.

valuation is a Level 3 measurement.

Balance at September 30, 2021

See Note 13 for the changes

in investments in AVLP, Alzamend and Ault & Company measured and carried at fair value on a recurring basis with the use of significant

unobservable inputs (Level 3) during the six months ended June 30, 2021.

unobservable inputs (Level 3) during the nine months ended September 30, 2021.

Net incomE (Loss) per Share

Basic and diluted net income

per common share for the three and six months ended June 30, 2021 are calculated as follows:

For the Three Months Ended June 30, 2021

per common share for the nine months ended September 30, 2021 are calculated as follows:

For the Nine Months Ended September 30, 2021

(Denominator)

4 unchanged sentences

Effect of dilutive securities

Stock options

4% convertible notes

Diluted earnings per share

Income available to common stockholders plus assumed

For the Six Months Ended June 30, 2021

Net income attributable to Ault Global Holdings

Preferred stock dividends

Basic earnings per share

Net income available to common stockholders

Effect of dilutive securities

Stock options

4% convertible notes

Restricted stock grants

Diluted earnings per share

Income available to common stockholders plus assumed

For the three and six months

ended June 30, 2020, net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of

common shares outstanding.

The calculation of the basic and diluted earnings per share is the same for the three and six months ended

June 30, 2020, as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for

Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following

at June 30, 2020:

Income available to common stockholders plus assumed conversions

loss per share is computed by dividing the net loss to common stockholders by the weighted

average number of common shares outstanding.

The calculation of the basic and diluted earnings

per share is the same for all periods presented, excluding the nine months ended September

30, 2021, as the effect of the potential common stock equivalents is anti-dilutive due to

the Company’s net loss position for all periods presented.

Anti-dilutive securities,

which are convertible into or exercisable for the Company’s common stock, consist of

the following at September 30, 2021 and 2020:

September 30,

Stock options

10 unchanged sentences

Accordingly, the results of the restaurant operations are presented as discontinued operations in the Company’s condensed consolidated

statements of operations and comprehensive income (loss) and are excluded from continuing operations for all periods presented.

statements of operations and comprehensive loss and are excluded from continuing operations for all periods presented.

November 2, 2020, I.AM filed a voluntary petition for bankruptcy under Chapter 7 in the United States Bankruptcy Court in the Central

9 unchanged sentences

The following tables summarize the major classes of line items included in loss from discontinued operations:

June 30, 2020

September 30, 2020

Cost of revenue

7 unchanged sentences

Marketable securities in equity

securities with readily determinable market prices consisted of the following as of June 30, 2021 and December 31, 2020:

Marketable equity securities at June 30, 2021

securities with readily determinable market prices consisted of the following as of September 30, 2021 and December 31, 2020:

Marketable equity securities at September 30, 2021

Gross unrealized

12 unchanged sentences

Purchases of marketable equity securities in operations

Purchases of marketable equity securities

Conversion of debt securities to marketable securities

3 unchanged sentences

Realized gains on marketable equity securities

Realized losses on marketable equity securities

( 4,386,000 )

Unrealized gains on marketable equity securities

Balance at June 30, 2021

At June 30, 2021 and December

31, 2020, the Company had invested in the marketable equity securities of certain publicly traded companies.

The Company’s investment

in marketable equity securities will be revalued on each balance sheet date.

At June 30, 2021 and December

31, 2020, the Company also held an investment in a limited partnership.

This investment does not have a readily determinable fair value

and has been measured at cost less impairment, if any, and adjusted for observable price changes for identical or similar investments.

( 6,353,000 )

Balance at September 30, 2021

At September 30, 2021 and

December 31, 2020, the Company had invested in the marketable equity securities of certain publicly traded companies.

The Company’s

investment in marketable equity securities will be revalued on each balance sheet date.

At September 30, 2021 and

December 31, 2020, the Company also held an investment in a limited partnership.

This investment does not have a readily determinable

fair value and has been measured at cost less impairment, if any, and adjusted for observable price changes for identical or similar investments.

Naked Brand Group Stock Purchase Agreement

8 unchanged sentences

as revenue in April 2021.

Loans receivable are summarized as follows :

September 30, 2021

December 31, 2020

Loans receivable before allowances and discounts

Allowances for uncollectible loans

( 1,281,000 )

Unamortized discounts

( 1,956,000 )

DP Lending provides commercial

loans to companies throughout the United States to provide them with operating capital to finance the growth of their businesses.

related to loans receivable for the nine months ended September 30, 2021 is summarized as follows:

Loans Receivable

Balance at January 1, 2021

Investment in convertible promissory notes

Accretion of discount

Foreign currency loss

Conversion to marketable securities

Balance at September 30, 2021

PROPERTY AND EQUIPMENT, NET

At June 30, 2021 and December 31, 2020,

During the quarter ended

September 30, 2021, the Company executed contracts to purchase 4,000 Antminer S-19 Pro Bitcoin miners.

As of September

30, 2021, the Company had received 1,000 of the Bitcoin miners.

The remaining 3,000 units are expected to be delivered at a rate

of 300 units per month between October 2021 and July 2022 .

The gross purchase price is $2 7.3 million , of which $ 18.1 million was paid

as of September 30, 2021 with the balance scheduled to be paid between October 2021 and June 2022.

During the quarter ended September

30, 2021, the Company capitalized $ 433,000 of shipping costs and $ 1.2 million of third-party commissions related to cryptocurrency machines

and related equipment.

At September 30, 2021 and December 31,

2020, property and equipment consisted of:

June 30, 2021

September 30, 2021

December 31, 2020

7 unchanged sentences

Property and equipment, net

For the six months ended June

30, 2021 and 2020, depreciation expense amounted to $ 446,000 and $ 260,000 , respectively.

For the nine months ended

September 30, 2021 and 2020, depreciation expense amounted to $ 711,000 and $ 357,000 , respectively.

Acquisition of Michigan

14 unchanged sentences

INTANGIBLE ASSETS, NET

At June 30, 2021 and December 31, 2020

At September 30, 2021 and December 31,

2020 intangible assets consisted of:

June 30, 2021

September 30, 2021

December 31, 2020

8 unchanged sentences

Intangible assets, net

The Company’s trade

names and trademarks were determined to have an indefinite life.

