What changed in this filing

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Item 1. Financial Statements

2024-05-20 compared with 2023-11-20 · 710 added, 1175 removed, 534 unchanged (78% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS

1 unchanged sentence

Restricted cash

Cash and marketable securities held in trust account

Marketable equity securities

Accounts receivable

Accounts receivable, net

Investment in promissory notes and other, related party

7 unchanged sentences

Right-of-use assets

Investments in common stock, related parties

Investments in common stock and equity securities, related party

Investments in other equity securities

Noncurrent assets of discontinued operations

$ 299,777,000

4 unchanged sentences

Operating lease liability, current

Notes payable, net

Notes payable, related party

Notes payable, current

Notes payable, related party, current

Convertible notes payable, current

Redeemable noncontrolling interests in equity of subsidiaries

Guarantee liability

Current liabilities of discontinued operations

5 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

September 30,

LONG TERM LIABILITIES

Operating lease liability, non-current

Notes payable

Convertible notes payable

Notes payable, non-current

Convertible notes payable, non-current

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

Noncurrent liabilities of discontinued operations

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

Redeemable noncontrolling interests in equity of subsidiaries

Redeemable non-controlling interests in equity of subsidiaries

STOCKHOLDERS’ EQUITY

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 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 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 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)

7,040 shares issued and outstanding at March 31, 2024 and December 31, 2023 (liquidation preference of $ 176,000 as of March 31, 2024 and December 31, 2023)

Series C Convertible Preferred Stock, $ 1,000 stated value per share, share, $ 0.001 par value – 50,000 shares authorized;

43,500 and 41,500 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (liquidation preference of $ 43,500,000 and $ 41,500,000 at March 31, 2024 and December 31, 2023, respectively)

Series D Cumulative Redeemable Perpetual Preferred Stock, $ 25

stated value per share, $ 0.001

par value – 2,000,000

shares authorized;

and 425,197 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively (liquidation preference of $ 8,096,000

as of March 31, 2024 and December 31, 2023)

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

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

30,065,339 and 4,483,459 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

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

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

0 shares issued and outstanding at March 31, 2024 and December 31, 2023

Additional paid-in capital

18 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

For the Three Months Ended

For the Nine Months Ended

September 30,

Revenue, cryptocurrency mining

Revenue, digital assets mining

Revenue, crane operations

Revenue, lending and trading activities

( 4,939,000 )

Total revenue

Cost of revenue, products

Cost of revenue, cryptocurrency mining

Cost of revenue, digital assets mining

Cost of revenue, crane operations

5 unchanged sentences

General and administrative

Impairment of goodwill and intangible assets

Impairment of property and equipment

Impairment of deposit due to vendor bankruptcy filing

Impairment of mined cryptocurrency

Impairment of mined digital assets

Total operating expenses

Loss from operations

( 21,903,000 )

( 7,009,000 )

( 102,427,000 )

Income (loss) from operations

( 29,863,000 )

4 unchanged sentences

( 12,100,000 )

( 30,537,000 )

( 32,063,000 )

Loss on extinguishment of debt

( 1,546,000 )

( 1,700,000 )

Realized and unrealized (loss) gain on marketable securities

Gain on conversion of investment in equity securities to marketable equity securities

Gain (loss) on extinguishment of debt

Loss from investment in unconsolidated entity

1 unchanged sentence

( 9,555,000 )

(Loss) gain on the sale of fixed assets

Change in fair value of warrant liability

Total other expense, net

( 6,172,000 )

( 32,691,000 )

( 30,743,000 )

Loss before income taxes

( 28,075,000 )

( 7,945,000 )

( 135,118,000 )

( 58,893,000 )

Income tax (benefit) provision

Net loss from continuing operations

( 27,510,000 )

( 8,089,000 )

( 135,658,000 )

( 59,254,000 )

Net (loss) income from discontinued operations

( 5,862,000 )

Provision for loan losses, related party

( 3,068,000 )

Gain on the sale of fixed assets

Total other income (expense), net

( 16,006,000 )

Income (loss) before income taxes

( 45,869,000 )

Income tax benefit

Net income (loss) from continuing operations

( 45,606,000 )

Net loss from discontinued operations

( 1,801,000 )

Net loss attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

( 3,223,000 )

Net income (loss)

( 48,829,000 )

Net (income) loss attributable to non-controlling interest

( 6,244,000 )

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

( 48,646,000 )

Preferred dividends

Net loss available to common stockholders

( 1,260,000 )

$ ( 7,461,000 )

$ ( 132,063,000 )

Net income (loss) available to common stockholders

$ ( 48,875,000 )

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

Basic net income (loss) per common share:

Continuing operations

Discontinued operations

Net loss per common share

Weighted average basic and diluted common shares outstanding

Comprehensive loss

Net loss available to common stockholders

$ ( 22,184,000 )

$ ( 7,461,000 )

Basic net income (loss) per common share

$ ( 1,039.89 )

Diluted net income (loss) per common share:

Continuing operations

Discontinued operations

Diluted net income (loss) per common share

Weighted average common shares outstanding:

Comprehensive income (loss)

Net income (loss) available to common stockholders

$ ( 48,875,000 )

Foreign currency translation adjustment

( 1,001,000 )

( 1,452,000 )

Other comprehensive loss

( 1,001,000 )

( 1,452,000 )

Total comprehensive loss

$ ( 22,835,000 )

$ ( 7,155,000 )

$ ( 133,064,000 )

Other comprehensive income

Total comprehensive income (loss)

$ ( 48,705,000 )

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’

Three Months Ended September 30, 2023

Series A, B & D

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2024

Preferred Stock

Class A Common Stock

Comprehensive

Stockholders’

BALANCES, July 1, 2023

$ 573,386,000

BALANCES, January 1, 2024

$ 644,852,000

2 unchanged sentences

$ ( 30,571,000 )

Issuance of Series C preferred stock, related party

Fair value of warrants issued in connection with Series C

preferred stock, related party

Stock-based compensation

Issuance of common stock for cash

Financing cost in connection with sales of common stock

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

Increase in ownership interest of subsidiary

Issuance of Class A common stock for cash

Financing cost in connection with sales of Class A common stock

Remeasurement of Ault Disruptive subsidiary temporary

Sale of subsidiary stock to non-controlling interests

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

( 21,771,000 )

Preferred dividends

Distribution to Circle 8 Crane

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

Conversion of RiskOn International, Inc.

