What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-20 compared with 2023-08-21 · 861 added, 735 removed, 848 unchanged (65% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS

7 unchanged sentences

Prepaid expenses and other current assets

Current assets of discontinued operations

TOTAL CURRENT ASSETS

5 unchanged sentences

Investments in other equity securities

Noncurrent assets of discontinued operations

$ 378,456,000

3 unchanged sentences

Accounts payable and accrued expenses

Dividend payable in TurnOnGreen common stock

Operating lease liability, current

Notes payable, net

Notes payable, related party

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 June 30, 2023 and December 31, 2022, respectively (liquidation preference of $ 8,300,000 as of June 30, 2023)

Series G Convertible Preferred Liability:

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

14,208 and 0 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (liquidation preference of $ 1,421,000 as of June 30, 2023)

Redeemable noncontrolling interests in equity of subsidiaries

Current liabilities of discontinued operations

TOTAL CURRENT LIABILITIES

4 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

September 30,

LONG TERM LIABILITIES

3 unchanged sentences

Deferred underwriting commissions of Ault Disruptive Technologies Corporation (“Ault Disruptive”) subsidiary

Noncurrent liabilities of discontinued operations

TOTAL LIABILITIES

3 unchanged sentences

Series A Convertible Preferred Stock, $ 25 stated value per share, $ 0.001 par value – 1,000,000 shares authorized;

7,040 shares issued and outstanding at June 30, 2023 and December 31, 2022 (liquidation preference of $ 176,000 as of June 30, 2023 and December 31, 2022)

7,040 shares issued and outstanding at September 30, 2023 and December 31, 2022 (liquidation preference of $ 176,000 as of September 30, 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 June 30, 2023 and December 31, 2022 (liquidation preference of $ 1,190,000 at June 30, 2023 and December 31, 2022)

125,000 shares issued and outstanding at September 30, 2023 and December 31, 2022 (liquidation preference of $ 1,190,000 at September 30, 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, 425,197 shares and 172,838 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (liquidation preference of $ 10,630,000 and $ 4,321,000 as of June 30, 2023 and December 31, 2022, respectively)

shares authorized, 425,197 shares and 172,838 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively (liquidation preference of $ 10,630,000 and $ 4,321,000 as of September 30, 2023 and December 31, 2022, respectively)

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

1,526,411 and 1,274,157 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

12,379,673 and 1,274,157 shares issued and outstanding at September 30, 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 June 30, 2023 and December 31, 2022

0 shares issued and outstanding at September 30, 2023 and December 31, 2022

Additional paid-in capital

18 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

For the Three Months Ended

For the Six Months Ended

Revenue, products

For the Nine Months Ended

September 30,

Revenue, cryptocurrency mining

Revenue, hotel and real estate operations

Revenue, crane operations

3 unchanged sentences

Cost of revenue, cryptocurrency mining

Cost of revenue, hotel and real estate operations

Cost of revenue, crane operations

6 unchanged sentences

Impairment of goodwill and intangible assets

Impairment of property and equipment

Impairment of deposit due to vendor bankruptcy filing

Impairment of mined cryptocurrency

13 unchanged sentences

Loss on extinguishment of debt

( 1,546,000 )

( 1,700,000 )

Realized and unrealized (loss) gain on marketable securities

3 unchanged sentences

(Loss) gain on the sale of fixed assets

( 1,754,000 )

Change in fair value of warrant liability

3 unchanged sentences

( 30,743,000 )

( 31,966,000 )

Loss before income taxes

3 unchanged sentences

( 58,893,000 )

Income tax provision

Income tax (benefit) provision

Net loss from continuing operations

( 27,510,000 )

2 unchanged sentences

( 59,254,000 )

Net (loss) income from discontinued operations

( 5,862,000 )

( 3,614,000 )

( 28,439,000 )

( 7,996,000 )

( 141,520,000 )

( 62,868,000 )

Net loss attributable to non-controlling interest

10 unchanged sentences

$ ( 62,046,000 )

Basic net loss per common share

Diluted net loss per common share

Basic and diluted net income (loss) per common share:

Continuing operations

Discontinued operations

Net loss per common share

Weighted average basic and diluted common shares outstanding

16 unchanged sentences

$ ( 63,498,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2023

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

Three Months Ended September 30, 2023

Series A, B & D

2 unchanged sentences

Stockholders’

BALANCES, April 1, 2023

$ 575,073,000

$ ( 378,633,000 )

BALANCES, July 1, 2023

$ 573,386,000

1 unchanged sentence

$ ( 1,450,000 )

Preferred stock issued for cash

Preferred stock offering costs

$ ( 29,919,000 )

4 unchanged sentences

Issuance of common stock for conversion of preferred stock liabilities

Common stock issued in connection with issuance of notes payable

Remeasurement of Ault Disruptive subsidiary temporary equity

( 4,736,000 )

Increase in ownership interest of subsidiary

( 1,223,000 )

( 1,221,000 )

Sale of subsidiary stock to non-controlling interests

Distribution to Circle 8 non-controlling interest

Purchase of treasury stock - Ault Alpha LP (“Ault Alpha”)

6 unchanged sentences

( 6,668,000 )

Dividend payable in TurnOnGreen common stock ($3.52 per share)

( 5,200,000 )

Distribution of securities of Imperalis Holding Corp., d/b/a TurnOnGreen, Inc.

(“TurnOnGreen”) to Ault Alliance stockholders ($1.44 per share)

( 5,500,000 )

BALANCES, June 30, 2023

BALANCES, September 30, 2023

$ 589,279,000

3 unchanged sentences

$ 119,059,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2022

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

Three Months Ended September 30, 2022

Series A, B & D

2 unchanged sentences

Stockholders’

BALANCES, April 1, 2022

BALANCES, July 1, 2022

$ 550,036,000

3 unchanged sentences

$ 345,399,000

Issuance of common stock for restricted stock awards

Preferred stock issued for cash

Preferred stock issued

Preferred stock offering costs

Stock-based compensation

Sale of common stock

Issuance of Gresham Worldwide, Inc.

common stock for acquisition of Giga-tronics Incorporated (“GIGA”)

Issuance of common stock for cash

Financing cost in connection with sales of common stock

( 1,266,000 )

Acquisition of non-controlling interests

Increase in ownership interest of subsidiary

( 1,539,000 )

( 1,671,000 )

Non-controlling interest from Avalanche International Corp.

(“AVLP”) acquisition

Non-controlling interest from The Singing Machine Company, Inc.

(“SMC”) acquisition

Non-controlling interest from GIGA acquisition

Purchase of treasury stock - Ault Alpha

5 unchanged sentences

Foreign currency translation adjustments

( 1,471,000 )

Net loss attributable to non-controlling interest

BALANCES, June 30, 2022

BALANCES, September 30, 2022

$ 557,758,000

3 unchanged sentences

$ 338,763,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2023

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

Nine Months Ended September 30, 2023

Series A, B & D

17 unchanged sentences

Issuance of common stock for conversion of preferred stock liabilities

Common stock issued in connection with issuance of notes payable

Remeasurement of Ault Disruptive subsidiary temporary equity

4 unchanged sentences

( 1,584,000 )

Non-controlling position at BitNile Metaverse, Inc.

(“BMI”) subsidiary acquired

Non-controlling position at RiskOn International, Inc.

(“ROI”) subsidiary acquired

Sale of subsidiary stock to non-controlling interests

Distribution to Circle 8 non-controlling interest

Distribution to Circle 8 Crane Services, LLC (“Circle 8”) non-controlling interest

Purchase of treasury stock - Ault Alpha

1 unchanged sentence

( 1,306,000 )

( 131,100,000 )

Preferred dividends

Foreign currency translation adjustments

Net loss attributable to non-controlling interest

( 1,001,000 )

Dividend payable in TurnOnGreen common stock ($3.52 per share)

Net loss attributable to non-controlling interest

( 10,420,000 )

BALANCES, June 30, 2023

Distribution of securities of TurnOnGreen to Ault Alliance stockholders ($2.02 per share)

( 10,700,000 )

BALANCES, September 30, 2023

$ 589,279,000

2 unchanged sentences

$ ( 30,540,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

$ 119,059,000

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2022

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

Nine Months Ended September 30, 2022

Series A, B & D

12 unchanged sentences

Stock-based compensation

Sale of common stock

Issuance of Gresham Worldwide, Inc.

common stock for acquisition of GIGA

Issuance of common stock for cash

Financing cost in connection with sales of common stock

1 unchanged sentence

( 4,103,000 )

Acquisition of non-controlling interests

Increase in ownership interest of subsidiary

( 1,980,000 )

( 1,921,000 )

( 3,901,000 )

Non-controlling interest from AVLP acquisition

Non-controlling interest from SMC acquisition

Non-controlling interest from GIGA acquisition

Purchase of treasury stock - Ault Alpha

8 unchanged sentences

Net loss attributable to non-controlling interest

BALANCES, June 30, 2022

( 1,061,000 )

BALANCES, September 30, 2022

$ 557,758,000

1 unchanged sentence

$ ( 1,557,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

$ ( 28,788,000 )

