What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-04-14 compared with 2023-04-14 · 496 added, 786 removed, 1181 unchanged (52% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS

5 unchanged sentences

Accrued revenue

Investment in promissory notes and other, related party

Loans receivable, current

Investment in promissory notes and other, related parties

Prepaid expenses and other current assets

7 unchanged sentences

Investment in unconsolidated entity

Loans receivable, non-current

Loans receivable

$ 596,271,000

13 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

September 30,

LONG TERM LIABILITIES

9 unchanged sentences

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

issued and outstanding at September 30, 2022 and December 31, 2021

issued and outstanding at June 30, 2022 and December 31, 2021

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

September 30, 2022 and December 31, 2021)

June 30, 2022 and December 31, 2021)

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

1 unchanged sentence

125,000 shares issued

and outstanding at September 30, 2022 and December 31, 2021 (liquidation

preference of $ 1,190,000 at September 30, 2022 and December 31, 2021)

and outstanding at June 30, 2022 and December 31, 2021 (liquidation

preference of $ 1,250,000 at June 30, 2022 and December 31, 2021)

Series D Cumulative Redeemable Perpetual Preferred Stock, $ 25 stated

1 unchanged sentence

shares authorized, 146,618 shares and 0 shares issued and outstanding at

September 30, 2022 and December 31, 2021, respectively (liquidation

preference of $ 3,665,450 and $ 0 as of September 30, 2022 and

December 31, 2021, respectively)

June 30, 2022 and December 31, 2021, respectively (liquidation preference of

$ 3,665,450 and $ 0 as of June 30, 2022 and December 31, 2021, respectively)

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

341,446,982 and 84,344,607 shares issued and outstanding at September 30,

324,440,579 and 84,344,607 shares issued and outstanding at June 30,

2022 and December 31, 2021, respectively

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

0 shares issued and outstanding at September 30, 2022 and December 31,

0 shares issued and outstanding at June 30, 2022 and December 31, 2021

Additional paid-in capital

18 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

AND COMPREHENSIVE (LOSS) INCOME

For the Three Months Ended

For the Nine Months Ended

September 30,

For the Six Months Ended

Revenue, cryptocurrency mining

1 unchanged sentence

Revenue, lending and trading activities

( 38,869,000 )

Total revenue

( 30,794,000 )

Cost of revenue, products

Cost of revenue, cryptocurrency mining

Cost of revenue, hotel operations

Total cost of revenue

( 36,065,000 )

Cost of revenue

Operating expenses

2 unchanged sentences

General and administrative

Impairment of deposit due to vendor bankruptcy filing

Impairment of mined cryptocurrency

Total operating expenses

Loss from operations

( 5,311,000 )

( 49,874,000 )

(Loss) income from operations

( 23,719,000 )

3 unchanged sentences

Change in fair value of equity securities, related party

( 7,773,000 )

Accretion of discount on note receivable, related party

Interest expense

2 unchanged sentences

Change in fair value of marketable equity securities

Realized gain on digital currencies and marketable securities

( 1,915,000 )

Realized gain (loss) on marketable securities

Loss from investment in unconsolidated entity

6 unchanged sentences

( 2,227,000 )

Loss before income taxes

( 7,852,000 )

( 50,989,000 )

(Loss) income before income taxes

( 25,868,000 )

3 unchanged sentences

( 3,510,000 )

( 62,868,000 )

( 6,334,000 )

Net loss (income) attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

Net (loss) income

( 26,085,000 )

( 54,872,000 )

Net loss attributable to non-controlling interest

Net (loss) income attributable to Ault Alliance, Inc.

( 25,764,000 )

1 unchanged sentence

Preferred dividends

Net loss available to common stockholders

$ ( 7,461,000 )

$ ( 47,723,000 )

Net (loss) income available to common stockholders

$ ( 25,808,000 )

5 unchanged sentences

Comprehensive (loss) income

Net loss available to common stockholders

$ ( 7,461,000 )

$ ( 47,723,000 )

Net (loss) income available to common stockholders

$ ( 25,808,000 )

3 unchanged sentences

( 1,471,000 )

Other comprehensive income (loss)

( 1,758,000 )

Total comprehensive loss

Other comprehensive (loss) income

( 1,471,000 )

( 1,758,000 )

Total comprehensive (loss) income

$ ( 27,279,000 )

6 unchanged sentences

IN STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2022

Series A, B &

Three Months Ended June 30, 2022

Series A, B & D

Preferred Stock

Comprehensive

Stockholders’

BALANCES, July 1, 2022

BALANCES, April 1, 2022

$ 495,536,000

3 unchanged sentences

$ 308,458,000

Issuance of common stock for restricted stock awards

Preferred stock issued

1 unchanged sentence

Stock-based compensation

Issuance of Gresham Worldwide common stock

GIGA acquisition

Issuance of common stock for cash

Financing cost in connection with sales of

Increase in ownership interest of subsidiary

Sale of common stock

Financing cost in connection with sales of common stock

( 1,266,000 )

Non-controlling interest from GIGA acquisition

Acquisition of non-controlling interests

( 1,848,000 )

( 2,230,000 )

Non-controlling interest from AVLP acquisition

Non-controlling interest from SMC acquisition

Purchase of treasury stock - Ault Alpha

5 unchanged sentences

Foreign currency translation adjustments

( 1,471,000 )

Net loss attributable to non-controlling interest

BALANCES, September 30, 2022

BALANCES, June 30, 2022

$ 549,713,000

9 unchanged sentences

IN STOCKHOLDERS’ EQUITY (RESTATED)

Three Months Ended September 30, 2021

Three Months Ended June 30, 2021

Preferred Stock

Comprehensive

1 unchanged sentence

Stockholders’

BALANCES, July 1, 2021

Income (Loss)

BALANCES, April 1, 2021

$ 292,763,000

2 unchanged sentences

$ 176,470,000

Issuance of common stock for restricted stock awards

Stock-based compensation

Restricted stock awards

Issuance of stock options at Gresham

Issuance of common stock for cash

Financing cost in connection with sales of common

to treasury stock for holdings in

investment partnerships

( 2,773,000 )

Sale of common stock

Financing cost in connection with sales of common stock

Issuance of common stock for conversion

of convertible notes payable, related party

Comprehensive loss:

( 47,719,000 )

Preferred dividends

1 unchanged sentence

Net income attributable to non-controlling interest

BALANCES, September 30, 2021

( 1,083,000 )

BALANCES, June 30, 2021

$ 311,760,000

1 unchanged sentence

$ ( 744,000 )

$ 231,389,000

The accompanying notes are an integral part of

4 unchanged sentences

IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2022

Series A, B &

Six Months Ended June 30, 2022

Series A, B & D

Preferred Stock

Comprehensive

6 unchanged sentences

$ 228,455,000

Issuance of common stock for restricted stock

Issuance of common stock for restricted stock awards

Preferred stock issued

1 unchanged sentence

Stock-based compensation

Issuance of Gresham Worldwide common stock

GIGA acquisition

Issuance of common stock for cash

Financing cost in connection with sales of

( 4,103,000 )

Sale of common stock

Financing cost in connection with sales of common stock

( 4,024,000 )

Increase in ownership interest of subsidiary

( 4,024,000 )

Acquisition of non-controlling interests

( 1,848,000 )

2 unchanged sentences

Non-controlling interest from SMC acquisition

Non-controlling interest from GIGA acquisition

Purchase of treasury stock - Ault Alpha

8 unchanged sentences

Net loss attributable to non-controlling interest

( 1,061,000 )

BALANCES, September 30, 2022

BALANCES, June 30, 2022

$ 549,713,000

9 unchanged sentences

IN STOCKHOLDERS’ EQUITY (RESTATED)

Nine Months Ended September 30, 2021

Six Months Ended June 30, 2021

Preferred Stock

Comprehensive

Non-Controlling

Stockholders’

Income (Loss)

BALANCES, January 1, 2021

2 unchanged sentences

$ ( 785,000 )

Issuance of common stock for restricted stock awards

Stock-based compensation

Restricted stock awards

Issuance of stock options at Gresham

Issuance of common stock for cash

Financing cost in connection with sales of common

( 4,952,000 )

to treasury stock for holdings in investment

( 2,773,000 )

Sale of common stock

Financing cost in connection with sales of

Issuance of common stock for conversion

3 unchanged sentences

Comprehensive loss:

( 6,427,000 )

Preferred dividends

1 unchanged sentence

Net income attributable to non—controlling interest

BALANCES, September 30, 2021

$ 331,886,000

BALANCES, June 30, 2021

$ 311,760,000

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Six Months Ended June 30,

Cash flows from operating activities:

1 unchanged sentence

$ ( 54,872,000 )

$ ( 6,334,000 )

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

4 unchanged sentences

Accretion of original issue discount on notes receivable – related party

( 4,213,000 )

Accretion of original issue discount on notes receivable

1 unchanged sentence

Stock-based compensation

Impairment of deposit due to vendor bankruptcy filing

Impairment of cryptocurrencies

2 unchanged sentences

( 12,283,000 )

Unrealized losses on marketable securities

Unrealized losses (gains) on marketable securities

( 3,483,000 )

Unrealized losses (gains) on investments in equity securities, related parties

( 36,928,000 )

Unrealized gains on equity securities

8 unchanged sentences

( 2,311,000 )

( 1,270,000 )

Accrued revenue

4 unchanged sentences

( 7,785,000 )

( 2,944,000 )

Accounts payable and accrued expenses

( 1,082,000 )

Other current liabilities

Lease liabilities

( 1,334,000 )

Net cash provided by (used in) operating activities

15 unchanged sentences

( 8,239,000 )

Purchase of GIGA, net of cash received

( 3,687,000 )

Cash received upon acquisition of AVLP

3 unchanged sentences

( 1,981,000 )

( 2,144,000 )

Sales of marketable equity securities

14 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Six Months Ended June 30,

Cash flows from financing activities:

16 unchanged sentences

( 7,459,000 )

( 2,773,000 )

Payments on revolving credit facilities, net

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents and restricted cash

( 6,490,000 )

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

$ 105,391,000

Supplemental disclosures of cash flow information:

14 unchanged sentences

Ault Alliance, Inc., a Delaware

corporation which was then known as BitNile Holdings, Inc., (“BitNile” or the “Company”) was incorporated in September

corporation which was then known as BitNile Holdings, Inc.

(“BitNile” or the “Company”) was incorporated in September

BitNile is a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a

1 unchanged sentence

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 oil exploration,

defense/aerospace, industrial, automotive, medical/biopharma, karaoke audio equipment, 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.

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

industrial, automotive, medical/biopharma, karaoke audio equipment, 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.

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.

investment and capital allocation decisions are made for the Company by Mr.

Ault and the other members of the Executive Committee.

The Company has seven reportable segments:

Company has eight reportable segments:

· BitNile, Inc.

1 unchanged sentence

· Ault Alliance, Inc.

(“Ault Alliance”) – commercial lending, activist investing, advanced

textiles processing technology, media, and digital learning;

(“Ault Alliance”) – commercial lending, activist investing, media,

and digital learning;

· Gresham Worldwide, Inc.

(“GWW”) – defense solutions;

· Imperalis Holding Corp., to be renamed TurnOnGreen, Inc.

(“TurnOnGreen”) – commercial

electronics solutions;

· TurnOnGreen, Inc.

(“TurnOnGreen”) – commercial electronics solutions;

· The Singing Machine Company, Inc.

(“SMC”) – karaoke audio equipment;

· Avalanche International Corp.

(“Avalanche” or “AVLP”) – advanced textiles processing technology;

· Ault Global Real Estate Equities, Inc.

5 unchanged sentences

PREVIOUSLY ISSUED FINANCIAL STATEMENTS

This Amendment amends the

Quarterly Report on Form 10-Q of the Company for the nine months ended September 30, 2022, that was originally filed with the U.S.

and Exchange Commission on November 21, 2022.

This Amendment only corrects an error in classification with respect to changes in fair

value of financial instruments issued by a related party.

The changes in fair value were erroneously recorded in other comprehensive

income (loss) and have been reclassified to correct for the error within the statement of operations.

The Company has restated its Condensed

Consolidated Statements of Operations and Comprehensive Loss, Condensed Consolidated Statements of Changes in Stockholders’ Equity

and Condensed Consolidated Statements of Cash Flows to correct this misclassification.

Further, this Amendment also includes certain

limited modifications to reflect the correct classification in disclosures in the Company’s Note 20 Net Loss per Share footnote

in the Company’s Notes to Condensed Consolidated Financial Statements.

Finally, the Company

has modified its disclosures in Item 4 of Part I to reflect the identification of an additional material weakness.

This Amendment amends the Quarterly Report on

Form 10-Q of the Company for the six months ended June 30, 2022, that was originally filed with the U.S.

Securities and Exchange Commission

on August 22, 2022.

This Amendment only corrects an error in classification with respect to changes in fair value of financial instruments

issued by a related party.

The changes in fair value were erroneously recorded in other comprehensive income (loss) and have been reclassified

to correct for the error within the statement of operations.

The Company has restated its Condensed Consolidated Statements of Operations

and Comprehensive Loss, Condensed Consolidated Statements of Changes in Stockholders’ Equity and Condensed Consolidated Statements

of Cash Flows to correct this misclassification.

Further, this Amendment also includes certain limited modifications to reflect the correct

classification in disclosures in the Company’s Note 20 Net (Loss) Income per Share footnote in the Company’s Notes to Condensed

Consolidated Financial Statements.

Finally, the Company has modified its disclosures in Item 4

of Part I to reflect the identification of an additional material weakness.

a result, the Condensed Consolidated Statements of Operations and Comprehensive Loss amounts

1 unchanged sentence

unrealized gain on derivative securities of related party ” were adjusted pursuant to the schedules

Schedule of condensed consolidated statements

of operations and comprehensive loss

Schedule of condensed consolidated statements of operations and comprehensive loss

For the Three Months Ended

September 30, 2021

June 30, 2021

Revenue, cryptocurrency mining, net

Revenue, lending and trading activities

( 38,869,000 )

Total revenue

( 30,794,000 )

Cost of revenue, products

Cost of revenue, cryptocurrency mining

Total cost of revenue

( 36,065,000 )

Cost of revenue

Operating expenses

3 unchanged sentences

Total operating expenses

Loss from operations

( 49,874,000 )

Income from operations

Other income (expenses)

3 unchanged sentences

( 5,893,000 )

Accretion of discount on note receivable, related party

Interest expense

Change in fair value of marketable equity securities

Realized gain on marketable securities

Change in fair value of warrant liability

Total other income (expenses), net

( 1,915,000 )

Loss before income taxes

Gain on extinguishment of debt

Change in fair value of warrant liability

Total other expenses, net

( 1,186,000 )

1 unchanged sentence

( 7,079,000 )

Income (loss) before income taxes

( 5,893,000 )

Income tax provision

1 unchanged sentence

( 3,504,000 )

Net income (loss)

( 5,893,000 )

Net income attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

( 42,870,000 )

( 4,849,000 )

Net income (loss) attributable to Ault Alliance, Inc.

( 5,893,000 )

Preferred dividends

Net loss available to common stockholders

$ ( 42,874,000 )

$ ( 4,849,000 )

Net income (loss) available to common stockholders

$ ( 5,893,000 )

3 unchanged sentences

Weighted average diluted common shares outstanding

Comprehensive loss

Net loss available to common stockholders

$ ( 42,874,000 )

$ ( 4,849,000 )

Comprehensive income

Net income (loss) available to common stockholders

$ ( 5,893,000 )

5 unchanged sentences

( 5,759,000 )

Total comprehensive loss

$ ( 47,905,000 )

For the Nine Months Ended

September 30, 2021

Total comprehensive income

For the Six Months Ended

June 30, 2021

Revenue, cryptocurrency mining, net

1 unchanged sentence

Total revenue

Cost of revenue, products

Cost of revenue, cryptocurrency mining

Total cost of revenue

Cost of revenue

Operating expenses

3 unchanged sentences

Total operating expenses

Loss from operations

( 2,850,000 )

Income from operations

Other income (expenses)

3 unchanged sentences

( 2,924,000 )

Accretion of discount on note receivable, related party

Interest expense

Change in fair value of marketable equity securities

Gain on extinguishment of debt

Realized gain on marketable securities

Gain on extinguishment of debt

Change in fair value of warrant liability

Total other income (expenses), net

( 7,773,000 )

Total other (expenses) income, net

( 2,924,000 )

Loss before income taxes

( 2,227,000 )

Income (loss) before income taxes

( 2,924,000 )

2 unchanged sentences

( 3,510,000 )

Net income attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

Net income (loss)

( 2,924,000 )

Net income attributable to non-controlling interest

Net income (loss) attributable to Ault Alliance, Inc.