The remaining definite lived intangible assets are primarily being amortized

on a straight-line basis over their estimated useful lives.

Amortization expense was $ 191,000

and $167 ,000 , respectively,

for the six months ended June 30, 2021 and 2020.

The Company’s

trade names and trademarks were determined to have an indefinite life.

The remaining definite lived intangible assets are primarily

being amortized on a straight-line basis over their estimated useful lives.

Amortization expense was $ 296,000 and $ 252,000 ,

respectively, for the nine months ended September 30, 2021 and 2020.

The following table summarizes

the changes in the Company’s goodwill during the six months ended June 30, 2021:

the changes in the Company’s goodwill during the nine months ended September 30, 2021:

Balance as of January 1, 2021

Effect of exchange rate changes

Balance as of June 30, 2021

Balance as of September 30, 2021

INVESTMENTS – RELATED PARTIES

Investments in AVLP, Alzamend

and Ault & Company at June 30, 2021 and December 31, 2020, are comprised of the following :

and Ault & Company at September 30, 2021 and December 31, 2020, are comprised of the following:

Investment in Promissory

Notes, Related Parties

September 30,

Investment in convertible promissory note of AVLP

4 unchanged sentences

February 25, 2022

Accrued interest in promissory notes, related parties

Accrued interest receivable, AVLP

Accrued interest receivable, Ault & Company and Alzamend

Total investment in promissory notes, related parties – gross

original issue discount

( 2,240,000 )

provision for loan losses

provision for loan losses, AVLP

( 2,000,000 )

1 unchanged sentence

Total investment in promissory notes, related parties

in Common Stock and Warrants, Related Parties

Investment in Common

Stock and Warrants, Related Parties

Weighted Avg.

September 30,

Contractual Term

3 unchanged sentences

Investment in common stock of Alzamend

Total investment in common stock and warrants, related

Total investment in common stock and warrants, related parties

The following table summarizes

the changes in the Company’s investments in AVLP, Alzamend and Ault & Company during the six months ended June 30, 2021 :

the changes in the Company’s investments in AVLP, Alzamend and Ault & Company during the nine months ended September 30, 2021:

Investment in

19 unchanged sentences

Accrued interest

Balance at June 30, 2021

Balance at September 30, 2021

Investments in AVLP

2 unchanged sentences

promissory notes, warrants and shares of AVLP common stock.

As of June 30, 2021, loans to AVLP totaled $ 15.0 million and, in addition

As of September 30, 2021, loans to AVLP totaled $ 16.5 million and, in addition

to the 12 % convertible promissory notes, AVLP has issued to the Company warrants to purchase 33.1 million shares of AVLP common stock

at an exercise price of $ 0.50 per share for a period of five years .

At June 30, 2021, the Company

recorded a cumulative unrealized loss on its investment in warrants of AVLP of $4.0 million

representing the difference between the cost basis and the estimated fair value of the warrants in the Company’s accumulated

other comprehensive income in the stockholder's equity section of the Company’s consolidated balance sheet.

The Company’s

investment in AVLP will be revalued on each balance sheet date.

Fair Value Assessments of Warrants - AVLP

The fair value of the Company’s

holdings in the AVLP warrants was estimated using the Black-Scholes option-pricing method and the following assumptions :

Exercise price

Remaining contractual term (in years)

68.7 % — $ 112.1 %

Weighted average risk free interest rate

0.13 % — 2.98 %

Expected dividend yield

The volatility factor was

determined based on historical stock prices for similar technology companies with market capitalizations under $100 million.

valuation is a Level 3 measurement.

at an exercise price of $ 0.50 per share and an initial contractual term of five years.

During the nine months

ended September 30, 2021, the Company recorded an unrealized loss of $ 7.7

million due to the decline in value of the warrant derivative securities that the Company received as a result of its

investment in AVLP.

The unrealized loss was recorded in accumulated other comprehensive loss in the stockholder’s equity

section of the Company’s consolidated balance sheet.

The Company’s investment in AVLP will be revalued on each balance

Fair Value Assessment of Convertible Notes

During the six months ended June 30, 2021 and 2020, no interest income

was recognized from the Company’s investment in convertible promissory notes in AVLP.

The Company evaluated the collectability of

both interest and principal for the convertible promissory notes in AVLP to determine whether there was an impairment.

At June 30, 2021,

the Company determined that the fair value of the convertible promissory notes in AVLP was $ 13.6 million .

The Company’s determination

of fair value was based upon the estimated present value of a future liquidity event combined with the closing price of AVLP’s common

stock at June 30, 2021.

Impairment assessments require significant judgments and are based on significant assumptions related to the borrower’s

credit risk, financial performance, expected sales, and estimated fair value of the collateral.

During the nine months ended

September 30, 2021 and 2020, no interest income was recognized from the Company’s investment in convertible promissory notes in

The Company evaluated the collectability of both interest and principal for the convertible promissory notes in AVLP to determine

whether there was an impairment.

At September 30, 2021, the Company determined that the fair value of the convertible promissory notes

in AVLP was $ 16.6 million .

The Company’s determination of fair value requires significant judgments

and are based on significant assumptions related to the borrower’s credit risk, financial performance, expected sales, and estimated

fair value of the collateral.

Fair Value Assessment of Common Stock –

1 unchanged sentence

has 999,175 shares of AVLP common stock which represents 18.0 % of AVLP’s outstanding shares of common stock.

At June 30, 2021, the

closing market price of AVLP’s common stock was $ 0.45 , a decrease from $ 0.50 at December 31, 2020.

Based upon the closing market

price of AVLP common stock at June 30, 2021, the Company’s investment in AVLP common stock had an unrealized loss of $ 0.3 million .

As a result of new rules implemented

by the SEC, which became effective September 28, 2021, shares of AVLP were

no longer eligible for quotation on the “Pink – No Information” tier operated by the OTC Markets Group, Inc.

new rules, companies like AVLP are required to have current financial information publicly available for brokers to publish competing

quotes and provide continuous market making.