$ 338,763,000

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

AULT ALLIANCE, INC.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

1 unchanged sentence

$ ( 62,868,000 )

Net loss from discontinued operations

( 5,862,000 )

( 3,614,000 )

Net loss from continuing operations

( 135,658,000 )

( 59,254,000 )

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

3 unchanged sentences

Impairment of goodwill and intangible assets

Impairment of property and equipment

Stock-based compensation

Impairment of deposit due to vendor bankruptcy filing

Gain on the sale of fixed assets

9 unchanged sentences

( 19,194,000 )

Unrealized gains on marketable securities

Unrealized (gains) losses on marketable securities

( 2,554,000 )

15 unchanged sentences

( 3,022,000 )

( 5,867,000 )

Prepaid expenses and other current assets

( 3,969,000 )

( 2,944,000 )

Accounts payable and accrued expenses

1 unchanged sentence

( 2,511,000 )

Net cash provided by operating activities

( 1,334,000 )

Net cash provided by operating activities from continuing operations

Net cash (used in) provided by operating activities from discontinued operations

( 3,632,000 )

Net cash (used in) provided by operating activities

Cash flows from investing activities:

8 unchanged sentences

( 8,239,000 )

Purchase of GIGA, net of cash received

( 3,687,000 )

Cash received upon acquisition of AVLP

1 unchanged sentence

( 1,584,000 )

( 3,901,000 )

Purchase of marketable equity securities

8 unchanged sentences

Proceeds from the sale of fixed assets

Net cash used in investing activities from continuing operations

( 16,766,000 )

( 110,918,000 )

Net cash used in investing activities from discontinued operations

( 6,103,000 )

( 4,442,000 )

Net cash used in investing activities

1 unchanged sentence

( 115,360,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the Nine Months Ended September 30,

Cash flows from financing activities:

17 unchanged sentences

( 1,306,000 )

( 15,607,000 )

Proceeds from sales of convertible notes

Payments on convertible notes

Net cash provided by financing activities from continuing operations

Net cash provided by financing activities from discontinued operations

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash

( 1,565,000 )

( 6,490,000 )

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Less cash and cash equivalents and restricted cash of discontinued operations at end of period

( 1,851,000 )

( 6,154,000 )

Cash and cash equivalents and restricted cash of continuing operations at end of

Supplemental disclosures of cash flow information:

Cash paid during the period for interest

Cash paid during the period for interest – continuing operations

Cash paid during the period for interest – discontinued operations

Non-cash investing and financing activities:

8 unchanged sentences

Preferred stock exchanged for notes payable

Redeemable noncontrolling interests in equity of Ault Disruptive paid with cash and marketable securities held in trust account

Notes payable exchanged for convertible notes payable

Notes payable exchanged for notes payable, related party

Redeemable noncontrolling interests in equity of subsidiaries paid with cash and marketable securities held in trust account

$ 120,064,000

Dividend payable in TurnOnGreen common stock in additional paid-in capital

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

Dividend paid in TurnOnGreen common stock in additional paid-in capital

The accompanying notes are an integral part of these unaudited

condensed consolidated financial statements.

DESCRIPTION OF BUSINESS

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 offers colocation and hosting services for the emerging artificial

intelligence ecosystems and other industries, 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

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, stock trading, media, and

digital learning;

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 offers colocation and hosting services for the emerging artificial intelligence

ecosystems and other industries, 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.

Horne, its Chief Executive Officer and

Vice Chairman and Henry Nisser, its President and General Counsel.

Together, they constitute the Executive Committee, which manages the

day-to-day operations of the Company.

All major investment and capital allocation decisions are made for the Company by the Executive

The Company has the following eight reportable segments:

· Energy and Infrastructure (“Energy”) – crane

operations, advanced textiles processing and oil exploration;

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

activist investing, stock trading, media, and digital learning;

· The Singing Machine Company, Inc.

1 unchanged sentence

· Sentinum, Inc.

(“Sentinum”) – cryptocurrency mining operations and colocation and hosting

services for the emerging artificial intelligence ecosystems and other industries;

· 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.

(“AGREE”) – hotel operations and other commercial

real estate holdings;

· Ault Disruptive Technologies Corporation (“Ault Disruptive”) – a special purpose acquisition

(“Sentinum”) – cryptocurrency

mining operations and colocation and hosting services for the emerging artificial intelligence ecosystems and other industries;

· GIGA – defense industry;

· TurnOnGreen – commercial electronics solutions;

· RiskOn International, Inc., formerly BitNile Metaverse, Inc.

(“ROI”) – immersive metaverse platform;

· Ault Disruptive – a special purpose acquisition 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 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, preferred stock or their respective par value per share.

On 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 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, preferred stock or their respective par value per share.

As a result of the Reverse Split,

3 unchanged sentences

updated to reflect the Reverse Split.

LIQUIDITY AND FINANCIAL

of June 30, 2023, the Company had cash and cash equivalents of $ 19.7

million, negative working capital of $ 70.0 million

and a history of net operating losses.

The Company 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, as well as 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 beyond 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 June 30, 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

LIQUIDITY AND FINANCIAL CONDITION

of September 30, 2023, the Company had cash and cash equivalents of $ 8.7 million, negative working capital of $ 45.1 million and a

history of net operating losses.

The Company 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.

Accordingly, 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,

as well as 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 beyond 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 September 30, 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.

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.

BASIS OF PRESENTATION

AND SIGNIFICANT ACCOUNTING POLICIES

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

13 unchanged sentences

Results of the

three and six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full year ending December

Significant Accounting

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

the 2022 Annual Report.

Revenue Recognition

– Bitcoin Mining

Company recognizes revenue from Bitcon Mining under ASC 606, Revenue from Contracts with Customers (“ASC 606”).

The core principle

of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that

reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

The following five steps

are applied to achieve that core principle:

three and nine months ended September 30, 2023, are not necessarily indicative of the results to be expected for the full year ending

December 31, 2023.

Significant Accounting Policies

Other than as noted

below, there have been no material changes to the Company’s significant accounting policies previously disclosed in the 2022 Annual

Revenue Recognition – Bitcoin Mining

The Company recognizes

revenue from Bitcoin mining under Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC

The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services

to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.

The following five steps are applied to achieve that core principle:

Identify the contract with the customer;

1 unchanged sentence

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract, and

Allocate the transaction price to the performance obligations in the contract;

Recognize revenue when the company satisfies a performance obligation.

Company has entered into a digital asset mining pool by executing a contract with a mining pool operator to provide computing power to

the mining pool.

The Company’s customer, as defined in ASC 606-10-20, is with the mining pool operator with whom the Company has

agreed to the terms of service and user service agreement.

The Company supplies computing power, in exchange for consideration, to the

pool operator who in turn provides transaction verification services to third parties via a mining pool that includes other participants.

Company’s enforceable right to compensation begins only when, and lasts as long as, the Company provides computing power to the

mining pool operator and is created as power is provided over time.

The only consideration due to the Company relates to the provision

of computing power.

The Company has

entered into a digital asset mining pool by executing a contract with a mining pool operator to provide computing power to the mining

The Company’s customer, as defined in ASC 606-10-20, is the mining pool operator with which the Company has agreed to the

The Company supplies computing power, in exchange for consideration, to the pool operator

who in turn provides transaction verification services to third parties via a mining pool that includes other participants.

The Company’s

enforceable right to compensation begins only when, and lasts as long as, the Company provides computing power to the mining pool operator

and is created as power is provided over time.

The only consideration due to the Company relates to the provision of computing power.

The contracts are terminable at any time by and at no cost to the Company, and by the pool operator.

Providing computing

power in digital asset transaction verification services is an output of the Company’s ordinary activities.

Providing such computing

power is the only performance obligation in the Company’s contracts with mining pool operators.

transaction consideration the Company receives, if any, is non-cash consideration in the form of Bitcoin.

Changes in the fair value of

the non-cash consideration due to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction

price and therefore, are not included in revenue.

The mining pool operator charges fees to cover the costs of maintaining the pool and

are deducted from amounts the Company may otherwise earn and are treated as a reduction to the consideration received.

Fees fluctuate

and historically have been approximately 0.3% per reward earned, on average.

exchange for providing computing power, the Company is entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula,

which primarily calculates the hash rate provided by the Company to the mining pool as a percentage of total network hash rate, and other

The Company is entitled to consideration even if a block is not successfully placed by the mining pool operator.

is in effect until terminated by either party.

consideration pursuant to this arrangement is variable.

It is not probable that a significant reversal of cumulative revenue will occur

and the Company is able to calculate the payout based on the contractual formula, non-cash revenue is estimated and recognized based on

the spot price of the Company’s principal market for Bitcoin at the inception of each contract, which is determined to be daily.

Non-cash consideration is measured at fair value at contract inception.

Fair value of the crypto asset consideration is determined using

the spot price of the Company’s principal market for Bitcoin at the beginning of the contract period.

This amount is estimated and

recognized in revenue upon inception, which is when hash rate is provided.

is no significant financing component in these transactions.

associated with running the cryptocurrency mining business, such as equipment depreciation and electricity costs, are recorded as a component

of cost of revenues.

