Hyperscale Data, Inc. 10-Q

Item 1. Financial Statements. BITNILE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2022 2021 ASSETS CURRENT ASSETS Cash and cash equivalents $ 39,446,000 $ 15,912,000 Restricted cash 4,695,000 5,321,000 Marketable equity securities 16,158,000 40,380,000 Digital currencies 745,000 2,165,000 Accounts receivable 6,977,000 6,455,000 Accrued revenue 2,723,000 2,283,000 Inventories 7,144,000 5,482,000 Prepaid expenses and other current assets 7,995,000 15,436,000 TOTAL CURRENT ASSETS 85,883,000 93,434,000 Cash and marketable securities held in Trust Account 116,737,000 116,725,000 Intangible assets, net 3,896,000 4,035,000 Goodwill 9,944,000 10,090,000 Property and equipment, net 206,797,000 174,025,000 Right-of-use assets 7,049,000 5,243,000 Investment in promissory notes and other, related parties 2,653,000 2,842,000 Investments in common stock, related parties 8,729,000 13,230,000 Investments in equity securities 37,091,000 30,482,000 Investment in unconsolidated entity 22,297,000 22,130,000 Loans receivable 13,358,000 14,337,000 Other assets 4,490,000 3,713,000 TOTAL ASSETS $ 518,924,000 $ 490,286,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 27,239,000 $ 22,755,000 Investment margin accounts payable - 18,488,000 Operating lease liability, current 1,742,000 1,123,000 Notes payable, net 1,312,000 39,554,000 TOTAL CURRENT LIABILITIES 30,293,000 81,920,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 1 BITNILE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (Unaudited) March 31, December 31, 2022 2021 LONG TERM LIABILITIES Operating lease liability, non-current 5,511,000 4,213,000 Notes payable 53,999,000 55,055,000 Convertible notes payable 488,000 468,000 Deferred underwriting commissions of Ault Disruptive subsidiary 3,450,000 3,450,000 TOTAL LIABILITIES 93,741,000 145,106,000 COMMITMENTS AND CONTINGENCIES Redeemable noncontrolling interests in equity of subsidiaries 116,725,000 116,725,000 STOCKHOLDERS’ EQUITY Series A Convertible Preferred Stock, $ 25.00 stated value per share, - - $ 0.001 par value – 1,000,000 shares authorized; 7,040 shares issued and outstanding at March 31, 2022 and December 31, 2021 (redemption amount and liquidation preference of $ 176,000 as of March 31, 2022 and December 31, 2021) Series B Convertible Preferred Stock, $ 10 stated value per share, - - share, $ 0.001 par value – 500,000 shares authorized; 125,000 shares issued and outstanding at March 31, 2022 and December 31, 2021 (liquidation preference of $ 1,250,000 at March 31, 2022 and December 31, 2021) Class A Common Stock, $ 0.001 par value – 500,000,000 shares authorized; 225,000 84,000 225,015,203 and 84,344,607 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively Class B Common Stock, $ 0.001 par value – 25,000,000 shares authorized; - - nil shares issued and outstanding at March 31, 2022 and December 31, 2021 Additional paid-in capital 495,536,000 385,644,000 Accumulated deficit ( 174,378,000 ) ( 145,600,000 ) Accumulated other comprehensive loss ( 393,000 ) ( 106,000 ) Treasury stock, at cost ( 14,172,000 ) ( 13,180,000 ) TOTAL BITNILE HOLDINGS STOCKHOLDERS’ EQUITY 306,818,000 226,842,000 Non-controlling interest 1,640,000 1,613,000 TOTAL STOCKHOLDERS’ EQUITY 308,458,000 228,455,000 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 518,924,000 $ 490,286,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 2 BITNLE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) For the Three Months Ended March 31, 2022 2021 Revenue $ 8,659,000 $ 7,905,000 Revenue, cryptocurrency mining, net 3,548,000 130,000 Revenue, hotel operations 2,698,000 - Revenue, lending and trading activities 17,921,000 5,210,000 Total revenue 32,826,000 13,245,000 Cost of revenue 10,494,000 5,108,000 Gross profit 22,332,000 8,137,000 Operating expenses Research and development 695,000 602,000 Selling and marketing 6,481,000 1,242,000 General and administrative 13,687,000 5,092,000 Impairment of mined cryptocurrency 439,000 - Total operating expenses 21,302,000 6,936,000 Income from operations 1,030,000 1,201,000 Other income (expenses) Interest and other income 449,000 37,000 Interest expense ( 29,824,000 ) ( 314,000 ) Change in fair value of marketable equity securities - 1,960,000 Realized gain on marketable securities 109,000 397,000 Loss from investment in unconsolidated entity ( 533,000 ) - Gain on extinguishment of debt - 482,000 Change in fair value of warrant liability ( 18,000 ) ( 679,000 ) Total other (expenses) income, net ( 29,817,000 ) 1,883,000 (Loss) income before income taxes ( 28,787,000 ) 3,084,000 Income tax (provision) benefit - ( 6,000 ) Net (loss) income ( 28,787,000 ) 3,078,000 Net loss (income) attributable to non-controlling interest 15,000 ( 1,081,000 ) Net (loss) income attributable to BitNile Holdings, Inc. ( 28,772,000 ) 1,997,000 Preferred dividends ( 5,000 ) ( 4,000 ) Net (loss) income available to common stockholders $ ( 28,777,000 ) $ 1,993,000 Basic net (loss) income per common share $ ( 0.32 ) $ 0.05 Diluted net (loss) income per common share $ ( 0.32 ) $ 0.05 Weighted average basic common shares outstanding 90,971,000 39,256,000 Weighted average diluted common shares outstanding 90,971,000 40,202,000 Comprehensive (loss) income Net (loss) income available to common stockholders $ ( 28,777,000 ) $ 1,993,000 Other comprehensive income (loss) Foreign currency translation adjustment ( 287,000 ) ( 93,000 ) Net unrealized gain on derivative securities of related party - 2,969,000 Other comprehensive (loss) income ( 287,000 ) 2,876,000 Total comprehensive (loss) income $ ( 29,064,000 ) $ 4,869,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 3 BITNILE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Three Months Ended March 31, 2022 Accumulated Series A & B Additional Other Non- Total Preferred Stock