( 2,924,000 )

Preferred dividends

Net loss available to common stockholders

$ ( 7,773,000 )

Net income (loss) available to common stockholders

$ ( 2,924,000 )

3 unchanged sentences

Weighted average diluted common shares outstanding

Comprehensive loss

Net loss available to common stockholders

$ ( 7,773,000 )

Comprehensive income

Net income (loss) available to common stockholders

$ ( 2,924,000 )

5 unchanged sentences

( 2,883,000 )

Total comprehensive loss

$ ( 6,581,000 )

Total comprehensive income

Condensed Consolidated Statements of Changes in Stockholders’ Equity amounts of “ Accumulated

1 unchanged sentence

were adjusted pursuant to the schedules below:

Schedule of condensed consolidated statements

of changes in stockholders’ equity

Schedule of condensed consolidated statements of changes in stockholders’ equity

January 1, 2021

9 unchanged sentences

TOTAL STOCKHOLDERS’ EQUITY

April 1, 2021

STOCKHOLDERS’ EQUITY

3 unchanged sentences

( 117,366,000 )

( 81,047,000 )

Accumulated other comprehensive loss

5 unchanged sentences

$ 176,470,000

September 30, 2021

June 30, 2021

STOCKHOLDERS’ EQUITY

6 unchanged sentences

( 4,601,000 )

Treasury stock, at cost

( 2,773,000 )

TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY

6 unchanged sentences

Condensed Consolidated Statements of Cash Flows, as follows:

Schedule of Condensed Consolidated

Statements of Cash Flows

For the Nine Months Ended

September 30, 2021

Schedule of condensed consolidated statements of cash flows

For the Six Months Ended

June 30, 2021

Cash flows from operating activities:

Net income (loss)

$ ( 2,924,000 )

$ ( 6,334,000 )

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

4 unchanged sentences

Accretion of original issue discount on notes receivable – related party

( 4,213,000 )

Accretion of original issue discount on notes receivable

4 unchanged sentences

( 12,283,000 )

Unrealized losses on marketable securities

Unrealized losses (gains) on marketable securities

( 3,483,000 )

Unrealized losses (gains) on equity securities, related parties

( 39,852,000 )

( 36,928,000 )

Unrealized gains on equity securities

6 unchanged sentences

Accounts receivable

( 1,270,000 )

Accrued revenue

3 unchanged sentences

Accounts payable and accrued expenses

( 1,082,000 )

Other current liabilities

4 unchanged sentences

LIQUIDITY AND FINANCIAL

of September 30, 2022, the Company had cash and cash equivalents of $ 10.1 million and working capital of $ 25.7 million.

The Company has

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

of June 30, 2022, the Company had cash and cash equivalents of $ 24.1 million and working capital of $ 51.4 million.

The Company has financed its operations principally through issuances of convertible debt, promissory notes and equity securities.

The Company believes

17 unchanged sentences

statements contained in the above referenced Form 10-K.

Results of the three and nine months ended September 30, 2022, are not necessarily

indicative of the results to be expected for the full year ending December 31, 2022.

Results of the three and six months ended June 30, 2022, are not necessarily indicative

of the results to be expected for the full year ending December 31, 2022.

Significant Accounting

than as noted below, there have been no material changes to the Company’s significant accounting policies previously disclosed in

Other than as noted

below, there have been no material changes to the Company’s significant accounting policies previously disclosed in

the 2021 Annual Report.

4 unchanged sentences

is recorded as goodwill.

The purchase price allocation process requires management to make significant estimates and assumptions at the

acquisition date with respect to intangible assets.

The allocation of the consideration transferred in certain cases may be subject to

revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition

Acquired customer relations, technology, tradenames and know how are recognized at fair value.

The purchase price

allocation process requires management to make significant estimates and assumptions, especially at the acquisition date with respect

to intangible assets.

Direct transaction costs associated with the business combination are expensed as incurred.

The Company includes the results of

operations of the business that it has acquired in its consolidated results prospectively from the date of acquisition.

The allocation of the

consideration transferred in certain cases may be subject to revision based on the final determination of fair values during the measurement

period, which may be up to one year from the acquisition date.

The Company includes the results of operations of the business that it

has acquired in its consolidated results prospectively from the date of acquisition.

the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest

2 unchanged sentences

in profit or loss.

Oil and Gas Properties

Company uses the successful efforts method of accounting for oil and natural gas producing properties, as further defined under Accounting

Standards Codification (“ASC”) 932, Extractive Activities - Oil and Natural Gas.

Under this method, costs to acquire mineral

interests in oil and natural gas properties are capitalized.

The costs of non-producing mineral interests and associated acquisition costs

are capitalized as unproved properties pending the results of leasing efforts and drilling activities of exploration and production (“E&P”)

operators on our interests.

As unproved properties are determined to have proved reserves, the related costs are transferred to proved

oil and gas properties.

Capitalized costs for proved oil and natural gas mineral interests are depleted on a unit-of-production basis

over total proved reserves.

For depletion of proved oil and gas properties, interests are grouped in a reasonable aggregation of properties

with common geological structural features or stratigraphic conditions.

Impairment of Oil

and Gas Properties

Company evaluates its producing properties for impairment whenever events or changes in circumstances indicate that the carrying amount

of an asset may not be recoverable.

When assessing proved properties for impairment, the Company compares the expected undiscounted future

cash flows of the proved properties to the carrying amount of the proved properties to determine recoverability.

If the carrying amount

of proved properties exceeds the expected undiscounted future cash flows, the carrying amount is written down to the properties’

estimated fair value, which is measured as the present value of the expected future cash flows of such properties.

The factors used to

determine fair value include estimates of proved reserves, future commodity prices, timing of future production, and a risk-adjusted discount

The proved property impairment test is primarily impacted by future commodity prices, changes in estimated reserve quantities, estimates

of future production, overall proved property balances, and depletion expense.

If pricing conditions decline or are depressed, or if there

is a negative impact on one or more of the other components of the calculation, we may incur proved property impairments in future periods.

oil and gas properties are assessed periodically for impairment of value, and a loss is recognized at the time of impairment by charging

capitalized costs to expense.

Impairment is assessed when facts and circumstances indicate that the carrying value may not be recoverable,

at which point an impairment loss is recognized to the extent the carrying value exceeds the estimated recoverable value.

in the assessment include but are not limited to commodity price outlooks and current and future operator activity in the respective basins.

The Company recognized no impairment of unproved properties for the three and nine months ended September 30, 2022 and 2021.

Reclassifications

1 unchanged sentence

These reclassifications had no effect on previously reported results of operations.

Adopted Accounting Standards

Accounting Standards

In May 2021, the Financial

16 unchanged sentences

will have a significant impact on its condensed consolidated financial statements.

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

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 condensed consolidated financial statements.

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

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 condensed consolidated financial statements.

In October 2021, the FASB

1 unchanged sentence

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.

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 condensed consolidated financial statements.

by the acquirer on the acquisition date in accordance with Accounting Standards Codification (“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

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 condensed 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 issuer’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 condensed consolidated financial statements.

REVENUE DISAGGREGATION

The following tables summarize

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

disaggregated customer contract revenues and the source of the revenue for the three and six months ended June 30, 2022 and 2021.

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 consisted of the following for the three months ended September 30, 2022:

revenues consisted of the following for the three months ended June 30, 2022:

Schedule of disaggregated revenues

Three months ended September 30, 2022

Three months ended June 30, 2022

Primary Geographical Markets

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Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

Revenue, lending and trading activities (North America)

Total revenue

Major Goods or Services

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units

Digital currency mining, net

Power supply systems

Healthcare diagnostic systems

Electric vehicle chargers

Defense systems

Digital currency mining

Hotel operations

Karaoke machines and related

Revenue from contracts with customers

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The Company’s disaggregated

revenues consisted of the following for the nine months ended September 30, 2022:

Nine months ended September 30, 2022

revenues consisted of the following for the six months ended June 30, 2022:

Six months ended June 30, 2022

Primary Geographical Markets

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Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

Revenue, lending and trading activities (North America)

Total revenue

Major Goods or Services

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units

Power supply systems

Healthcare diagnostic systems

Electric vehicle chargers

Defense systems

1 unchanged sentence

Hotel operations

Karaoke machines and related

Revenue from contracts with customers

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The Company’s disaggregated

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

Three Months ended September 30, 2021

revenues consisted of the following for the three months ended June 30, 2021:

Three months ended June 30, 2021

Ault Alliance

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North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

( 38,869,000 )

Revenue, lending and trading activities (North America)

Total revenue

$ ( 38,261,000 )

$ ( 30,794,000 )

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units

Power supply systems

Healthcare diagnostic systems

Defense systems

2 unchanged sentences

Revenue, lending and trading activities

( 38,869,000 )

Total revenue

$ ( 38,261,000 )

$ ( 30,794,000 )

Timing of Revenue Recognition

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The Company’s disaggregated

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

Nine Months Ended September 30, 2021

revenues consisted of the following for the six months ended June 30, 2021:

Six months ended June 30, 2021

Ault Alliance

1 unchanged sentence

North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

Revenue, lending and trading activities (North America)

Total revenue

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units

Power supply systems

Healthcare diagnostic systems

Defense systems

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Schedule of financial instrument measured at fair value

Fair Value Measurement at September 30, 2022

Fair Value Measurement at June 30, 2022

Investment in term promissory note of Ault & Company, Inc.