Preferred Stock

The Company follows Accounting

Standards Codification (“ASC”) 480-10, “Distinguishing Liabilities from Equity” in its evaluation of the accounting

for the Preferred Shares (as defined in Note 16).

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:

Providing computing power in digital

asset transaction verification services is an output of the Company’s ordinary activities.

Providing such computing power is the

only performance obligation in the Company’s contracts with mining pool operators.

The transaction

consideration the Company receives, if any, is non-cash consideration in the form of Bitcoin.

Changes in the fair value of the non-cash

consideration due to form of the consideration (changes in the market price of Bitcoin) are not included in the transaction price and

are therefore not included in revenue.

The mining pool operator charges fees to cover the costs of maintaining the pool and are deducted

from amounts the Company may otherwise earn and are treated as a reduction to the consideration received.

Fees fluctuate and historically

have been approximately 0.3% per reward earned, on average.

In exchange for

providing computing power, the Company is entitled to a Full-Pay-Per-Share payout of Bitcoin based on a contractual formula, which primarily

calculates the hash rate provided by the Company to the mining pool as a percentage of total network hash rate, and other inputs.

Company is entitled to consideration even if a block is not successfully placed by the mining pool operator.

The contract is in effect

until terminated by either party.

All consideration

pursuant to this arrangement is variable.

It is not probable that a significant reversal of cumulative revenue will occur and the Company

is able to calculate the payout based on the contractual formula, non-cash revenue is estimated and recognized based on the spot price

of the Company’s principal market for Bitcoin at the inception of each contract, which is determined to be daily.

Non-cash consideration

is measured at fair value at contract inception.

Fair value of the crypto asset consideration is determined using the spot price of the

Company’s principal market for Bitcoin at the beginning of the contract period.

This amount is estimated and recognized in revenue

upon inception, which is when hash rate is provided.

There is no significant

financing component in these transactions.

Expenses associated

with running the cryptocurrency mining business, such as equipment depreciation and electricity costs, are recorded as a component of

cost of revenues.

Preferred Stock Liabilities

The Company follows ASC 480-10, “Distinguishing

Liabilities from Equity” in its evaluation of the accounting for the Preferred Shares (as defined in Note 17).

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.

· Variations in something other than the fair value of the issuer’s 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 fixed.

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.

Discontinued operations

The Company records discontinued

operations when the disposal of a separately identified business unit constitutes a strategic shift in the Company’s operations,

as defined in ASC Topic 205-20, Discontinued Operations (“ASC Topic 205-20”).

Reclassifications

prior period amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation.

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

Adopted Accounting Standards

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.

Certain prior period

amounts have been reclassified for comparative purposes to conform to the current-period financial statement presentation.

These reclassifications

had no effect on previously reported results of operations.

Recently Adopted

Accounting Standards

In June 2016, the Financial Accounting Standards

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

2016-13, “Financial Instruments - Credit Losses,”

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

issued ASU 2021-08, “Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with

Customers,” which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured

by the acquirer on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers.” The guidance

will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

should be applied prospectively to acquisitions occurring on or after the effective date.

The guidance is effective for fiscal years beginning

after December 15, 2022, including interim periods within those fiscal years.

The adoption of this guidance did not have a material impact

on the Company’s condensed consolidated financial statements.

The adoption of this guidance

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

In October 2021, the FASB issued ASU 2021-08,

“Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,”

which requires contract assets and contract liabilities acquired in a business combination to be recognized and measured by the acquirer

on the acquisition date in accordance with ASC 606, “Revenue from Contracts with Customers.” The guidance will result in the

acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

The guidance should be applied

prospectively to acquisitions occurring on or after the effective date.

The guidance is effective for fiscal years beginning after December

15, 2022, including interim periods within those fiscal years.

The adoption of this guidance did not have a material impact on the Company’s

condensed consolidated financial statements.

ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Presentation of AGREE Operations

In September 2023, the Company committed to a plan for its wholly owned

subsidiary AGREE to list for sale its four recently renovated Midwest hotels, the Hilton Garden Inn in Madison West, the Residence Inn

in Madison West, the Courtyard in Madison West, and the Hilton Garden Inn in Rockford.

The decision to sell the hotels follows the decision

to also list the multifamily development site in St.

Petersburg, Florida and is driven by the Company’s desire to focus on its core

businesses, Energy, Fintech and Sentinum.

The Company’s real estate properties, which include both hotels and land are currently

listed for sale.

In connection with the planned sale of AGREE

assets, the Company concluded that the net assets of AGREE met the criteria for classification as held for sale.

In addition, the proposed

sale represents a strategic shift that will have a significant effect on the Company’s operations and financial results.

the Company has presented the results of operations, cash flows and financial position of AGREE as discontinued operations in the accompanying

consolidated financial statements and notes for all periods presented.

As of September 30, 2023, the Company

expects the planned sale of AGREE assets to close within one year and, as a result, the Company has classified the total assets and

total liabilities associated with AGREE as current in the consolidated balance sheets as of September 30, 2023.

The following table presents the assets

and liabilities of AGREE operations:

Schedule of assets and liabilities of agree operations

September 30,

Cash and cash equivalents

Restricted cash

Accounts receivable

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Accounts payable and accrued expenses

Total current liabilities

Notes payable

Total liabilities

Net assets of discontinued operations

A disposal group classified as held for sale shall be measured at the

lower of its carrying amount or fair value less costs to sell.

No impairment was recognized up reclassification of the disposal group

as held for sale.

The following table presents the results

of AGREE operations:

Schedule of estimated costs to sell and expected

For the Three Months Ended

For the Nine Months Ended

September 30,

Revenue, hotel and real estate operations

Cost of revenue, hotel operations

General and administrative

Total operating expenses

Income (loss) from operations

Interest expense

( 1,979,000 )

( 1,605,000 )

( 5,513,000 )

( 3,764,000 )

Net (loss) income from discontinued operations

$ ( 929,000 )

$ ( 5,862,000 )

$ ( 3,614,000 )

REVENUE DISAGGREGATION

The following tables summarize

disaggregated customer contract revenues and the source of the revenue for the three and six months ended June 30, 2023 and 2022.

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

The following tables summarize disaggregated

customer contract revenues and the source of the revenue for the three and nine months ended September 30, 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 three months ended June 30, 2023 (excludes Ault Disruptive, as that segment has no revenue):

The Company’s disaggregated revenues

consisted of the following for the three months ended September 30, 2023 (excludes Ault Disruptive, as that segment has no revenue):

Schedule of disaggregated revenues

1 unchanged sentence

North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities (North America)

Revenue, lending

and trading activities (North America)

Total revenue

$ ( 249,000 )

Major Goods or Services

RF/microwave filters

Radio frequency/microwave

Power supply units & systems

2 unchanged sentences

Digital currency mining

Hotel and real estate operations

Karaoke machines and related consumer goods

Karaoke machines and related consumer

Revenue from contracts with customers

Revenue, lending and trading activities

Revenue, lending

and trading activities

Total revenue

$ ( 249,000 )

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 six months ended June 30, 2023 (excludes Ault Disruptive, as that segment has no revenue):

Services transferred

contracts with customers

The Company’s disaggregated revenues

consisted of the following for the nine months ended September 30, 2023 (excludes Ault Disruptive, as that segment has no revenue):

Primary Geographical Markets

North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities (North America)

Total revenue

lending and trading activities (North America)

$ 119,930,000

Major Goods or Services

RF/microwave filters

Radio frequency/microwave

Power supply units & systems

2 unchanged sentences

Digital currency mining

Hotel and real estate operations

Karaoke machines and related consumer goods

Karaoke machines and related

consumer goods

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

lending and trading activities

$ 119,930,000

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 June 30, 2022:

Three months ended June 30, 2022

Goods transferred at a point

transferred over time

from contracts with customers

$ 115,593,000

The Company’s disaggregated revenues

consisted of the following for the three months ended September 30, 2022 (excludes Ault Disruptive, as that segment has no revenue):

Primary Geographical Markets

5 unchanged sentences

Major Goods or Services

RF/microwave filters

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital currency mining

Hotel and real estate operations

Power supply units

Digital currency mining, net

Karaoke machines and related

Revenue from contracts with customers

5 unchanged sentences

Revenue from contracts with customers

The Company’s disaggregated

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

Six months ended June 30, 2022

The Company’s disaggregated revenues

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

Primary Geographical Markets

5 unchanged sentences

Major Goods or Services

RF/microwave filters

Power supply units & systems

Power supply units

Healthcare diagnostic systems

1 unchanged sentence

Digital currency mining

Hotel and real estate operations

Karaoke machines and related

Revenue from contracts with customers

5 unchanged sentences

Revenue from contracts with customers

FAIR VALUE OF FINANCIAL

FAIR VALUE OF FINANCIAL INSTRUMENTS

following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis by level within

1 unchanged sentence

Fair value, assets measured on recurring basis

Fair Value Measurement at June 30, 2023

Fair Value Measurement at September 30, 2023

Investment in common stock of Alzamend Neuro, Inc.

