What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-22 compared with 2022-11-21 · 675 added, 1199 removed, 513 unchanged (79% of the section changed)

Financial Statements.

BITNILE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS

1 unchanged sentence

Restricted cash

Cash and marketable securities held in trust account

Marketable equity securities

Digital currencies

Accounts receivable

Accrued revenue

Investment in promissory notes and other, related party

2 unchanged sentences

TOTAL CURRENT ASSETS

Cash and marketable securities held in trust account

Intangible assets, net

3 unchanged sentences

Investments in other equity securities

Investment in unconsolidated entity

Loans receivable, non-current

$ 526,907,000

3 unchanged sentences

Accounts payable and accrued expenses

Investment margin accounts payable

Operating lease liability, current

1 unchanged sentence

Convertible notes payable, current

Series E Convertible Preferred Liability:

$ 100 stated value per share, $ 0.001 par value – 83,000 shares authorized;

83,000 and 0 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Series F Convertible Preferred Liability:

$ 100 stated value per share, $ 0.001 par value – 1,000 shares authorized;

1,000 and 0 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Series G Convertible Preferred Liability:

$ 100 stated value per share, $ 0.001 par value – 16,000 shares authorized;

16,000 and 0 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Redeemable noncontrolling interests in equity of subsidiaries

TOTAL CURRENT LIABILITIES

1 unchanged sentence

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

September 30,

LONG TERM LIABILITIES

5 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Redeemable noncontrolling interests in equity of subsidiaries

STOCKHOLDERS’ EQUITY

1 unchanged sentence

par value – 1,000,000 shares authorized;

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

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

September 30, 2022 and December 31, 2021)

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

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

125,000 shares issued

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

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

7,040 shares issued and outstanding at March 31, 2023 and December 31, 2022 (liquidation

preference of $ 176,000 as of March 31, 2023 and December 31, 2022)

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

$ 0.001 par value – 500,000 shares authorized;

125,000 shares issued and outstanding at March 31, 2023 and December 31, 2022 (liquidation

preference of $ 1,190,000 as of March 31, 2023 and December 31, 2022)

Series D Cumulative Redeemable Perpetual Preferred Stock, $ 25 stated

value per share, $ 0.001 par value – 2,000,000 shares authorized;

shares authorized, 154,928 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)

shares authorized, 263,022 shares and 172,838 shares issued and

outstanding at March 31, 2023 and December 31, 2022, respectively (liquidation preference of $ 6,576,000 and $ 4,321,000 as of March 31,

2023 and December 31, 2022)

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,

2022 and December 31, 2021, respectively

1,385,822 and 1,274,157 shares issued and outstanding at March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022

Additional paid-in capital

7 unchanged sentences

( 29,235,000 )

TOTAL BITNILE HOLDINGS STOCKHOLDERS’ EQUITY

TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY

Non-controlling interest

5 unchanged sentences

these unaudited condensed consolidated financial statements.

BITNLE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE (LOSS) INCOME

AND COMPREHENSIVE LOSS

For the Three Months Ended

For the Nine Months Ended

September 30,

Revenue, products

Revenue, cryptocurrency mining

Revenue, hotel operations

Revenue, crane operations

Revenue, lending and trading activities

1 unchanged sentence

Total revenue

( 30,794,000 )

Cost of revenue, products

1 unchanged sentence

Cost of revenue, hotel operations

Cost of revenue, crane operations

Cost of revenue, lending and trading activities

Total cost of revenue

( 36,065,000 )

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 )

( 28,000,000 )

(Loss) income from operations

( 31,418,000 )

Other income (expenses)

Other income (expense):

Interest and other income

Accretion of discount on note receivable, related party

Interest expense

1 unchanged sentence

( 29,824,000 )

Change in fair value of marketable equity securities

Realized gain on digital currencies and marketable securities

Loss on extinguishment of debt

Realized (loss) gain on marketable securities

Loss from investment in unconsolidated entity

Gain on extinguishment of debt

Change in fair value of warrant liability

Total other (expenses) income, net

( 2,541,000 )

( 34,507,000 )

(Loss) income before income taxes

Impairment of equity securities

( 9,555,000 )

Gain on the sale of fixed assets

Change in fair value of warrant liability

Total other expense, net

( 17,674,000 )

( 29,817,000 )

Income tax (provision) benefit

Net (loss) income

Loss before income taxes

( 49,092,000 )

( 28,787,000 )

Income tax benefit

( 48,829,000 )

Net loss (income) attributable to non-controlling interest

Net (loss) income attributable to BitNile Holdings, Inc.

( 28,787,000 )

Net loss attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

( 48,646,000 )

1 unchanged sentence

Preferred dividends

Net (loss) income available to common stockholders

$ ( 7,461,000 )

$ ( 42,874,000 )

Net loss available to common stockholders

$ ( 48,875,000 )

Basic net (loss) income per common share

Diluted net (loss) income per common share

Weighted average basic common shares outstanding

Weighted average diluted common shares outstanding

Comprehensive (loss) income

Net (loss) income available to common stockholders

$ ( 28,777,000 )

Basic net loss per common share

Diluted net loss per common share

Weighted average basic and diluted common shares outstanding

Comprehensive loss

Net loss available to common stockholders

$ ( 48,875,000 )

2 unchanged sentences

Foreign currency translation adjustment

( 1,452,000 )

Net unrealized loss on derivative securities of related party

( 4,849,000 )

( 7,773,000 )

Other comprehensive income (loss)

( 5,031,000 )

( 1,452,000 )

( 7,914,000 )

Total comprehensive loss

1 unchanged sentence

$ ( 29,064,000 )

$ ( 63,498,000 )

$ ( 6,581,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2022

Series A, B &

Three Months Ended March 31, 2023

Series A, B & D

Preferred Stock

Comprehensive

Stockholders’

BALANCES, July 1, 2022

BALANCES, January 1, 2023

$ 565,904,000

3 unchanged sentences

$ 223,988,000

Preferred stock issued

Issuance of common stock for restricted stock awards

Preferred stock issued for cash

Preferred stock offering costs

( 1,079,000 )

Stock-based compensation

Issuance of Gresham Worldwide common stock

GIGA acquisition

Issuance of common stock for cash

Financing cost in connection with sales of

Financing cost in connection with sales of common stock

Remeasurement of Ault Disruptive subsidiary temporary equity

Increase in ownership interest of subsidiary

( 1,539,000 )

( 1,671,000 )

Non-controlling interest from GIGA acquisition

Non-controlling position at BMI subsidiary acquired

Purchase of treasury stock - Ault Alpha

1 unchanged sentence

( 48,645,000 )

( 7,271,000 )

Preferred dividends

1 unchanged sentence

Net loss attributable to non-controlling interest

BALANCES, September 30, 2022

BALANCES, March 31, 2023

$ 575,073,000

5 unchanged sentences

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Preferred Stock

Comprehensive

1 unchanged sentence

Stockholders’

BALANCES, July 1, 2021

$ 311,759,000

$ ( 77,190,000 )

$ ( 4,600,000 )

$ 231,389,000

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 )

Comprehensive loss:

( 42,870,000 )

Preferred dividends

Net unrealized gain on derivatives in related

( 4,849,000 )

Foreign currency translation adjustments

Net income attributable to non-controlling interest

BALANCES, September 30, 2021

$ 331,886,000

$ ( 120,066,000 )

$ ( 9,631,000 )

$ ( 2,773,000 )

$ 200,981,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2022

Series A, B &

Comprehensive

Stockholders’

BALANCES, January 1, 2022

4 unchanged sentences

$ 228,455,000

Issuance of common stock for restricted stock

Preferred stock issued

Preferred stock offering costs

Issuance of common stock for restricted stock awards

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 )

Increase in ownership interest of subsidiary

( 1,980,000 )

Financing cost in connection with sales of common stock

( 2,758,000 )

Non-controlling interest from AVLP acquisition

Non-controlling interest from SMC acquisition

Non-controlling interest from GIGA acquisition

Purchase of treasury stock – Ault Alpha

1 unchanged sentence

( 28,772,000 )