(“ROI”) convertible note

Series A preferred dividends ($0.63 per share)

Series C preferred dividends ($25.53 per share)

Series D preferred dividends ($0.81 per share)

Foreign currency translation adjustments

Net loss attributable to non-controlling interest

( 6,668,000 )

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, September 30, 2023

$ 589,279,000

$ ( 467,088,000 )

$ ( 2,102,000 )

$ ( 30,540,000 )

$ 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’

Three Months Ended September 30, 2022

Series A, B & D

Preferred Stock

Comprehensive

Stockholders’

BALANCES, July 1, 2022

$ 550,036,000

$ ( 200,184,000 )

$ ( 1,863,000 )

$ ( 20,639,000 )

$ 345,399,000

Preferred stock issued

Preferred stock offering costs

Stock-based compensation

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

Increase in ownership interest of subsidiary

( 1,539,000 )

( 1,671,000 )

Non-controlling interest from GIGA acquisition

Purchase of treasury stock - Ault Alpha

( 8,148,000 )

Net income attributable to non-controlling interest

Distribution of securities of TurnOnGreen, Inc.

(“TurnOnGreen”)

to Ault Alliance Class A common stockholders ($2.02 per share)

( 4,900,000 )

Distribution of ROI investment in White River Energy

Corp (“White River”)

to ROI stockholders

( 19,210,000 )

Preferred dividends

Foreign currency translation adjustments

Net loss attributable to non-controlling interest

BALANCES, September 30, 2022

( 19,210,000 )

BALANCES, March 31, 2024

$ 656,587,000

2 unchanged sentences

$ ( 30,571,000 )

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’

Nine Months Ended September 30, 2023

Series A, B & D

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2023

Preferred Stock

Class A Common

Comprehensive

6 unchanged sentences

$ 223,988,000

Issuance of common stock for restricted stock awards

Issuance of Class A common stock for

restricted stock awards

Preferred stock issued for cash

3 unchanged sentences

Stock-based compensation

Issuance of common stock for cash

Financing cost in connection with sales of common stock

Issuance of common stock for conversion of preferred stock liabilities

Common stock issued in connection with issuance of notes payable

Issuance of Class A common stock for cash

Financing cost in connection with sales of Class A common

Remeasurement of Ault Disruptive subsidiary temporary equity

( 5,945,000 )

Increase in ownership interest of subsidiary

( 1,597,000 )

( 1,584,000 )

Non-controlling position at RiskOn International, Inc.

(“ROI”) subsidiary acquired

Sale of subsidiary stock to non-controlling interests

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

Purchase of treasury stock - Ault Alpha

( 1,306,000 )

( 131,100,000 )

Preferred dividends

Foreign currency translation adjustments

( 1,001,000 )

Net loss attributable to non-controlling interest

( 10,420,000 )

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

( 10,700,000 )

BALANCES, September 30, 2023

$ 589,279,000

$ ( 467,088,000 )

$ ( 2,102,000 )

$ ( 30,540,000 )

$ 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’

Nine Months Ended September 30, 2022

Series A, B & D

Preferred Stock

Comprehensive

Stockholders’

BALANCES, January 1, 2022

$ 385,728,000

$ ( 145,600,000 )

$ ( 106,000 )

$ ( 13,180,000 )

$ 228,455,000

Issuance of common stock for restricted stock awards

Preferred stock issued for cash

Preferred stock offering costs

Stock-based compensation

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

( 4,103,000 )

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

( 15,607,000 )

Increase in ownership interest

of subsidiary

Non-controlling position at ROI subsidiary acquired

Purchase of treasury stock - Ault Alpha, LP

( 48,645,000 )

Preferred dividends

Series A preferred dividends ($0.63 per share)

Series D preferred dividends ($0.81 per share)

Foreign currency translation adjustments

( 1,452,000 )

Net loss attributable to non-controlling interest

( 1,061,000 )

BALANCES, September 30, 2022

BALANCES, March 31, 2023

$ 575,074,000.00

3 unchanged sentences

$ 190,343,000

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.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Cash flows from operating activities:

$ ( 141,520,000 )

Net income (loss)

$ ( 48,829,000 )

2 unchanged sentences

( 3,223,000 )

Net loss from continuing operations

( 135,658,000 )

Net income (loss) from continuing operations

( 45,606,000 )

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

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

operating activities:

Depreciation and amortization

1 unchanged sentence

Amortization of right-of-use assets

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

1 unchanged sentence

Impairment of equity securities

Impairment of cryptocurrencies

Realized gain on the sale of cryptocurrencies

Revenue, cryptocurrency mining

( 23,273,000 )

( 11,398,000 )

Realized losses on sale of marketable securities

Impairment of digital assets

Realized gain on the sale of digital assets

Revenue, digital assets mining

( 8,862,000 )

( 7,347,000 )

Unrealized (gains) losses on marketable securities

Realized gains on sale of marketable securities

Gain on conversion of investment in equity securities to marketable equity securities

Unrealized gains on marketable securities

( 8,899,000 )

Unrealized losses on investments in common stock, related parties

Unrealized gains on equity securities

( 1,908,000 )

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

Income from cash held in trust

( 2,561,000 )

Loss from investment in unconsolidated entity

Loss on remeasurement of investment in unconsolidated entity

Provision for loan losses

Change in the fair value of warrant liability

Provision for loan losses, related party

(Gain) loss on extinguishment of debt

( 1,405,000 )

( 1,196,000 )

Changes in operating assets and liabilities:

Proceeds from the sale of cryptocurrencies

Proceeds from the sale of digital assets

Marketable equity securities

Accounts receivable

( 5,582,000 )

( 3,022,000 )

( 5,867,000 )

Prepaid expenses and other current assets

Accounts payable and accrued expenses

( 4,385,000 )

( 3,801,000 )

Accounts payable and accrued expenses

Lease liabilities

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

( 8,478,000 )

Net cash used in operating activities from discontinued operations

( 1,738,000 )

Net cash provided by operating activities from continuing operations

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

( 2,646,000 )

Net cash (used in) provided by operating activities

( 10,216,000 )

Cash flows from investing activities:

1 unchanged sentence

( 4,308,000 )

( 80,058,000 )

Investment in promissory notes and other, related parties

( 2,200,000 )

Investments in common stock and warrants, related parties

( 4,840,000 )

Purchase of SMC, net of cash received

( 8,239,000 )