3 unchanged sentences

Total assets measured at fair value

Series E and G preferred stock liabilities

Warrant and embedded conversion feature liabilities

12 unchanged sentences

Total liabilities measured at fair value

The Company assesses the inputs

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

in the market.

For investments where little or no public market exists, management’s determination of fair value is based on the

best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking

into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities

and liquidity risks.

The Company assesses the inputs used to

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

For investments where little or no public market exists, management’s determination of fair value is based on the best available

information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration

various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks.

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 six months ended June 30, 2023:

with the use of significant unobservable inputs (Level 3) for the nine months ended September 30, 2023 (no changes during the three months

ended September 30, 2023):

Schedule of investments

3 unchanged sentences

( 13,340,000 )

Balance at June 30, 2023

Equity Investments

for Which Measurement Alternative Has Been Selected

of June 30, 2023 and December 31, 2022, the Company held equity investments in other securities, which consisted of investments in preferred

stock, valued at $ 25.9 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.

Measurement Alternative

Company has made cumulative downward adjustments for impairments for equity securities that do not have readily determinable fair values

as of June 30, 2023, totaling $ 11.6 million.

Approximately $ 9.6 million of these adjustments have been reflected in other income

(expense) and $ 2.0 million of these adjustments related to Fintech lending operations and have been recorded against revenue from lending

and trading activities on the consolidated statement of operations and comprehensive loss.

Marketable EQUITY Securities

Balance at September 30, 2023

Equity Investments for Which

Measurement Alternative Has Been Selected

As of September

30, 2023 and December 31, 2022, the Company held equity investments in other securities, which consisted of investments in preferred stock,

valued at $ 26.0 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.

Measurement Alternative Impairment

The Company has

made cumulative downward adjustments for impairments for equity securities that do not have readily determinable fair values as of September

30, 2023, totaling $ 11.6 million.

Approximately $ 9.6 million of these adjustments have been reflected in other income (expense) and

$ 2.0 million of these adjustments related to Fintech lending operations and have been recorded against revenue from lending and trading

activities on the consolidated statement of operations and comprehensive loss.

Marketable EQUITY Securities

with readily determinable market prices consisted of the following as of June 30, 2023 and December 31, 2022:

Marketable equity securities with readily

determinable market prices consisted of the following as of September 30, 2023 and December 31, 2022:

Schedule of marketable securities

Marketable equity securities at June 30, 2023

Marketable equity securities at September 30, 2023

Gross unrealized

7 unchanged sentences

$ ( 4,064,000 )

The Company’s investment

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

The Company’s investment 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 six months ended June 30, 2023

The following table presents the activities

of the digital currencies (included in prepaid expenses and other current assets) for the nine months ended September 30, 2023 and 2022:

Schedule of activities of the digital currencies

6 unchanged sentences

Realized gain on sale of digital currencies

Balance at June 30, 2023

Balance at September 30, 2023

Balance at January 1, 2022

6 unchanged sentences

Realized gain on sale of digital currencies

Balance at June 30, 2022

Balance at September 30, 2022

PROPERTY AND EQUIPMENT, NET

At June 30, 2023 and December

At September 30, 2023 and December 31, 2022,

property and equipment consisted of:

Schedule of property and equipment

June 30, 2023

September 30, 2023

December 31, 2022

9 unchanged sentences

Property and equipment placed in service, net

Construction in progress AVLP equipment

Deposits on cryptocurrency machines

5 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Depreciation expense

INTANGIBLE ASSETS, NET

At June 30, 2023 and December 31, 2022,

intangible assets consisted of:

At September 30, 2023 and December 31, 2022, intangible

assets consisted of:

Schedule of intangible asset

September 30,

Definite-lived intangible assets:

Developed technology

Customer list

Trade name and trademark

Indefinite life

Domain name and other intangible assets

2 unchanged sentences

( 2,102,000 )

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.

Total definite-lived intangible assets

Indefinite-lived intangible assets:

Trade name and trademark

Indefinite life

Total intangible assets, net

Certain of the Company’s trade names and trademarks were determined to have an indefinite life.

remaining definite-lived intangible assets are primarily being amortized on a straight-line basis over their estimated useful lives.

Schedule of indefinite-lived intangible assets

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Amortization expense

of June 30, 2023, intangible assets subject to amortization have 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.

As of September

30, 2023, intangible assets subject to amortization have an average remaining useful life of 9.5 years.

The following table

presents estimated amortization expense for each of the succeeding five calendar years and thereafter.

Schedule of estimated amortization expense

4 unchanged sentences

it was determined that the carrying amount of the assets were not recoverable and, based on an assessment of the fair value of the assets,

impairment of $17.0 million was recognized as a non-cash impairment charge during the six months ended June 30, 2023.

The tradenames and patents/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 of

18% for patents and developed technology and 0.25% for trademarks.

The resulting net annual royalty payments are then discounted to present

value using a discount factor of 25.7%.

The following table summarizes

the changes in the Company’s goodwill for the six months ended June 30, 2023:

impairment of $17.0 million was recognized as a non-cash impairment charge during the nine months ended September 30, 2023.

The tradenames and patents/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 whereby 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 of 18% for patents

and developed technology and 0.25% for trademarks.

The resulting net annual royalty payments are then discounted to present value using

a discount factor of 25.7%.

The following table summarizes the changes

in the Company’s goodwill for the nine months ended September 30, 2023:

Schedule of goodwill

Balance as of January 1, 2023

Acquisition of BMI

Acquisition of ROI

Impairment of goodwill

1 unchanged sentence

Effect of exchange rate changes

Balance as of June 30, 2023

Balance as of September 30, 2023

Impairment of AVLP Goodwill

The Company tests the recorded

amount of goodwill for impairment on an annual basis on December 31 or more frequently if there are indicators that the carrying amount

of the goodwill exceeds its carried value.

The Company performed a goodwill impairment test as of June 30, 2023 related to AVLP as there

were indicators of impairment related to certain unforeseen business developments and changes in financial projections.

The valuation of the AVLP

reporting unit was determined using a market and income approach methodology of valuation.

The income approach was based

on the projected cash flows discounted to their present value using discount rates, that in the Company’s judgment, consider the

timing and risk of the forecasted cash flows using internally developed forecasts and assumptions.

Under the income approach, the discount

rate used is the average estimated value of a market participant’s cost of capital and debt, derived using customary market metrics.

The analysis included assumptions regarding AVLP’s revenue forecast and discount rates of 26.7 % using a weighted average cost of

capital analysis.

The market approach utilized the guideline public company method.

results of the quantitative test indicated the fair value of the AVLP reporting unit did not exceed its carrying amounts, including

goodwill, in excess of the carrying value of the goodwill.

The Company tests the recorded amount of

goodwill for impairment on an annual basis on December 31 or more frequently if there are indicators that the carrying amount of the goodwill

exceeds its carried value.

The Company performed a goodwill impairment test as of June 30, 2023 related to AVLP as there were indicators

of impairment related to certain unforeseen business developments and changes in financial projections.

The valuation of the AVLP reporting unit

was determined using a market and income approach methodology of valuation.

The income approach was based on the projected cash flows discounted to their present

value using discount rates that, in the Company’s judgment, consider the timing and risk of the forecasted

cash flows using internally developed forecasts and assumptions.

Under the income approach, the discount rate used is the average estimated

value of a market participant’s cost of capital and debt, derived using customary market metrics.

The analysis included assumptions

regarding AVLP’s revenue forecast and discount rates of 26.7 % using a weighted average cost of capital analysis.

The market approach

utilized the guideline public company method.

The results of the quantitative test

indicated that the fair value of the AVLP reporting unit did not exceed its carrying amounts, including goodwill, in excess of the

carrying value of the goodwill.

As a result, the entire $ 18.6

million carrying amount of AVLP’s goodwill was recognized as a non-cash impairment charge during the six months ended June

million carrying amount of AVLP’s goodwill was recognized as a non-cash impairment charge during the nine months ended

September 30, 2023.

VARIABLE INTEREST ENTITY - SMC

the quarter ended June 30, 2023, the Company’s voting interest in SMC was less than 50%.

As a result, the Company assessed its

interest in SMC under the Variable Interest Entity Model.

the quarter ended September 30, 2023, the Company’s voting interest in SMC was less than 50%.

As a result, the Company assessed

its interest in SMC under the Variable Interest Entity Model.

As a result of that assessment, the Company consolidates SMC as a variable

3 unchanged sentences

BUSINESS COMBINATION

BMI Acquisition

On March 6, 2023, the Company

closed 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 Ault Iconic, Inc.

(formerly Ault Media Group,

Inc.) and the securities of Earnity, Inc.

(“Earnity”) 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 the Nasdaq Stock

Market and 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, in each case subject

to the approval of the Nasdaq Stock Market.

The Company consolidates

BMI as 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.

ROI Acquisition

On March 6, 2023, the Company closed a

Share Exchange Agreement (the “Agreement”) with ROI and sold to ROI all of the outstanding shares of capital stock of the

Company’s subsidiary, BitNile.com, Inc.

(“BitNile.com”) as well as RiskOn360, Inc.

(formerly Ault Iconic, Inc.) and

the securities of Earnity, Inc.