Common Stock Paid-In Accumulated Comprehensive Controlling Treasury Stockholders’ Shares Amount Shares Amount Capital Deficit Loss Interest Stock Equity BALANCES, January 1, 2022 132,040 $ - 84,344,607 $ 84,000 $ 385,644,000 $ ( 145,600,000 ) $ ( 106,000 ) $ 1,613,000 $ ( 13,180,000 ) $ 228,455,000 Issuance of common stock for restricted stock awards - - 12,500 - - - - - - - Stock-based compensation: Options - - - - 1,025,000 - - 41,000 - 1,066,000 Restricted stock awards - - - - 1,619,000 - - - - 1,619,000 Issuance of common stock for cash - - 140,658,096 141,000 110,006,000 - - - - 110,147,000 Financing cost in connection with sales of common stock - - - - ( 2,758,000 ) - - - - ( 2,758,000 ) Purchase of treasury stock – Ault Alpha - - - - - - - - ( 992,000 ) ( 992,000 ) Net loss - - - - - ( 28,772,000 ) - - - ( 28,772,000 ) Preferred dividends - - - - ( 5,000 ) - - - ( 5,000 ) Foreign currency translation adjustments - - - - - - ( 287,000 ) - - ( 287,000 ) Net loss attributable to non-controlling interest - - - - - - - ( 15,000 ) - ( 15,000 ) Other - - - - - ( 1,000 ) - 1,000 - - BALANCES, March 31, 2022 132,040 $ - 225,015,203 $ 225,000 $ 495,536,000 $ ( 174,378,000 ) $ ( 393,000 ) $ 1,640,000 $ ( 14,172,000 ) $ 308,458,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 4 BITNILE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) Three Months Ended March 31, 2021 Accumulated Series A & B Additional Other Total Preferred Stock Common Stock Paid-In Accumulated Comprehensive Non-Controlling Stockholders’ Shares Amount Shares Amount Capital Deficit Income (Loss) Interest Equity BALANCES, January 1, 2021 132,040 $ - 27,753,562 $ 28,000 $ 171,396,000 $ ( 121,396,000 ) $ ( 1,718,000 ) $ 822,000 $ 49,132,000 Stock based compensation: Options - - - - 20,000 - - - 20,000 Issuance of common stock for cash - - 21,561,900 21,000 124,962,000 - - - 124,983,000 Issuance of common stock for conversion of convertible notes payable - - 183,214 - 450,000 - - - 450,000 Financing cost in connection with sales of common stock - - - - ( 4,065,000 ) - - - ( 4,065,000 ) Comprehensive loss: Net income - - - - 1,997,000 - - 1,997,000 Preferred dividends - - - - - ( 4,000 ) - - ( 4,000 ) Net unrealized gain on derivatives in related party - - - - - - 2,969,000 - 2,969,000 Foreign currency translation adjustments - - - - - - ( 93,000 ) - ( 93,000 ) Net income attributable to non-controlling interest - - - - - - - 1,081,000 1,081,000 Other - - - - - ( 1,000 ) 1,000 - BALANCES, March 31, 2021 132,040 $ - 49,498,676 $ 49,000 $ 292,763,000 $ ( 119,404,000 ) $ 1,159,000 $ 1,903,000 $ 176,470,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 5 BITNILE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended March 31, 2022 2021 Cash flows from operating activities: Net (loss) income $ ( 28,787,000 ) $ 3,078,000 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation 2,562,000 162,000 Amortization 80,000 104,000 Amortization of right-of-use assets 339,000 229,000 Amortization, related party 173,000 8,000 Interest expense – debt discount 26,461,000 20,000 Gain on extinguishment of debt - ( 482,000 ) Change in fair value of warrant liability 18,000 679,000 Accretion of original issue discount on notes receivable – related party - ( 4,000 ) Accretion of original issue discount on notes receivable ( 276,000 ) ( 65,000 ) Increase in accrued interest on notes receivable – related party ( 54,000 ) ( 1,000 ) Stock-based compensation 2,685,000 20,000 Impairment of cryptocurrencies 439,000 - Realized gains on sale of marketable securities 5,707,000 ( 4,892,000 ) Unrealized gains on marketable securities ( 13,515,000 ) ( 2,260,000 ) Unrealized (gains) losses on investments in common stock, related parties 4,694,000 ( 154,000 ) Unrealized gains on equity securities ( 13,461,000 ) ( 58,000 ) Loss from investment in unconsolidated entity 533,000 - Changes in operating assets and liabilities: Marketable equity securities 32,649,000 ( 8,870,000 ) Accounts receivable ( 621,000 ) 301,000 Accrued revenue ( 484,000 ) 104,000 Inventories ( 1,723,000 ) ( 118,000 ) Prepaid expenses and other current assets 7,431,000 ( 91,000 ) Digital currencies ( 3,809,000 ) - Other assets ( 704,000 ) ( 86,000 ) Accounts payable and accrued expenses 4,961,000 ( 1,713,000 ) Other current liabilities - 78,000 Lease liabilities ( 270,000 ) ( 230,000 ) Net cash provided by (used in) operating activities 25,028,000 ( 14,241,000 ) Cash flows from investing activities: Purchase of property and equipment ( 35,359,000 ) ( 4,349,000 ) Investment in promissory notes and other, related parties ( 700,000 ) ( 3,595,000 ) Investments in common stock and warrants, related parties ( 194,000 ) ( 4,756,000 ) Investment in real property, related party - ( 2,670,000 ) Purchase of marketable equity securities ( 158,000 ) - Sales of marketable equity securities 10,210,000 430,000 Investments in loans receivable ( 246,000 ) - Principal payments on loans receivable 1,500,000 - Sale of digital currencies 4,377,000 - Investments in equity securities ( 3,820,000 ) ( 1,787,000 ) Net cash used in investing activities ( 24,390,000 ) ( 16,727,000 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 6 BITNILE HOLDINGS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) For the Three Months Ended March 31, 2022 2021 Cash flows from financing activities: Gross proceeds from sales of common stock $ 110,147,000 $ 124,983,000 Financing cost in connection with sales of equity securities ( 2,758,000 ) ( 4,065,000 ) Proceeds from notes payable 295,000 - Repayment of margin accounts ( 18,488,000 ) - Payments on notes payable ( 65,986,000 ) ( 972,000 ) Payments of preferred dividends ( 5,000 ) ( 4,000 ) Purchase of treasury stock ( 992,000 ) - Payments on revolving credit facilities, net - ( 8,000 ) Net cash provided by financing activities 22,213,000 