Purchase of GIGA, net of cash received

( 3,687,000 )

Cash received upon acquisition of AVLP

Acquisition of non-controlling interests

( 1,584,000 )

( 3,901,000 )

Purchase of marketable equity securities

( 1,981,000 )

Sales of marketable equity securities

Investments in loans receivable

( 7,081,000 )

Principal payments on loans receivable

Investments in equity securities

( 10,702,000 )

( 22,449,000 )

Investments in non-marketable equity securities

Proceeds from the sale of fixed assets

1 unchanged sentence

( 1,141,000 )

( 110,918,000 )

Net cash used in investing activities from discontinued operations

( 2,713,000 )

( 4,442,000 )

Net cash used in investing activities

1 unchanged sentence

( 2,767,000 )

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 (continued)

For the Nine Months Ended September 30,

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

Cash flows from financing activities:

Gross proceeds from sales of common stock

$ 167,983,000

Financing cost in connection with sales of common stock

( 4,103,000 )

Proceeds from sales of preferred stock

Financing cost in connection with sales of preferred stock

Gross proceeds from sales of Class A common stock

Financing cost in connection with sales of Class A common stock

Proceeds from sales of Series D preferred stock

Financing cost in connection with sales of Series D preferred stock

( 1,079,000 )

Proceeds from sales of Series C preferred stock and warrants to purchase Class A common stock, related party

Proceeds from subsidiaries’ sale of stock to non-controlling interests

2 unchanged sentences

Repayment of margin accounts

( 16,111,000 )

Payments on notes payable

1 unchanged sentence

( 19,651,000 )

Payments of preferred dividends

Purchase of treasury stock

Payments on convertible notes payable, related party

Payments on notes payable, related party

( 1,894,000 )

Payments of preferred dividends

( 1,260,000 )

Purchase of treasury stock

Proceeds from sales of convertible notes

Payments on convertible notes

Net cash provided by financing activities from continuing operations

( 1,030,000 )

Net cash provided by (used in) financing activities from continuing operations

( 10,595,000 )

Net cash provided by financing activities from discontinued operations

Net cash provided by financing activities

Net cash provided by (used in) financing activities

( 8,097,000 )

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents and restricted cash

Discontinued operations cash contributions from parent

Net increase (decrease) in cash and cash equivalents and restricted cash - continuing operations

Net increase (decrease) in cash and cash equivalents and restricted cash - discontinued operations

( 2,781,000 )

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

( 2,984,000 )

Cash and cash equivalents and restricted cash at beginning of period - continuing operations

Cash and cash equivalents and restricted cash at beginning of period - discontinued operations

Cash and cash equivalents and restricted cash at beginning of period

3 unchanged sentences

( 2,601,000 )

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

Cash and cash equivalents and restricted cash of continued operations at end of period

Supplemental disclosures of cash flow information:

2 unchanged sentences

Non-cash investing and financing activities:

Settlement of accounts payable with digital currency

Conversion of investment in unconsolidated entity for acquisition of AVLP

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

Settlement of accounts payable with digital assets

Settlement of interest payable with digital assets

Settlement of note payable with digital assets

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

Conversion of debt and equity securities to marketable securities

Conversion of loans receivable to marketable securities

Conversion of interest receivable to marketable securities

Exchange of related party advances for investment in other equity securities, related party

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

Remeasurement of Ault Disruptive temporary equity

Preferred stock exchanged for notes payable

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 of ROI investment in White River to ROI shareholders

Redeemable non-controlling interests in equity of subsidiaries paid with cash and marketable securities held in trust account

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.

Debt discount from accrued lender profit participation rights

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 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.

(“SMC”) – consumer electronics;

Alliance, Inc., a Delaware corporation (“Ault Alliance” or the “Company”) is a diversified holding company pursuing

growth by acquiring and developing 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.

Company has the following seven reportable segments:

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

and oil exploration;

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

· Sentinum, Inc.

(“Sentinum”) – cryptocurrency

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

· GIGA – defense industry;

(“Sentinum”) – digital assets mining operations and colocation and hosting

services for the emerging artificial intelligence ecosystems and other industries;

· Gresham Worldwide, Inc., formerly known as Giga-tronics Incorporated (“GIGA”) – defense

· TurnOnGreen – commercial electronics solutions;

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

(“ROI”) – immersive metaverse platform;

· ROI – immersive metaverse platform, media, and digital learning;

· Ault Disruptive – a special purpose acquisition company.

Reverse Stock Split

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,

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

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

All share amounts in these financial statements have been

updated to reflect the Reverse Split.

LIQUIDITY AND FINANCIAL 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

LIQUIDITY AND FINANCIAL

of March 31, 2024, the Company had cash and cash equivalents of $ 9.4 million, negative working capital of $ 53.5 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 March 31, 2024, 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 as well as digital assets, 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 or cease its operations altogether.

OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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

8 unchanged sentences

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

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

and Exchange Commission (the “SEC”) on May 22, 2023.

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

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

Results of the

three 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;

Identify the performance obligations in the contract;

Determine the transaction price;

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

Recognize revenue when the company satisfies a performance obligation.

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.

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 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”).

Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”), filed with the Securities and

Exchange Commission (the “SEC”) on April 16, 2024.

The condensed consolidated balance sheet as of December 31, 2023 was derived

from the Company’s audited 2023 financial statements contained in the above referenced 2023 Annual Report.

Results of the three

months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

Significant Accounting

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

the 2023 Annual Report.

Reclassifications

Certain prior period

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

These reclassifications

had no effect on previously reported results of operations.

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.

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.

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.

Issued Accounting Standards

On December 14, 2023, the

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

2023-09, Income

Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 requires entities to disclose specific

rate reconciliations, amount of income taxes separated by federal and individual jurisdiction, and the amount of income (loss) from continuing

operations before income tax expense (benefit) disaggregated between federal, state, and foreign.

The new standard is effective for the

Company for its fiscal year beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of

adopting the standard.

On November 27, 2023, the

FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 is designed to improve the reportable segment disclosure requirements, primarily through enhanced disclosures about significant

segment expenses that are regularly provided to the chief operating decision maker.

The new standard is effective for the Company for

its fiscal year beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the impact of adopting the

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:

Presentation of Ault Global Real Estate

Equities, Inc.

(“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.

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.

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.