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

As consideration for the acquisition, ROI issued shares of preferred stock convertible into common stock of ROI representing approximately

73.2% of ROI’s outstanding common stock.

Pending approval of the transaction by the Nasdaq Stock Market and ROI’s shareholders,

the preferred stock combined are subject to a 19.99% beneficial ownership limitation.

The Transaction benefits the Company as ROI is a

publicly traded company and provides BitNile.com access to capital markets as the primary focus for ROI to fund the expected growth of

the ROI metaverse platform.

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 consolidates ROI as a VIE due

to its significant level of influence and control of ROI, the size of its investment, and its ability to participate in policy making

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.

Ault Alliance investment in ROI

The total purchase price to acquire ROI

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

price allocated to goodwill.

The goodwill resulting from this acquisition is not tax deductible.

The fair value of the

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

valuation expert.

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

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

Although the completion of the valuation activities may result in

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

The fair value of the acquired assets

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

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

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

Although the completion of the valuation activities may result in asset

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

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

The preliminary purchase

price allocation is as follows:

The preliminary purchase price allocation

is as follows:

Schedule of recognized identified assets acquired and liabilities assumed

Preliminary Allocation

Fair value of Company interest

11 unchanged sentences

INVESTMENTS – RELATED PARTIES

Investments in Alzamend and

Ault & Company, Inc.

(“Ault & Company”) at June 30, 2023 and December 31, 2022, were comprised of the following:

Investment in Promissory Notes, Related

Parties – Ault & Company

Investments in Alzamend and Ault & Company,

(“Ault & Company”) at September 30, 2023 and December 31, 2022, were comprised of the following:

Investment in Promissory Notes, Related Parties –

Ault & Company

Schedule of investment

September 30,

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:

Summary of interest income, related party,

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

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Interest income, related party

Investment in Common Stock, Related Parties

Investment in Common Stock, Related Parties – Alzamend

Schedule of investment in common stock

Investments in common stock, related parties at June 30, 2023

Investments in common stock, related parties at September 30, 2023

Gross unrealized losses

5 unchanged sentences

$ ( 18,224,000 )

The following table summarizes

the changes in the Company’s investments in Alzamend common stock during the three months ended June 30, 2023 and 2023:

The following table summarizes the changes

in the Company’s investments in Alzamend common stock during the three months ended September 30, 2023 and 2022:

Schedule of investment in warrants and common stock

For the Three Months Ended June 30,

Balance at April 1

For the Three Months Ended September 30,

Balance at July 1

Investment in common stock of Alzamend

1 unchanged sentence

( 3,124,000 )

Balance at June 30

The following table summarizes

the changes in the Company’s investments in Alzamend common stock during the six months ended June 30, 2023 and 2023:

For the Six Months Ended June 30,

Balance at September 30

The following table summarizes the changes

in the Company’s investments in Alzamend common stock during the nine months ended September 30, 2023 and 2022:

For the Nine Months Ended September 30,

Balance at January 1

2 unchanged sentences

( 3,752,000 )

Balance at June 30

Unrealized loss in common

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

( 5,676,000 )

Balance at September 30

Unrealized loss in common stock of Alzamend

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

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at June 30,

2023 and December 31, 2022 consisted of:

Other current liabilities at September 30, 2023 and

December 31, 2022 consisted of:

Schedule of other current liabilities

September 30,

Accounts payable

Accrued payroll and payroll taxes

Accrued legal

Short position marketable equity securities

Financial instrument liabilities

Interest payable

Warrant derivative liabilities

Accrued legal

Accrued lender profit participation rights

1 unchanged sentence

Other accrued expenses

DIVIDEND PAYABLE IN TURNONGREEN COMMON

On June 26, 2023, the Company

established a record date for its initial distribution of TurnOnGreen securities.

Stockholders as of this date were entitled

to 40 shares of TurnOnGreen common stock, along with warrants to purchase 40 shares of TurnOnGreen common stock (the “TurnOnGreen

Securities”) for every share of the Company's common stock they held on the record date.

The initial distribution was finalized

in July 2023.

The Company recorded a dividend

payable, which was directly offset against equity based on the recorded value of the TurnOnGreen Securities of $ 5.2 million.

DIVIDEND PAYABLE IN TURNONGREEN COMMON STOCK

During the nine months ended September

30, 2023, the Company, in connection with a planned distribution of its holdings of TurnOnGreen, distributed to its stockholders 115.1

million shares of TurnOnGreen common stock and warrants to purchase 115.1

million shares of TurnOnGreen common stock, which resulted in an adjustment to additional paid in capital and increase to

non-controlling interest of $ 10.7

million based on the recorded value of the Company’s holdings in TurnOnGreen at the record dates of the distributions.

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”),

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

5 unchanged sentences

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

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 primarily of accrued but unpaid interest on these notes.

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.

In June 2023, the Investors

converted 1,000 shares of Series F Preferred Stock and 1,792 shares of Series G Preferred Stock into an aggregate of 37,493 shares of

the Company’s common stock.

During the six months ended June 30, 2023, the Company recorded a loss of $ 91,000 on the conversions

of Series F Preferred Stock and Series G Preferred Stock.

Preferred stock liability

at June 30, 2023 was comprised of the following:

Schedule of preferred stock liability

Preferred Type

Series E 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 following table summarizes the changes in

the Company’s preferred stock liability for the six months ended June 30, 2023:

Schedule of changes in preferred stock liability

Preferred Stock

Balance at December 31, 2022

Preferred stock issued upon extinguishment of debt

Conversion of preferred stock to common stock

Change in fair value

Balance at June 30, 2023

Subsequent Event

– Exchange of Preferred Shares for Secured Debt and Assignment of Secured Note

August 2023, the Company and the Investors entered into an Exchange Agreement (the “Exchange Agreement”) pursuant to which

the Investors exchanged all of their Preferred Shares as well as their demand notes (the “Demand Notes”) with each Demand

Note having a principal outstanding amount of approximately $0.8 million for two new 10% Secured OID Promissory Notes (the “Exchange

Notes”), each with a principal face amount of $5.3 million, for an aggregate of amount owed of $10.5 million (the “Principal

The Company and Milton “Todd” Ault, III, the Company’s Executive Chairman, entered into guaranty agreements

with the Investors guaranteeing Ault & Company’s repayment of the Exchange Notes.

the Company assigned the Exchange Notes to Ault & Company.

As consideration for Ault & Company assuming the Exchange Notes from

the Company, the Company issued a 10% demand promissory note in the principal face amount of $10.5 million to Ault & Company.

REDEEMABLE NONCONTROLLING INTERESTS IN

EQUITY OF SUBSIDIARY LIABILITY

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 primarily of accrued but unpaid

interest on these notes.

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.

During the nine months ended September 30,

2023, the Investors converted 1,000 shares of Series F Preferred Stock and 6,756 shares of Series G Preferred Stock into an aggregate

of 143,402 shares of the Company’s common stock.

During the nine months ended September 30, 2023, the Company recorded a loss of

$ 0.3 million on the conversions of Series F Preferred Stock and Series G Preferred Stock.

Exchange of Preferred Shares

for Secured Debt and Assignment of Secured Note

In August 2023, the Company and the Investors entered into an Exchange

Agreement (the “Exchange Agreement”) pursuant to which the Investors exchanged 83,000 shares of Series E Convertible Stock

and 9,244 shares of Series G Convertible Stock as well as their demand notes (the “Demand Notes”) with each Demand Note having

a principal outstanding amount of approximately $0.8 million for two new 10% Secured OID Promissory Notes (the “Exchange Notes”),

each with a principal face amount of $5.3 million, for an aggregate of amount owed of $10.5 million (the “Principal Amount”).

The Company recorded a loss on extinguishment of debt of $1.5 million related to the transaction based on the difference between the carrying

amount of the preferred stock liability and the value of the Exchange Notes.

Concurrent with

the Exchange Agreement, the Company assigned the Exchange Notes to Ault & Company.

As consideration for Ault & Company assuming

the Exchange Notes from the Company, the Company issued a 10% demand promissory note in the principal face amount of $10.5 million to

Ault & Company.

The Company and Milton “Todd” Ault, III, the Company’s Executive Chairman, entered into guaranty

agreements with the Investors guaranteeing Ault & Company’s repayment of the Exchange Notes.

Certificates of Elimination of Series E

Preferred Stock, Series F Preferred Stock, and the Series G Preferred Stock

August 17, 2023, the Company filed certificates of elimination with respect to the Company’s Series E Preferred Stock, Series

F Preferred Stock and Series G Preferred Stock.

REDEEMABLE NONCONTROLLING INTERESTS IN EQUITY OF SUBSIDIARY

The Company records redeemable

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

of June 30, 2023, the carrying amount of the redeemable noncontrolling interest in equity of subsidiaries was recorded at its redemption

value of $ 2.0 million.

Approximately 11.3 million shares of Ault Disruptive common stock were redeemed at a redemption price of $ 10.61

per share, for an aggregate redemption amount of $ 120.0 million.