(“Ault & Company”) and other – a related party

Investment in common stock of Alzamend Neuro, Inc.

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Fair Value Measurement at December 31, 2021

Investment in term promissory note of Ault & Company and other – a related party

Investment in common stock of Alzamend – a related party

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following table summarizes the changes in investments in other equity securities measured and carried at fair value on a recurring basis

with the use of significant unobservable inputs (Level 3) for the nine months ended September 30, 2022:

with the use of significant unobservable inputs (Level 3) for the six months ended June 30, 2022:

Schedule of other equity securities measured and carried at fair value

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Investment in preferred stock

Change in fair value of financial instruments

Change in fair value of warrants

Conversion to marketable securities

Balance at September 30, 2022

( 24,828,000 )

Balance at June 30, 2022

Note 11 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 and six months ended June 30, 2022.

equity securities also include investments in entities that do not have a readily determinable fair value and do not report net asset

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as nonrecurring fair value measurements, including the level in the fair value hierarchy that was used.

of September 30, 2022 and December 31, 2021, investments in other equity securities valued using a measurement alternative of $ 41.6 million

and $ 21.4 million, respectively, are included in other equity securities in the accompanying condensed consolidated balance sheets.

The following table presents information on certain assets measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2022 and December 31, 2021.

There were no observable price changes or indicators of impairment for these investments during the nine months ended September 30, 2022.

As of June 30, 2022 and December

31, 2021, investments in other equity securities valued using a measurement alternative of $ 37.7 million and $ 21.3 million, respectively,

are included in other equity securities in the accompanying condensed consolidated balance sheets.

following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy

as of June 30, 2022 and December 31, 2021.

These investments were not measured due to an observable price change or impairment during the six months ended June

Schedule of investments not measured

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identical assets

As of September 30, 2022

Investments in other equity securities that do not report net asset

Fair Value Measurement Using

As of June 30, 2022

Investments in other equity securities that do not report net asset value

Value Measurement Using

Quoted prices

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As of December 31, 2021

Investments in other equity securities that do not report net asset

Investments in other equity securities that do not report net asset value

MARKETABLE EQUITY SECURITIES

Marketable equity securities

with readily determinable market prices consisted of the following as of September 30, 2022 and December 31, 2021:

with readily determinable market prices consisted of the following as of June 30, 2022 and December 31, 2021:

Schedule of marketable equity securities

Marketable equity securities at September 30, 2022

Marketable equity securities at June 30, 2022

Gross unrealized

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PROPERTY AND EQUIPMENT, NET

At September 30, 2022 and

December 31, 2021, property and equipment consisted of:

At June 30, 2022 and December

31, 2021, property and equipment consisted of:

Schedule of property and equipment

September 30, 2022

June 30, 2022

December 31, 2021

Cryptocurrency machines and related equipment

$ 131,141,000

Computer, software and related equipment

Office furniture and equipment

Oil and natural gas properties, unproved properties

Building and improvements

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$ 174,025,000

Summary of depreciation expense:

Schedule of summary of depreciation expenses

For the Three Months Ended

For the Nine Months Ended

September 30,

Depreciation expense

Ault Energy Oil and Gas Properties

On July 11, 2022, the Company

announced the formation of Ault Energy, LLC (“Ault Energy”), as an indirect wholly-owned subsidiary of the Company through

Ault Alliance.

Ault Energy is partnering with White River Holdings Corp.

(“White River”), a wholly owned subsidiary of Ecoark

Holdings, Inc.

(“Ecoark”), on drilling projects across 30,000 acres in Texas, Louisiana and Mississippi.

Ault Energy, as the

designee of Ault Lending, LLC (“Ault Lending”), has the right to purchase up to 25%, or such higher percentages at the discretion

of White River, in various drilling projects of White River.

In August 2022, Ault Energy purchased a 40% working interest of the Harry

O’Neal 20-9 No.1 drilling project in Mississippi for $972,000 included in property and equipment.

The Company has not recorded any

depletion as the Harry O’Neal 20-9 No.1 drilling project was considered an unproved property as of September 30, 2022.

Compute North Bankruptcy

On September 22, 2022, Compute North Holdings, Inc.

(along with its

affiliated debtors, collectively, “Compute North”), filed for chapter 11 bankruptcy protection in the U.S.

Bankruptcy Court

for the Southern District of Texas under Chapter 11 of the U.S.

Bankruptcy Code (11 U.S.

Code section 101 et seq.).

At the time of Compute

North’s bankruptcy filing, BitNile had 6,572 Bitcoin miners with a carrying amount of $38.0 million, classified within property

and equipment on the consolidated balance sheet, with Compute North at the Wolf Hollow hosting facility in Texas.

Additionally, the Company

has a deposit of approximately $2.0 million with Compute North for services yet to be performed by Compute North.

The ultimate outcome

of the bankruptcy process, and its impact on the deposit held by the Company, remains to be determined.

The Company assessed this financial

exposure and recorded an impairment of the deposit totaling $2 million during the three months ended September 30, 2022.

The Company has

inspected the Bitcoin miners that are installed at the hosting facility in Texas.

No impairment on the mining equipment was recorded as

of September 30, 2022.

The Company has retained counsel to assist in this matter.

For the six months ended June

30, 2022 and 2021, depreciation expense amounted to $ 6.3 million and $ 0.4 million, respectively.

BUSINESS COMBINATIONS

Avalanche International Corp.

(“AVLP”) Acquisition

On June 1, 2022, the Company

converted the principal amount under the convertible promissory notes issued to it by AVLP and accrued unpaid interest into common stock

The Company converted $ 20.0 million in principal and $ 5.9 million of accrued interest receivable at a conversion price of $0.50

per share and received 51,889,168 shares of common stock increasing its common stock ownership of AVLP from less than 20 % to approximately

Overview of AVLP Acquisition

On June 1, 2022, the

Company converted the principal amount under the convertible promissory notes issued to it by AVLP and accrued but unpaid interest

into common stock of AVLP.

The Company converted $ 20.0

million in principal and $ 5.9

million of accrued interest receivable at a conversion price of $0.50 per share and received 51,889,168 shares of common stock

increasing its common stock ownership of AVLP from less than 20 %

to approximately 92 %.

Prior to the conversion of

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in consolidation.

The consideration transferred

for the Company’s approximate 92% ownership interest in connection with this acquisition aggregated $20.7 million, which represented

the fair value of the Company’s holdings in AVLP immediately prior to conversion.

The carrying amount of the Company’s holdings

in AVLP immediately prior to conversion was $23.4 million, resulting in a $2.7 million loss for the related remeasurement, which was recognized

in interest and other income.

The Company estimated the

fair values of assets acquired and liabilities assumed using valuation techniques, such as the income, cost and market approaches.

fair values are based on available historical information and on future expectations and assumptions deemed reasonable by management but

are inherently uncertain.

The income method to measure the fair value of intangible assets, is based on forecasts of the expected future

cash flows attributable to the respective assets.

Significant estimates and assumptions inherent in the valuations reflected a consideration

of other marketplace participants and included the amount and timing of future cash flows (including expected growth rates and profitability),

the underlying product or technology life cycles, economic barriers to entry and the discount rate applied to the cash flows.

Unanticipated

market or macroeconomic events and circumstances could affect the accuracy or validity of the estimates and assumptions.

The allocation of the total

consideration transferred to the assets acquired, including intangible assets and goodwill, and the liabilities assumed is preliminary

and could be revised as a result of additional information obtained due to the finalization of a third-party valuation report, leases

and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables.

consideration transferred for the Company’s approximate 92% ownership interest in connection with this acquisition aggregated

$20.7 million, which represented the fair value of the Company’s holdings in AVLP immediately prior to conversion.

carrying amount of the Company’s holdings in AVLP immediately prior to conversion was $23.4 million, resulting in a $2.7

million loss for the related remeasurement, which was recognized in interest and other income.

The allocation of the total consideration

transferred to the assets acquired, including intangible assets and goodwill, and the liabilities assumed is preliminary and could

be revised as a result of additional information obtained due to the finalization of a third-party valuation report, leases and

related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables.