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

As a result, 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 March 31, 2024 and December

31, 2023, the Company has classified the total assets and total liabilities associated with AGREE as current in the consolidated balance

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

1 unchanged sentence

Accounts receivable

Property and equipment, net - current

Prepaid expenses and other current assets

2 unchanged sentences

Accounts payable and accrued expenses

Notes payable, current

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:

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 assets and liabilities 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

2 unchanged sentences

Total operating expenses

Income (loss) from operations

Loss from operations

( 1,555,000 )

Interest expense

1 unchanged sentence

( 1,668,000 )

Net loss from discontinued operations

$ ( 1,801,000 )

$ ( 3,223,000 )

Net (loss) income from discontinued operations

The cash flow activity related

to discontinued operations is presented separately on the statement of cash flows as summarized below:

Schedule of cash flow activity related to discontinued operations

For the Three Months Ended March 31,

Cash flows from operating activities:

$ ( 1,801,000 )

$ ( 3,223,000 )

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

Depreciation and amortization

Amortization of debt discount

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Net cash used in operating activities

( 1,738,000 )

( 2,646,000 )

Cash flows from investing activities:

Purchase of property and equipment

( 2,713,000 )

Net cash used in investing activities

( 2,713,000 )

Cash flows from financing activities:

Proceeds from notes payable

Cash contributions from parent

Net cash provided by financing activities

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

( 2,780,000 )

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Supplemental disclosures of cash flow information:

Cash paid during the period for interest

Change in Plan of Sale of AGREE Hotel Properties

On April 30, 2024, the Company

had a change in plan of sale for its four hotels owned and operated by AGREE.

As a result, as of April 30, 2024, the assets will no longer

meet the held for sale criteria and will be required to be reclassified as held and used at the lower of adjusted carrying value or the

fair value at the date of the subsequent decision not to sell.

REVENUE DISAGGREGATION

The following tables summarize disaggregated

customer contract revenues and the source of the revenue for the three and nine months ended September 30, 2023 and 2022.

The following tables summarize

disaggregated customer contract revenues and the source of the revenue for the three months ended March 31, 2024 and 2023.

Revenues from

1 unchanged sentence

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

The Company’s disaggregated revenues

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

The Company’s disaggregated

revenues consisted of the following for the three months ended March 31, 2024 (excludes Ault Disruptive, as that segment has no revenue):

Schedule of disaggregated revenues

1 unchanged sentence

North America

Revenue from contracts with customers

Revenue, lending

and trading activities (North America)

Total revenue

$ ( 249,000 )

Major Goods or Services

Radio frequency/microwave

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital currency mining

Karaoke machines and related consumer

Revenue from contracts with customers

Revenue, lending

and trading activities

Total revenue

$ ( 249,000 )

Timing of Revenue Recognition

Goods transferred at a point in time

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

Revenue from contracts with customers

lending and trading activities (North America)

$ 119,930,000

Major Goods or Services

Radio frequency/microwave

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital currency mining

Karaoke machines and related

consumer goods

Revenue from contracts with customers

lending and trading activities

$ 119,930,000

Timing of Revenue Recognition

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

North America

Middle East and other

3 unchanged sentences

Major Goods or Services

Power supply units

Digital currency mining, net

Karaoke machines and related

Radio frequency/microwave filters

Power supply units and systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Revenue from contracts with customers

2 unchanged sentences

Timing of Revenue Recognition

Goods transferred at a point in time

Goods and services 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 nine months ended September 30, 2022:

The Company’s disaggregated

revenues consisted of the following for the three months ended March 31, 2023 (excludes Ault Disruptive, as that segment has no revenue):

Company, Inc.

Primary Geographical Markets

3 unchanged sentences

Revenue, lending and trading activities (North America)

( 4,939,000 )

Total revenue

$ ( 4,939,000 )

Major Goods or Services

Power supply units

Radio frequency/microwave filters

Power supply units and systems

Healthcare diagnostic systems

Defense systems

Digital currency mining

Karaoke machines and related

Digital assets mining

Karaoke machines and related consumer goods

Revenue from contracts with customers

Revenue, lending and trading activities

( 4,939,000 )

Total revenue

$ ( 4,939,000 )

Timing of Revenue Recognition

Goods transferred at a point in time

Goods and services transferred at a point in time

Services transferred over time

Revenue from contracts with customers

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL

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 September 30, 2023

Investment in common stock of Alzamend Neuro, Inc.

Fair Value Measurement at March 31, 2024

Investment in common stock of Alzamend

(“Alzamend”) – a related party

6 unchanged sentences

Fair Value Measurement at December 31, 2023

Investment in common stock of Alzamend – a related party

Investment in common stock of Alzamend

Investments in marketable equity securities

Cash and marketable securities held in trust account

Investments in other equity securities

Total assets measured at fair value

$ 144,572,000

$ 131,232,000

Warrant and embedded conversion feature liabilities

1 unchanged sentence

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

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 nine months ended September 30, 2023 (no changes during the three months

ended September 30, 2023):

Schedule of investments

Investments in

Balance at January 1, 2023

Conversion to Level 1 marketable securities

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.

Equity Investments

for Which Measurement Alternative Has Been Selected

of March 31, 2024 and December 31, 2023, the Company held equity investments in other securities valued at $ 20.6 million and $ 21.8 million,

respectively, that were valued using a measurement alternative.

These investments are included in other equity securities in the accompanying

consolidated balance sheets.

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

values for the three months ended March 31, 2024 and 2023, totaling $ 0

million, respectively.

Approximately $ 9.6

million of the prior year adjustments are 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 condensed consolidated

statement of operations and comprehensive loss.

The changes in Level 3 fair value hierarchy during the three

months ended March 31, 2024 and 2023 were as follows:

Schedule of changes in fair value hierarchy

Level 3 Balance

at Beginning of

and/or out of

Level 3 Balance

Three months ended March 31, 2024

Warrant and embedded conversion feature liabilities

$ ( 1,027,000 )

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.