As of September 30, 2023, the carrying amount of the redeemable noncontrolling interest in equity of subsidiaries was recorded at

its redemption value of $ 2.2

In June 2023, approximately 11.3

million shares of Ault Disruptive common stock were redeemed at a redemption price of $ 10.61

per share, for an aggregate redemption amount of $ 120.0

The following table summarizes

the changes in the Company’s redeemable noncontrolling interests in equity of subsidiaries during the nine months ended September

Redeemable noncontrolling interests in equity of subsidiaries as of December 31, 2022

$ 117,993,000

Redemption of ADRT common stock

( 120,064,000 )

Remeasurement of carrying value to redemption value

Redeemable noncontrolling interests in equity of subsidiaries as of September 30, 2023

NOTES PAYABLE

Notes payable at June 30,

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

Notes payable at September 30, 2023 and

December 31, 2022, were comprised of the following:

Schedule of notes payable

AGREE secured construction loans

January 1, 2025

Circle 8 Crane Services, LLC (“Circle 8”) revolving credit facility

Circle 8 revolving credit facility

Circle 8 cranes

1 unchanged sentence

8.5% secured promissory notes

19,389 Antminers, BNI Montana assets, Circle 8 membership interests, Florida property, Michigan property, aircraft

Ault & Company, Ault Lending, Milton C.

16% senior secured promissory notes*

12,000 Antminers, Ault Lending securities,

Deposit accounts, 19,389 Antminers, BNI Montana assets, Circle 8 membership interests, Florida property, Michigan property, aircraft

Ault & Company, Ault Lending, Sentinum, Alliance Cloud Services, Inc., Ault Aviation, LLC, Third Avenue Apartments LLC, BNI Montana, LLC, Milton C.

16% promissory notes

Ault & Company, Sentinum, Ault Lending, Milton C.

September 15, 2023

December 16, 2023

Circle 8 equipment financing notes

Circle 8 equipment

Various dates from

March 15, 2024 to

November 15, 2026

3% secured promissory notes

Certain Ault Lending securities

8% demand loans

4 unchanged sentences

December 30, 2023

Note payable, related party

10% secured promissory notes

August 10, 2023

SMC line of credit

October 14, 2025

Ault & Company

Other ($0.4 million in default)

Total notes payable

$ 137,799,000

$ 144,172,000

Unamortized debt discounts

2 unchanged sentences

Total notes payable, net

$ 133,995,000

$ 131,085,000

current portion

2 unchanged sentences

Notes payable – long-term portion

* Defaults on payment terms in July 2023.

Payments subsequent to June 30, 2023 of $10.3 million.

the loan maturity date was extended to September 15, 2023 and automatically extends for an additional 30 days for a $0.25 million extension

fee for each extension period, with an interest rate of 16% and principal amount outstanding of $2.5 million.

** Defaults on payment term as of June 30, 2023.

Paid in July 2023.

*** $3.4 million defaults on payment terms.

$3.1 million paid off in July 2023.

$0.3 million TurnOnGreen note

payable remains in default.

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 June 30, 2023 were:

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 September 30,

Schedule of maturities

$ 137,799,000

Interest Expense

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Contractual interest expense

2 unchanged sentences

Total interest expense

Ault & Company

Amendment to 8.5% Secured Promissory Notes

On July 19, 2023, the Company and certain

of its subsidiaries entered into an amendment agreement with the institutional investors and increased the principal balance of the secured

promissory notes by an additional $8.8 million.

The net proceeds to the Company from the amendment agreement were $7.5 million.

10% Secured Promissory Notes

The 10% secured promissory notes were retired

in March 2023 and converted into the Preferred Shares, as described in Note 17 – Preferred Stock Liability.

NOTES PAYABLE, RELATED PARTY

Notes payable, related party

at September 30, 2023 and December 31, 2022, were comprised of the following:

Schedule of notes payable related party

Interest rate

September 30,

Loan agreement

June 8, 2023, the Company entered into a loan agreement with Ault & Company as lender.

The loan agreement provides for an unsecured,

non-revolving credit facility in an aggregate principal amount of up to $ 10 million.

All loans under the loan agreement are due within

five business days after request by Ault & Company.

Ault & Company is not obligated to make any further advances under the

loan agreement after December 8, 2023.

Advances under the loan agreement bear interest at the rate of 9.5 % per annum and may be repaid

at any time without penalty or premium.

As of June 30, 2023, $ 750,000 has been advanced under the loan agreement.

of interest expense, related party, recorded within interest expense on the condensed consolidated statement of operations:

12% demand promissory note

10% demand promissory note

Total notes payable, related party

Ault & Company Loan Agreement

On June 8, 2023,

the Company entered into a loan agreement with Ault & Company as lender.

The loan agreement provides for an unsecured, non-revolving

credit facility in an aggregate principal amount of up to $ 10 million.

All loans under the loan agreement are due within five business

days after request by Ault & Company.

Ault & Company is not obligated to make any further advances under the loan agreement after

December 8, 2023.

Advances under the loan agreement bear interest at the rate of 9.5 % per annum and may be repaid at any time without

penalty or premium.

As of September 30, 2023, $ 4.6 million has been advanced under the loan agreement.

In August 2023,

Ault & Company assumed $11.6 million of secured promissory notes previously issued by the Company for which the Company has issued

term notes to Ault & Company in the same amount.

One term note has a principal amount of $1.1 million and bears interest at 12% and

the second term note has a principal amount of $10.5 million and bears interest at 10%.

Summary of interest

expense, related party, recorded within interest expense on the condensed consolidated statement of operations:

Schedule of interest expense, related party

For the Three Months Ended

For the Six Months Ended

Interest income, related party

Amendment to 8.5% Secured Promissory Notes

On July 19, 2023, the Company

and certain of its subsidiaries entered into an amendment agreement with the institutional investors and increased the principal balance

of the secured promissory notes by an additional $8.8 million.

The net proceeds to the Company from the amendment agreement were $7.5

10% Secured Promissory Notes

The 10% secured promissory

notes were retired in March 2023 and converted into the Preferred Shares, as described in Note 16 – Preferred Stock Liability.

Amendments to 16% Secured Promissory Notes

entered into several amendments subsequent to the initial lending due to certain defaults on payment terms.

The amendments included

$4.6 million in extension fees and payments subsequent to June 30, 2023 of $10.3 million.

Currently the loan maturity date was

extended to September 15, 2023 and automatically extends for an additional 30 days for a $0.25 million extension fee for each

extension period, with an interest rate of 16% and principal amount outstanding of $2.5 million.

3% Secured Promissory

the quarter ended June 30, 2023, the holders of the 3% secured promissory notes exercised their rights of future participation whereby

Sentinum issued additional promissory notes with a face amount of $10.4 million under the same terms as the existing notes, of which $5.5

million was outstanding and past due as of June 30, 2023.

The 3% secured promissory notes were fully paid in July 2023.

8% Demand Promissory Notes

On May 29, 2023, the Company

issued two demand promissory notes with a total principal amount of $ 4.5 million, bearing an interest rate of 8 % .

The demand notes were

issued at a discount, with net proceeds to the Company amounting to $ 2.0 million.

The notes are due upon demand;

however no demand may

be made within 90 days of the issuance date.

For the Nine Months Ended

September 30,

Interest expense, related party

CONVERTIBLE NOTES

Convertible notes payable at June 30, 2023 and

December 31, 2022, were comprised of the following:

Convertible notes payable at September 30, 2023

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

Schedule of convertible notes payable

1 unchanged sentence

Convertible promissory note

Convertible promissory note - OID only

90% of 5-day VWAP

September 28, 2024

AVLP convertible promissory notes

4 unchanged sentences

October 11, 2023

BMI senior secured convertible notes

$ 3.28 (BMI stock)

ROI senior secured convertible notes

$ 3.28 (ROI stock)

April 27, 2024

10 unchanged sentences

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

option, as of June 30, 2023 were:

option, as of September 30, 2023 were:

Schedule of contractual maturities

inputs associated with the AVLP embedded conversion option include:

Significant inputs associated

with the embedded conversion options include:

Schedule of weighted average assumptions

June 30, 2023

September 30, 2023

December 31, 2022

Exercise price

Contractual term in years

1 unchanged sentence

Risk-free interest rate

BMI Senior Secured Convertible Notes

On April 27, 2023, BMI sold

million of principal face amount senior secured convertible notes with an original issue discount to sophisticated investors for

net proceeds to BMI of $ 5.5

The notes mature on April 27, 2024

and are secured by all of the assets of BMI and certain of its subsidiaries.

There is no stated interest rate on the convertible note

unless there is an event of default.

The notes are convertible into shares of BMI common stock at $ 3.28 ;

however there are provision in the convertible note that enables the holders of the notes to receive a lower conversion rate upon future

common stock issuances by BMI that fall below the $3.28 price.

As BMI does not have sufficient

authorized shares to fulfill the conversion option, the conversion option meets the criteria of a derivative instrument, and the convertible

note has been discounted $ 4.1 million for the fair value of the warrant derivative liability and $ 1.4 million for the fair value of the

embedded conversion option derivative liability at inception.