Amounts will be finalized within the measurement period, which will not exceed one year from the acquisition date.

Goodwill represents

the excess of the purchase price over the preliminary fair value of identifiable assets acquired and liabilities assumed at the acquisition

date and is primarily attributable to the assembled workforce and expected synergies at the time of the acquisition.

The goodwill resulting

from this acquisition is not tax deductible.

The following table presents

the preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed based on their fair values.

Schedule of final allocation

resulting from this acquisition is not tax deductible.

following table presents the preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed

based on their fair values.

Schedule of preliminary allocation

Total purchase consideration

12 unchanged sentences

Fair value of bifurcated conversion option

( 4,425,000 )

Fair value of bifurcated put option

2 unchanged sentences

The Company consolidates the

results of AVLP on a one-month lag, therefore the statements of operations include results for AVLP for the three months ended August

results of AVLP on a one-month lag, therefore the statements of operations do not include results for AVLP for the three and six months

ended June 30, 2022.

Overview of SMC Acquisition

Beginning in June 2022, the

Company, through its subsidiary Ault Lending, began making open market purchases of SMC common stock.

These purchases granted the Company

a greater than 20% effective ownership on June 9, 2022, and subsequently, on June 15, 2022, the Company owned more than 50% of the issued

and outstanding common stock of SMC.

The Company’s ownership of SMC stood at approximately 57% as of September 30, 2022.

As of June 15, 2022 (“Acquisition

Date”), the purchase price of the common stock acquired totaled $ 7.4 million and on June 15, 2022 a $ 3.1 million gain

was recognized in interest and other income for the remeasurement of the Company’s previously held ownership interest to $ 10.5 million,

based on the trading price of SMC common stock.

The Company also recognized non-controlling interest at fair value as of the Acquisition

Date in the amount of $ 10.3 million.

The tradenames and developed

technology intangible assets were valued using the relief-from-royalty method.

The relief-from-royalty method is one of the methods under

the income approach wherein estimates of a company’s earnings attributable to the intangible asset are based on the royalty rate

the company would have paid for the use of the asset if it did not own it.

Royalty payments are estimated by applying royalty rates between

of 0.5% and 1.0% to the prospective revenue attributable to the intangible asset.

The resulting annual royalty payments are tax-affected

and then discounted to present value.

The Company determined

an estimated fair value of customer relationships using an income approach utilizing a discounted cash flow methodology.

analysis included assumptions regarding the development of new businesses and organic growth rates, a discount rate of 12 %

using a weighted average cost of capital analysis, and capital expenditure requirements associated with any new initiatives

developed by SMC.

Significant assumptions utilized in the income approach were based on company specific information and

projections which are not observable in the market and are therefore considered Level 3 fair value measurements.

Beginning in June 2022, the Company, through its subsidiary Digital Power Lending, LLC (“DP Lending”), began

making open market purchases of SMC common stock.

These purchases granted the Company a greater than 20% effective ownership on June

9, 2022, and subsequently, on June 15, 2022, the

Company owned more than 50% of the issued and outstanding common stock of SMC.

The Company’s ownership of SMC stands at 51.6%

as of June 30, 2022.

As of June 15,

2022 (“Acquisition Date”), the purchase price of the common stock acquired totaled $ 7.4 million and on June 15,

2022 a $ 3.1 million gain was recognized in interest and other income for the remeasurement of the Company’s previously held

ownership interest to $ 10.5 million, based on the trading price of SMC common stock.

The Company also recognized non-controlling

interest at fair value as of the Acquisition Date in the amount of $ 10.3 million.

The allocation of the total

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from this acquisition is not tax deductible.

The Company consolidates the

results of SMC on a one-quarter lag as it enables the Company to report its quarterly results independent from the timing of when SMC

reports its results, therefore the statements of operations do not include results for SMC for the three and six months ended June 30,

The following table presents

the preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed based on their fair values.

Schedule of preliminary allocation

Schedule of assets acquired and liabilities assumed

Total purchase consideration

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Intangible assets:

Tradenames (19 year estimated useful life)

Customer relationships (16 year estimated useful life)

Proprietary technology (3 year estimated useful life)

Trade names-estimated useful life of 19 years

Customer relationships-estimated useful life of 16 years

Proprietary technology-estimated useful life of 3 years

Accounts payable and accrued expenses

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The following unaudited pro

forma consolidated results of operations for the nine months ended September 30, 2022 have been prepared as if the SMC acquisition had

occurred on January 1, 2022.

forma consolidated results of operations for the three and six months ended June 30, 2022 have been prepared as if the SMC acquisition

had occurred on January 1, 2022.

Schedule of pro forma consolidated results of operations

Nine Months Ended

September 30, 2022

Three Months Ended

Six Months Ended

June 30, 2022

Total revenues

$ 131,609,000

Net loss attributable to BitNile Holdings, Inc.

$ ( 26,206,000 )

$ ( 56,531,000 )

The unaudited pro forma information

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had the acquisition been consummated as of that time, nor is it intended to be a projection of future results.

Overview of GIGA acquisition

On September 8, 2022, Giga-tronics

Incorporated (“GIGA”) acquired 100% of the capital stock of GWW from the Company in exchange for 2.92 million shares of GIGA’s

common stock and 514.8 shares of GIGA’s Series F Convertible Preferred Stock (“Series F”) that are convertible

into an aggregate of 3.96 million shares of GIGA’s common stock.

GIGA also assumed GWW’s outstanding equity awards representing

the right to receive up to 749,626 shares of GIGA’s common stock, on an as-converted basis.

The transaction described above resulted

in a change of control of GIGA.

Assuming the Company was to convert all of the Series F, the common stock owned by the Company after such

conversion would result in the Company owning approximately 71.2% of GIGA’s outstanding shares.

On September 8, 2022,

the Company loaned GIGA $ 4.25

million by purchasing a convertible note that carries an interest rate of 10% per annum and matures on February 14, 2023.

convertible note between the Company and GIGA is eliminated in consolidation beginning on September 8, 2022.

The Company received

the right to appoint four members of a seven member GIGA board of directors.

These factors contributed to the Company’s

determination that GWW be treated as the accounting acquirer.

The Company believes there

are synergies between GIGA and GWW.

GIGA manufactures specialized electronics equipment for use in both military test and airborne operational

applications.

GIGA focuses on the design and manufacture of custom microwave products for military airborne, sea, and ground applications

as well as the design and manufacture of high-fidelity signal simulation and recording solutions for RADAR and electronic warfare test

applications.

GIGA’s results of operations subsequent to the acquisition are included in the Company’s GWW defense business

In respect of the above transactions,

the acquired assets and assumed liabilities, together with acquired processes and employees, represent a business as defined in ASC 805,

Business Combinations.

The transactions were accounted for as a reverse acquisition using the acquisition method of accounting with GIGA

treated as the legal acquirer and GWW treated as the accounting acquirer.

In identifying GWW as the acquiring entity for accounting purposes,

GIGA and GWW took into account a number of factors, including the relative voting rights, executive management and the corporate governance

structure of the Company.

GWW is considered the accounting acquirer since the Company controls the board of directors of GIGA following

the transactions and received a 71.2 % beneficial ownership interest in GIGA.

However, no single factor was the sole determinant in the

overall conclusion that GWW is the acquirer for accounting purposes;

rather all factors were considered in arriving at such conclusion.

The fair value of the purchase

consideration was $ 9.5 million, consisting of $ 4.0 million for GIGA’s common stock and prefunded warrants, $ 0.4 million fair value

of vested stock incentives, $ 3.7 million cash and $ 1.3 million related to an existing loan agreement between Ault Lending and GIGA, which was deemed settled.

The tradenames and developed

technology intangible assets were valued using the relief-from-royalty method.

The relief-from-royalty method is one of the methods under

the income approach wherein estimates of a company’s earnings attributable to the intangible asset are based on the royalty rate

the company would have paid for the use of the asset if it did not own it.

Royalty payments are estimated by applying royalty rates between

1.0 % and 7.0 % to the prospective revenue attributable to the intangible asset.

The resulting annual royalty payments are tax-affected

and then discounted to present value.

The Company determined an

estimated fair value of customer relationships using an income approach utilizing a discounted cash flow methodology.

The analysis included

assumptions regarding the development of new businesses and organic growth rates, a discount rate of 22% using a weighted average cost

of capital analysis, and capital expenditure requirements associated with any new initiatives developed by GIGA.

Significant assumptions

utilized in the income approach were based on company specific information and projections which are not observable in the market and

are therefore considered Level 3 fair value measurements.