Convertible promissory notes

( 2,075,000 )

Three months ended March 31, 2023

Warrant and embedded conversion feature liabilities

$ ( 1,311,000 )

Series E, F and G preferred stock liabilities

Convertible promissory notes

Marketable EQUITY Securities

Marketable equity securities with readily

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

Marketable equity securities

with readily determinable market prices consisted of the following as of March 31, 2024 and December 31, 2023:

Schedule of marketable securities

Marketable equity securities at September 30, 2023

Marketable equity securities at March 31, 2024

Gross unrealized

7 unchanged sentences

$ ( 5,104,000 )

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 nine months ended September 30, 2023 and 2022:

Schedule of activities of the digital currencies

The Company’s investment

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

DIGITAL ASSETS

The following table presents

revenue from mined digital assets for the three months ended March 31, 2024 and 2023:

Schedule of revenue from digital assets

For the Three Months Ended

Revenue from mined digital assets at Sentinum owned and operated

Revenue from Sentinum mining equipment hosted at third-party facilities

Revenue, digital assets mining

The following table presents

the activities of the digital assets (included in prepaid expenses and other current assets) for the three months ended March 31, 2024

Schedule of activities of the digital assets

Balance at January 1, 2024

Additions of mined digital currencies

Additions of mined digital assets

Payments to vendors

Impairment of mined cryptocurrency

Sale of digital currencies

Sale of digital assets

( 8,634,000 )

Realized gain on sale of digital currencies

Balance at September 30, 2023

Payment of notes payable with digital assets

Payment of interest payable with digital assets

Realized gain on sale of digital assets

Unrealized gain on digital assets

Balance at March 31, 2024

Balance at January 1, 2023

Additions of mined digital currencies

Additions of mined digital assets

Payments to vendors

Impairment of mined cryptocurrency

( 2,930,000 )

Sale of digital currencies

Sale of digital assets

( 7,780,000 )

Realized gain on sale of digital currencies

Balance at September 30, 2022

Realized gain on sale of digital assets

Balance at March 31, 2023

PROPERTY AND EQUIPMENT, NET

At September 30, 2023 and December 31, 2022,

At March 31, 2024 and December

31, 2023, property and equipment consisted of:

Schedule of property and equipment

September 30, 2023

March 31, 2024

December 31, 2023

Building and improvements

Bitcoin mining equipment

Building, land and improvements

Digital assets mining equipment

Crane rental equipment

Computer, software and related equipment

Office furniture and equipment

Oil and natural gas properties, unproved properties

Other property and equipment

Accumulated depreciation and amortization

1 unchanged sentence

( 30,953,000 )

Property and equipment placed in service, net

Construction in progress AVLP equipment

Deposits on cryptocurrency machines

Property and equipment, net

4 unchanged sentences

For the Three Months Ended

For the Nine Months Ended

September 30,

Depreciation expense

INTANGIBLE ASSETS, NET

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

assets consisted of:

At March 31, 2024 and December 31, 2023,

intangible assets consisted of:

Schedule of intangible asset

September 30,

March 31, 2024

December 31, 2023

Definite lived intangible assets:

10 unchanged sentences

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.

Certain of 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.

Schedule of indefinite-lived intangible assets

For the Three Months Ended

For the Nine Months Ended

September 30,

Amortization expense

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.

of March 31, 2024, 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

Impairment of AVLP Intangible Assets

Due to indicators of impairment, AVLP intangible

assets were tested for impairment as of June 30, 2023.

Based on internally developed forecasts of undiscounted expected future cash flows,

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 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:

2024 (remainder)

The following table summarizes

the changes in the Company’s goodwill for the three months ended March 31, 2024:

Schedule of goodwill

Balance as of January 1, 2024

Acquisition of ROI

Impairment of goodwill

( 18,570,000 )

Effect of exchange rate changes

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.

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 nine months ended

September 30, 2023.

VARIABLE INTEREST ENTITY - SMC

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

interest entity (a “VIE”) due to the Company’s significant level of influence and control of SMC, the size of its investment,

and its ability to participate in policy making decisions.

As a result, the Company is considered the primary beneficiary of the VIE.

BUSINESS COMBINATION

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 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

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:

Schedule of recognized identified assets acquired and liabilities assumed

Fair value of Company interest

Fair value of non-controlling interest

Total consideration

Identifiable net assets acquired:

Investment in equity securities

Prepaid expenses and other current assets

Property and equipment, net

Right-of-use assets

Accounts payable and accrued expenses

( 5,790,000 )

Lease liabilities

Net assets acquired

Balance as of March 31, 2024

INVESTMENTS – RELATED PARTIES

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

Investments in Alzamend and

Ault & Company, Inc.

(“Ault & Company”) at March 31, 2024 and December 31, 2023, 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

December 31, 2023

Promissory note, related party

Accrued interest receivable Ault & Company

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:

Other - Alzamend

Total investment in promissory notes and other, related parties

Summary of interest income,

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

Schedule of Interest income, related party

For the Three Months Ended

For the Nine Months Ended

September 30,

Interest income, related party

Investment in Common Stock, Related Parties – Alzamend

During the quarter ended March

31, 2023, due to uncertainties surrounding collection, the Company recorded a loan loss reserve of $3.1 million related to the promissory

note from Ault & Company, reversed the related accrued receivable and did not record interest income on the note.

Investment in Common Stock, Related Parties

Schedule of investment in common stock

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

Investments in common stock, related parties at March 31, 2024

Gross unrealized losses

5 unchanged sentences

$ ( 24,009,000 )

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:

The following table summarizes

the changes in the Company’s investments in Alzamend common stock during the three months ended March 31, 2024 and 2023:

Schedule of investment in warrants and common stock

For the Three Months Ended September 30,

Balance at July 1

For the Three Months Ended March 31,

Balance at January 1

Investment in common stock of Alzamend

1 unchanged sentence

( 1,598,000 )

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

Investment in common stock of Alzamend

Unrealized loss in common stock of Alzamend

Balance at March 31

Ault Lending, LLC (“Ault Lending”) Investment in Alzamend Series

B Convertible Preferred Stock and Warrants

Schedule of investment in warrants and preferred stock

Investment in Alzamend preferred stock

Total investment in other investments securities, related party

In connection with a securities purchase agreement entered into with

Alzamend in January 2024, the Company purchased 2,000 shares of Alzamend Series B Convertible Preferred Stock and warrants to purchase

2.0 million shares of Alzamend common stock with a five-year term and an exercise price of $1.20 per share for a total purchase price

of $2.0 million.

The Agreement provides that

Ault Lending may purchase up to $6 million of Alzamend Series B Convertible Preferred Stock in one or more closings.

The Company has elected to

account for investment in other investments securities, related party, using a measurement alternative under which they are measured at

cost and adjusted for observable price changes and impairments.

Ault, Horne and Nisser

are each paid $ 50,000 annually by Alzamend.