As AVLP does not have financial information publicly available, AVLP was removed from the

Pink Market, which resulted in almost a complete loss of liquidity for shares of AVLP common stock.

Shares of AVLP are available

only through the “Expert Market” tier operated by the OTC Markets Group, in which quotes are “unsolicited only.”

That means broker-dealers can publish unsolicited quotes representing limit orders from customers who are not affiliates or insiders of

However, many broker-dealers will not effectuate trades in securities that are not eligible for competing quotes, such as

those on the Expert Market tier.

Quotations in Expert Market tier securities are only made available to broker-dealers, institutions and

other sophisticated investors.

Securities that are on Expert Market tier do not have trading bid and ask prices and share trading volumes

publicly quoted.

As a result, any transactions would be unknown to the public marketplace and would not provide stockholders with a reliable

market value for their shares.

At September 30, 2021, the

Company estimated the fair value of AVLP’s common stock was $0.06 per share, a decrease from $0.50 at December 31, 2020.

upon the estimated fair value of AVLP common stock at September 30, 2021, the Company’s investment in AVLP common stock had an unrealized

loss of $688,000.

Variable Interest Entity Considerations - AVLP

The Company has determined

that AVLP is a variable interest entity (“VIE”) as it does not have sufficient equity at risk.

The Company does not consolidate

AVLP because the Company is not the primary beneficiary and does not have a controlling financial interest.

To be a primary beneficiary,

an entity must have the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, among

other factors.

Although the Company has made a significant investment in AVLP, the Company has determined that Philou, which controls

AVLP through the voting power conferred by its equity investment and which is deemed to be more closely associated with AVLP, is the primary

As a result, AVLP’s financial position and results of operations are not consolidated in the Company’s financial

position and results of operations.

that AVLP is a VIE as it does not have sufficient equity at risk.

The Company does not consolidate AVLP because the Company is not the

primary beneficiary and does not have a controlling financial interest.

To be a primary beneficiary, an entity must have the power to

direct the activities of a VIE that most significantly impact the VIE’s economic performance, among other factors.

Company has made a significant investment in AVLP, the Company has determined that Philou, which controls AVLP through the voting power

conferred by its equity investment and which is deemed to be more closely associated with AVLP, is the primary beneficiary.

AVLP’s financial position and results of operations are not consolidated in the Company’s financial position and results of

Extension of AVLP Loan Agreement

On April 13, 2021, the AVLP

Loan Agreement was increased to up to $ 15,000,000 and extended to December 31, 2023.

Loan Agreement was increased to up to $ 15 million and extended to December 31, 2023.

On June 4, 2021, the AVLP Loan Agreement was

increased to up to $ 20,000,000 .

increased to up to $ 20 million.

Investments in Alzamend Common Stock and Warrants

The following table summarizes

the changes in the Company’s investments in Alzamend common stock during the six months ended June 30, 2021:

the changes in the Company’s investments in Alzamend common stock during the nine months ended September 30, 2021:

Investment in

5 unchanged sentences

Unrealized gain in common stock of Alzamend

Balance at June 30, 2021

Investment in Alzamend common stock

Investment in Alzamend options

Balance at September 30, 2021

At December 31, 2020, the

14 unchanged sentences

shares of Alzamend common stock with an exercise price of $3.00 per share.

Due to the significant risks and uncertainties associated with

FDA approvals, through June 30, 2021, the Company believes that the achievement of the requisite performance conditions for additional

investment is not probable and, as a result, no fair value of future investment rights has been recognized.

The transaction was approved

by the Company’s independent directors after receiving a third-party valuation report of Alzamend.

The transaction was approved by the Company’s independent

directors after receiving a third-party valuation report on Alzamend.

June 15, 2021, Alzamend closed an initial public offering at a price to the public of $ 5.00 per share.

DP Lending purchased 2,000,000 shares

of Alzamend’s Common stock in the initial public offering for an aggregate of $ 10,000,000 .

Alzamend’s common stock is listed

on The Nasdaq Capital Market under the ticker symbol “ALZN”.

At June 30, 2021, the fair

value of Alzamend’s common stock was $ 8.74 based on the closing price of Alzamend’s common stock.

Based upon the fair value

of Alzamend common stock at June 30, 2021, during the six months ended June 30, 2021, the Company recorded an unrealized gain of $ 31.7

million related to its investment in Alzamend common stock.

DP Lending purchased 2 million

shares of Alzamend’s Common stock in the initial public offering for an aggregate of $ 10 million.

Alzamend’s common stock

is listed on The Nasdaq Capital Market under the ticker symbol “ALZN”.

July 28, 2021, Alzamend received from the U.S.

Food and Drug Administration a “Study May Proceed” letter for a Phase 1 study

under the Alzamend’s Investigational New Drug application for AL001, a lithium-based ionic cocrystal oral therapy for patients with

dementia related to mild, moderate, and severe cognitive impairment associated with Alzheimer’s disease.

on the achievement of this milestone, under the March 9, 2021 securities purchase agreement, Alzamend sold an additional 1,333,333 shares

of its common stock to DPL for $2 million, or $1.50 per share, and issued to DPL warrants to acquire 666,667 shares of Alzamend common

stock with an exercise price of $3.00 per share.

At September 30, 2021, the

fair value of Alzamend’s common stock was $3.08 based on the closing price of Alzamend’s common stock.

Based upon the fair

value of Alzamend common stock at September 30, 2021, during the nine months ended September 30, 2021, the Company recorded an unrealized

gain of $3.8 million related to its investment in Alzamend common stock.

In conjunction with the March

3 unchanged sentences

option pricing model.

During the three and six months ended June 30, 2021, the Company recorded an unrealized gain on its investment in

warrants of Alzamend of $ 8.6 million .

During the nine months ended September 30, 2021, the Company recorded an unrealized gain on its investment in warrants

of Alzamend of $2.6 million.

The Company’s investment in Alzamend will be revalued on each balance sheet date.

7 unchanged sentences

Expected dividend yield

Significant Fluctuation

in the Fair Value of Investment in Alzamend

from the Company’s trading activities during the nine months ended September 30, 2021 included significant net gains on equity securities,

including unrealized gains and losses from market price changes.

