What changed in this filing

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Item 1A. Risk Factors

2023-04-14 compared with 2023-04-14 · 73 added, 37 removed, 9 unchanged (92% of the section changed)

8 unchanged sentences

The Risk Factors section of our 2021 Annual Report on Form 10-K remains current in all material respects, with the exception

of updated risk factors filed in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, and the first risk factor under

the “ Risks Related to Ownership of Our Common Stock ” section of Risk Factors section of our 2021 Annual Report

on Form 10-K, which is hereby amended and restated in its entirety to read as follows:

“ If we do not continue to satisfy the

NYSE American continued listing requirements, our common stock could be delisted from NYSE American.

listing of our common stock on the NYSE American is contingent on our compliance with the NYSE American’s conditions for continued

On November 2, 2022, we received a deficiency letter (the “ Letter ”)

from the NYSE American LLC (the “ NYSE American ” or the “ Exchange ”) indicating that we are not in

compliance with the Exchange’s continued listing standard set forth in Section 1003(f)(v) of the NYSE American Company Guide (the

“ Company Guide ”) because our shares of common stock for a substantial period of time have been selling at a low price

per share, which the Exchange determined to be a 30-trading day average price of less than $0.20 per share.

The Letter has no immediate

effect on the listing or trading of our common stock and our common stock will continue to trade on the NYSE American under the symbol

Additionally, the Letter does not result in the immediate delisting of our common stock from the NYSE American.

to Section 1003(f)(v) of the Company Guide, the NYSE American staff determined that our continued listing is predicated on us demonstrating

sustained price improvement within a reasonable period of time or effecting a reverse stock split of our common stock, which the staff

determined to be no later than May 2, 2023.

We intend to regain compliance with the NYSE American’s continued listing standards

by undertaking a measure or measures that are in our best interests and our stockholders.

intend to closely monitor the price of our common stock and consider available options if our common stock does not trade at a consistent

level likely to result in us regaining compliance by May 2, 2023.

We are actively engaged in discussions with the Exchange and are developing

plans to regain compliance with the NYSE American’s continued listing standards within the cure period.

If we should fail to achieve

compliance with NYSE American low-priced continued listing standard or fail to meet any other NYSE American listing requirement, then

our common stock will be subject to delisting.

In the event our common stock is no longer

listed for trading on the NYSE American, our trading volume and share price may decrease and we may experience further difficulties in

raising capital which could materially affect our operations and financial results.

Further, delisting from the NYSE American could also

have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees and could also trigger

various defaults under our lending agreements and other outstanding agreements.

Finally, delisting could make it harder for us to raise

capital and sell securities.

You may experience future dilution as a result of future equity offerings.

In order to raise additional capital,

we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock.

that the following section of Risk Factors section of our 2021 Annual Report on Form 10-K is hereby amended and restated in

its entirety:

“ Risks Related to Related Party Transactions

We have lent a substantial

amount of funds to Avalanche, a related party, whose ability to repay us is subject to significant doubt;

in addition, we currently beneficially

own a significant percentage of Avalanche’s issued and outstanding shares of common stock, for which there is presently no market.

On September 6, 2017, we entered

into a Loan and Security Agreement with Avalanche (as amended, the “AVLP Loan Agreement”) with an effective date of August

21, 2017 pursuant to which we provided Avalanche a non-revolving credit facility.

The AVLP Loan Agreement was increased to up to $20.0

million in June of 2021 and extended to December 31, 2023.

Until recently, we held a convertible note issued to us by AVLP in the amount

of $20.0 million (the “Prior AVLP Note”).

While Avalanche received funds

from a third party in the amount of $2.75 million in early April of 2019 in consideration for its issuance of a convertible promissory

note to such third party (the “Third Party Note”), $2.7 million was used to pay an outstanding receivable due us and no amount

was used to repay the debt Avalanche owes us pursuant to the AVLP Loan Agreement.

On October 12, 2021, Ault Alpha, an affiliate of ours,

repaid the Third Party Note in full and also acquired a warrant to purchase 1.6 million shares of AVLP common stock.

In consideration

therefor, AVLP issued Ault Alpha a term note in the principal amount of $3.6 million, which term note had a maturity date of June 30,

On June 27, 2022, AVLP exchanged

the term note it had issued to Ault Alpha for a 10% senior secured convertible note in the principal face amount of $3,797,260 due June

15, 2024 (the “Ault Alpha Note”).

The Ault Alpha Note is convertible, subject to adjustment, at $0.50 per share.

issued Ault Alpha a warrant to purchase an aggregate of 1,617,647 shares of Avalanche common stock at an exercise price of $0.50.

to a security agreement entered into by Avalanche and Ault Alpha, as amended by an intercreditor agreement entered into by and among the

foregoing parties, our company and certain other persons, Ault Alpha has a second priority interest in AVLP’s assets securing the

repayment of the Ault Alpha Note.

On July 11, 2022, AVLP issued

us a 10% senior secured convertible note in the principal face amount of $3,000,000 due July 10, 2024 (the “AVLP Note”).

AVLP Note is convertible, subject to adjustment, at $0.50 per share.

AVLP also issued us warrants to purchase an aggregate of 40,998,272

shares of Avalanche common stock at an exercise price of $0.50.

Pursuant to a security agreement entered into by Avalanche and Ault Alpha,

as amended by an intercreditor agreement entered into by and among the foregoing parties, our company and certain other persons, we have

a first priority interest in AVLP’s assets securing the repayment of the AVLP Note.

On June 1, 2022, we converted

the entire principal and accrued interest on the Prior AVLP Note into an aggregate of 51,889,168 shares of common stock of Avalanche,

representing approximately 90.2% of Avalanche’s issued and outstanding shares of common stock.

There is currently no liquid market

for the Avalanche common stock.

Consequently, even if we were inclined to sell such shares of common stock on the open market, our ability

to do so would be severely limited.

Avalanche is not current in its filings with the Commission and is not required to register the shares

of its common stock underlying the Prior AVLP Note or any other loan arrangement we have made with Avalanche described above.

There is some doubt as to

whether Avalanche will ever have the ability to repay its debt to us, as well as our ability to sell the shares we beneficially own since

at present there is no market for these shares.

If we are unable to recoup our investment in Avalanche in the foreseeable future or at

all, such failure would have a materially adverse effect on our financial condition and future prospects.

Ault, III and William Horne, our

Executive Chairman and Chief Executive Officer, respectively, and two of our directors are directors of Avalanche.

In addition, Philou

is the controlling stockholder of Avalanche.

Ault, III and William

Horne, our Executive Chairman and Chief Executive Officer, respectively, and two of our directors, are also directors of Avalanche.

addition, Philou is the controlling stockholder of Avalanche.

Certain conflicts of interest between us, on the one hand, and Avalanche,

on the other hand, may arise relating to commercial or strategic opportunities or initiatives, in addition to the conflicts related to

the debt that Avalanche owes us.

For example, Messrs.

Ault and Horne may find it difficult to determine how to meet their fiduciary duties

to us as well as Avalanche, which could result in a less favorable result for us than would be the case if they were solely directors

of our company.

Further, even if Messrs.

Ault and Horne were able to successfully meet their fiduciary obligations to us and Avalanche,

the fact that they are members of the board of directors of both companies could attenuate their ability to focus on our business and

best interests, possibly to the detriment of both companies.

Ault’s control of Philou through Ault & Company only enhances

the risk inherent in having Messrs.

Ault and Horne serve as directors of both our company and Avalanche.”

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 1A. Risk Factors