EQUITY METHOD INVESTMENT

Equity Investments in Unconsolidated Entity

The following table summarizes

the changes in the Company’s equity investments in an unconsolidated entity, SMC, included in other assets on the condensed consolidated

balance sheet, during the three months ended March 31, 2024:

Schedule of equity investments in unconsolidated entity

Rollforward investment in unconsolidated entity

Beginning balance - January 1, 2024

Loss from investment in unconsolidated entity

Ending balance - March 31, 2024

The following table provides

summarized financial information for the Company’s ownership interest in SMC accounted for under the equity method and has been

compiled from SMC’s financial statements.

Amounts presented represent totals at the investee level and not the Company’s proportionate

Summarized Statements of Operations

Schedule of summarized statements of operations

For the Three

Loss from operations

$ ( 2,287,000 )

$ ( 2,368,000 )

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.

Summarized Balance Sheet Information

Schedule of summarized balance sheet information

Current assets

Non-current assets

Current liabilities

Non-current liabilities

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at September 30, 2023 and

December 31, 2022 consisted of:

Other current liabilities at March 31,

2024 and December 31, 2023 consisted of:

Schedule of other current liabilities

September 30,

Accounts payable

3 unchanged sentences

Accrued legal

Accrued lender profit participation rights

Related party advances

Contract liabilities

Other accrued expenses

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”),

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

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

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

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

the “Preferred Shares”).

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

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

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

DIVIDEND PAYABLE IN TURNONGREEN COMMON

In March 2024, the Company,

in connection with a planned distribution of its common stock holdings of TurnOnGreen, announced the distribution to its stockholders

25.0 million shares of TurnOnGreen common stock and warrants to purchase 25.0 million shares of TurnOnGreen common stock, which resulted

in an adjustment to additional paid in capital and increase to non-controlling interest of $ 4.9 million based on the recorded value of

the Company’s holdings in TurnOnGreen at the record date of the distribution.

ROI TRANSFERS OF WHITE RIVER COMMON STOCK

In January 2024, ROI announced

that it had concluded that, for regulatory reasons, ROI would be unable to effect the distribution of its shares of common stock of White

River as contemplated by a registration statement previously filed by White River.

In an effort to attempt to fulfill its original intent

to transfer the shares to ROI shareholders of record as of September 30, 2022, ROI would send such shareholders an agreement whereby qualified

shareholders can demonstrate to ROI’s satisfaction that they in fact were beneficial shareholders of ROI’s common or preferred

stock as of September 30, 2022 and affirm that they are “accredited investors” by July 26, 2024.

During the quarter ended March

31, 2024, ROI transferred 6.7 million shares of White River common stock with a fair value of $19.2 million at the date of transfer to

certain of its accredited investors to resolve the matters discussed above.

In conjunction with the transfers to non-controlling interests, ROI

converted a portion of their White River’s Series A Convertible Preferred Stock into common stock and recorded a non-cash $17.9

million gain on conversion.

Ault Lending Transfer

On February 14, 2024, ROI transferred 2.5 million shares of White River common stock with a carryover basis of

$0.5 million at the date of transfer to Ault Lending.

As of March 31, 2024, the 2.5 million shares of White River common stock held by

Ault Lending had a fair value of $ 9.4 million and Ault Lending recorded an unrealized gain of $ 8.9 million during the quarter ended March

31, 2024 included in revenue from lending and trading activities.

REDEEMABLE NONCONTROLLING INTERESTS IN

EQUITY OF SUBSIDIARY LIABILITY

The Company records redeemable

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

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

of March 31, 2024, the carrying amount of the redeemable noncontrolling interest in equity of subsidiaries was recorded at its redemption

value of $ 0.8 million.

During the three months ended March 31, 2024, shares of Ault Disruptive common stock were redeemed for an aggregate

redemption amount of $ 1.4 million.

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

the changes in the Company’s redeemable noncontrolling interests in equity of subsidiaries during the three months ended March 31,

Redeemable noncontrolling interests in equity of subsidiary liability

Redeemable noncontrolling interests in equity of subsidiaries as of January 1, 2024

Redemption of ADRT common stock

1 unchanged sentence

Remeasurement of carrying value to redemption value

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

Redeemable noncontrolling interests in equity of subsidiaries as of March 31, 2024

NOTES PAYABLE

Notes payable at September 30, 2023 and

December 31, 2022, were comprised of the following:

Notes payable at March 31,

2024 and December 31, 2023, were comprised of the following:

Schedule of notes payable

Circle 8 revolving credit facility

Circle 8 cranes

December 16, 2025

8.5% secured promissory notes

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.

Circle 8 cranes with a book value of $30.7 million

December 16, 2025

16% promissory note (in default at December 31, 2023)

Ault & Company and Milton C.

Circle 8 equipment financing notes

Circle 8 equipment

Various dates from

March 15, 2024 to

November 15, 2026

3% secured promissory notes

Circle 8 equipment with a book value of $3.8 million

April 15, 2024 through November 15, 2026

8% demand loans

1 unchanged sentence

Renews monthly

XBTO note payable

2,482 Antminers

December 30, 2023

10% secured promissory notes

SMC line of credit

October 14, 2025

Other ($0.4 million in default)

Sentinum note payable

ROI promissory note (in default as of May 1, 2024)

April 30, 2024

Other ($0.9 million in default at March 31, 2024)

Total notes payable

Unamortized debt discounts

( 3,623,000 )

( 12,325,000 )

Total notes payable, net

3 unchanged sentences

Notes payable – long-term portion

ROI 15% Term Note

February 9, 2024, ROI entered into a $ 1.77

million term note agreement with an institutional investor bearing interest of 15 % .

The term note was issued at a discount, with net proceeds to ROI of $ 1.75

The term note was scheduled to mature February 14, 2024.

This note has been guaranteed by Ault & Company and Mr.

The term note was subsequently amended to increase the principal amount due to $ 2.1

million, increase the interest rate to 18 %

and extend the maturity date to April

The term note is in default as of May 1, 2024.

Subsequent Events –

15% Term Notes

On April 29, 2024, the Company entered into a $ 1.7

million term note agreement with an institutional investor bearing interest of 15 % .

The term note was issued at a discount, with net proceeds

to the Company of $ 1.6 million.

The term note was scheduled to mature May 17, 2024 .

On May 16, 2024, the due date was extended to June

2024, the Company entered into a $ 0.5 million term note agreement with an institutional investor bearing interest of 15 % .