119,934,000 Effect of exchange rate changes on cash and cash equivalents 57,000 152,000 Net increase in cash and cash equivalents and restricted cash 22,908,000 89,118,000 Cash and cash equivalents and restricted cash at beginning of period 21,233,000 18,680,000 Cash and cash equivalents and restricted cash at end of period $ 44,141,000 $ 107,798,000 Supplemental disclosures of cash flow information: Cash paid during the period for interest $ 2,572,000 $ 658,000 Non-cash investing and financing activities: Conversion of convertible notes payable into shares of common stock $ - $ 450,000 Payment of accounts payable with digital currency $ 413,000 $ 119,000 Conversion of convertible notes payable, related party into shares of common stock $ 400,000 $ - Recognition of new operating lease right-of-use assets and lease liabilities $ 2,188,000 $ - Purchase of marketable equity securities for future payment $ - $ 33,647,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. F- 7 1. DESCRIPTION OF BUSINESS BitNile Holdings, Inc., a Delaware corporation (“BitNile” or the “Company”) was incorporated in September 2017. BitNile 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, hotel operations and textiles. In addition, the Company extends credit to select entrepreneurial businesses through a licensed lending subsidiary. BitNile was founded by Milton “Todd” Ault, III, its Executive Chairman and is led by Mr. Ault, William B. Horne, its Chief Executive Officer and Vice Chairman and Henry Nisser, its President and General Counsel. Together, they constitute the Executive Committee, which manages the day-to-day operations of the Company. All major investment and capital allocation decisions are made for the Company by Mr. Ault and the Executive Committee. The Company has six reportable segments: · BitNile, Inc. (“BNI”) – cryptocurrency mining operations, · Ault Alliance, Inc. (“Ault Alliance”) – commercial lending, activist investing, media, and digital learning, · Gresham Worldwide, Inc. (“GWW”) – defense solutions, · TurnOnGreen, Inc. (“TurnOnGreen”) – commercial electronics solutions, · Real Estate – hotel operations and other commercial real estate holdings, and · Ault Disruptive Technologies Corporation (“Ault Disruptive”) – a special purpose acquisition company (“SPAC”). 2. LIQUIDITY AND FINANCIAL CONDITION As of March 31, 2022, the Company had cash and cash equivalents of $ 39.4 million and working capital of $ 55.6 million . The Company has primarily financed its operations principally through issuances of convertible debt, promissory notes and equity securities. The Company believes its current cash on hand is sufficient to meet its operating and capital requirements for at least the next twelve months from the date these financial statements are issued. 3. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES 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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on April 15, 2022. The condensed consolidated balance sheet as of December 31, 2021 was derived from the Company’s audited 2021 financial statements contained in the above referenced Form 10-K. Results of the three months ended March 31, 2022, are not necessarily indicative of the results to be expected for the full year ending December 31, 2022. F- 8 Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2021 Annual Report. Reclassifications Certain prior period amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation. These reclassifications had no effect on previously reported results of operations. Recent Accounting Standards In May 2021, the Financial Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04, “Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options.” The guidance became effective for the Company on January 1, 2022. The Company adopted the guidance on January 1, 2022, and has concluded the adoption did not have a material impact on its unaudited condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses,” (“ASU No. 2016-13”) to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. ASU 2016-13 replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. This guidance is effective for the Company beginning on January 1, 2023, with early adoption permitted. The Company does not expect that the adoption of this standard will have a significant impact on its condensed consolidated financial statements and related disclosures. In August 2020, the FASB issued ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. ASU 2020-06 also simplifies the diluted net income per share calculation in certain areas. The amendments in ASU 2020-06 are effective for smaller reporting companies as defined by the SEC for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Effective January 1, 2022, the Company early adopted ASU 2020-06 using the modified retrospective approach, which resulted in no impact on its consolidated financial statements. In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers.” The guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree. The guidance should be applied prospectively to acquisitions occurring on or after the effective date. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832),” which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on an entity’s financial statements. The amendments in this update are effective for financial statements issued for annual periods beginning after December 15, 2021. The Company expects that this guidance will not have a significant impact on its consolidated financial statements. F- 9 4. REVENUE DISAGGREGATION The following tables summarize disaggregated customer contract revenues and the source of the revenue for the three months ended March 31, 2022 and 2021. 