The total purchase price to

acquire GIGA has been allocated to the assets acquired and assumed liabilities based upon preliminary estimated fair values, with any

excess purchase price allocated to goodwill.

The goodwill resulting from this acquisition is not tax deductible.

The fair value of the

acquired assets and assumed liabilities as of the date of acquisition are based on preliminary estimates assisted, in part, by a third-party

valuation expert.

The estimates are subject to change upon the finalization of appraisals and other valuation analyses, which are expected

to be completed no later than one year from the date of acquisition.

Although the completion of the valuation activities may result in

asset and liability fair values that are different from the preliminary estimates included herein, it is not expected that those differences

would alter the understanding of the impact of this transaction on the consolidated financial position and results of operations of the

The preliminary purchase price

allocation is as follows:

Schedule of preliminary purchase price

Preliminary allocation

Total purchase consideration

Fair value of non-controlling interest

Total consideration

Identifiable net assets acquired (liabilities assumed):

Trade accounts receivable

Prepaid expenses

Accrued revenue

Property and equipment

Right-of-use asset

Other long-term assets

Intangible assets:

Tradename ( 12 year estimated useful life)

Developed Technology ( 8 year estimated useful life)

Existing customer relationships ( 10 - 15 year estimated useful life)

Accounts payable

( 2,831,000 )

Loans payable, net of discounts and issuance costs

Accrued payroll and benefits

( 1,488,000 )

Lease obligations

Other current liabilities

Other non-current liabilities

Net assets acquired

The Company’s goodwill

increased due to the acquisition of controlling interests in AVLP on June 1, 2022 and SMC on June 15, 2022.

The following table summarizes

the changes in the Company’s goodwill for the nine months ended September 30, 2022:

the changes in the Company’s goodwill for the six months ended June 30, 2022:

Schedule of goodwill

2 unchanged sentences

Acquisition of SMC

Acquisition of GIGA

Effect of exchange rate changes

Balance as of September 30, 2022

Balance as of June 30, 2022

INCREASE IN OWNERSHIP INTEREST OF SUBSIDIARIES

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Between June 15, 2022 and

September 30, 2022, Ault Lending increased the Company’s ownership interest in SMC through the open market purchase of approximately

274,000 shares for $ 2.1 million.

June 30, 2022, DP Lending increased the Company’s ownership interest in SMC through the open market purchase of approximately 55,000

shares for $ 430,000 .

INVESTMENTS – RELATED PARTIES

Investments in Alzamend and

Ault & Company at September 30, 2022 and December 31, 2021, were comprised of the following:

Ault & Company at June 30, 2022 and December 31, 2021, were comprised of the following:

Investment in Promissory Notes, Related

Schedule of investment

September 30,

Investment in promissory note of Ault & Company

4 unchanged sentences

Related Parties

September 30,

Investment in common stock and options of Alzamend

The following table summarizes

the changes in the Company’s investments in Alzamend and Ault & Company during the nine months ended September 30, 2022:

the changes in the Company’s investments in Alzamend and Ault & Company during the six months ended June 30, 2022:

Schedule of investments in Alzamend and Ault

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Accrued interest

Balance at September 30, 2022

Balance at June 30, 2022

Investments in

Alzamend Common Stock

following table summarizes the changes in the Company’s investments in Alzamend common stock during the nine months ended September

following table summarizes the changes in the Company’s investments in Alzamend common stock during the six months ended June 30,

Schedule of investments in Alzamend common stock

5 unchanged sentences

( 9,048,000 )

Balance at September 30, 2022

* Pursuant to the March 9, 2021 securities purchase agreement, in

aggregate, Alzamend agreed to sell up to 6,666,667 shares of its common stock to Ault Lending for $10.0 million, or $1.50 per share, and

issue to Ault Lending warrants to acquire 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per share.

As of December

31, 2021, Ault Lending funded $6.0 million, including the conversion of notes and advances of $0.8 million, and the remaining $4.0 million

was funded upon Alzamend achieving certain milestones during the nine months ended September 30, 2022.

INVESTMENT IN UNCONSOLIDATED ENTITY –

Balance at June 30, 2022

* Pursuant to the March 9, 2021 securities purchase

agreement, in aggregate, Alzamend agreed to sell up to 6,666,667 shares of its common stock to DP Lending for $10.0 million, or $1.50

per share, and issue to DP Lending warrants to acquire 3,333,334 shares of Alzamend common stock with an exercise price of $3.00 per

As of December 31, 2021, DP Lending funded $6.0 million, including the conversion of notes and advances of $0.8 million, and the

remaining $4.0 million was funded upon Alzamend achieving certain milestones during the three months ended June 30, 2022.

INVESTMENT IN UNCONSOLIDATED ENTITY – AVLP

Equity Investments in Unconsolidated Entity

The Company converted its

AVLP convertible promissory note on June 1, 2022 as part of the acquisition of AVLP (see Note 8).

Equity investments in the then

unconsolidated entity, AVLP, at December 31, 2021, were comprised of the following:

Company converted its AVLP convertible promissory note on June 1, 2022 as part of the acquisition of AVLP (see Note 8).

investments in the then unconsolidated entity, AVLP, at December 31, 2021, were comprised of the following:

Investment in Promissory Notes

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Total investment in promissory note

The following table summarizes

the changes in the Company’s equity investments in the then unconsolidated entity, AVLP, during the nine months ended September

Schedule of changes in the equity investments

following table summarizes the changes in the Company’s equity investments in the then unconsolidated entity, AVLP, during the

six months ended June 30, 2022:

Schedule ofchanges in the equity investments

Investment in

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( 3,809,000 )

Balance at September 30, 2022

Balance at June 30, 2022

CONSOLIDATED VARIABLE INTEREST ENTITY -

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Interest Entity

As of September 30, 2022 and

December 31, 2021, the Company held an investment in Ault Alpha LP (“Alpha Fund”).

Alpha Fund operates as a private investment

As of June 30, 2022 and December

31, 2021, the Company held an investment in Ault Alpha LP (“Alpha Fund”).

Alpha Fund operates as a private investment fund.

The general partner of Alpha Fund, Ault Alpha GP LLC (“Alpha GP”) is owned by Ault Capital Management LLC (the “Investment

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

As of September 30,

2022, Ault Lending subscribed for $ 33 million

or approximately 100 % of

the limited partnership interests in Alpha Fund, the full amount of which was funded, an increase of $ 16

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 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

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

As of June 30, 2022, DP Lending

subscribed for $ 25 million or 100 % of the limited partnership interests in Alpha Fund, the full amount of which was funded, an increase

of $ 8 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 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 Alpha Fund’s partnership agreement and side letter entered into between the Company and Alpha Fund.

The Company consolidates Alpha

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Investments by Alpha Fund – Treasury

As of September 30, 2022,

Alpha Fund owned 45,049,871 shares of the Company’s common stock and 91,033 shares of the Company’s 13.00 % Series D Cumulative

Redeemable Perpetual Preferred Stock (the “Series D Preferred Stock”), accounted for as treasury stock as of September 30,

As of June 30, 2022, Alpha

Fund owned 22,225,000 shares of the Company’s common stock and 53,033 shares of the Company’s 13.00 % Series D Cumulative Redeemable

Perpetual Preferred Stock (the “Series D Preferred Stock”), accounted for as treasury stock as of June 30, 2022.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at September

Other current liabilities at June 30,

2022 and December 31, 2021 consisted of:

Schedule of other current liabilities

September 30,

Accounts payable

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Schedule of Financial Instrument

September 30,

June 30, 2022

December 31, 2021

Contractually stipulated stock price

10 unchanged sentences

The following table sets forth

a summary of the changes in the estimated fair value of the financial instruments during the nine months ended September 30, 2022 and

a summary of the changes in the estimated fair value of the financial instruments during the six months ended June 30, 2022 and 2021:

Schedule of fair value of the financial instruments

September 30, 2022

September 30, 2021

June 30, 2022

June 30, 2021

Beginning balance

4 unchanged sentences

NOTES PAYABLE

Notes payable at September

Notes payable at June 30,

2022 and December 31, 2021, were comprised of the following.

Schedule of notes payable

September 30,

Short-term notes payable

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SMC notes payable

XBTO note payable

XBTO Trading note payable

December 30, 2023

10% secured promissory notes

August 10, 2023

Short-term bank line of credit

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Notes payable – long-term portion

10% Secured Promissory Notes

On August 10, 2022, the

Company, through its BNI subsidiary, entered into a note purchase agreement providing for the issuance of secured promissory notes

with an aggregate principal face amount of $ 11,000,000 and

an interest rate of 10 %.

The purchase price (proceeds to the Company) for the secured promissory notes was $ 10.0 million.