The term note

is scheduled to mature June 15, 2024 .

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 September 30,

The contractual maturities

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

as of March 31, 2024 were:

Schedule of maturities

2024 (remainder)

Interest Expense

1 unchanged sentence

For the Three Months Ended

For the Nine Months Ended

September 30,

Contractual interest expense

2 unchanged sentences

Total interest expense

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:

at March 31, 2024 and December 31, 2023, were comprised of the following:

Schedule of notes payable, related party

Interest rate

September 30,

Loan agreement

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:

March 31, 2024

Notes from officers – Ault Alliance

Notes from officers - TurnOnGreen

Notes from board member - ROI

Ault & Company advances

Advances from officers - GIGA

Other related party advances

Total notes payable

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 Nine Months Ended

September 30,

Interest expense, related party

CONVERTIBLE NOTES

Convertible notes payable at September 30, 2023

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

Convertible notes payable at March 31, 2024 and

December 31, 2023, were comprised of the following:

Schedule of convertible notes payable

Conversion price per

Convertible promissory note

Convertible promissory note - OID only

Interest rate

March 31, 2024

December 31, 2023

Convertible promissory notes

June 12, 2024

Convertible promissory note – original issue discount (“OID”) only

90% of 5-day VWAP

September 28, 2024

Avalanche International Corp.

(“AVLP”) convertible promissory notes,

4 unchanged sentences

October 11, 2024

ROI senior secured convertible notes

ROI senior secured convertible note – in default as of May 1,

$ 0.11 (ROI stock)

4 unchanged sentences

( 2,179,000 )

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

Total convertible notes payable, net

of financing cost, long term

current portion

1 unchanged sentence

( 11,763,000 )

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

Convertible notes payable, net of

financing cost – long-term portion

Convertible Promissory Notes

March 11, 2024, the Company entered into a note purchase agreement with two institutional investors pursuant to which the investors agreed

to acquire, and the Company agreed to issue and sell in a registered direct offering to the investors an aggregate of $ 2.0 million

convertible promissory notes, bearing interest of 6 % .

The convertible promissory notes were issued at a discount, with net proceeds

to the Company of $ 1.8 million.

The convertible promissory notes are scheduled to mature June 12, 2024, though the Company has the

option to extend the maturity date to September 12, 2024 , for which the Company will increase the principal amount of the Notes by

The Notes are convertible into shares of Class A common stock at a conversion price of $ 0.35 per share.

ROI Gain on Extinguishment of Senior Secured

Convertible Notes

During the three months ended

March 31, 2024, ROI converted $ 2.3 million of ROI senior secured convertible notes that had a fair value of $ 0.9 million at the time of

conversion and recognized a $ 1.4 million gain on extinguishment of debt.

The contractual maturities

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

option, as of September 30, 2023 were:

option, as of March 31, 2024 were:

Schedule of contractual maturities

Significant inputs associated

with the embedded conversion options include:

inputs associated with the embedded conversion options include:

Schedule of weighted average assumptions

September 30, 2023

March 31, 2024

December 31, 2023

2 unchanged sentences

Risk-free interest rate

4.6 % – 5.3 %

Activity related to the embedded

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

conversion option derivative liabilities for the three months ended March 31, 2024 was as follows:

Schedule of derivative liabilities

Balance as of December 31, 2022

Fair value of embedded conversion options issued

Balance as of January 1, 2024

Change in fair value

( 3,440,000 )

Ending balance as of September 30, 2023

Ending balance as of March 31, 2024

COMMITMENTS AND CONTINGENCIES

23 unchanged sentences

to significant uncertainties.

As of September 30, 2023,

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

The Company had accrued loss

contingencies related to litigation matters $ 2.4 million and $ 2.3 million as of March 31, 2024 and December 31, 2023, respectively.

STOCKHOLDERS’ EQUITY

Reverse Stock Split

On January 12, 2024, pursuant

to the authorization provided by the Company’s stockholders at the annual 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-twenty-five (the “1-for-25 Reverse Split”).

The 1-for-25 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 1-for-25 Reverse Split, each twenty-five shares of common stock issued and outstanding prior to the 1-for-25 Reverse Split were converted

into one share of common stock.

The 1-for-25 Reverse Split became effective in the State of Delaware on January 16, 2024.

2023 Issuances

Common ATM Offering

On February 25, 2022, the

Company entered into an At-The-Market issuance sales agreement with Ascendiant Capital Markets, LLC (“Ascendiant Capital”)

to sell shares of common stock having an aggregate offering price of up to $ 200 million from time to time, through an “at the market

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

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

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

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

2022 Preferred ATM Offering

On June 14, 2022, the Company

entered into an At-The-Market 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.

Effective June 16, 2023, the 2022 Preferred ATM Offering was terminated.

2023 ATM Offering – Common Stock

On June 9, 2023, the Company

entered into an At-The-Market issuance sales agreement with Ascendiant Capital to sell shares of common stock having an aggregate offering

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

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.

Issuance of Common

Stock Upon Conversion of Preferred Stock

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 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 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.

During the three months ended March 31, 2024,

the Company sold an aggregate of 25.6 million shares of Class A common stock pursuant to the At-The-Market issuance sales agreement, as

amended, entered into with Ascendiant Capital Markets, LLC in 2023 (the “2023 Common ATM Offering”) for gross proceeds of

$ 14.6 million.

Series C Convertible Preferred Stock Offering,

Related Party

During the three months ended

March 31, 2024, the Company sold to Ault & Company an aggregate of 2,000 shares of Series C Preferred Stock and Warrants to purchase

0.6 million shares of Class A common stock, for a total purchase price of $ 2.0 million.

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 ( 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 (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

Net loss per share is computed

by dividing the net loss to common stockholders by the weighted average number of common shares outstanding.

The calculation of the basic

and diluted earnings per share is the same for all periods presented as the effect of the potential common stock equivalents is anti-dilutive

due to the Company’s net loss position for all periods presented.

Anti-dilutive securities, which are convertible into or exercisable

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

Schedule of anti-dilutive securities

September 30,

Stock options

Restricted stock grants

Convertible notes

SEGMENT AND CUSTOMERS INFORMATION

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 nine months ended September

Schedule of operating segments

Nine Months Ended

September 30, 2023

cryptocurrency mining

lending and trading activities

crane operations

The Company’s effective tax rate (“ETR”) from continuing operations was 0.4 %

and ( 0.6 % ) for the three

months ended March 31, 2024 and 2023, respectively.

The Company recorded an income tax benefit of $ 44,000

and $ 0.3 million for the three

months ended March 31, 2024 and 2023, respectively.

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

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

federal income tax purposes and changes

in valuation allowance.

NET INCOME (LOSS) PER SHARE

The following table presents

the calculation of basic and diluted net income (loss) per share:

Schedule of basic and diluted net income (loss) per share

For the Three Months Ended

Net income (loss) from continuing operations

$ ( 45,606,000 )

and amortization expense

(loss) from operations

net income (loss) attributable to non-controlling interest, continuing operations

( 6,244,000 )

Preferred stock dividends

( 1,260,000 )

Numerator for basic EPS - Net income (loss) from continuing operations attributable to Ault Alliance, Inc.

( 45,652,000 )

Numerator for basic EPS - Net loss from discontinued operations attributable to Ault Alliance, Inc.

( 1,801,000 )

( 3,223,000 )

Effect of dilutive securities:

Interest expense associated with convertible notes, continuing operations

Series C Convertible Preferred Stock dividend

Numerator for diluted EPS - Net income (loss) from continuing operations attributable to Ault Alliance, Inc., after the effect of dilutive securities

( 45,652,000 )

Numerator for diluted EPS - Net loss from discontinued operations attributable to Ault Alliance, Inc.

$ ( 1,801,000 )

$ ( 3,223,000 )

Denominator for basic EPS - Weighted average shares of common stock outstanding

Effect of dilutive securities:

Convertible notes

Series C Convertible Preferred Stock

Denominator for diluted EPS - Weighted average shares of common stock outstanding after the effect of dilutive securities

Basic net income (loss) per share from:

Continuing operations

Discontinued operations

Basic net income (loss) per share

$ ( 1,039.89 )

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

Diluted net income (loss) per share from:

Continuing operations

Discontinued operations

Diluted net income (loss) per share

$ ( 1,039.89 )

Three Months Ended

September 30, 2023

cryptocurrency mining

lending and trading activities

crane operations

For the three ended March

31, 2023, net loss per share is computed by dividing the net loss to common stockholders by the weighted average number of common shares

The calculation of the basic and diluted earnings per share is the same for the three months ended March 31, 2023, as the

effect of the potential common stock equivalents is anti-dilutive due to the Company’s net loss position for the period.

Anti-dilutive

securities, which are convertible into or exercisable for the Company’s common stock, consist of the following at March 31, 2023:

Schedule of net loss per share

Stock options

SEGMENT AND CUSTOMERS INFORMATION

The Company had the following

reportable segments as of March 31, 2024 and 2023;

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 months ended March 31, 2024:

Schedule of operating segments

Revenue, digital assets mining

Revenue, lending and trading activities

Revenue, crane operations

Total revenues

Depreciation and amortization expense

(Loss) income from operations

$ ( 3,478,000 )

and amortization expense

(loss) from operations

$ ( 495,000 )

2 unchanged sentences

$ ( 5,147,000 )

Interest expense

$ ( 627,000 )

2 unchanged sentences

$ ( 1,601,000 )

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

$ ( 1,397,000 )

$ ( 4,900,000 )

Capital expenditures for the three months ended March 31, 2024

Segment identifiable assets as of March 31, 2024

Assets of discontinued operations

Total identifiable assets as of March 31, 2024

$ 299,777,000

Segment information for the

three and nine months ended September 30, 2022:

Nine Months Ended September 30, 2022

Revenue, cryptocurrency mining

three months ended March 31, 2023:

Revenue, digital assets mining

Revenue, commercial real estate leases

Revenue, crane operations

Revenue, lending and trading activities

Total revenues

Depreciation and amortization expense

Income (loss) from operations

( 4,939,000 )

Total revenues

$ ( 4,939,000 )

Depreciation and amortization expense

Impairment of mined digital assets

(Loss) income from operations

$ ( 2,672,000 )

1 unchanged sentence

$ ( 6,985,000 )

Capital expenditures for the nine months ended September 30, 2022

Three Months Ended September 30, 2022

Revenue, cryptocurrency mining

Revenue, lending and trading activities

Total revenues

Depreciation and amortization expense

$ ( 475,000 )

Income (loss) from operations

$ ( 383,000 )

3 unchanged sentences

$ ( 29,863,000 )

Interest expense

Capital expenditures for the three months ended March 31, 2023

Identifiable assets as of March 31, 2023

$ 119,649,000

Capital expenditures for the three months ended September 30, 2022

Assets of discontinued operations

Total identifiable assets as of March 31, 2023

$ 526,907,000

CONCENTRATIONS OF CREDIT AND REVENUE RISK

The following table summarizes

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

Schedule of concentrations of credit risk

September 30, 2023

December 31, 2022

The following table provides

the percentage of total revenues attributable to customers from which 10 % or more of total revenues are derived:

For the Three Months Ended

For the Nine Months Ended

September 30,

Customer V (Mining Pool Operator)

Customer W (Mining Pool Operator)

* Less than 10%

2024 Concentrations

of Credit and Revenue Risk

receivable are concentrated with two large Energy customers in North America that accounted for 14 % and 11 % of consolidated accounts receivable,

respectively.

For the three

months ended March 31, 2024, one customer, a mining pool operator in North America, represented 20 %

of consolidated revenues.

2023 Concentrations

of Credit and Revenue Risk

receivable are concentrated with two large customers.

At December 31, 2023, one Enertec customer in the Middle East accounted for 14 %

of consolidated accounts receivable, and one Circle 8 customer in North America accounted for 11 % of consolidated accounts receivable.

For the three

months ended March 31, 2023, one customer, a mining pool operator in North America, represented 25 % of consolidated revenues.

SUBSEQUENT EVENTS

2023 Common ATM

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

Additional Closing of Series C Preferred Stock, Related Party

On April 17, 2024, the Company

sold to Ault & Company 500 shares of Series C Preferred Stock and Warrants to purchase 0.1 million shares of Class A common stock,

for a total purchase price of $ 0.5 million.

Amendment to Loan and Guarantee

On May 15, 2024, the loan and guarantee agreement, under which the Company has financial guarantee obligations

related to Ault & Company borrowings, was amended to extend the deadline, from May 15, 2024 to July 22, 2024, by which the Company

is required to have the minimum balance in the restricted cash account, and the minimum specified balance was increased from $7 million

to $7.4 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