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 March 31, 2022: Three months ended March 31, 2022 GWW TurnOnGreen Ault Alliance Cryptocurrency Real Estate Total Primary Geographical Markets North America $ 1,511,000 $ 1,012,000 $ 7,000 $ 3,826,000 $ 2,698,000 $ 9,054,000 Europe 2,179,000 19,000 - - - 2,198,000 Middle East 3,254,000 - - - - 3,254,000 Other 301,000 98,000 - - - 399,000 Revenue from contracts with customers 7,245,000 1,129,000 7,000 3,826,000 2,698,000 14,905,000 Revenue, lending and trading activities (North America) - - 17,921,000 - - 17,921,000 Total revenue $ 7,245,000 $ 1,129,000 $ 17,928,000 $ 3,826,000 $ 2,698,000 $ 32,826,000 Major Goods or Services RF/microwave filters 1,511,000 - - - - 1,511,000 Detector logarithmic video amplifiers - - - - - - Power supply units 2,431,000 1,096,000 - - - 3,527,000 Power supply systems 48,000 - - - - 48,000 Healthcare diagnostic systems - - - - - - EV Chargers - 33,000 - - - 33,000 Defense systems 3,255,000 - - - - 3,255,000 Digital currency mining, net - - - 3,548,000 - 3,548,000 Hotel operations - - - - 2,698,000 2,698,000 Other - - 7,000 278,000 - 285,000 Revenue from contracts with customers 7,245,000 1,129,000 7,000 3,826,000 2,698,000 14,905,000 Revenue, lending and trading activities - - 17,921,000 - - 17,921,000 Total revenue $ 7,245,000 $ 1,129,000 $ 17,928,000 $ 3,826,000 $ 2,698,000 $ 32,826,000 Timing of Revenue Recognition Goods transferred at a point in time $ 3,512,000 $ 1,129,000 $ 7,000 $ 3,826,000 $ 2,698,000 $ 11,172,000 Services transferred over time 3,733,000 - - - - 3,733,000 Revenue from contracts with customers $ 7,245,000 $ 1,129,000 $ 7,000 $ 3,826,000 $ 2,698,000 $ 14,905,000 F- 10 The Company’s disaggregated revenues consist of the following for the three months ended March 31, 2021: Three months ended March 31, 2021 GWW TurnOnGreen Ault Alliance Total Primary Geographical Markets North America $ 1,889,000 $ 1,208,000 $ 302,000 $ 3,399,000 Europe 1,910,000 109,000 - 2,019,000 Middle East 2,389,000 - - 2,389,000 Other 162,000 66,000 - 228,000 Revenue from contracts with customers 6,350,000 1,383,000 302,000 8,035,000 Revenue, lending and trading activities (North America) - - 5,210,000 5,210,000 Total revenue $ 6,350,000 $ 1,383,000 $ 5,512,000 $ 13,245,000 Major Goods RF/microwave filters $ 1,215,000 $ - $ - $ 1,215,000 Detector logarithmic video amplifiers 71,000 - - 71,000 Power supply units 238,000 1,383,000 - 1,621,000 Power supply systems 2,233,000 - - 2,233,000 Healthcare diagnostic systems 185,000 - - 185,000 Defense systems 2,408,000 - - 2,408,000 Digital currency mining - - 130,000 130,000 Other - - 172,000 172,000 Revenue from contracts with customers 6,350,000 1,383,000 302,000 8,035,000 Revenue, lending and trading activities - - 5,210,000 5,210,000 Total revenue $ 6,350,000 $ 1,383,000 $ 5,512,000 $ 13,245,000 Timing of Revenue Recognition Goods transferred at a point in time $ 3,758,000 $ 1,383,000 $ 302,000 $ 5,443,000 Services transferred over time 2,592,000 - - 2,592,000 Revenue from contracts with customers $ 6,350,000 $ 1,383,000 $ 302,000 $ 8,035,000 5. FAIR VALUE OF FINANCIAL INSTRUMENTS The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy: Fair Value Measurement at March 31, 2022 Total Level 1 Level 2 Level 3 Investment in term promissory note of Ault & Company, Inc. (“Ault & Company”) and other – a related party $ 2,653,000 $ - $ - $ 2,653,000 Investment in common stock of Alzamend Neuro, Inc. (“Alzamend”) – a related party 8,729,000 8,729,000 - - Investments in marketable equity securities 16,158,000 16,158,000 - - Cash and marketable securities held in trust account 116,737,000 116,737,000 - - Investments in equity securities 37,091,000 - - 37,091,000 Total assets measured at fair value $ 181,368,000 $ 141,624,000 $ - $ 39,744,000 F- 11 Fair Value Measurement at December 31, 2021 Total Level 1 Level 2 Level 3 Investment in term promissory note of Ault & Company and other – a related party $ 2,842,000 $ - $ - $ 2,842,000 Investment in common stock of Alzamend – a related party 13,230,000 13,230,000 - - Investments in marketable equity securities 40,380,000 40,380,000 - - Cash and marketable securities held in trust account 116,725,000 116,725,000 - - Investments in equity securities 30,482,000 - - 30,482,000 Total assets measured at fair value $ 203,659,000 $ 170,335,000 $ - $ 33,324,000 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 following table summarizes the changes in investments in equity securities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the three months ended March 31, 2022: Investments in equity securities Balance at January 1, 2022 $ 30,482,000 Investment in equity securities 3,820,000 Change in fair value of warrants 10,281,000 Unrealized gains on equity securities 3,180,000 Conversion to marketable securities ( 10,672,000 ) Balance at March 31, 2022 $ 37,091,000 See Note 8 for the changes in investments in Ault & Company measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) during the three months ended March 31, 2022. 6. Marketable Securities Marketable securities in equity securities with readily determinable market prices consisted of the following as of March 31, 2022 and December 31, 2021: Marketable equity securities at March 31, 2022 Gross unrealized Gross unrealized Cost gains losses Fair value Common shares $ 16,366,000 $ 5,268,000 $ ( 5,476,000 ) $ 16,158,000 Marketable equity securities at December 31, 2021 Gross unrealized Gross unrealized Cost gains losses Fair value Common shares $ 53,475,000 $ 32,000 $ ( 13,127,000 ) $ 40,380,000 At March 31, 2022 and December 31, 2021, the Company invested in the marketable equity securities of publicly traded companies. The Company’s investment in marketable equity securities are revalued on each balance sheet date. F- 12 7. PROPERTY AND EQUIPMENT, NET At March 31, 2022 and December 31, 2021, property and equipment consisted of: March 31, 2022 December 31, 2021 Cryptocurrency machines and related equipment $ 18,507,000 $ 10,763,000 Computer, software and related equipment 7,702,000 8,884,000 Office furniture and equipment 3,362,000 702,000 Land 25,696,000 25,696,000 Building and improvements 69,415,000 68,959,000 124,682,000 115,004,000 Accumulated depreciation and amortization ( 7,493,000 ) ( 5,096,000 ) Property and equipment placed in service, net 117,189,000 109,908,000 Deposits on cryptocurrency machines 89,608,000 64,117,000 Property and equipment, net $ 206,797,000 $ 174,025,000 For the three months ended March 31, 2022 and 2021, depreciation expense amounted to $ 2.6 million and $ 0.2 million , respectively. 