These gains and losses have caused, and will continue to cause, significant

volatility in the Company’s periodic earnings.

September 30, 2021, the fair value of Alzamend’s common stock was $3.08 based on the closing price of Alzamend’s common stock.

Based upon the fair value of Alzamend common stock at September 30, 2021, during the three months ended September 30, 2021, the Company

recorded an unrealized loss of $27.4 million related to its investment in Alzamend common stock and during the nine months ended September

30, 2021, the Company recorded an unrealized gain of $3.8 million related to its investment in Alzamend common stock.

the three months ended September 30, 2021, the Company recorded an unrealized loss on its investment in warrants of Alzamend of $6.0 million

and during the nine months ended September 30, 2021, the Company recorded an unrealized gain on its investment in warrants of Alzamend

of $2.6 million.

The Company’s investment in Alzamend will be revalued on each balance sheet date.

Investment in Ault

& Company, Inc.

February 25, 2021, Ault & Company, a related party, sold and issued an 8 % Secured Promissory Note in the principal amount of $ 2.5

million to the Company.

The principal amount of the Secured Promissory Note, plus any accrued and unpaid interest at a rate of 8% per

annum, is due and payable on February 25, 2022 .

The carrying value of the 8% Secured Promissory Note is considered to be a reasonable

estimate of its fair value.

February 25, 2021, Ault & Company, a related party, sold and issued an 8 % Secured Promissory Note in the principal

amount of $ 2.5 million to the Company.

The principal amount of the Secured Promissory Note, plus any accrued and unpaid

interest at a rate of 8% per annum, is due and payable on February 25, 2022.

The carrying value of the 8% Secured Promissory

Note is considered to be a reasonable estimate of its fair value.

INVESTMENT PARTNERSHIP

Investments in the Alpha Fund

During fiscal year 2021, the

Company has invested in the Alpha Fund.

The Alpha Fund operates as a private investment fund.

The general partner of the Alpha Fund, Ault

Alpha GP LLC (“Alpha GP”) is owned by Ault Capital Management LLC (the “Investment Manager”), which also acts

as the investment manager to the Alpha Fund.

The Investment Manager is owned by Ault & Company, Inc.

(“Ault & Co.”).

Ault, Horne and Nisser as well as Kenneth Cragun, who serve as executive officers and/or directors of the Company, are executive

officers of the Investment Manager, and Messrs.

Ault, Horne and Nisser are executive officers and directors of Ault & Company.

As of September 30, 2021,

the Company subscribed for $ 10 million of limited partnership interests in the Alpha Fund, of which $ 7.5 million was funded, and was the

only limited partner in the Alpha Fund at such date.

These investments are subject to a rolling five-year lock-up period, provided that

after three years, Alpha GP will waive the last twenty-four (24) months of the lock-up period upon receipt of written notice from an executive

officer of the Company that a withdrawal of capital is required to prevent a going concern opinion from the Company’s auditors,

under the terms of the Alpha Fund’s partnership agreement and side letter entered into between the Company and the Alpha Fund.

The Company consolidates Alpha

Fund as a VIE due to its significant level of influence and control of Alpha Fund, the size of its investment, and its ability to participate

in policy making decisions, the Company is considered the primary beneficiary of the VIE.

Investments by Alpha Fund

The Alpha Fund has purchased

shares of the Company’s common stock in open market transactions.

As of September 30, 2021, the Alpha Fund owned 1,000,000 shares

of the Company’s common stock, accounted for as treasury stock as of September 30, 2021.

EXECUTIVE CHAIRMAN RELOCATION BENEFIT

On February 23, 2021, as part

of a relocation benefit for the Company’s Executive Chairman, Milton C.

Ault, III, related to the Company moving its corporate headquarters

from Newport Beach, CA to Las Vegas, NV, the Company agreed to purchase Mr.

Ault’s California residence for $ 2.7 million.

The transaction

was structured such that upon the closing of the subsequent sale of the residence, the Company shall have not recognized a gain or a loss

on the transaction.

On February 23, 2021, as

part of a relocation benefit for the Company’s Executive Chairman, Milton C.

Ault, III, related to the Company moving its

corporate headquarters from Newport Beach, CA to Las Vegas, NV, the Company agreed to purchase Mr.

Ault’s California residence

The transaction was structured such that upon the closing of the subsequent sale of the residence, the Company shall have

not recognized a gain or a loss on the transaction.

The Company and Mr.

Ault agreed to escrow $2 54,000 of the purchase price in the event of a loss on the subsequent

sale of the residence.

During April 2021, the Company entered into an agreement for the subsequent sale of the residence, which closed

on April 19, 2021.

Ault agreed to escrow $ 254,000

of the purchase price in the event of a loss on the subsequent sale of the residence.

During April 2021, the Company entered into an

agreement for the subsequent sale of the residence, which closed on April 19, 2021.

STOCK-BASED COMPENSATION

The options outstanding as of June 30, 2021, have

been classified by exercise price, as follows :

The options outstanding as of September 30, 2021,

have been classified by exercise price, as follows :

$ 480 - $ 560

2 unchanged sentences

Issuances Outside of Plans

$ 2.46 - $ 2.55

$ 1.79 - $ 2.55

Total Options

$ 1.79 - $ 1,856

The total stock-based compensation expense related to stock options

and stock awards issued the Company’s employees, consultants and directors, included in reported net income (loss) for the three

and six months ended June 30, 2021 and 2020, was comprised as follows:

Three Months Ended June 30,

Six Months Ended June 30,

total stock-based compensation expense related to stock options and stock awards issued to the Company’s employees,

consultants and directors, included in reported net loss for the three and nine months ended September 30, 2021 and 2020, was

comprised as follows :

Three Months Ended

September 30,

Nine Months Ended

September 30,

General and administrative

1 unchanged sentence

A summary of option activity

under the Company’s stock option plans as of June 30, 2021, and changes during the six months ended are as follows:

under the Company’s stock option plans as of September 30, 2021, and changes during the nine months ended are as follows :

Outstanding Options

1 unchanged sentence

Restricted stock awards

June 30, 2021

1 Includes options

that were issued pursuant to the Company’s 2002 Plan and are not available for future issuance.