( 61,807,000 )

Preferred dividends

Foreign currency translation adjustments

( 1,452,000 )

Net loss attributable to non-controlling interest

( 1,061,000 )

BALANCES, September 30, 2022

$ 557,418,000

$ ( 207,647,000 )

$ ( 1,557,000 )

$ ( 28,788,000 )

$ 338,763,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2021

Comprehensive

Non-Controlling

Stockholders’

BALANCES, January 1, 2021

$ 171,396,000

$ ( 121,396,000 )

$ ( 1,718,000 )

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 )

Issuance of common stock for conversion

of convertible notes payable

Issuance of common stock for conversion

of convertible notes payable, related party

Comprehensive loss:

Preferred dividends

Net unrealized loss on derivatives in related

( 7,773,000 )

Foreign currency translation adjustments

Net income attributable to non-controlling interest

BALANCES, September 30, 2021

BALANCES, March 31, 2022

$ 495,760,000

5 unchanged sentences

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

Net (loss) income

$ ( 48,829,000 )

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

Depreciation and amortization

Interest expense – debt discount

Gain on extinguishment of debt

Change in fair value of warrant liability

Accretion of original issue discount on notes receivable – related party

$ ( 28,787,000 )

Accretion of original issue discount on notes receivable

Increase in accrued interest on notes receivable – related party

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

Amortization of debt discount

Amortization of right-of-use assets

Loss on extinguishment of debt

Stock-based compensation

Impairment of deposit due to vendor bankruptcy filing

Gain on the sale of fixed assets

Impairment of equity securities

Impairment of cryptocurrencies

Realized gains on sale of marketable securities

Realized gain on the sale of cryptocurrencies

Revenue, cryptocurrency mining

( 7,347,000 )

( 3,548,000 )

Unrealized losses on marketable securities

Unrealized losses (gains) on investments in common stock, related parties

Realized losses on sale of marketable securities

Unrealized gains on marketable securities

( 1,908,000 )

Unrealized gains on equity securities

( 13,515,000 )

Unrealized losses on investments in common stock, related parties

Unrealized gains on equity securities

( 13,461,000 )

Loss from investment in unconsolidated entity

Loss on remeasurement of investment in unconsolidated entity

Provision for loan losses

Changes in operating assets and liabilities:

Proceeds from the sale of cryptocurrencies

Marketable equity securities

( 34,196,000 )

Accounts receivable

( 1,723,000 )

( 1,270,000 )

Accrued revenue

( 5,867,000 )

Prepaid expenses and other current assets

( 5,155,000 )

Digital currencies

( 12,227,000 )

( 2,944,000 )

Accounts payable and accrued expenses

( 4,230,000 )

Other current liabilities

Lease liabilities

( 1,334,000 )

Net cash provided by (used in) operating activities

( 56,911,000 )

Net cash provided by operating activities

Cash flows from investing activities:

3 unchanged sentences

Investment in promissory notes and other, related parties

( 2,200,000 )

( 4,994,000 )

Investments in common stock and warrants, related parties

( 4,840,000 )

( 19,590,000 )

Investment in real property, related party

( 2,670,000 )

Proceeds from sale of investment in real property, related party

Purchase of SMC, net of cash received

( 8,239,000 )

Purchase of GIGA, net of cash received

( 3,687,000 )

Cash received upon acquisition of AVLP

Acquisition of non-controlling interests

( 3,901,000 )

Purchase of marketable equity securities

( 1,981,000 )

( 2,144,000 )

Sales of marketable equity securities

Investments in loans receivable

( 7,081,000 )

Principal payments on loans receivable

Sale of digital currencies

Investments in equity securities

( 3,820,000 )

( 14,287,000 )

Proceeds from the sale of fixed assets

Net cash used in investing activities

3 unchanged sentences

these unaudited condensed consolidated financial statements.

BITNILE HOLDINGS, INC.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from financing activities:

1 unchanged sentence

$ 110,147,000

$ 160,483,000

Financing cost in connection with sales of common stock

( 2,758,000 )

( 4,952,000 )

Proceeds from sales of preferred stock

Financing cost in connection with sales of preferred stock

( 1,079,000 )

Proceeds from notes payable

6 unchanged sentences

Purchase of treasury stock

( 15,607,000 )

Proceeds from convertible notes

Payments on convertible notes

Net cash (used in) provided by financing activities

( 8,097,000 )

Payments on revolving credit facilities, net

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

6 unchanged sentences

Non-cash investing and financing activities:

Conversion of convertible notes payable into shares of common stock

Settlement of accounts payable with digital currency

Conversion of investment in unconsolidated entity for acquisition of AVLP

Conversion of convertible notes payable, related party into shares of common stock

Conversion of debt and equity securities to marketable securities

Conversion of investments in other equity securities to marketable

Conversion of loans receivable to marketable securities

Conversion of interest receivable to marketable securities

Conversion of loans receivable to debt and equity securities

Recognition of new operating lease right-of-use assets and lease liabilities

Remeasurement of Ault Disruptive temporary equity

Notes payable exchanged for series E, F and G convertible preferred stock liabilities

The accompanying notes are an integral part of

1 unchanged sentence

DESCRIPTION OF BUSINESS

BitNile Holdings, Inc., a

Delaware corporation (“BitNile” or the “Company”) was incorporated in September 2017.

BitNile is a diversified

holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact.

Through its wholly-

and majority-owned subsidiaries and strategic investments, the Company owns and operates a data center at which it mines Bitcoin, and

provides mission-critical products that support a diverse range of industries, including 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.

Ault, William B.

Horne, its Chief Executive Officer and Vice Chairman and Henry Nisser, its President and General

Together, they constitute the Executive Committee, which manages the day-to-day operations of the Company.

All major investment

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

Ault and the other members of the Executive Committee.

The Company has

seven reportable segments:

Ault Alliance, Inc., a Delaware

corporation (“Ault Alliance” or the “Company”) is a diversified holding company pursuing growth by acquiring undervalued

businesses and disruptive technologies with a global impact.

Through its wholly- and majority-owned subsidiaries and strategic investments,

the Company owns and operates a data center at which it mines Bitcoin, and provides mission-critical products that support a diverse range

of industries, including metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma,

consumer electronics, hotel operations and textiles.

In addition, the Company extends credit to select entrepreneurial businesses through

a licensed lending subsidiary.

Ault Alliance was founded

by Milton “Todd” Ault, III, its Executive Chairman and is led by Milton “Todd” Ault, III, William B.

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 the Executive Committee.

The Company has the following nine reportable segments:

· Energy and Infrastructure (“Energy”) – crane operations, advanced textiles processing

and oil exploration;

· Technology and Finance (“Fintech”) –commercial lending, activist investing, media, and

digital learning;

· The Singing Machine Company, Inc.

(“SMC”) – consumer electronics;

· BitNile, Inc.

(“BNI”) – cryptocurrency mining operations;

· Ault Alliance, Inc.

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

textiles processing technology, media, and digital learning;

· Gresham Worldwide, Inc.

(“GWW”) – defense solutions;

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

(“TurnOnGreen”) – commercial

electronics solutions;

· The Singing Machine Company, Inc.

(“SMC”) – karaoke audio equipment;

· Giga-tronics Incorporated (“GIGA”) – defense industry;

· Imperalis Holding Corp., d/b/a TurnOnGreen, Inc.

(“TurnOnGreen”) – commercial electronics

· BitNile Metaverse, Inc.

(“BMI”) – immersive metaverse platform;

· Ault Global Real Estate Equities, Inc.

3 unchanged sentences

company (“SPAC”).

January 3, 2023, the Company (then known as BitNile Holdings, Inc.) merged its wholly owned subsidiary, Ault Alliance, Inc.

with and into

In connection with this upstream merger, Ault Alliance, Inc.

was merged out of existence and the business of the Company continued

as it was being conducted.

Further, on January 3, 2023, the effective date of the merger, the Company changed its name to Ault Alliance,

and its ticker was changed to “AULT.” The name change did not affect the rights of security holders of the Company.

Reverse Stock Split

May 15, 2023, pursuant to the authorization provided by the Company’s stockholders at a special meeting of stockholders, the Company’s

board of directors approved an amendment to the Certificate of Incorporation to effectuate a reverse stock split of the of the Company’s

issued and outstanding common stock by a ratio of one-for-three hundred (the “Reverse Split”).

The Reverse Split did not affect

the number of authorized shares of common stock or preferred stock or their par value per share.

As a result of the Reverse Split, each

three hundred shares of common stock issued and outstanding prior to the Reverse Split were converted into one share of common stock.

The Reverse Split became effective in the State of Delaware on May 17, 2023.

All share amounts in these financial statements have been

updated to reflect the Reverse Split.

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.

The Company believes

its current cash on hand is sufficient to meet its operating and capital requirements for at least the next twelve months from the date

these financial statements are issued.

of March 31, 2023, the Company had cash and cash equivalents of $ 9.2 million and negative working capital of $ 37.9 million.

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

These factors

create substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date that these

condensed consolidated financial statements are issued.

The condensed consolidated

financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

the condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern

and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

In making this assessment

management performed a comprehensive analysis of the Company’s current circumstances including:

its financial position, cash flow

and cash usage forecasts, and obligations and debts.

Although management has a long history of successful capital raises, the analysis

used to determine the Company’s ability as a going concern does not include cash sources outside the Company’s direct control

that management expects to be available within the next 12 months.

Management expects that the

Company’s existing cash and cash equivalents, accounts receivable and marketable securities as of March 31, 2023, will not be sufficient

to enable the Company to fund its anticipated level of operations through one year from the date these financial statements are issued.

Management anticipates raising additional capital through the private and public sales of the Company’s equity or debt securities

and selling its marketable securities and digital currencies, or a combination thereof.

Although management believes that such capital

sources will be available, there can be no assurances that financing will be available to the Company when needed in order to allow the

Company to continue its operations, or if available, on terms acceptable to the Company.

If the Company does not raise sufficient capital

in a timely manner, among other things, the Company may be forced to scale back its operations or cease operations altogether.

OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

10 unchanged sentences

consolidated financial statements should be read in conjunction with the consolidated financial statements in the Company’s Annual

Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on

April 15, 2022.

The condensed consolidated balance sheet as of December 31, 2021 was derived from the Company’s audited 2021 financial

statements contained in the above referenced Form 10-K.

Results of the three 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.

Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), filed with the Securities and Exchange

Commission (the “SEC”) on April 17, 2023.

The condensed consolidated balance sheet as of December 31, 2022 was derived from

the Company’s audited 2022 financial statements contained in the above referenced 2022 Annual Report.

Results of the three months

ended March 31, 2023, are not necessarily indicative of the results to be expected for the full year ending December 31, 2023.

Significant Accounting

1 unchanged sentence

the 2022 Annual Report.

Business Combination

Company allocates the purchase price of an acquired business to the tangible and intangible assets acquired and liabilities assumed based

upon their estimated fair values on the acquisition date.

Any excess of the purchase price over the fair value of the net assets acquired

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

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

in the acquirer is re-measured to fair value at the acquisition date;

any gains or losses arising from such re-measurement are recognized

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.

Preferred Stock

The Company follows ASC 480-10,

“Distinguishing Liabilities from Equity” in its evaluation of the accounting for the Preferred Shares.

ASC 480-10-25-14 requires

liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable

number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics:

· A fixed monetary amount known at inception;

· Variations in something other than the fair value of the issuer’s equity shares;

· Variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty

moves in the opposite direction as the value of the issuer’s shares.

The number of shares delivered

is determined on the basis of (1) the fixed monetary amount determined as the stated value and (2) the current stock price at settlement,

so that the aggregate fair value of the shares delivered equals the monetary value of the obligation, which is fixed or predominantly

Accordingly, the holder is not significantly exposed to gains and losses attributable to changes in the fair value of the Company’s

equity shares.

Instead, the Company is using its own equity shares as currency to settle a monetary obligation.

Reclassifications

2 unchanged sentences

Adopted Accounting Standards

In May 2021, the Financial

Accountings Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04, “Earnings Per Share

(Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and

Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40):

Issuer’s Accounting for Certain Modifications or Exchanges of

Freestanding Equity-Classified Written Call Options.” The guidance became effective for the Company on January 1, 2022.

adopted the guidance on January 1, 2022, and has concluded the adoption did not have a material impact on its unaudited condensed consolidated

financial statements.

In June 2016, the FASB issued

2016-13, “Financial Instruments - Credit Losses,” (“ASU No.

2016-13”) to improve information on credit

losses for financial assets and net investment in leases that are not accounted for at fair value through net income.

ASU 2016-13 replaces

the current incurred loss impairment methodology with a methodology that reflects expected credit losses.

This guidance is effective for

the Company beginning on January 1, 2023, with early adoption permitted.

The Company does not expect that the adoption of this standard

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

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 June 2016, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, “Financial Instruments

- Credit Losses,” (“ASU No.

2016-13”) to improve information on credit losses for financial assets and net investment

in leases that are not accounted for at fair value through net income.

ASU 2016-13 replaces the current incurred loss impairment methodology

with a methodology that reflects expected credit losses.

This guidance was effective for the Company beginning on January 1, 2023.

adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

In October 2021, the FASB

6 unchanged sentences

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.

The adoption of this guidance did not have a material impact

on the Company’s 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.

The Company’s disaggregated

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

Three months ended September 30, 2022

Primary Geographical Markets

North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

Total revenue

Major Goods or Services

Power supply units

Digital currency mining, net

Hotel operations

Karaoke machines and related

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred over time

Revenue from contracts with customers

disaggregated customer contract revenues and the source of the revenue for the three months ended March 31, 2023 and 2022.

Revenues from

lending and trading activities included in consolidated revenues were primarily interest, dividend and other investment income, which

are not considered to be revenues from contracts with customers under GAAP.

The Company’s disaggregated

revenues 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 three months ended March 31, 2023 (excludes segments with no revenue):

Schedule of disaggregated revenues

Primary Geographical Markets

2 unchanged sentences

Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

Revenue, lending and trading activities (North America)

( 4,939,000 )

Total revenue

$ ( 4,939,000 )

Major Goods or Services

Power supply units

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units & systems

Healthcare diagnostic systems

Electric vehicle chargers

Defense systems

4 unchanged sentences

Revenue, lending and trading activities

Total revenue

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred over time

Revenue from contracts with customers

The Company’s disaggregated

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

Three Months ended September 30, 2021

Ault Alliance

Primary Geographical Markets

North America

Revenue from contracts with customers

Revenue, lending and trading activities

(North America)

( 4,939,000 )

2 unchanged sentences

$ ( 4,939,000 )

$ ( 30,794,000 )

Power supply units

Defense systems

Digital currency mining

Revenue from contracts with customers

Revenue, lending and trading activities

( 38,869,000 )

Total revenue

$ ( 38,261,000 )

$ ( 30,794,000 )

Timing of Revenue Recognition

3 unchanged sentences

The Company’s disaggregated

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

Nine Months Ended September 30, 2021

Ault Alliance

revenues consisted of the following for the three months ended March 31, 2022:

Primary Geographical Markets

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

Power supply units

Power supply systems

Major Goods or Services

RF/microwave filters

Detector logarithmic video amplifiers

Power supply units & systems

Electric vehicle chargers

Defense systems

Digital currency mining

Hotel operations

Revenue from contracts with customers

8 unchanged sentences

the fair value hierarchy:

Fair Value Measurement at September 30, 2022

Fair value, assets measured on recurring basis

Fair Value Measurement at March 31, 2023

Investment in common stock of Alzamend Neuro, Inc.

2 unchanged sentences

Cash and marketable securities held in trust account

Investments in other equity securities

Total assets measured at fair value

1 unchanged sentence

$ 125,477,000

Series E, F and G preferred stock liabilities

Convertible promissory notes

Total liabilities measured at fair value

Fair Value Measurement at December 31, 2022

6 unchanged sentences

$ 131,232,000

Convertible promissory notes

The Company assesses the inputs

6 unchanged sentences

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 three months ended March 31, 2023:

Schedule of investments

Investments in

Balance at January 1, 2023

Investment in preferred stock

Change in fair value of financial instruments

Conversion to marketable securities

Balance at September 30, 2022

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

value per share.

These investments are accounted for using a measurement alternative under which they are measured at cost and adjusted

for observable price changes and impairments.

Observable price changes result from, among other things, equity transactions for the same

issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the

For these transactions to be considered observable price changes of the same issuer, the Company evaluates whether these

transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors,

to the investments the Company holds.

Any investments adjusted to their fair value by applying the measurement alternative are disclosed

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.

Fair Value Measurement Using

Quoted prices

identical assets

As of September 30, 2022

Investments in other equity securities that do not report net asset

Fair Value Measurement Using

Quoted prices

identical assets

As of December 31, 2021

Investments in other equity securities that do not report net asset

Conversion to Level 1 marketable securities

( 13,340,000 )

Balance at March 31, 2023

Equity Investments

for Which Measurement Alternative Has Been Selected

of March 31, 2023 and December 31, 2022, the Company held equity investments in other securities, consisting of investments in preferred

stock, valued at $ 23.7 million and $ 29.2 million, respectively, that were valued using a measurement alternative.

These investments

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

Marketable EQUITY Securities

Marketable equity securities

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

Marketable equity securities at September 30, 2022

with readily determinable market prices consisted of the following as of March 31, 2023 and December 31, 2022:

Schedule of marketable securities

Marketable equity securities at March 31, 2023

Gross unrealized

8 unchanged sentences

The Company’s investment

in marketable equity securities are revalued on each balance sheet date.

in marketable equity securities is revalued on each balance sheet date.

DIGITAL CURRENCIES

The following table presents

the activities of the digital currencies (included in prepaid expenses and other current assets) for the three months ended March 31,

2023 and 2022:

Schedule of activities of the digital currencies

Balance at January 1, 2023

Additions of mined digital currencies

Impairment of mined cryptocurrency

Sale of digital currencies

( 7,780,000 )

Realized gain on sale of digital currencies

Balance at March 31, 2023

Balance at January 1, 2022

Additions of mined digital currencies

Payments to vendors

Impairment of mined cryptocurrency

Sale of digital currencies

( 4,377,000 )

Realized gain on sale of digital currencies

Balance at March 31, 2022

PROPERTY AND EQUIPMENT, NET

At September 30, 2022 and

December 31, 2021, property and equipment consisted of:

September 30, 2022

At March 31, 2023 and December

31, 2022, property and equipment consisted of:

Schedule of property and equipment

March 31, 2023

December 31, 2022

Cryptocurrency machines and related equipment

$ 131,141,000

Building and improvements

Bitcoin mining equipment

Crane rental equipment

Computer, software and related equipment

1 unchanged sentence

Oil and natural gas properties, unproved properties

Building and improvements

Accumulated depreciation and amortization

7 unchanged sentences

Summary of depreciation expense:

Schedule of depreciation

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.

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

Prior to the conversion of

the convertible promissory notes, the Company accounted for its investment in AVLP as an investment in an unconsolidated entity under

the equity method of accounting.

In connection with the conversion of the convertible promissory notes, the Company’s consolidated

financial statements now include all of the accounts of AVLP, and any significant intercompany balances and transactions have been eliminated

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.

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

Total purchase consideration

Fair value of non-controlling interest

Total consideration

Identifiable net liabilities assumed:

Prepaid expenses and other current assets

Property and equipment

Note receivable

Accounts payable and accrued expenses

( 5,018,000 )

Convertible notes payable, principal

( 9,734,000 )

Fair value of embedded derivative

( 1,226,000 )

Fair value of bifurcated conversion option

( 4,425,000 )

Fair value of bifurcated put option

Net liabilities assumed

( 13,446,000 )

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

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.

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.

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.

Total purchase consideration

Fair value of non-controlling interest

Total consideration

Identifiable net assets acquired:

Accounts receivable

Prepaid expenses and other current assets

Property and equipment, net

Right-of-use assets

Intangible assets:

Tradenames (19 year estimated useful life)

Customer relationships (16 year estimated useful life)

Proprietary technology (3 year estimated useful life)

Accounts payable and accrued expenses

( 10,052,000 )

Notes payable

( 2,972,000 )

Lease liabilities

( 1,124,000 )

Net assets acquired

Unaudited Pro Forma Financial Information

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.

Nine Months Ended

September 30, 2022

Total revenues

INTANGIBLE ASSETS, NET

At March 31, 2023 and December 31, 2022,

intangible assets consisted of:

Schedule of intangible asset

Trade name and trademark

Indefinite life

Customer list

Developed technology

Domain name and other intangible assets

Accumulated amortization

( 2,324,000 )

Net loss attributable to BitNile Holdings, Inc.

( 2,102,000 )

The unaudited pro forma information

is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved

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

Intangible assets, net

The Company’s trade

names and trademarks were determined to have an indefinite life.

The remaining definite lived intangible assets are primarily being amortized

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

Amortization expense was $ 0.3 million and $ 0.1 million, respectively, for

the three months ended March 31, 2023 and 2022.

relationships, developed technology and certain trade names are subject to amortization over their estimated useful lives, which

range between 5 and 10 years with an average remaining useful life of 8.2 years.

The following table presents estimated amortization expense

for each of the succeeding five calendar years and thereafter.

Schedule of estimated amortization expense

The following table summarizes

the changes in the Company’s goodwill for the three months ended March 31, 2023:

Schedule of goodwill

Balance as of January 1, 2023

Acquisition of BMI

Effect of exchange rate changes

Balance as of March 31, 2023

BUSINESS COMBINATION

BMI Acquisition

On March 6, 2023, the Company

closed into a Share Exchange Agreement (the “Agreement”) with BMI and sold to BMI all of the outstanding shares of capital

stock of the Company’s subsidiary, BitNile.com, Inc.

(“BitNile.com”) as well as the securities of Earnity, Inc.

beneficially owned by BitNile.com as of the date of the Agreement (the “Transaction”).

As consideration for the acquisition,

BMI issued shares of preferred stock convertible into common stock of BMI representing approximately 73.2% of BMI’s outstanding

common stock.

Pending approval of the transaction by BMI’s shareholders, the preferred stock combined are subject to a 19.9% beneficial

ownership limitation.

The Transaction benefits the Company as BMI is a publicly traded company and provides BitNile.com access to capital

markets as the primary focus for BMI to fund the expected growth of the BMI metaverse platform.

In addition, there are certain synergies

between the Company’s Bitcoin mining operations and BMI’s Agora Digital mining business.

The holders of preferred

stock will be entitled to receive dividends at a rate of 5% of the stated value of the preferred stock.

The Company is entitled to

appoint three members to the board of directors of BMI and, following shareholder approval, a majority of the board.

The Company consolidates

BMI as a variable interest entity (a “VIE”) due to its significant level of influence and control of BMI, the size of its

investment, and its ability to participate in policy making decisions.

The Company is considered the primary beneficiary of the VIE.

Schedule of variable interest entities

Ault Alliance investment in BMI

The total purchase price

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

excess purchase price allocated to goodwill.

1 unchanged sentence

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

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

valuation expert.

4 unchanged sentences

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:

Preliminary allocation

Total purchase consideration

The preliminary purchase

price allocation is as follows:

Schedule of recognized identified assets acquired and liabilities assumed

Fair value of Company interest

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

Identifiable net assets acquired:

Investment in equity securities

Prepaid expenses and other current assets

Property and equipment, net

Right-of-use assets

Accounts payable and accrued expenses

( 4,551,000 )

Lease obligations

Other current liabilities

Other non-current liabilities

Lease liabilities

Net assets acquired

The following table summarizes

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

Balance as of January 1, 2022

Acquisition of AVLP

Acquisition of SMC

Acquisition of GIGA

Effect of exchange rate changes

Balance as of September 30, 2022

INCREASE IN OWNERSHIP INTEREST OF SUBSIDIARIES

On May 12, 2022, BNI closed

a $ 1.8 million membership interest purchase agreement whereby BNI acquired the 30 % minority interest of Alliance Cloud Services, LLC (“ACS”)

which BNI did not previously own, resulting in ACS becoming a wholly-owned subsidiary of BNI.

ACS owns and operates the Company’s

Michigan data center, where BNI conducts the Company’s Bitcoin mining operations.

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.

INVESTMENTS – RELATED PARTIES

Investments in Alzamend and

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

Ault & Company, Inc.

(“Ault & Company”) at March 31, 2023 and December 31, 2022, were comprised of the following:

Investment in Promissory Notes, Related

September 30,

Schedule of investment

Investment in promissory note of Ault & Company

2 unchanged sentences

Total investment in promissory note, related party

Summary of interest income,

related party, recorded within interest and other income on the condensed consolidated statement of operations:

For the Three Months Ended

Interest income, related party

Investment in Common Stock and Options,

Related Parties

September 30,

Investment in common stock and options of Alzamend

Investment in common stock 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 during the three months ended March 31, 2023:

Schedule of investment in warrants and common stock

Investment in

common stock of

Investment in

promissory notes of

Ault & Company

Balance at January 1, 2023

Investment in common stock and options of Alzamend

Investment in common stock of Alzamend

Unrealized loss in common stock of Alzamend

( 1,598,000 )

Amortization of related party investment

Accrued interest

Balance at September 30, 2022

Balance at March 31, 2023

Unrealized loss in common

stock of Alzamend is recorded within revenue from lending and trading activities on the condensed consolidated statements of operations.

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 three months ended March

Schedule of investment of common stock

Investment in

Balance at January 1, 2023

March 9, 2021 securities purchase agreement *

Open market purchases after initial public offering

1 unchanged sentence

( 1,598,000 )

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 –

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:

Investment in Promissory Notes

Interest rate

December 31, 2021

Investment in convertible promissory note

Investment in promissory note – Alpha Fund

June 30, 2022

Accrued interest receivable

Total investment in promissory notes, gross

provision for loan losses

( 2,000,000 )

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

Investment in

promissory notes

Balance at January 1, 2022

Investment in convertible promissory notes

Loss from equity investment

Accrued interest

Loss on remeasurement upon conversion

( 2,700,000 )

Conversion of AVLP convertible promissory notes

( 17,040,000 )

Elimination of intercompany debt after conversion

( 3,809,000 )

Balance at September 30, 2022

CONSOLIDATED VARIABLE INTEREST ENTITY -

Alpha Fund – Consolidated Variable

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

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

Manager”), which also acts as the investment manager to Alpha Fund.

The Investment Manager is owned by Ault & Company.

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

Manager, and Messrs.

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

As of 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.

The Company consolidates Alpha

Fund as a variable interest entity (a “VIE”) due to its significant level of influence and control of Alpha Fund, the size

of its investment, and its ability to participate in policy making decisions, the Company is considered the primary beneficiary of the

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,

Balance at March 31, 2023

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at September

Other current liabilities at March 31,

2023 and December 31, 2022 consisted of:

Schedule of other current liabilities

September 30,

Accounts payable

Accrued payroll and payroll taxes

Financial instrument liabilities

Accrued legal

Interest payable

Accrued legal

Accrued lender profit participation rights

Financial instrument liabilities

Related party advances

Other accrued expenses

Financial Instruments

Under authoritative guidance

used by the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments that

do not have fixed settlement provisions are deemed to be derivative instruments.

In prior years, the Company granted certain warrants

that resulted in these warrants accounted for as a financial instrument and being re-measured every reporting period with the change in

value reported in the statement of operations.

The financial

instruments were valued using a variety of pricing models with the following valuation assumptions:

Schedule of Financial Instrument

September 30,

Contractually stipulated stock price

Exercise price

Contractually defined remaining term

Contractually defined volatility

Dividend yield

Risk-free interest rate

Per the terms of

the warrant agreements underlying the financial instruments, the value to the warrant holders is defined within the agreement based on

a stock price, contractual term, volatility factor and dividend rate as defined in the warrant agreement, and not indexed to the company’s

stock, resulting in the financial instrument accounting.

The risk-free interest rate was based on rates established by the Federal Reserve

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

Schedule of fair value of the financial instruments

September 30, 2022

September 30, 2021

Beginning balance

Change in fair value

Extinguishment

( 3,339,000 )

Ending balance

Accrued Lender Profit Participation Rights

During the quarter ended March

31, 2023, the $ 6.0 million accrued lender profit participation rights obligation was paid in full.

PREFERRED STOCK LIABILITY

March 28, 2023 Security Purchase Agreement

On March 28, 2023, the Company

entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”),

pursuant to which the Company sold in a private placement (the “Offering”), an aggregate of 100,000 shares of its preferred

stock, with each such share having a stated value of $ 100.00 and consisting of (i) 83,000 shares of Series E Convertible Preferred Stock

(the “Series E Preferred Stock”), (ii) 1,000 shares of Series F Convertible Preferred Stock (the “Series F Preferred

Stock”) and (iii) 16,000 shares of Series G Convertible Preferred Stock (the “Series G Preferred Stock” and collectively,

the “Preferred Shares”).

The Preferred Shares are convertible into shares of the Company’s common stock at the option

of the holders and, in certain circumstances, by the Company.

Preferred stock liability

at March 31, 2023 was comprised of the following:

Schedule of preferred stock liability

Preferred Type

Series E Convertible Preferred Liability

Series F Convertible Preferred Liability

Series G Convertible Preferred Liability

* Each Preferred

Share is convertible into such number of shares of the Company’s common stock equal to the stated value per share divided by the

conversion price, which is equal to 85% of the closing sale price of the common stock on the trading day prior to the date of conversion,

subject to a floor price of $0.10, which floor price is not affected by the recently consummated reverse split.

The purchase price of the

Series E Preferred Stock and the Series F Preferred Stock was paid for by the Investors’ canceling outstanding secured promissory

notes in the principal amount of $8.4 million, whereas the purchase price of the shares of Series G Preferred Stock consisted of accrued

but unpaid interest on these notes, as well as other good and valuable consideration.

The Company recorded a loss on extinguishment of

debt of $ 0.1 million related to the transaction.

The Preferred Shares have been classified as a liability as they embody an unconditional

obligation to transfer a variable number of shares, based on a fixed monetary amount known at inception.

The Company elected the fair

value option to record the Preferred Shares with changes in fair value recorded through earnings.

REDEEMABLE NONCONTROLLING INTERESTS IN

EQUITY OF SUBSIDIARY LIABILITY

The Company records redeemable

noncontrolling interests in equity of subsidiaries to reflect the economic interests of the common stockholders in Ault Disruptive.

of March 31, 2023, the carrying amount of the redeemable noncontrolling interest in equity of subsidiaries was recorded at its redemption

value of $ 118.7 million.

These redeemable noncontrolling interests are classified as current liabilities in the condensed consolidated

balance sheets.

This classification is due to the expiry of time that was allotted for Ault Disruptive to consummate its initial business

combination, which occurred on December 20, 2022.

Ault Disruptive announced two, three-month extension periods, however, the deposits

associated with these extensions have yet to be made.

NOTES PAYABLE

Notes payable at September

Notes payable at March 31,

2023 and December 31, 2022, were comprised of the following:

Schedule of notes payable

September 30,

Short-term notes payable

10% original issue discount senior secured notes

Short-term notes payable – in default

January 3, 2023

AGREE Madison secured construction loans

1 unchanged sentence

SMC line of credit *

June 11, 2023

October 14, 2025

SMC installment notes

June 18, 2024

SMC notes payable

Circle 8 revolving credit facility

December 16, 2025

Circle 8 equipment financing notes

November 16, 2026

XBTO note payable

December 30, 2023

16% senior secured promissory note

3% secured promissory notes

8.5% secured promissory notes

10% secured promissory notes

August 10, 2023

Short-term bank line of credit

Short-term bank credit facilities

Renews monthly

1 unchanged sentence

$ 121,790,000

$ 144,172,000

Unamortized debt discounts

2 unchanged sentences

Total notes payable, net

$ 118,332,000

$ 131,085,000

current portion

2 unchanged sentences

Notes payable – long-term portion

* As of March 31, 2023, SMC was in violation of a financial covenant on this line of credit.

However, SMC subsequently obtained a waiver

for this covenant violation in May 2023.

Notes Payable Maturities

The contractual maturities

of the Company’s notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option,

as of March 31, 2023 were:

Schedule Of maturities

$ 121,790,000

Interest Expense

Schedule of interest expense

For the Three Months Ended

Contractual interest expense

Forbearance fees

Amortization of debt discount

Total interest expense

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

The SMC debt is secured by

a perfected security interest in all SMC assets including a first-priority security interest in SMC accounts receivable and inventory.

Amortization of Debt Discount of Secured

Promissory Notes

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:

The 10% secured promissory

notes were retired in March 2023 and converted into the Preferred Shares, as described in Note 14 – Preferred Stock Liability.

Amendments to 16% Secured Promissory Notes

On April 6, 2023, the Company

entered into an amendment agreement, effective as of March 16, 2023, with the initial investor related to the December 2022 16% secured

promissory note extending the due date on the note to May 31, 2023, which will automatically extend to June 30, 2023 if the Company repays

the balance outstanding on the note as of the extension date, which was $8.3 million, by May 31, 2023.

The Company agreed to increase

the principal amount of the note by approximately $2.0 million, reflecting a $1.7 million extension fee and $0.4 million of liquidated

damages for failure to obtain an effective registration statement.

On May 4, 2023, the Company

entered into an amendment agreement, effective as of March 16, 2023, with the subsequent investor related to the December 2022 16% secured

promissory note extending the due date on the note to June 30, 2023.

The Company agreed to increase the principal amount of the note by

approximately $0.8 million, reflecting a $0.6 million extension fee and $0.2 million amendment fee.

CONVERTIBLE NOTES

Convertible notes payable at September 30, 2022

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

Convertible notes payable at March 31, 2023 and

December 31, 2022, were comprised of the following:

Schedule of convertible notes payable

Conversion price per

Interest rate

September 30,

Convertible promissory note

AVLP convertible promissory notes

AVLP convertible promissory notes, principal

$ 0.35 (AVLP stock)

August 22, 2025

GIGA senior secured convertible notes – in default

$ 0.25 (GIGA stock)

October 11, 2023

Fair value of embedded options and derivatives

unamortized debt discounts

Total convertible notes payable, net of financing cost

current portion

Total convertible notes payable, net of financing cost, long term

AVLP convertible promissory notes

The AVLP convertible notes

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

current portion

( 3,869,000 )

( 1,325,000 )

Convertible notes payable, net of financing cost – long-term portion

inputs associated with the embedded option include:

Schedule of weighted average assumptions

March 31, 2023

December 31, 2022

Exercise price

Contractual term in years

Dividend yield

Risk-free interest rate

GIGA Senior Secured Convertible Notes

On January 11, 2023,

GIGA entered into a Securities Purchase Agreement (“GIGA SPA”) with two accredited investors (the “Lenders”)

pursuant to which GIGA sold to the Lenders $ 3.3

original issue discount Senior Secured Convertible Notes (the “Notes”) and five-year warrants (the “Warrants”) to purchase

shares of common stock, no par value for total gross proceeds of $3.0 million.

The net proceeds shall be used primarily for working

The Notes are secured by the

assets of GIGA pursuant to a Security Agreement entered into for such purpose, and are senior to the indebtedness payable to Ault and

Ault Lending, pursuant to a Subordination Agreement entered into in connection with the GIGA SPA.

The Notes mature on the earlier

of (i) nine months from the issuance date, or October 11, 2023, or (ii) completion of the uplist transaction pursuant to which GIGA’s

common stock becomes listed for trading on a national securities exchange operated by The Nasdaq Stock Market or the New York Stock Exchange

(an “Uplist Transaction”).

The Notes accrue interest at a rate of 6 % per annum payable monthly, which increases to 18% upon

an event of default.

In addition, under the Notes upon an event of default GIGA is required to pay 20% of its consolidated revenues monthly

on each interest payment date in reduction of the principal amount of the Notes then outstanding.

The Notes provide for certain

events of default which include failure of the Uplist Transaction to occur by the maturity date, failure to maintain effectiveness of

the registration statement under the Registration Rights Agreement (as described below), suspension of trading of GIGA’s common

stock for five consecutive trading days, failure to timely deliver shares issuable upon conversion of the Notes or exercise of the Warrants,

failure to timely make payments under the Notes, default under other indebtedness, and certain other customary events of default, subject

to certain exceptions and limitations.

Upon an event of default,

the holders will have the right to require GIGA to prepay the Notes at a 125% premium.

Further, upon a bankruptcy event of default or

a change of control event, GIGA will be required to prepay the Notes at a premium.

If the conversion price falls below $0.25, GIGA may

also elect to prepay the notes at a 125% premium.

The Notes are convertible

upon the earlier of the Uplist Transaction and an event of default at a conversion price equal to the greater of (a) 90% of the lowest

volume weighted average price (“VWAP”) for the 10 trading days prior to the conversion date and (b) $0.25 per share, subject

to adjustment including downward adjustment upon any dilutive issuance of securities.

GIGA repaid its existing

line of credit with Western Alliance Bank which had an existing balance of approximately $ 59,000 .

Under the Notes, GIGA may enter into a factoring agreement of $2 million using GIGA’s accounts receivable as collateral.

The Warrants entitle the holders

to purchase a total of 1.7 million shares of common stock for a five-year period from issuance, at an exercise price determined as follows:

(i) beginning on the issuance date and for a period of 90 days thereafter, $0.78, (ii) if the Uplist Transaction has occurred as of the

date of exercise, the lower of (A) $0.78 and (B) 110% of the per share offering price to the public in the Uplist Transaction, and (iii)

if neither of (i) and (ii) apply, the lower of (A) $0.78 and (B) 90% of the lowest VWAP for the 10 trading days prior to the date of the

exercise, subject to adjustment including downward adjustment upon any dilutive issuance of securities.

If the Uplist Transaction is not

completed prior to the maturity date of the Notes, the number of shares of common stock that may be purchased upon exercise of the Warrants

will be doubled, without an adjustment to the exercise price.

The GIGA SPA, Warrants and

Notes require a reserve of authorized but unissued shares of common stock initially equal to approximately 15.0 million shares of common

stock, subject to reduction as the Notes and Warrants are converted and exercised, respectively.

Spartan Capital Securities,

LLC (the “Placement Agent”) served as placement agent in the offering and received a cash commission in the amount of 8% of

the gross proceeds, or $0.2 million.

In addition, GIGA agreed to pay the Placement Agent an expense allowance of $30,000.

GIGA agreed to issue the Placement Agent five-year warrants (the “Placement Agent Warrants”) to purchase a number of shares

of common stock equal to 8% of the total number of shares of common stock underlying the Notes and Warrants sold in the offering, or 1.2

million shares.

The Placement Agent Warrants have an exercise price of 110% of the Warrant exercise price.

Under the GIGA SPA, GIGA

reimbursed the Lenders a total of $ 60,000

out of the proceeds from the offering for fees and expenses incurred in connection therewith.

In connection with the GIGA

SPA, GIGA entered into a Registration Rights Agreement pursuant to which it agreed to register the resale by the Lenders of the common

stock issuable upon conversion of the Notes and Warrants.

Pursuant to the Registration Rights Agreement, the initial registration statement

on Form S-1 must be filed 30 days after the Notes become convertible, and to cause the registration statement to be declared effective

within 90 days thereafter, subject to certain limitations and exceptions.

GIGA did not complete the registration statement in a timely

manner, which is an event of default.

The Lenders required GIGA to terminate the Financing Agreement as a condition of lending it the

$3 million and GIGA’s issuance of the Notes.

COMMITMENTS AND CONTINGENCIES

Blockchain Mining Supply and Services, Ltd.

On November 28, 2018, Blockchain

Mining Supply and Services, Ltd.

(“Blockchain Mining”) a vendor who sold computers to one of the Company’s subsidiaries,

filed a Complaint (the “Complaint”) in the United States District Court for the Southern District of New York against the

Company and the Company’s subsidiary, Digital Farms, Inc.

(f/k/a Super Crypto Mining, Inc.), in an action captioned Blockchain

Mining Supply and Services, Ltd.

Super Crypto Mining, Inc.

and DPW Holdings, Inc.

The Complaint asserts claims

for breach of contract and promissory estoppel against the Company and its subsidiary arising from the subsidiary’s alleged failure

to honor its obligations under the purchase agreement.

The Complaint seeks monetary damages in excess of $ 1,388,495 , plus attorneys’

fees and costs.

The Company intends to vigorously

defend against the claims asserted against it in this action.

On April 13, 2020, the Company

and its subsidiary, jointly filed a motion to dismiss the Complaint in its entirety as against the Company, and the promissory estoppel

claim as against its subsidiary.

On the same day, the Company’s subsidiary also filed a partial Answer to the Complaint in connection

with the breach of contract claim.

On April 29, 2020, Blockchain

Mining filed an amended complaint (the “Amended Complaint”).

The Amended Complaint asserts the same causes of action and seeks

the same damages as the initial Complaint.

On May 13, 2020, the Company

and its subsidiary, jointly filed a motion to dismiss the Amended Complaint in its entirety as against the Company, and the promissory

estoppel claim as against of its subsidiary.

On the same day, the Company’s subsidiary also filed a partial Answer to the Amended

Complaint in connection with the breach of contract claim.

In its partial Answer, the

Company’s subsidiary admitted to the validity of the contract at issue and also asserted numerous affirmative defenses concerning

the proper calculation of damages.

On December 4, 2020, the Court

issued an Order directing the parties to engage in limited discovery to be completed by March 4, 2021.

In connection therewith, the Court

also denied the defendants’ motion to dismiss without prejudice.

On June 2, 2021, the Company

and its subsidiary filed a motion to dismiss the Amended Complaint in its entirety as against the Company, and the promissory estoppel

claim as against the subsidiary.

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.

Based on the Company’s

assessment of the facts underlying the claims, the uncertainty of litigation, and the preliminary stage of the case, the Company cannot

reasonably estimate the potential loss or range of loss that may result from this action.

Notwithstanding, the Company has established

a reserve in the amount of the unpaid portion of the purchase agreement, which is included in accounts payable and accrued expenses.

unfavorable outcome may have a material adverse effect on the Company’s business, financial condition and results of operations.

Ding Gu (a/k/a Frank Gu) and Xiaodan Wang

On January 17, 2020, Ding

Gu (a/k/a Frank Gu) (“Gu”) and Xiaodan Wang (“Wang” and with “Gu” collectively, “Plaintiffs”),

filed a Complaint (the “Complaint”) in the Supreme Court of the State of New York, County of New York against the Company

and the Company’s Chief Executive Officer, Milton C.

Ault, III, in an action captioned Ding Gu (a/k/a Frank Gu) and Xiaodan Wang

DPW Holdings, Inc.

and Milton C.

Ault III (a/k/a Milton Todd Ault III a/k/a Todd Ault) , Index No.

The Complaint asserts causes

of action for declaratory judgment, specific performance, breach of contract, conversion, attorneys’ fees, permanent injunction,

enforcement of Guaranty, unjust enrichment, money had and received, and fraud arising from:

(i) a series of transactions entered into

between Gu and the Company, as well as Gu and Ault, in or about May 2019;

and (ii) a term sheet entered into between Plaintiffs and the

Company, in or about July 2019.

The Complaint seeks, among other things, monetary damages in excess of $ 1.1 million , plus a decree of

specific performance directing the Company to deliver unrestricted shares of common stock to Gu, plus attorneys’ fees and costs.

The Company intends to vigorously

defend against the claims asserted against it in this action.

On May 4, 2020, the Company

and Ault jointly filed a motion to dismiss the Complaint in its entirety, with prejudice.

On July 28, 2021, the Court

conducted oral argument in connection with the motion to dismiss.

During the oral argument, the Court informed the parties that the Court

was dismissing the fraud claim, in its entirety, and provided Plaintiffs an opportunity to amend their fraud claim within sixty days of

the date of the oral argument.

The Court reserved decision on the other causes of action.

On December 14, 2021, the

Court entered a decision and order in connection with the motion to dismiss whereby the Court dismissed Plaintiff’s causes of action

for specific performance, conversion, permanent injunction, and reiterated its prior determination that the fraud claim was also dismissed.

The Court denied the motion to dismiss in connection with the other causes of action asserted in the complaint.

On January 26, 2022, the Company

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.

The Company and certain affiliates

and related parties have received several subpoenas from the SEC for the production of documents and testimony.

The Company is fully cooperating

with this non-public, fact-finding inquiry and management believes that the Company has operated its business in compliance with all applicable

The subpoenas expressly provide that the inquiry is not to be construed as an indication by the SEC or its staff that any violations

of the federal securities laws have occurred, nor should they be considered a reflection upon any person, entity or security.

there can be no assurance as to the outcome of this matter.

Other Litigation Matters

Contingencies

Litigation Matters

The Company is involved in

20 unchanged sentences

to significant uncertainties.

As of March 31, 2023, the Company

had accrued $ 3.1 million as a loss contingency related to litigation matters.

SEC Investigation

The Company and certain affiliates

and related parties received several subpoenas from the SEC for the production of documents and testimony in the non-public fact-finding

investigation referred to as In re DPW Holdings, Inc.

The Company and those parties have engaged in discussions with the SEC regarding

the matters at issue in the investigation, and those discussions have progressed.

No final resolution regarding the matters at issue in

the investigation has been reached however, and there can be no assurance as to the outcome of this matter.

The Company recorded a $1.0

million loss contingency related to this matter.

STOCKHOLDERS’ EQUITY

2023 Issuances

2022 ATM Offering – Common Stock

2022 Common ATM Offering

On February 25, 2022, the

2 unchanged sentences

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

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

million shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $ 168.0 million .

Public Offering of Series D Preferred Stock

The Company has designated

2,000,000 shares of preferred stock, par value $0.001 per share, of the Company as the Series D Preferred Stock.

On June 3, 2022, the Company

announced the closing of its public offering of 144,000 shares of its Series D Preferred Stock at a price to the public of $ 25.00 per

Gross proceeds from the offering were approximately $ 3.6 million, before deducting offering expenses.

Net proceeds to the Company,

after payment of commissions, non-accountable fees and offering expenses were $ 3.1 million.

2022 ATM Offering – Preferred Stock

On June 14, 2022, the Company

entered into an At-The-Market equity offering program with Ascendiant Capital under which it may sell, from time to time, shares of its

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 10,928 shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for

gross proceeds of $ 207,000 .

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

to items recorded for GAAP but permanently disallowed for U.S.

federal income tax purposes and changes in valuation allowance.

NET (LOSS) INCOME PER SHARE

Basic and diluted net income

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

For the Nine Months Ended September 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

Restricted stock grants

Diluted earnings per share

Income available to common stockholders plus assumed conversions

During the three months ended March 31, 2023, the Company sold an

aggregate of 0.1 million shares of common stock pursuant to the 2022 Common ATM Offering for gross proceeds of $ 4.2 million.

March 17, 2023, the 2022 Common ATM Offering was terminated.

2022 Preferred ATM Offering

On June 14, 2022, the

Company entered into an At-The-Market equity offering program with Ascendiant Capital under which it may sell, from time to time,

shares of its Series D Preferred Stock for aggregate gross proceeds of up to $ 46.4

million (the “2022 Preferred ATM Offering”).

During the three months ended March 31, 2023, the Company sold an aggregate

shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for net proceeds of $ 1.2

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

The Company’s effective tax rate (“ETR”) from continuing operations was ( 0.5 %) and 0 %

for the three months ended March 31, 2023 and 2022, respectively.

The Company recorded an income tax benefit of $ 0.3 million

and $ 0 for the three months ended

March 31, 2023 and 2022, respectively.

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

primarily attributable to items recorded for GAAP but permanently disallowed for U.S.

federal income tax purposes and changes in

valuation allowance.

NET LOSS PER SHARE

Net loss per share is computed

1 unchanged sentence

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:

Net Loss Per Share

September 30,

and diluted earnings per share is the same for all periods presented 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, consisted of the following at March 31, 2023 and 2022:

Schedule of net loss per share

Stock options

1 unchanged sentence

Convertible notes

Convertible preferred stock

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 nine reportable

segments as of March 31, 2023 and seven as of March 31, 2022;

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

Nine Months Ended September 30, 2022

the revenues, expenditures and other operating data of the Company’s operating segments for the three months ended March 31, 2023:

Schedule of operating segments

Revenue, cryptocurrency mining

1 unchanged sentence

Revenue, lending and trading activities

( 4,939,000 )

Revenue, crane operations

Revenue, hotel operations

Total revenues

$ ( 4,939,000 )

Depreciation and amortization expense

6 unchanged sentences

$ ( 383,000 )

Capital expenditures for the nine

months ended September 30, 2022

Three Months Ended September 30, 2022

Revenue, cryptocurrency mining

Revenue, commercial real estate leases

Revenue, lending and trading activities

Revenue, hotel operations

Total revenues

Depreciation and amortization expense

$ ( 2,251,000 )

Income (loss) from operations

$ ( 8,056,000 )

1 unchanged sentence

$ ( 31,418,000 )

$ ( 314,000 )

Capital expenditures for the three months ended March 31, 2023

Identifiable assets as of March 31, 2023

$ 119,649,000

$ 526,907,000

Capital expenditures for the three

months ended September 30, 2022

AVLP, SMC and GIGA 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.

Segment information for the

three and nine months ended September 30, 2021:

Nine Months Ended September 30, 2021

three months ended March 31, 2022:

Revenue, cryptocurrency mining

11 unchanged sentences

$ ( 7,521,000 )

Capital expenditures for the nine

months ended September 30, 2021

Three Months Ended September 30, 2021

Revenue, cryptocurrency mining

Revenue, commercial real estate leases

Revenue, lending and trading activities

( 38,869,000 )

Revenue, hotel operations

Total revenues

$ ( 38,759,000 )

$ ( 30,794,000 )

Depreciation and amortization expense

Income (loss) from operations

$ ( 408,000 )

$ ( 41,390,000 )

$ ( 339,000 )

Capital expenditures for the three months ended March 31, 2022

Identifiable assets as of March 31, 2022

$ 131,833,000

1 unchanged sentence

$ 518,924,000

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.

The following table summarizes

accounts receivable that are concentrated with certain large customers as of March 31, 2023 and December 31, 2022:

Schedule of concentrations of credit risk

March 31, 2023

December 31, 2023

the year three months ended March 31, 2023 and 2022, no customer represented 10% or

more of consolidated revenues.

SUBSEQUENT EVENTS

2022 Common ATM Offering

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

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 April 1, 2023 through May 19, 2023, the Company sold an aggregate of 105,475

shares of Series D Preferred Stock pursuant to the 2022 Preferred ATM Offering for net proceeds of $ 1.2 million .

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.

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.

April 1, 2023 through May 19, 2023, Ault Lending purchased an additional $0.3 million of limited

partnership interests in Alpha Fund.

12% Term Note

On April 5, 2023, the Company

issued a term note with a principal amount of $ 1.1 million, bearing an interest rate of 12 % .

The term note was issued at a discount, with

net proceeds to the Company amounting to $ 1.0 million.

The note is scheduled to mature on June 5, 2023 .

The Company has the option to

extend the maturity date by one month, upon payment of a $30,000 extension fee.

Ault & Company, a related party, guaranteed the term

Series C Preferred Purchase Agreement

May 1, 2023, the Company entered into a securities purchase agreement (the “Agreement”) with Ault & Company, pursuant

to which the Company agreed to sell to Ault & Company up to 40,000 shares of Series C convertible preferred stock and warrants to

purchase up to 1.3 million shares of common stock for a total purchase price of up to $ 40 million.

The consummation of the transactions

contemplated by the Agreement are subject to various customary closing conditions and the receipt of certain third party consents.

addition to customary closing conditions, the closing of the transaction is also conditioned upon the receipt by Ault & Company of

financing in an amount sufficient to consummate the transaction.

The Agreement contains customary termination provisions for Ault &

Company under certain circumstances, and the Agreement shall automatically terminate if the closing has not occurred prior to May 31,

2023, although such date may be extended by Ault & Company as set forth in the Agreement.

Amendment to 16% Secured Promissory Note

On May 2, 2023, the Company

entered into a second amendment agreement, effective as of April 18, 2023, with the Initial Investor related to the December 2022 16%

secured promissory note extending the due date on the date for which the Company was required to make a payment of $1.0 million.

agreed to increase the principal amount of the note by $0.2 million as an extension fee and to grant the Investors an additional 2,000

miners as collateral for repayment of the notes.

Original Issuance Discount Term Notes

On May 15, 2023, the Company

issued a term note with a principal amount of $ 1.3 million, which does not bear interest unless there is an event of default.

note was issued at a discount, with net proceeds to the Company amounting to $ 1.0 million.

The Company is obligated to repay $1.0 million

of the note on June 15, 2023 and the remaining $0.3 million on June 30, 2023.

Upon an event of default, the Company will pledge its ownership

of the membership interests in 456 Lux Hotel NYC, LLC, which is a limited partner in NYREIC 456 LP.

Milton “Todd” Ault, III,

the Company’s Executive Chairman, and his wife, guaranteed repayment of the term note.

On May 16, 2023, the Company

issued a term note with a principal amount of $ 120,000 ,

which does not bear interest.

The term note was issued at a discount, with net proceeds to the Company amounting to $ 100,000 .

The note is scheduled to mature on June

Company has the option to extend the maturity date by 15 days, upon payment of an extension fee equal to 1% of the amount then outstanding.

On May 17, 2023, the Company

issued a term note with a principal amount of $ 1.3 million, which does not bear interest unless there is an event of default.

note was issued at a discount, with net proceeds to the Company amounting to $ 1.0 million.

The note is scheduled to mature on July 17,

Milton “Todd” Ault, III, the Company’s Executive Chairman, and Ault & Company guaranteed repayment of the

BMI Securities Purchase Agreement

On April 27, 2023, BMI entered

into a securities purchase agreement with certain accredited investors providing for the issuance of senior secured convertible notes

with an aggregate principal face amount of $ 6.9 million convertible into shares of BMI common stock and five-year warrants to purchase

an aggregate of 63.0 million shares of BMI common stock at an exercise price of $ 0.1091 per share, subject to adjustment.

The Notes are

secured by a guaranty provided by the Company, as well as by Milton “Todd” Ault, III, the Company’s Executive Chairman,

and Ault & Company guaranteed repayment of the term note.

BMI and the investors entered

into a registration rights agreement whereby BMI agreed to file a registration statement to register the conversion shares and warrant

The senior secured convertible notes bear no interest as they were issued with an original issuance discount.

The maturity date of the Notes is April 27, 2024 .

The senior secured convertible notes are convertible at a price per share equal to

the lower of (i) $0.1091 or (ii) the greater of (A) $0.0168 and (B) 85% of the lowest volume weighted average price of BMI common stock

during the 10 trading days prior to the date of conversion, subject to adjustment.

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

What changed 10-Q

Item 1. Financial Statements