The secured promissory notes have a security interest in $ 10 million of marketable securities and investments and certain Bitcoin

mining equipment with a carrying amount of $ 23.1 million.

The secured promissory notes are further secured by a guaranty provided by the Company, Ault Lending and by

Ault, the Executive Chairman of the Company.

The maturity date of the secured

promissory notes is August 10, 2023.

The Company is required to make monthly payment (principal and interest) of $1,000,000 on the tenth

calendar day of each month, starting in September 2022.

Provided that the Company makes the first six monthly payments in full and on

a timely basis, after six months, the Company may elect to pay a forbearance fee of $250,000 in lieu of a monthly payment, which would

extend the maturity date of the related secured promissory notes by one month for each forbearance.

The Company may not elect forbearance

in consecutive months.

SMC Debt Security Interest

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Promissory Notes

On December 30, 2021, the

Company entered into a securities purchase agreement with certain accredited 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;

· 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

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 $ 66 million 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.

The following table summarizes

the principal maturity schedule for our notes payable outstanding as of September 30, 2022:

Schedule of principal maturity

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.

CONVERTIBLE NOTES

Convertible notes payable at September 30, 2022

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

Convertible notes payable at June 30, 2022 and

December 31, 2021, were comprised of the following:

Schedule of convertible notes payable

Conversion price per

Interest rate

September 30,

Conversion price

Convertible promissory note

2 unchanged sentences

August 22, 2025

Fair value of embedded options and derivatives

Fair value of embedded derivative

Fair value of bifurcated conversion option

Fair value of bifurcated put option

unamortized debt discounts

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payable are due and payable on August 22, 2025, with interest at 7% per annum.

At the election of the holders, outstanding principal and

accrued interest under the notes are convertible into shares of AVLP’s common stock at a conversion price equal to either (i) if

the aggregate market capital of AVLP on the date of conversion (the “Market Cap”) is $35 million or less, at a 25% discount

to the market price, or (ii) if the Market Cap is greater than $35 million, at a 25% discount to the market price, provided that such

discount shall be increased by dividing it by the quotient that shall be obtained by dividing $35 million by the Market Cap at the time

of conversion, provided, however, any increase in the discount to the market price shall not result in a discount that is greater than

a 75% discount (the “Conversion Price”).

Notwithstanding the foregoing, in no event shall the Conversion Price be less than

At the election of the holders, outstanding principal

and accrued but unpaid interest under the notes are convertible into shares of AVLP’s common stock at a conversion price equal

to either (i) if the aggregate market capital of AVLP on the date of conversion (the “Market Cap”) is $35 million or less,

at a 25% discount to the market price, or (ii) if the Market Cap is greater than $35 million, at a 25% discount to the market price,

provided that such discount shall be increased by dividing it by the quotient that shall be obtained by dividing $35 million by the Market

Cap at the time of conversion, provided, however, any increase in the discount to the market price shall not result in a discount that

is greater than a 75% discount (the “Conversion Price”).

Notwithstanding the foregoing, in no event shall the Conversion

Price be less than $0.35.

COMMITMENTS AND CONTINGENCIES

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issued an Order directing the parties to engage in limited discovery to be completed by March 4,

In connection therewith, the Court

also denied the defendants’ motion to dismiss without prejudice.

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.

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.

On August 8, 2022, the Court

issued an Order denying the motion to dismiss, in its entirety.

On September 2, 2022, the

Company and its subsidiary filed an answer to the Amended Complaint and asserted numerous affirmative defenses.

The deadline for the Company

and its subsidiaries to file an Answer to the Amended Complaint is September 2, 2022.

Based on the Company’s

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Ault filed an answer to the complaint and asserted numerous affirmative defenses.

On November 1, 2022, the parties

informed the Court that they reached a settlement in principle and requested an extension of time, until November 22, 2022, to file motions

for summary judgment to allow the parties time to draft formal settlement documents.

The Court granted the parties’ request and

the deadline for the Company and Mr.

Ault to file their summary judgment is November 22, 2022.

Based on the terms of

the settlement in principle, the Company believes its current legal accrual is adequate to cover the cost of settlement.

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.

The Company and certain affiliates

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offering” program (the “2022 Common ATM Offering”).

As of September 30, 2022, the Company had sold an aggregate of 256.7

As of June 30, 2022, the Company had sold an aggregate of 239.7

million shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $ 163.4 million.

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Series D Preferred Stock for aggregate gross proceeds of up to $ 46,400,000 (the “2022 Preferred ATM Offering”).

As of September

30, 2022, the Company had sold an aggregate of 2,618 shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for

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Company calculates its interim income tax provision in accordance with ASC Topic 270, Interim Reporting, and ASC Topic 740, Income Taxes.

The Company’s effective tax rate (“ETR”) from continuing operations was 0.6 % and ( 9.1 %) for the nine months ended

September 30, 2022 and 2021, respectively.

The Company an income tax provision of $ 0.4 million and $ 0.1 million for the nine months

ended September 30, 2022 and 2021, respectively.

The Company’s effective tax rate (“ETR”) from continuing operations was 0.4 % and ( 7.4 %) for the six months ended

June 30, 2022 and 2021, respectively.

The Company an income tax provision of $ 0.2 million and $ 3.5 million for the six months ended

June 30, 2022 and 2021, respectively.

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

1 unchanged sentence

federal income tax purposes and changes in valuation allowance.

(LOSS) INCOME PER SHARE

For the three and six months

ended June 30, 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 and six months ended

June 30, 2022, 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, consisted of the

following at June 30, 2022:

Net Loss Per Share

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 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,

2022 and 2021:

Schedule of net loss per share

September 30,

June 30, 2022

Stock options

2 unchanged sentences

Convertible preferred stock

Basic and diluted net income

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

Schedule of basic and diluted net income per common share

For the Three Months Ended June 30, 2021

(Denominator)

Net income attributable to BitNile Holdings

Preferred stock dividends

Basic earnings per share

Net income available to common stockholders

Effect of dilutive securities

Stock options

4% convertible notes

Diluted earnings per share

Income available to common stockholders plus assumed conversions

For the Six Months Ended June 30, 2021

(Denominator)

Net income attributable to BitNile Holdings

Preferred stock dividends

Basic earnings per share

Net income available to common stockholders

Effect of dilutive securities

Stock options

4% convertible notes

Diluted earnings per share

Income available to common stockholders plus assumed conversions

SEGMENT AND CUSTOMERS INFORMATION

The Company had seven

reportable segments as of September 30, 2022 and five as of September 30, 2021;

see Note 1 for a brief description of the

Company’s business.

The Company had six reportable

segments as of June 30, 2022 and three as of June 30, 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 and nine months ended September

the revenues, expenditures and other operating data of the Company’s operating segments for the three and six months ended June

Schedule of operating segments

Nine Months Ended September 30, 2022

Three Months Ended June 30, 2022

Ault Alliance

Revenue, cryptocurrency mining

4 unchanged sentences

Depreciation and amortization expense

Income (loss) from operations

Loss from operations

$ ( 1,076,000 )

4 unchanged sentences

$ ( 489,000 )

Capital expenditures for the nine

months ended September 30, 2022

Three Months Ended September 30, 2022

$ ( 6,603,000 )

$ ( 23,719,000 )

Capital expenditures for the three months ended June 30, 2022

Six Months Ended June 30, 2022

Revenue, cryptocurrency mining

4 unchanged sentences

Depreciation and amortization expense

$ ( 264,000 )

Income (loss) from operations

5 unchanged sentences

$ ( 14,124,000 )

Capital expenditures for the three

months ended September 30, 2022

AVLP, SMC and GIGA Segment Information

$ ( 22,689,000 )

Capital expenditures for the six months ended June 30, 2022

AVLP and SMC Segment Information

The AVLP and SMC acquisitions

were completed in June 2022 and the GIGA acquisition was completed in September 2022.

As of September 30, 2022, identifiable assets for

AVLP, SMC and GIGA were $ 47.5 million, $ 40.0 million and $ 19.2 million, respectively.

were completed in June 2022.

The results of operations were not material to the Company’s consolidated results of operations for

the three and six months ended June 30, 2022.

As of June 30, 2022, identifiable assets for AVLP and SMC were $ 49.9 million and $ 35.0

million, respectively.

Segment information for the

three and nine months ended September 30, 2021:

Nine Months Ended September 30, 2021

three and six months ended June 30, 2021:

Three Months Ended June 30, 2021

Revenue, cryptocurrency mining

9 unchanged sentences

$ ( 2,354,000 )

$ ( 12,814,000 )

$ ( 2,850,000 )

Capital expenditures for the nine

months ended September 30, 2021

Three Months Ended September 30, 2021

Capital expenditures for the three months ended June 30, 2021

Six Months Ended June 30, 2021

Revenue, cryptocurrency mining

1 unchanged sentence

Revenue, lending and trading activities

( 38,869,000 )

Revenue, hotel operations

Total revenues

$ ( 38,759,000 )

$ ( 30,794,000 )

Depreciation and amortization expense

4 unchanged sentences

$ ( 5,197,000 )

$ ( 7,613,000 )

$ ( 49,874,000 )

Capital expenditures for the three

months ended September 30, 2021

CONCENTRATIONS OF CREDIT AND REVENUE RISK

Accounts receivable are concentrated

with certain large customers.

At September 30, 2022, approximately 36 % of accounts receivable were due from two customers in North America,

each of which individually accounted for over 10 % of consolidated accounts receivable.

For the three months ended

September 30, 2022, one customer represented 15 % and one customer represented 10% of consolidated revenues.

Capital expenditures for the six months ended June 30, 2021

CONCENTRATIONS

OF CREDIT AND REVENUE RISK

Accounts receivable are concentrated with certain

large customers.

At June 30, 2022, approximately 38 %

of accounts receivable were due from two customers in North America, each of which individually accounted for over 10%

of consolidated accounts receivable.

the three months ended June 30, 2022, one customer represented 13 % of consolidated revenues.

SUBSEQUENT EVENTS

1 unchanged sentence

During the period between

October 1, 2022 through November 18, 2022, the Company sold an aggregate of 14.8

million shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $ 2.6

July 1, 2022 through August 18, 2022, the Company sold an aggregate of 6.5 million shares of common stock pursuant to the 2022 Common

ATM Offering for gross proceeds of $ 2.1 million.

2022 Preferred

the period between October 1, 2022 through November 18, 2022, the Company sold an aggregate of 8,933

shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for gross proceeds of $ 124,000 .

the period between July 1, 2022 through August 18, 2022, the Company sold an aggregate of 6,866 shares of Series D Preferred Stock pursuant

to the 2022 Preferred ATM Offering for gross proceeds of $ 126,000 .

Investments in Alpha Fund

During the period between

October 1, 2022 through November 18, 2022, Ault Lending purchased an additional $0.2 million

of limited partnership interests in Alpha Fund.

SMC Credit and Security Agreement with Fifth

On October 14, 2022, SMC entered

into a credit agreement with Fifth Third Bank.

The credit agreement provides for a three-year secured revolving credit facility in an

aggregate principal amount of up to $15 million decreased to $7.5 million during the non-peak period of January 1 through July 31 of each

The credit agreement matures on October 14, 2025.

The revolving credit facility

bears interest of the Prime Rate plus 0.50 % or the 30-day term secured overnight financing rate plus 3.00 %.

Under the credit agreement:

· Accounts receivable advance rate up to an 85 % against SMC’s eligible accounts receivable;

· Inventory advance of up to 85 % of SMC’s eligible inventory;

· SMC must maintain a minimum fixed charge coverage of 1.05 to 1.

Availability under the credit

agreement was approximately $ 4.0 million as of November 18, 2022.

Secured Debt Financing

On November 7, 2022, the Company

and certain of its subsidiaries borrowed $18.9 million of principal amount of term loans (the “Loans”) from a group of institutional

investors (the “Financing”).

The Loans mature in 18 months, which may be extended to 24 months, accrue interest at the rate

of 8.5% per annum and are secured by certain assets of the Company and various subsidiaries.

Starting in January 2023, the lenders have

the right to require the Company to make monthly payments of $0.6 million, which will increase to $1.1 million in November 2023.

were issued with an original issue discount of $1.89 million.

The lenders received warrants

to purchase approximately 4.5 million shares of the Company’s common stock, exercisable for four years at $ 0.45 per share and warrants

to purchase another approximately 4.5 million shares of the Company’s common stock, exercisable for four years at $ 0.75 per share,

subject to adjustment.

On November 7, 2022, Ault Aviation used proceeds from the Loans to purchase a private aircraft for a total purchase

price of $ 15.8 million.

In addition, the Company and

certain of its subsidiaries entered into various agreements as collateral for the repayment of the Loans, including (i) a security interest

in certain Bitcoin mining equipment, (ii) a pledge of the membership interests of Third Avenue Apartments, LLC, a wholly owned subsidiary

of the Company (“Third Apartments”), (iii) a pledge of the membership interests of Alliance Cloud Services, LLC, a wholly

owned subsidiary of the Company (“Alliance Cloud”), (iv) a pledge of the membership interests of Ault Aviation, LLC, a wholly

owned subsidiary of the Company (“Ault Aviation”), (v) a pledge in a segregated deposit account of $1.5 million of cash, (vi)

a mortgage and security agreement by Third Avenue on the real estate property owned by Third Avenue in St.

Petersburg, Florida, (vii)

a future advance mortgage by Alliance Cloud on the real estate property owned by Alliance Cloud in Dowagiac, Michigan, and (viii) an aircraft

mortgage and security agreement by Ault Aviation on the private aircraft purchased by Ault Aviation on November 7, 2022.

The Loans are further secured by a guaranty provided by Ault Lending and Milton C.

July 1, 2022 through August 18, 2022, DP Lending purchased an additional $6.5 million of limited partnership interests in Alpha Fund.

As of August 18, 2022, DP Lending had subscribed for $31.5 million of limited partnership interests.

Formation of Ault Energy

On July 11, 2022, the Company

announced the formation of Ault Energy, LLC (“Ault Energy”), as an indirect wholly-owned subsidiary of the Company through

Ault Alliance.

Ault Energy will partner with White River Holdings Corp.

(“White River”), a wholly owned subsidiary of Ecoark

Holdings, Inc.

(“Ecoark”), on drilling projects across 30,000 acres in Texas, Louisiana and Mississippi.

Ault Energy, as DP

Lending’s designee, has the right to purchase up to 25 %, or such higher percentages at the discretion of White River, in various

drilling projects of White River.

In August 2022, Ault Energy committed to purchasing 40% of the first drilling project offered, at a

cost to Ault Energy of approximately $1 million.

Note Purchase Agreement

On August 10, 2022, the Company,

through its BNI and DP Lending subsidiaries, entered into a note purchase agreement providing for the issuance of secured promissory notes

with an aggregate principal face amount of $11,000,000 and an interest rate of 10%.

The purchase price (proceeds to the Company) for the

secured promissory notes was $10.0 million.

The secured promissory notes have a security interest in marketable securities, investments

and certain Bitcoin mining equipment.

The secured promissory notes are further secured by a guaranty provided by the Company, as well

as by Milton C.

Ault, the Executive Chairman of the Company.

3% Secured Promissory Notes

On November 18, 2022, the

Company, through its BNI subsidiary, entered into a note purchase agreement providing for the issuance of secured promissory notes with

an aggregate principal face amount of $ 8,181,819 and an interest rate of 3 %.

The purchase price (proceeds to the Company) for the secured

promissory notes was $ 8.2 million.

The secured promissory notes have a security interest in certain marketable securities to be acquired

by BNI (the “Collateral”).

The maturity date of the secured

promissory notes is May 18, 2023.

When the Company sells the Collateral, the Company is required to make a payment towards the secured

promissory notes equal to 45% of the realized gains.

After the secured promissory notes have been repaid in full and until all of the

Collateral is sold, when the Company sells any remaining Collateral, the Company is required to give the investors a profits participation

interest equal to 45% of the realized gains.

Amendment to 10% Secured Promissory Notes

On November 18, 2022, the

Company’s BNI subsidiary entered into an amendment to the 10% secured promissory notes issued on August 10, 2022, whereby the investors

permitted the Company to (i) elect to utilize one of the six monthly forbearances under the notes for the November 2022 monthly payment

and (ii) make the forbearance payment with the December 2022 monthly payment.

promissory notes is August 10, 2023.

The Company is required to make monthly payment (principal and interest) of $1,000,000 on the tenth

calendar day of each month, starting in September 2022.

After six months, the Company may elect to pay a forbearance fee of $250,000 in

lieu of a monthly payment, which would extend the maturity date of the related secured promissory notes.

Hosting Agreement

August 15, 2022, the Company, through its BNI subsidiary, entered into a hosting agreement with Compute North LLC (“Compute North”)

to host 6,500 S19j Pro Antminers owned by BNI for a period of five years.

The Company granted Compute North a continuing first-position

security interest in the hosted miners, as collateral for the Company’s obligations under the hosting agreement.

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/A

Item 1. Financial Statements