As of June 30, 2021, there

was $ 83,000 of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the Plans.

cost is expected to be recognized over a weighted average period of 0.72 years.

January 1, 2021

Stock options granted

( 1,760,000 )

Restricted stock awards

( 1,070,000 )

September 30, 2021

As of September 30, 2021,

there was $ 3.3 million of unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the

Company’s stock incentive plans.

That expense is expected to be recognized over a weighted average period of 3.54 years.

GWW Stock-Based Compensation

On May 25, 2021, GWW issued to Jonathan Read, its Chief Executive Officer,

and Timothy Long, its Chief Operating Officer, options to purchase an aggregate total of 100,000 shares of GWW Class A common stock, at

an exercise price per share of $ 14.64 .

On May 25, 2021, GWW issued

to Jonathan Read, its Chief Executive Officer, and Timothy Long, its Chief Operating Officer, options to purchase an aggregate total of

100,000 shares of GWW Class A common stock, at an exercise price per share of $ 14.64 .

The options vest over a four -year period.

Additionally, Mr.

Long were also granted

a restricted stock award to acquire an aggregate of 50,000 shares of GWW Class A common stock, vesting annually over a three-year term.

As of the date of grant, the authorized share capital of GWW is 1,000,000 shares of Class A common stock, of which 700,000 shares were

issued and outstanding, 500,000 shares of Class B common stock of which 500,000 shares were issued and outstanding and 100,000 shares

of preferred stock of which no shares of which were outstanding.

The stock-based compensation expense related to the options included

in reported net income (loss) for the three and six months ended June 30, 2021 was $ 545,000 , based on the estimated fair value of the

options on the date of issuance.

The estimated fair value of the options was based on observable market prices of the Company’s

common stock and extrapolated to GWW based upon its relative fair value within the Company as determined by equal weighting of revenues,

operating income, and net tangible assets between the Company’s subsidiaries.

As of June 30, 2021, there was $ 514,000 of unrecognized

compensation cost related to non-vested stock-based compensation arrangements with Mr.

That cost is expected to be

recognized over a weighted average period of 2.9 years.

During the six months ended

June 30, 2021, the Company did not issue any warrants.

Additionally,

Read and Long were also granted a restricted stock award to acquire an aggregate of 50,000 shares of GWW Class A common stock,

vesting annually over a three-year term.

As of the date of grant, the authorized share capital of GWW is 1,000,000 shares of Class A common

stock, of which 700,000 shares were issued and outstanding, 500,000 shares of Class B common stock of which 500,000 shares were issued

and outstanding and 100,000 shares of preferred stock of which no shares of which were outstanding.

The stock-based compensation expense

related to the options included in reported net loss for the three and nine months ended September 30, 2021 was $ 42,000 and $ 587,000 ,

respectively, based on the estimated fair value of the options on the date of issuance.

The estimated fair value of the options was based

on observable market prices of the Company’s common stock and extrapolated to GWW based upon its relative fair value within the

Company as determined by equal weighting of revenues, operating income, and net tangible assets between the Company’s subsidiaries.

As of September 30, 2021, there was $ 472,000 of unrecognized compensation cost related to non-vested stock-based compensation arrangements

Read and Long.

That cost is expected to be recognized over a weighted average period of 2.7 years.

During the nine months ended

September 30, 2021, the Company did not issue any warrants.

The following table summarizes information about common stock warrants outstanding

at June 30, 2021:

$ 0.88 - $ 1.91

$ 8.00 - $ 19.80

at September 30, 2021:

$ 0.88 - $ 3.01

4 unchanged sentences

The Company utilized the Black-Scholes

option pricing model and the assumptions used during the six months ended June 30, 2020:

option pricing model and the assumptions used during the nine months ended September 30, 2021 :

Exercise price

1 unchanged sentence

Remaining contractual term (in years)

Weighted average risk free interest rate

86.3 % - 104.6 %

Risk free interest rate

0.17 % - 1.38 %

Expected dividend yield

OTHER CURRENT LIABILITIES

Other current liabilities at June 30,

Other current liabilities at September

30, 2021 and December 31, 2020 consisted of :

June 30, 2021

September 30, 2021

December 31, 2020

8 unchanged sentences

The following table provides

a summary of leases by balance sheet category as of June 30, 2021 :

June 30, 2021

a summary of leases by balance sheet category as of September 30, 2021 :

September 30, 2021

Operating right-of-use assets

2 unchanged sentences

The components of lease expenses

for the six months ended June 30, 2021, were as follows :

Six Months Ended

June 30, 2021

for the nine months ended September 30, 2021, were as follows :

Nine Months Ended

September 30, 2021

Operating lease cost

1 unchanged sentence

Variable lease cost

The following tables provides

a summary of other information related to leases for the six months ended June 30, 2021 :

June 30, 2021

T he following tables provides

a summary of other information related to leases for the nine months ended September 30, 2021:

September 30, 2021

Cash paid for amounts included in the measurement of lease liabilities:

4 unchanged sentences

The Company determined that

using a discount rate of 9% is reasonable, as this is consistent with the mortgage rates for commercial properties for the time period

commensurate with the terms of the leases.

using a weighted average discount rate of 8% is reasonable, as this is consistent with the mortgage rates for commercial properties for

the time period commensurate with the terms of the leases.

Maturity of lease liabilities

under the Company’s non-cancellable operating leases as of June 30, 2021, were as follows :

under the Company’s non-cancellable operating leases as of September 30, 2021, were as follows:

Payments due by period

5 unchanged sentences

NOTES PAYABLE

Notes payable at June 30,

Notes payable at September

30, 2021 and December 31, 2020, were comprised of the following :

Interest Rate

September 30,

Esousa purchased notes

11 unchanged sentences

Notes payable – long-term portion

Master Exchange

On February 10, 2020, the

Company entered into a master exchange agreement (the “Master Exchange Agreement”) with Esousa Holdings, LLC (“Esousa”

or the “Creditor”) which acquired certain promissory notes that had been previously issued by the Company.