The fair value of the warrant derivative liability is updated quarterly

and is recorded within financial instrument liabilities, a component of accounts payable and accrued liabilities and the fair value of

the embedded conversion option derivative liability is updated quarterly and is recorded within convertible notes.

In addition, BMI has

recorded $1.4 million in original issue discount, which is being amortized over the interest method for the term of the BMI senior

secured convertible notes.

Amortization of discount related to the senior secured convertible notes was $ 0.2 million for the three months

ended June 30, 2023.

4.6 % – 5.3 %

Activity related to the embedded

conversion option derivative liability for the three months ended June 30, 2023 is as follows:

Schedule of option derivative liability

April 27, 2023 issuances of convertible note – derivative liability

Change in fair value of convertible note derivative liability

conversion option derivative liabilities for the nine months ended September 30, 2023 was as follows:

Schedule of derivative liabilities

Balance as of December 31, 2022

Fair value of embedded conversion options issued

Change in fair value

( 3,440,000 )

Ending balance as of June 30, 2023

Level 3 inputs associated with the BMI embedded conversion option include:

Schedule of assumptions

June 30, 2023

Contractual term in years

Dividend yield

Risk-free interest rate

Ending balance as of September 30, 2023

COMMITMENTS AND CONTINGENCIES

23 unchanged sentences

to significant uncertainties.

As of June 30, 2023, the Company

had accrued $ 5.3 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 reached a settlement with the SEC to fully

resolve the SEC’s previously disclosed investigation into certain of the Company’s public disclosures and its accounting for

certain transactions, among other matters.

Under terms of the settlement,

announced on August 15, 2023, the Company, Executive Chairman Milton “Todd” Ault, III, and Chief Executive Officer William

Horne neither admit nor deny the SEC’s findings, which do not entail intentional misconduct.

The Company will pay a civil penalty

of $0.7 million that was fully accrued in the fourth quarter of 2022;

Ault will pay disgorgement of $85,504 and a civil penalty of

Horne will pay a civil penalty of $20,720.

In addition, the Company has undertaken to retain an independent consultant

to conduct a comprehensive review of the Company’s internal control over financial reporting and disclosure controls and procedures,

and to issue a report providing recommendations for improvements.

As of September 30, 2023,

the Company had accrued $ 4.4 million as a loss contingency related to litigation matters.

STOCKHOLDERS’ EQUITY

10 unchanged sentences

On June 14, 2022, the Company

entered into an At-The-Market sales agreement 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”).

six months ended June 30, 2023, the Company sold an aggregate of 252,359 shares of Series D Preferred Stock pursuant to the 2022 Preferred

entered into an At-The-Market sales agreement 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 nine

months ended September 30, 2023, the Company sold an aggregate of 252,359 shares of Series D Preferred Stock pursuant to the 2022 Preferred

ATM Offering for net proceeds of $ 2.9 million.

4 unchanged sentences

price of up to $ 10 million from time to time, through an “at the market offering” program (the “2023 Common ATM Offering”).

During the three months ended June 30, 2023, the Company sold an aggregate of 0.1 million shares of common stock pursuant to the 2023

On July 13, 2023 and September 8, 2023, the sales agreement was amended increasing the size of the 2023 ATM Offering

to $20 million and $50 million, respectively.

During the nine months ended September 30, 2023, the Company sold an aggregate of 10.8 million shares of common stock pursuant to the

2023 Common ATM Offering for gross proceeds of $ 21.2 million.

1 unchanged sentence

Stock Upon Conversion of Preferred Stock

June 2023, the Investors converted 1,000 shares of Series F Preferred Stock and 1,792 shares of Series G Preferred Stock into an aggregate

of 37,493 shares of the Company’s common stock.

A loss on extinguishment of $0.1 million was recognized on the issuance of common

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

the nine months ended September 30, 2023, the Investors converted 1,000 shares of Series F Preferred Stock and 6,756 shares of Series

G Preferred Stock into an aggregate of 143,402 shares of the Company’s common stock.

A loss on extinguishment of $0.3 million was

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

Issuance of Common Stock for Restricted Stock

the six months ended June 30, 2023, the Company issued 4,974 shares of common stock upon vesting of restricted stock awards.

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

The consummation of the transactions contemplated by the Agreement are subject to various customary closing conditions and

the receipt of certain third party consents.

In 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, in whole

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 for a period of 90 days as set forth in the Agreement.

the nine months ended September 30, 2023, the Company issued 4,974 shares of common stock upon vesting of restricted stock awards.

Proceeds from Subsidiaries’ Sale of Stock

to Non-Controlling Interests

During the six months ended

June 30, 2023, SMC and BMI sold an aggregate of $ 2.3 million of common stock pursuant to their respective at-the-market

During the nine months ended

September 30, 2023, SMC and ROI sold an aggregate of $ 2.3 million of common stock pursuant to their respective at-the-market

issuance sales agreements.

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 3.0 % and 0.8 % for the three months ended June

30, 2023 and 2022, respectively, and 1.2 % and 0.4 % for the six months ended June 30, 2023 and 2022, respectively.

The Company’s effective tax rate (“ETR”) from continuing operations was ( 2.0 %) and 1.8 % for the three months ended September

30, 2023 and 2022, respectively, and 0.4 % and 0.6 % for the nine months ended September 30, 2023 and 2022, respectively.

The Company recorded

income tax provision of $ 1.4 million and $ 0.2 million for the three months ended June 30, 2023 and 2022, respectively, and $ 1.1 million

and $ 0.2 million for the six months ended June 30, 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.

income tax (benefit) provision of ($ 0.6 ) million and $ 0.1 million for the three months ended September 30, 2023 and 2022, respectively,

and $ 0.5 million and $ 0.4 million for the nine months ended September 30, 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.

income tax purposes and changes in valuation allowance.

NET LOSS PER SHARE

5 unchanged sentences

Anti-dilutive securities, which are convertible into or exercisable

for the Company’s common stock, consisted of the following at June 30, 2023 and 2022:

for the Company’s common stock, consisted of the following at September 30, 2023 and 2022:

Schedule of anti-dilutive securities

September 30,

Stock options

2 unchanged sentences

SEGMENT AND CUSTOMERS INFORMATION

The Company had nine reportable

segments as of June 30, 2023 and seven as of June 30, 2022;

The Company had the following reportable

segments as of September 30, 2023 and six as of September 30, 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 and its operating segments for the three and six months ended June

the revenues, expenditures and other operating data of the Company and its operating segments for the three and nine months ended September

Schedule of operating segments

Six Months Ended June 30, 2023

Revenue, cryptocurrency mining

Revenue, commercial real estate leases

Revenue, lending and trading activities

Revenue, crane operations

Revenue, hotel operations

Total revenues

Depreciation and amortization expense

Income (loss) from operations

Nine Months Ended

September 30, 2023

cryptocurrency mining

lending and trading activities

crane operations

$ 119,930,000

and amortization expense

(loss) from operations

$ ( 5,620,000 )

7 unchanged sentences

$ ( 102,427,000 )

Capital expenditures for the six months ended June 30, 2023

Identifiable assets as of June 30, 2023

expenditures for the nine months ended September 30, 2023

identifiable assets as of September 30, 2023

of discontinued operations

identifiable assets as of September 30, 2023

$ 378,456,000

Three Months Ended June 30, 2023

Revenue, cryptocurrency mining

Revenue, commercial real estate leases

Revenue, lending and trading activities

Revenue, crane operations

Revenue, hotel operations

Total revenues

Depreciation and amortization expense

Income (loss) from operations

Three Months Ended

September 30, 2023

cryptocurrency mining

lending and trading activities

crane operations

$ ( 249,000 )

and amortization expense

(loss) from operations

$ ( 503,000 )

6 unchanged sentences

$ ( 21,903,000 )

Capital expenditures for the three months ended June 30, 2023

expenditures for the three months ended September 30, 2023

assets as of September 30, 2023

of discontinued operations

identifiable assets as of September 30, 2023

$ 378,456,000

Segment information for the

three and six months ended June 30, 2022:

Three Months Ended June 30, 2022

three and nine months ended September 30, 2022:

Nine 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

Loss from operations

$ ( 1,076,000 )

$ ( 445,000 )

Income (loss) from operations

$ ( 1,881,000 )

4 unchanged sentences

$ ( 28,150,000 )

Capital expenditures for the three months ended June 30, 2022

Six Months Ended June 30, 2022

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

Income (loss) from operations

$ ( 264,000 )

Income (loss) from operations

$ ( 661,000 )

4 unchanged sentences

$ ( 7,009,000 )

Capital expenditures for the six months ended June 30, 2022

Capital expenditures for the three months ended September 30, 2022

CONCENTRATIONS OF CREDIT AND REVENUE RISK

The following table summarizes

accounts receivable that are concentrated with certain large customers as of June 30, 2023 and December 31, 2022:

accounts receivable that are concentrated with certain large customers as of September 30, 2023 and December 31, 2022:

Schedule of concentrations of credit risk

June 30, 2023

September 30, 2023

December 31, 2022

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Customer X (Mining Pool Operator)

Less than 10 %

For the Nine Months Ended

September 30,

Customer V (Mining Pool Operator)

Customer W (Mining Pool Operator)

* Less than 10%

1 unchanged sentence

2023 Common ATM

Company and Ascendiant Capital entered into an amendment to the At-The-Market issuance sales agreement to increase the size of the 2023

Common ATM Offering from $10.0 million to $20.0 million.

During the period between July 1, 2023 through August 18, 2023, the Company sold

an aggregate of 3.9 million shares of common stock pursuant to the 2023 Common ATM Offering for gross proceeds of $ 15.6 million.

Advances under

Ault & Company Loan Agreement

additional $ 3.9 million has been advanced by Ault & Company to the Company under the loan agreement entered into June 8, 2023.

Assignment of Term

Effective August 10, 2023, the Company assigned the Term Note to Ault & Company.

As consideration for Ault & Company assuming the Term

Note from the Company, the Company issued a 12% demand promissory note in the principal face amount of $ 1.1 million

(the “Second Demand Note”) to Ault & Company.

Second Partial

Distribution of TurnOnGreen Securities

On July 24, 2023, the Company

established a record date for its second partial distribution of TurnOnGreen Securities.

Stockholders as of this date were entitled to

40 shares of TurnOnGreen Securities for every share of the Company’s common stock they held on the record date.

The second distribution

was finalized on August 7, 2023, whereby the Company relinquished control of voting interests of TurnOnGreen.

The Company distributed 56.4 million TurnOnGreen Securities in the second distribution.

the period between October 1, 2023 through November 17, 2023, the Company sold an aggregate of 54.2 million shares of common

stock pursuant to the 2023 Common ATM Offering for gross proceeds of $ 10.0 million.

Note Conversions

In October 2023,

an investor converted $ 0.5 million in principal of a convertible note into 2.1 million shares of the Company’s common stock.

Senior Secured

Convertible Note, Related Party

October 13, 2023 (the “Closing Date”), the Company entered into a note purchase agreement with Ault & Company, pursuant

to which the Company sold to the Purchaser (i) a senior secured convertible promissory note in the principal face amount of $ 17,519,832

(the “Note”) and warrants (the “Warrants”) to purchase shares of the Company’s common stock for a total

purchase price of up to $ 17,519,832 (the “Transaction”).

purchase price was comprised of the following:

(i) cancellation of $4.6 million of cash loaned by Ault & Company to the Company since

June 8, 2023 pursuant to the loan agreement;

(ii) cancellation of $11.6 million of term loans made by the Company to Ault & Company

in exchange for Ault & Company assuming liability for the payment of $11.6 million of secured notes;

and (iii) the retirement of $1.25

million stated value of 125,000 shares of the Company’s Series B Convertible Preferred Stock (representing all shares issued and

outstanding of that series) being transferred from Ault & Company to the Company.

Note has a principal face amount of $ 17,519,832 and has a maturity date of October 12, 2028 (the “Maturity Date”).

bears interest at the rate of 10 % per annum.

Interest is payable, at the Purchaser’s option, in cash or shares of Common Stock at

the applicable Conversion Price (as defined below).

Accrued interest is payable on the Maturity Date, provided, however, that Ault &

Company has the option, on not less than 10 calendar days’ notice to the Company, to require payment of accrued but unpaid interest

on a monthly basis in arrears.

The Note is convertible into shares

of common stock at a conversion price equal to the greater of (i) $0.10 per share (the “Floor Price”), and (ii) the

lesser of (A) $0.2952 or (B) 105% of the volume weighted average price of the common stock during the ten trading days immediately

prior to the date of conversion (the “Conversion Price”).

The Conversion Price is subject to adjustment in the event of

an issuance of common stock at a price per share lower than the Conversion Price then in effect, as well as upon customary stock

splits, stock dividends, combinations or similar events.

The Floor Price shall not be adjusted for stock dividends, stock splits,

stock combinations and other similar transactions.

Warrants grant Ault & Company the right to purchase 47,685,988 shares of common stock.

The Warrants have a five-year term, expiring

on the fifth anniversary of the Closing Date, and become exercisable on the first business day after the six-month anniversary of the

Closing Date.

The exercise price of the Warrants is $ 0.1837 , which is subject to adjustment in the event of customary stock splits, stock

dividends, combinations or similar events.

addition, the Company and various subsidiaries of the Company granted Ault & Company a

senior security interest in substantially all of their assets as collateral for the repayment of the Note, which is subordinated to the

security interest granted to the holders of the outstanding secured promissory notes.

Series C Preferred Purchase Agreement, Related

November 6, 2023, the Company entered into a securities purchase agreement (the “SPA”) with Ault & Company, pursuant to

which the Company agreed to sell to Ault & Company up to 50,000 shares of Series C convertible preferred stock and warrants to purchase

up to 370 million shares of common stock for a total purchase price of up to $50 million, of which up to $17.5 million of the Note may

be tendered for cancellation.

The consummation of the transactions contemplated by the SPA, specifically the conversion of the Series

C convertible preferred stock and the exercise of the warrants in an aggregate number in excess of 19.99% on the execution date of the

Agreement, are subject to various customary closing conditions as well as regulatory and stockholder approval.

In addition to customary

closing conditions, the closing of the financing is also conditioned upon the receipt by Ault & Company of financing to consummate

the transaction.

The SPA contains customary termination provisions for Ault & Company under certain circumstances, and the Agreement

shall automatically terminate if the closing has not occurred prior to December 29, 2023, although such date may be extended by Ault &

Company for a period of 90 days as set forth in the SPA.

Series D Preferred Purchase Agreement,

Related Party

On November 15,

2023, the Company purchased from ROI 603.44 shares of ROI’s newly designated Series D Convertible Preferred Stock for a total purchase

price of $15.1 million.

The purchase price was paid by the cancellation of $15.1 million of cash advances made by the Company to ROI between

January 1, 2023 and November 9, 2023.

The preferred shares each have a stated value of $25,000 per share and each preferred share is convertible

into a number of shares of ROI’s common stock determined by dividing the stated value by $0.51, or an aggregate of 29.6 million

shares of ROI common stock, subject to adjustment in the event of an issuance of ROI common stock at a price per share lower than the

conversion price, as well as upon customary stock splits, stock dividends, combinations or similar events.

The preferred shares holders

are entitled to receive dividends at a rate of 10% per annum from issuance until November 14, 2033.

In addition, for

as long as at least 25% of the Preferred Shares remain outstanding, ROI must obtain from the Company consent with respect to certain corporate

events, including reclassifications, fundamental transactions, stock redemptions or repurchases, increases in the number of directors,

and declarations or payment of dividends, and further ROI is subject to certain negative covenants, including covenants against issuing

additional shares of capital stock or derivative securities, incurring indebtedness, engaging in related party transactions, selling of

properties having a value of over $50,000, altering the number of directors, and discontinuing the business of any subsidiary, subject

to certain exceptions and limitations.

Payment of Related

Party Advances

On October 5, 2023, William

Horne, the Company’s Chief Executive Officer, loaned the Company $ 262,500 , including a $ 12,500 original issue discount.

12, 2023, the loan was repaid.

On October 10, 2023,

ROI repaid $ 52,000 of advances payable to Mr.

Horne, the Company’s Chief Executive Officer and director of ROI.

Eco Pack Acquisition

On November 10,

2023, the Company’s wholly owned subsidiary, Eco Pack Technologies, Inc., completed the acquisition of an 80% ownership interest

in Eco Pack Technologies Limited, a company incorporated in England and Wales.

As of the closing date, the total consideration paid amounted

to $0.8 million.

Additionally, the Company is committed to providing approximately $2.5 million in further funding over the next two years.

Deficiency Letter from the NYSE American

On November 13, 2023, the

Company received a deficiency letter (the “Letter”) from the NYSE American LLC (the “NYSE American” or the “Exchange”)

indicating that the Company is not in compliance with the Exchange’s continued listing standard set forth in Section 1003(f)(v)

of the NYSE American Company Guide (the “Company Guide”) because the shares of common stock of the Company (the “Common

Stock”) for a substantial period of time have been selling at a low price per share, which the Exchange determined to be a 30-trading

day average price of less than $0.20 per share.

The Letter has no immediate effect on the listing or trading of the Company’s Common

Stock and the Common Stock will continue to trade on the NYSE American under the symbol “AULT”.

Additionally, the Letter does

not result in the immediate delisting of the Common Stock from the NYSE American.

Pursuant to Section 1003(f)(v)

of the Company Guide, the NYSE American staff determined that the Company’s continued listing is predicated on it demonstrating

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

determined to be no later than May 13, 2024.

The Company intends to regain compliance with the NYSE American’s continued listing

standards by undertaking a measure or measures that are in the best interests of the Company and its stockholders.

The Company intends to closely

monitor the price of its common stock and consider available options if the Common Stock does not trade at a consistent level likely to

result in the Company regaining compliance by May 13, 2024.

The Company’s receipt of the Letter does not affect the Company’s

business, operations or reporting requirements with the Securities and Exchange Commission.

The Company is actively engaged in discussions

with the Exchange and is developing plans to regain compliance with the NYSE American’s continued listing standards within the cure

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