8. INVESTMENTS – RELATED PARTIES Investments in Alzamend and Ault & Company at March 31, 2022 and December 31, 2021, were comprised of the following: Investment in Promissory Notes, Related Parties Interest Due March 31, December 31, Rate Date 2022 2021 Investment in promissory note of Ault & Company 8 % December 31, 2022 $ 2,500,000 $ 2,500,000 Accrued interest receivable, Ault & Company 153,000 170,000 Other - 172,000 Total investment in promissory note, related party $ 2,653,000 $ 2,842,000 Investment in Common Stock and Options, Related Parties March 31, December 31, 2022 2021 Investment in common stock and options of Alzamend $ 8,729,000 $ 13,230,000 The following table summarizes the changes in the Company’s investments in Alzamend and Ault & Company during the three months ended March 31, 2022: Investment in warrants and common stock of Alzamend Investment in promissory notes and advances of Alzamend and Ault & Company and Other Balance at January 1, 2022 $ 13,230,000 $ 2,842,000 Investment in common stock and options of Alzamend 194,000 - Unrealized loss in common stock of Alzamend ( 4,695,000 ) - Amortization of related party investment - ( 173,000 ) Accrued interest - ( 16,000 ) Balance at March 31, 2022 $ 8,729,000 $ 2,653,000 F- 13 Investments in Alzamend Common Stock The following table summarizes the changes in the Company’s investments in Alzamend common stock during the three months ended March 31, 2022: Shares of Per Share Investment in Common Stock Price Common Stock Balance at January 1, 2022 6,947,000 $ 1.90 $ 13,230,000 Open market purchases after initial public offering 153,000 $ 1.27 194,000 Unrealized loss in common stock of Alzamend ( 4,691,000 ) Investment in Alzamend common stock 7,100,000 $ 1.23 8,733,000 Investment in Alzamend options ( 4,000 ) Balance at March 31, 2022 $ 8,729,000 9. INVESTMENT IN UNCONSOLIDATED ENTITY – Avalanche International Corp. (“AVLP”) Equity Investments in Unconsolidated Entity – AVLP Equity investments in an unconsolidated entity, AVLP, at March 31, 2022 and December 31, 2021, were comprised of the following: Investment in Promissory Notes Interest Due March 31, December 31, Rate Date 2022 2021 Investment in convertible promissory note 12 % 2022-2026 $ 18,499,000 $ 17,799,000 Investment in promissory note – Alpha Fund 8 % June 30, 2022 3,600,000 3,600,000 Accrued interest receivable 2,092,000 2,092,000 Other 106,000 600,000 Total investment in promissory notes, gross 24,297,000 24,091,000 Less: provision for loan losses ( 2,000,000 ) ( 2,000,000 ) Total investment in promissory note $ 22,297,000 $ 22,091,000 * During the three months ended March 31, 2022 and 2021, no interest income was recognized from the Company’s investment in AVLP. AVLP Convertible Promissory Note Maturities The contractual maturities of AVLP’s convertible promissory notes as of March 31, 2022 were: Year 2022 $ 4,124,000 2023 2,820,000 2024 2,651,000 2025 1,674,000 2026 6,530,000 2027 700,000 Total $ 18,499,000 F- 14 The following table summarizes the changes in the Company’s equity investments in an unconsolidated entity, AVLP, during the year ended December 31, 2021 and the three months ended March 31, 2022: Investment in Investment in warrants and promissory notes Total common stock and advances investment Balance at January 1, 2021 $ 5,486,000 $ 10,471,000 $ 15,957,000 Investment in convertible promissory notes - 7,344,000 7,344,000 Fair value of warrants 2,786,000 - 2,786,000 Unrealized loss in warrants ( 7,772,000 ) - ( 7,772,000 ) Unrealized gain in common stock ( 150,000 ) - ( 150,000 ) Loss from equity investment ( 311,000 ) - ( 311,000 ) Accretion of discount - 4,210,000 4,210,000 Accrued interest - 66,000 66,000 Balance at January 1, 2022 39,000 22,091,000 22,130,000 Investment in convertible promissory notes - 700,000 700,000 Loss from equity investment ( 39,000 ) ( 494,000 ) ( 533,000 ) Balance at March 31, 2022 $ - $ 22,297,000 $ 22,297,000 10. CONSOLIDATED VARIABLE INTEREST ENTITY - ALPHA FUND Alpha Fund – Consolidated Variable Interest Entity During the three months ended March 31, 2022 and the year ended December 31, 2021, the Company invested in Ault Alpha LP (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. Messrs. Ault, Horne, Nisser and 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 March 31, 2022, the Company subscribed for $ 18 million or 100 % of the limited partnership interests in the Alpha Fund, the full amount of which was funded, an increase of $1 million from the $ 17 million subscribed and funded as of December 31, 2021. 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 variable interest entity (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 – Treasury Stock As of March 31, 2022, the Alpha Fund owned 7,100,000 shares of the Company’s common stock, accounted for as treasury stock as of March 31, 2022. F- 15 11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Other current liabilities at March 31, 2022 and December 31, 2021 consisted of: March 31, December 31, 2022 2021 Accounts payable $ 11,448,000 $ 6,902,000 Accrued payroll and payroll taxes 4,364,000 5,027,000 Financial instrument liabilities 4,267,000 4,249,000 Accrued legal 1,787,000 2,637,000 Other accrued expenses 5,373,000 3,940,000 $ 27,239,000 $ 22,755,000 Financial Instruments Under authoritative guidance used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments that do not have fixed settlement provisions are deemed to be derivative instruments. In prior years, the Company granted certain warrants that resulted in these warrants accounted for as a financial instrument and being re-measured every reporting period with the change in value reported in the statement of operations. The financial instruments were valued using a variety of pricing models with the following valuation assumptions: March 31, 2022 December 31, 2021 Contractually stipulated stock price $ 2.50 $ 2.50 Exercise price $ 2.50 $ 2.50 Contractually defined remaining term 5.0 5.0 Contractually defined volatility 135 % 135 % Dividend yield 0 % 0 % Risk-free interest rate 2.4 % 1.3 % Per the terms of the warrant agreements underlying the financial instruments, the value to the warrant holders is defined within the agreement based on a stock price, contractual term, volatility factor and dividend rate as defined in the warrant agreement, and not indexed to the company’s stock, resulting in the financial instrument accounting. The risk-free interest rate was based on rates established by the Federal Reserve Bank. The following table sets forth a summary of the changes in the estimated fair value of the financial instruments during the three months ended March 31, 2022 and 2021: March 31, 2022 March 31, 2021 Beginning balance $ 4,249,000 $ 4,192,000 Change in fair value 18,000 679,000 Ending balance $ 4,267,000 $ 4,871,000 12. AMORTIZATION OF DEBT DISCOUNT OF SECURED PROMISSORY NOTES On December 30, 2021, the Company entered into a securities purchase agreement with certain sophisticated investors providing for the issuance of: · secured promissory notes (the “Secured Promissory Notes”) that bear interest at 8 % per annum with an aggregate principal face amount of approximately $ 66 million including a 10 % original issue discount; · five-year warrants to purchase an aggregate of 14,095,350 shares of the Company’s common stock at an exercise price of $ 2.50 , subject to adjustment; and · five-year warrants to purchase an aggregate of 1,942,508 shares of Common Stock (the “Class B Warrant Shares”) at an exercise price of $ 2.50 per share, subject to adjustment. The Class B Warrant Shares are deemed to be a derivative instrument. F- 16 As of December 31, 2021, unamortized debt discount on the Secured Promissory Notes related to the original issue discount and estimated fair value of the warrants totaled $ 26.3 million . During the three months ended March 31, 2022, the Secured Promissory Notes were repaid and the Company fully amortized the related debt discount of $ 26.3 million , which is included within interest expense on the condensed consolidated statements of operations. 13. COMMITMENTS AND CONTINGENCIES Blockchain Mining Supply and Services, Ltd. On November 28, 2018, Blockchain Mining Supply and Services, Ltd. (“Blockchain Mining”) a vendor who sold computers to one of the Company’s subsidiaries, filed a Complaint (the “Complaint”) in the United States District Court for the Southern District of New York against the Company and the Company’s subsidiary, Digital Farms, Inc. (f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain Mining Supply and Services, Ltd. v. Super Crypto Mining, Inc. and DPW Holdings, Inc. , Case No. 18-cv-11099. The Complaint asserts claims for breach of contract and promissory estoppel against the Company and its subsidiary arising from the subsidiary’s alleged failure to honor its obligations under the purchase agreement. The Complaint seeks monetary damages in excess of $ 1,388,495 , plus attorneys’ fees and costs. The Company intends to vigorously defend against the claims asserted against it in this action. On April 13, 2020, the Company and its subsidiary, jointly filed a motion to dismiss the Complaint in its entirety as against the Company, and the promissory estoppel claim as against its subsidiary. On the same day, the Company’s subsidiary also filed a partial Answer to the Complaint in connection with the breach of contract claim. On April 29, 2020, Blockchain Mining filed an amended complaint (the “Amended Complaint”). The Amended Complaint asserts the same causes of action and seeks the same damages as the initial Complaint. On May 13, 2020, the Company and its subsidiary, jointly filed a motion to dismiss the Amended Complaint in its entirety as against the Company, and the promissory estoppel claim as against of its subsidiary. On the same day, the Company’s subsidiary also filed a partial Answer to the Amended Complaint in connection with the breach of contract claim. In its partial Answer, the Company’s subsidiary admitted to the validity of the contract at issue and also asserted numerous affirmative defenses concerning the proper calculation of damages. On December 4, 2020, the Court issued an Order directing the parties to engage in limited discovery (the “Limited Discovery”) to be completed by March 4, 2021. In connection therewith, the Court also denied the defendants’ motion to dismiss without prejudice. On June 2, 2021, the Company and its subsidiary filed a motion to dismiss the amended complaint in its entirety as against the Company, and the promissory estoppel claim as against the subsidiary. The motion to dismiss has been fully briefed and is currently pending before the Court. Based on the Company’s assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably estimate the potential loss or range of loss that may result from this action. Notwithstanding, the Company has established a reserve in the amount of the unpaid portion of the purchase agreement, which is included in accounts payable and accrued expenses. An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations. Ding Gu (a/k/a Frank Gu) and Xiaodan Wang Litigation On January 17, 2020, Ding Gu (a/k/a Frank Gu) (“Gu”) and Xiaodan Wang (“Wang” and with “Gu” collectively, “Plaintiffs”), filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and the Company’s Chief Executive Officer, Milton C. Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang v. DPW Holdings, Inc. and Milton C. Ault III (a/k/a Milton Todd Ault III a/k/a Todd Ault) , Index No. 650438/2020. F- 17 The Complaint asserts causes of action for declaratory judgment, specific performance, breach of contract, conversion, attorneys’ fees, permanent injunction, enforcement of Guaranty, unjust enrichment, money had and received, and fraud arising from: (i) a series of transactions entered into between Gu and the Company, as well as Gu and Ault, in or about May 2019; and (ii) a term sheet entered into between Plaintiffs and the Company, in or about July 2019. The Complaint seeks, among other things, monetary damages in excess of $1.1 million, plus a decree of specific performance directing the Company to deliver unrestricted shares of common stock to Gu, plus attorneys’ fees and costs. The Company intends to vigorously defend against the claims asserted against it in this action. On May 4, 2020, the Company and Ault jointly filed a motion to dismiss the Complaint in its entirety, with prejudice. On July 28, 2021, the Court conducted oral argument in connection with the motion to dismiss. During the oral argument, the Court informed the parties that the Court was dismissing the fraud claim, in its entirety, and provided Plaintiffs an opportunity to amend their fraud claim within sixty days of the date of the oral argument. The Court reserved decision on the other causes of action. On December 14, 2021, the Court entered a decision and order in connection with the motion to dismiss whereby the Court dismissed Plaintiff’s causes of action for specific performance, conversion, permanent injunction, and reiterated its prior determination that the fraud claim was also dismissed. The Court denied the motion to dismiss in connection with the other causes of action asserted in the complaint. On January 26, 2022, the Company and Mr. Ault filed an answer to the complaint and asserted numerous affirmative defenses. Based on the Company’s assessment of the facts underlying the above claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot reasonably estimate the potential loss or range of loss that may result from this action. An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations. Subpoena The Company and certain affiliates and related parties have received several subpoenas from the SEC for the production of documents and testimony. The Company is fully cooperating with this non-public, fact-finding inquiry and management believes that the Company has operated its business in compliance with all applicable laws. The subpoenas expressly provide 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 they 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 The Company is involved in litigation arising from other matters in the ordinary course of business. The Company is regularly subject to claims, suits, regulatory and government investigations, and other proceedings involving labor and employment, commercial disputes, and other matters. Such claims, suits, regulatory and government investigations, and other proceedings could result in fines, civil penalties, or other adverse consequences. Certain of these outstanding matters include speculative, substantial or indeterminate monetary amounts. The Company records a liability when it believes that it is probable that a loss has been incurred and the amount can be reasonably estimated. If the Company determines that a loss is reasonably possible and the loss or range of loss can be estimated, the Company discloses the reasonably possible loss. The Company evaluates developments in its legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and makes adjustments as appropriate. Significant judgment is required to determine both likelihood of there being and the estimated amount of a loss related to such matters. With respect to the Company’s other outstanding matters, based on the Company’s current knowledge, the Company believes that the amount or range of reasonably possible loss will not, either individually or in aggregate, have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows. However, the outcome of such matters is inherently unpredictable and subject to significant uncertainties. F- 18 14. STOCKHOLDERS’ EQUITY 2022 Issuances 2022 ATM Offering On February 25, 2022, the Company entered into an At-The-Market issuance sales agreement with Ascendiant Capital Markets to sell shares of common stock having an aggregate offering price of up to $ 200 million from time to time, through an “at the market offering” program (the “2022 ATM Offering”). As of March 31, 2022, the Company had sold an aggregate of 140.0 million shares of common stock pursuant to the 2022 ATM Offering for gross proceeds of $ 110.1 million . 15. INCOME TAXES The Company calculates its interim income tax provision in accordance with ASC 270 and ASC 740. The Company’s effective tax rate (“ETR”) from continuing operations was 0.0 % and 0.2 % for the three months ended March 31, 2022 and 2021, respectively. The Company had no provision for income taxes for the three months ended March 31, 2022 and recorded an income tax provision of $ 6,000 for the three months ended March 31, 2021. 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. 16. NET INCOME (LOSS) PER SHARE For the three months ended March 31, 2022, 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 months ended March 31, 2022, as the effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for the period. Anti-dilutive securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at March 31, 2022: Net Loss Per Share March 31, 2022 Stock options 6,396,000 Restricted stock grants 2,063,000 Warrants 20,015,000 Convertible notes 165,000 Convertible preferred stock 2,000 Total 28,641,000 F- 19 Basic and diluted net income per common share for the three months ended March 31, 2021 were calculated as follows: For the Three Months Ended March 31, 2021 Income Shares Per-Share (Numerator) (Denominator) Amount Net income attributable to BitNile Holdings $ 1,997,000 Less: Preferred stock dividends ( 4,000 ) Basic earnings per share Net income available to common stockholders 1,993,000 39,256,000 $ 0.05 Effect of dilutive securities Stock options - 505,000 8% convertible notes, related party 8,000 276,000 4% convertible notes 7,000 165,000 Diluted earnings per share Income available to common stockholders plus assumed conversions $ 2,008,000 40,202,000 $ 0.05 17. SEGMENT AND CUSTOMERS INFORMATION The Company had six reportable segments as of March 31, 2022 and three as of March 31, 2021; see Note 1 for a brief description of the Company’s business. The following data presents the revenues, expenditures and other operating data of the Company’s operating segments for the three months ended March 31, 2022: GWW TurnOnGreen Ault Alliance Cryptocurrency Real Estate Ault Disruptive Holding Company Total Revenue $ 7,245,000 $ 1,129,000 $ 7,000 $ - $ - $ - $ - $ 8,381,000 Revenue, cryptocurrency mining, net - - - 3,548,000 - - - 3,548,000 Revenue, commercial real estate leases - - - 278,000 - - - 278,000 Revenue, lending and trading activities - - 17,921,000 - - - - 17,921,000 Revenue, hotel operations - - - - 2,698,000 - - 2,698,000 Total revenues $ 7,245,000 $ 1,129,000 $ 17,928,000 $ 3,826,000 $ 2,698,000 $ - $ - $ 32,826,000 Depreciation and amortization expense $ 221,000 $ 6,000 $ 34,000 $ 1,527,000 $ 828,000 $ - $ 26,000 $ 2,642,000 Income (loss) from operations $ ( 144,000 ) $ ( 1,175,000 ) $ 11,912,000 $ ( 363,000 ) $ ( 1,382,000 ) $ ( 297,000 ) $ ( 7,521,000 ) $ 1,030,000 Capital expenditures for the three months ended March 31, 2022 $ 129,000 $ 75,000 $ 88,000 $ 34,987,000 $ 34,000 $ - $ 46,000 $ 35,359,000 F- 20 Segment information for the three months ended March 31, 2021: GWW TurnOnGreen Ault Alliance Holding Company Total Revenue $ 6,350,000 $ 1,383,000 $ 172,000 $ - $ 7,905,000 Revenue, cryptocurrency mining, net 130,000 130,000 Revenue, lending and trading activities - - 5,210,000 - 5,210,000 Total revenues $ 6,350,000 $ 1,383,000 $ 5,512,000 $ - $ 13,245,000 Depreciation and amortization expense $ 213,000 $ 7,000 $ 43,000 $ 3,000 $ 266,000 Income (loss) from operations $ 212,000 $ ( 200,000 ) $ 4,033,000 $ ( 2,844,000 ) $ 1,201,000 Capital expenditures for the three months ended March 31, 2021 $ 92,000 $ - $ 4,257,000 $ - $ 4,349,000 18. SUBSEQUENT EVENTS 2022 ATM Offering During the period between April 1, 2022 through May 20, 2022, the Company sold an aggregate of 88.2 million shares of common stock pursuant to the 2022 ATM Offering for gross proceeds of $ 49.4 million . Investments in Alpha Fund During the period between April 1, 2022 through May 16, 2022, the Company purchased an additional $ 3.0 million of limited partnership interests in the Alpha Fund. As of May 16, 2022, the Company had subscribed for $ 21.0 million of limited partnership interests. Investments in Alzamend On April 26, 2022, DP Lending funded the remaining $ 4 million due to Alzamend upon its achievement of the final milestone. EYP Acquisition On April 25, 2022, the Company announced that its subsidiary, Ault Alliance has agreed to lend approximately $12 million (inclusive of existing loans) through a super-priority debtor-in-possession (“DIP”) loan to, and entered into an asset purchase agreement with, EYP, Inc. and its affiliates (“EYP”) providing for the acquisition of all of EYP’s assets for an aggregate consideration of approximately $68 million (the “Asset Purchase”). Ault Alliance will also make an offer of employment to all current employees of EYP. EYP is an integrated architecture, engineering, and design services company specializing in higher education, healthcare, government and science & technology with offices in 11 cities across the United States. The asset purchase agreement constitutes a “stalking horse” bid in a sale process being conducted under Section 363 of the U.S. Bankruptcy Code. As such, Ault Alliance’s acquisition of EYP’s assets remains subject to approval by the United States Bankruptcy Court for the District of Delaware, following court-approved bidding procedures, including the potential receipt of competing offers for EYP’s assets at auction. It is expected that the sale process will be completed by June 2022, and that throughout the sale process, the business will continue to operate in the ordinary course providing services to its customers. As part of the purchase, Ault Alliance will be able to include the value of its DIP loan as part of its bid at closing. Consummation of the Asset Purchase is subject to Bankruptcy Court approved bidding procedures, higher and better offers made in the auction by other potential bidders, approval of the highest bidder by the Bankruptcy Court and customary closing conditions. Increase in Ownership of Alliance Cloud Services, LLC On May 12, 2022, BNI closed a $ 1.8 million membership interest purchase agreement whereby BNI acquired the 30 % minority interest of Alliance Cloud Services, LLC (“ACS”) which BNI did not previously own, resulting in ACS becoming a wholly-owned subsidiary of BNI. ACS owns and operates the Company’s Michigan data center, where BNI conducts the Company’s Bitcoin mining operations. F- 21