Master Exchange Agreement

February 10, 2020, the Company entered into a master exchange agreement (the “Master Exchange Agreement”) with Esousa Holdings,

LLC (“Esousa”) which acquired certain promissory notes that had been previously issued by the Company.

During January 2021,

2021, the Company issued to Esousa an aggregate of 183,214 shares of the Company’s common stock upon the exchange of principal and

interest in the amount of $ 200,000 and $ 15,948 , respectively.

A loss on extinguishment of $ 234,000 was recognized on the issuance of common

stock based on the fair value of the Company’s common stock at the date of the exchanges.

the Company issued to Esousa an aggregate of 183,214

shares of the Company’s common stock upon the exchange of principal and interest in the aggregate amount of $ 216,000 .

A loss on extinguishment of $ 234,000

was recognized on the issuance of common stock based on the fair value of the Company’s common stock at the date of the

Protection Program

6 unchanged sentences

Notes payable – related

parties at June 30, 2021 and December 31, 2020, were comprised of the following :

June 30, 2021

parties at September 30, 2021 and December 31, 2020, were comprised of the followin g:

September 30, 2021

December 31, 2020

4 unchanged sentences

notes payable agreements with six of its past officers, employees and their family members.

As of June 30, 2021, the related party notes

payable were paid in full.

As of September 30, 2021, the related party

notes payable were paid in full.

CONVERTIBLE NOTES

Convertible notes payable

at June 30, 2021 and December 31, 2020, were comprised of the following :

at September 30, 2021 and December 31, 2020, were comprised of the following :

September 30,

Convertible promissory note

2 unchanged sentences

4% Convertible Promissory Note

On May 20, 2019, the

Company entered into a securities purchase agreement with an investor to sell, for a purchase price of $ 500,000 ,

4 % original issue discount (“OID”) convertible promissory note with an aggregate principal face amount of $ 660,000

and a five-year

warrant to purchase an aggregate of 12,500

shares of the Company’s common stock.

The Company is required to make quarterly interest payments and the principal amount of

the note is due on May

The note is convertible into shares of common stock at $ 4.00

The exercise price of the warrant is $ 12.00

In addition, the Executive Chairman of the Company agreed to guarantee and act as surety for the Company’s

obligation to repay the note pursuant to a personal guarantee.

On May 20, 2019, the Company

entered into a securities purchase agreement with an investor to sell, for a purchase price of $ 500,000 , a 4 % original issue discount

(“OID”) convertible promissory note with an aggregate principal face amount of $ 660,000 and a five -year warrant to purchase

an aggregate of 12,500 shares of the Company’s common stock.

The Company is required to make quarterly interest payments and the

principal amount of the note is due on May 20, 2024.

The note is convertible into shares of common stock at $ 4.00 per share.

price of the warrant is $ 12.00 per share.

In addition, the Executive Chairman of the Company agreed to guarantee and act as surety for

the Company’s obligation to repay the note pursuant to a personal guarantee.

The Company computed the fair

8 unchanged sentences

During each of the

six months ended June 30, 2021 and 2020, non-cash interest expense of $ 40,000 was recorded from the amortization of debt discounts.

fair value of the warrants was estimated using the Black-Scholes option-pricing method.

The risk-free rate of 2.18 % was derived from the

nine months ended September 30, 2021 and 2020, non-cash interest expense of $ 40,000 was recorded from the amortization of debt discounts.

The fair value of the warrants was estimated using the Black-Scholes option-pricing method.

The risk-free rate of 2.18 % was derived from

Treasury yield curve, matching the term of the warrant, in effect at the measurement date.

The volatility factor of 87.51 % was determined

based on historical stock prices of similar technology companies.

The volatility factor of 87.51 % was

determined based on historical stock prices of similar technology companies.

COMMITMENTS AND CONTINGENCIES

83 unchanged sentences

The Company is fully cooperating with this non-public, fact-finding inquiry and

Management believe that the Company has operated its business in compliance with all applicable laws.

Management believes that the Company has operated its business in compliance with all applicable laws.

The subpoena expressly provides

that the inquiry is not to be construed as an indication by the Commission or its staff that any violations of the federal securities

laws have occurred, nor should it be considered a reflection upon any person, entity or security.

However, there can be no assurance as

to the outcome of this matter.

that the inquiry is not to be construed as an indication by the SEC or its staff that any violations of the federal securities laws have

occurred, nor should it be considered a reflection upon any person, entity or security.

However, there can be no assurance as to the outcome

of this matter.

Other Litigation Matters

25 unchanged sentences

million shares of Preferred Stock $ 0.001

The Board has designated 1.0

The Company’s board of directors (the “Board”) has designated 1.0

million shares as Series A Convertible Preferred Stock (the “Series A Preferred Stock”), 500,000

2 unchanged sentences

The rights, preferences,

privileges and restrictions on the remaining authorized 23.5

million shares of Preferred Stock have not been determined.

The Board is authorized to designate a new series of preferred

shares and determine the number of shares, as well as the rights, preferences, privileges and restrictions granted to or imposed

upon any series of preferred shares.

As of June 30, 2021 ,

privileges and restrictions on the remaining authorized 23.5 million shares of Preferred Stock have not been determined.

is authorized to designate a new series of preferred shares and determine the number of shares, as well as the rights, preferences,

privileges and restrictions granted to or imposed upon any series of preferred shares.

As of September

30, 2021 , there were 7,040

shares of Series A Preferred Stock, 125,000

shares of Series B Preferred Stock and no other shares of Preferred Stock

issued or outstanding.

shares of Series B Preferred Stock and no other shares of Preferred Stock issued or outstanding.

Common stock confers upon

11 unchanged sentences

an aggregate offering price of up to $ 200.0 million from time to time through the sales agent.

As of June 30, 2021, the Company had

sold an aggregate of 27.9 million shares of common stock pursuant to the sales agreement for gross proceeds of $ 144.0 million .

As of September 30, 2021, the Company

had sold an aggregate of 34.7 million shares of common stock pursuant to the sales agreement for gross proceeds of $ 160.5 million .

Issuance of Common Stock for Conversion

11 unchanged sentences

Agreement, Related Party

On June 11, 2021, the Company entered into a securities purchase agreement

with Ault & Company.

Under the terms of the agreement, Ault & Company will purchase an aggregate of 1,000,000 shares of the Company’s

common stock for a total purchase price of $ 2,990,000 , at a purchase price per share of $ 2.99 , which was $0.05 per share above the closing

stock price on June 10, 2021, subject to the approval of the NYSE American.

June 11, 2021, the Company entered into a securities purchase agreement with Ault & Company.

Under the terms of the agreement,

Ault & Company agreed to purchase an aggregate of 1,000,000

shares of the Company’s common stock for a total purchase price of $ 2.99

million , at a purchase price per share of $ 2.99 ,

which was $0.05 per share above the closing stock price on June 10, 2021, subject to the approval of the NYSE American.

SEGMENT, CUSTOMERS AND GEOGRAPHICAL INFORMATION

4 unchanged sentences

The total income (loss) from operations of the Company’s reportable segments is different than the Company’s consolidated

income (loss) from operations due to Ault Global Holdings corporate expenses.

Three Months ended June 30, 2021

loss from operations due to the Company’s corporate expenses.

Three Months Ended September 30, 2021

Ault Alliance

Revenue, lending and trading activities

( 38,869,000 )

Revenue, cryptocurrency mining

Total revenues

$ ( 38,261,000 )

$ ( 30,794,000 )

Depreciation and

2 unchanged sentences

$ ( 408,000 )

$ ( 41,872,000 )

$ ( 42,261,000 )

Capital expenditures for

segment assets, as of

June 30, 2021

September 30, 2021

Identifiable assets as of

June 30, 2021

September 30, 2021

$ 192,326,000

$ 225,721,000

Three Months ended June 30, 2020

Three Months Ended September 30, 2020

Ault Alliance

4 unchanged sentences

Income (loss) from operations

$ ( 122,000 )

Capital expenditures for

segment assets, as of

June 30, 2020

September 30, 2020

Identifiable assets as of

June 30, 2020

Six Months ended June 30, 2021

September 30, 2020

Nine Months Ended September 30, 2021

Ault Alliance

6 unchanged sentences

$ ( 766,000 )

$ ( 490,000 )

Capital expenditures for

segment assets, as of June 30, 2021

segment assets, as of

September 30, 2021

Identifiable assets as of

June 30, 2021

September 30, 2021

$ 191,326,000

$ 225,721,000

Six Months ended June 30, 2020

Nine Months Ended September 30, 2020

Ault Alliance

6 unchanged sentences

Capital expenditures for

Segments assets, as of June 30, 2020

segment assets, as of

September 30, 2020

Identifiable assets as of

June 30, 2020

September 30, 2020

Concentration Risk

The following tables provide

the percentage of total revenues for the three and six months ended June 30, 2020 to a single customer from which 10% or more of total

revenues are derived.

For the three and six months ended June 30, 2021 no single customer represented 10% or more of total revenues.

the percentage of total revenues for the three and nine months ended September 30, 2021 and 2020 to a single customer from which

10% or more of total revenues are derived .

For the Three Months Ended

For the Six Months Ended

June 30, 2020

For the Nine Months Ended

September 30, 2021

Total Revenues

4 unchanged sentences

Total Company

For the Nine Months Ended

September 30, 2020

Total Revenues

Percentage of

Total Revenues

Percentage of

Total Company

Revenue from Customer A is

attributable to Enertec.

Further, at June 30, 2021, MTIX Ltd.

represented all the Company’s accounts and other receivable, related party.

Revenue from Customer B is attributable to Microphase.

represented all the Company’s accounts

and other receivable, related party.

The Company calculates its

1 unchanged sentence

The Company’s effective tax rate (“ETR”) from continuing

operations was 7.8 % and 0.4 % for the three months ended June 30, 2021 and 2020, respectively, and 7.4 % and 0.2 % for the six months

ended June 30, 2021 and 2020, respectively.

The Company recorded income tax expense (benefit) of $ 3,504,000 and ($ 6,000 ) for

the three months ended June 30, 2021 and 2020, respectively, and $ 3,510,000 and ($ 12,000 ) for the six months ended June 30, 2021

operations was ( 7.3 %) and 0 % for the three months ended September 30, 2021 and September 30, 2020, respectively, and ( 9.1 %) and ( 0.1 %)

for the nine months ended September 30, 2021 and 2020, respectively.

The Company recorded income tax (provision) benefit of $3.4 million

and $ 6,000 for the three months ended September 30, 2021 and 2020, respectively and ($ 144,000 ) and $ 18,000 for the nine months ended September

30, 2021 and 2020, respectively.

The difference between the ETR and federal statutory rate of 21 % is primarily attributable to items recorded for GAAP but permanently disallowed for U.S.

The difference between the ETR and federal statutory rate of 21 % is primarily attributable to items recorded

for GAAP but permanently disallowed for U.S.

federal income tax purposes and changes in valuation allowance.

4 unchanged sentences

and liabilities and ongoing prudent and feasible tax planning strategies, in making such assessment.

As of June 30, 2021, the Company

As of September 30, 2021, the Company

maintains a full US federal, state and UK valuation allowance.

The Company records uncertain tax positions in accordance with ASC

740, Income Taxes, on the basis of a two-step process in which (i) the Company determines whether it is more likely than not a tax position

will be sustained on the basis of the technical merits of such position and (ii) for those tax positions meeting the more-likely-than-not

recognition threshold, the Company would recognize the largest amount of tax benefit that is more than 50% likely to be realized upon

ultimate settlement with the related tax authority.

The Company has determined it has no uncertain tax positions as of June 30, 2020 and

June 30, 2021.

The Company classifies interest and penalties recognized on uncertain tax positions as a component of income tax expense.

The Company records uncertain

tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (i) the Company determines whether

it is more likely than not a tax position will be sustained on the basis of the technical merits of such position and (ii) for those tax

positions meeting the more-likely-than-not recognition threshold, the Company would recognize the largest amount of tax benefit that is

more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company has determined it has no uncertain

tax positions as of September 30, 2021 and 2020.

The Company classifies interest and penalties recognized on uncertain tax positions as

a component of income tax expense.

SUBSEQUENT EVENTS

Activity Under 2021 ATM Offering

From July 1, 2021 through

August 13, 2021 , the Company had sold an aggregate of 2.4

million shares of common stock pursuant to the sales agreement for gross proceeds of $ 6.0

Additional Investment

in Alzamend Neuro, Inc.

July 28, 2021 Alzamend received from the U.S.

Food and Drug Administration a “Study May Proceed” letter for a Phase 1 study

under the Alzamend’s Investigational New Drug application for AL001, a lithium-based ionic cocrystal oral therapy for patients with

dementia related to mild, moderate, and severe cognitive impairment associated with Alzheimer’s disease.

on the achievement of this milestone, under the March 9, 2021 securities purchase agreement, Alzamend sold an additional 1,333,333 shares

of its common stock to DPL for $ 2 million , or $ 1.50 per share, and issued to DPL warrants to acquire 666,667 shares of Alzamend common

stock with an exercise price of $ 3.00 per share.

Significant Fluctuation

in the Fair Value of Investment in Alzamend

Revenues from the Company’s trading activities during the six

months ended June 30, 2021 included significant net gains on equity securities, including unrealized gains and losses from market price

These gains and losses have caused, and will continue to cause, significant volatility in the Company’s periodic earnings.

June 30, 2021, the fair value of Alzamend’s common stock was $ 8.74 based on the closing price of Alzamend’s common stock.

Based upon the fair value of Alzamend common stock at June 30, 2021, during the six months ended June 30, 2021, the Company recorded an

unrealized gain of $ 31.7 million related to its investment in Alzamend common stock.

During the three and six months ended June 30, 2021,

the Company recorded an unrealized gain on its investment in warrants of Alzamend of $ 8.6 million.

The Company’s investment in Alzamend

will be revalued on each balance sheet date.

August 12, 2021, the closing price of Alzamend’s common stock was $ 3.83 .

If the closing price of Alzamend common stock on

September 30, 2021 remains low relative to the closing price on June 30, 2021, the Company would record a significant unrealized loss

from trading activities for the three months ending September 30, 2021.

Annual Meeting

On Friday, August 13,

2021, the Company held its annual meeting of stockholders.

The proposals approved included the following:

• The exercise of warrants issued to Esousa to purchase up to an aggregate of 3,850,220 shares of common

• The Company’s 2021 Stock Incentive Plan, pursuant to which 7,500,000 shares of common stock may

• The Company’s Employee Stock Purchase Plan, pursuant to which 980,000 shares of common stock may

• The 2020 equity issuances to directors and executive officers of the Company, consisting of an aggregate

of up to 1,950,000 shares of common stock, whether issued pursuant to stock grants or underlying options granted to the Company’s

directors and executive officers;

• The 2020 equity issuances to directors and executive officers of the Company, consisting of an aggregate

of up to 3,750,000 shares of common stock, whether issued pursuant to stock grants or underlying options granted to the Company’s

directors and executive officers.

From October 1, 2021 through

November 18, 2021, the Company sold an aggregate of 17.9 million shares of common stock pursuant to the 2021 Sales Agreement for gross

proceeds of $ 39.5 million .

Investments in Alpha Fund

In October and November 2021,

the Company purchased an additional $8.5 million of limited partnership interests in the Alpha Fund.

Investments by Alpha Fund

In October 2021, Alpha Fund

purchased 1,650,000 shares of the Company’s common stock in open market transactions at an average purchase price of $ 2.42 per share.

As of November 15, 2021, the Alpha Fund owned 2,650,000 shares of the Company’s common stock.

Stock Option and Restricted Stock Grants

November 9, 2021, the Board approved the following grants:

· Grants to each independent director of non-qualified stock options to purchase

100,000 shares of the Company’s common stock with an exercise price of $ 2.19 per share, vesting monthly beginning on January 1,

2023 and ending December 31, 2024 and will be exercisable upon approval by the NYSE American and the Company’s stockholders ;

· Grants to each of Milton C.

Ault, III, William Horne, Henry Nisser and

Kenneth Cragun of non-qualified stock options to purchase 1,000,000 , 800,000 , 600,000

shares of the Company’s common stock, respectively, with an exercise price of $ 2.19

per share, vesting

monthly beginning on January 1, 2023 and ending December 31, 2024 and exercisable upon approval by the NYSE American and the

Corporation’s stockholders ;

· Grant to certain employees of non-qualified stock options to purchase

an aggregate of 1,635,000

shares of the Company’s common stock with an exercise price of $ 2.19

per share, vesting

over 36 months beginning on January 1, 2022 and exercisable pursuant to the Company’s 2021 Stock Incentive Plan,

although one employee’s stock option grant of 100,000

options is exercisable at $ 2.66

per share vesting

ratably over 48 months beginning October 1, 2021 ;

· Restricted stock grant to certain employees of an aggregate of 200,000 shares

pursuant to the Company’s 2021 Stock Incentive Plan.

Such shares will vest 25% on November 15, 2021, 25% on May 15, 2022, 25% on

November 15, 2022 and 25% on May 15, 2023 .

TurnOnGreen Lease Agreement

On November 5, 2021, the

Company’s subsidiary, TurnOnGreen, entered into a lease agreement to lease a 31,165

square foot building in Milpitas, California.

lease term is approximately 50 months ending January 31, 2026 .

The total commitment under the lease is $ 2.3

Purchase Agreement for Bitcoin Mining Equipment

In November 2021, Ault

Alliance entered into contracts with Bitmain Technologies Limited to purchase an aggregate of 16,000 Bitcoin miners for $ 121

The purchase includes both the environmentally friendly S19 XP Antminers that feature a processing power of 140

terahashes per second (TH/s) with an energy consumption of 3.01 kilowatt-hours (kWh) and the S19j Pro Antminers that feature a

processing power of 100 TH/s with an energy consumption of 2.95 kWh.

Based on current delivery schedules, Ault Alliance expects that

the 16,000 newly purchased miners will be shipped by Bitmain between March 2022 and September 2022.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements