What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-16 compared with 2024-05-20 · 892 added, 473 removed, 771 unchanged (64% of the section changed)

11 unchanged sentences

Prepaid expenses and other current assets

Current assets of discontinued operations

TOTAL CURRENT ASSETS

15 unchanged sentences

Guarantee liability

Current liabilities of discontinued operations

TOTAL CURRENT LIABILITIES

14 unchanged sentences

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

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

7,040 shares issued and outstanding at June 30, 2024 and December 31, 2023 (liquidation preference of $ 176,000 as of June 30, 2024 and December 31, 2023)

Series C Convertible Preferred Stock, $ 1,000 stated value per share, share, $ 0.001 par value – 75,000 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)

44,000 and 41,500 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively (liquidation preference of $ 44,000,000 and $ 41,500,000 at June 30, 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;

323,835 shares and 425,197 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively (liquidation preference of $ 8,096,000 as of June 30, 2024 and December 31, 2023)

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

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

35,846,318 and 4,483,459 shares issued and outstanding at June 30, 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 March 31, 2024 and December 31, 2023

0 shares issued and outstanding at June 30, 2024 and December 31, 2023

Additional paid-in capital

21 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Revenue, digital assets mining

Revenue, hotel and real estate operations

Revenue, crane operations

4 unchanged sentences

Cost of revenue, digital assets mining

Cost of revenue, hotel and real estate operations

Cost of revenue, crane operations

5 unchanged sentences

General and administrative

Impairment of property and equipment

Impairment of goodwill and intangible assets

Impairment of mined digital assets

Total operating expenses

Income (loss) from operations

Loss from operations

( 26,925,000 )

( 50,505,000 )

( 26,306,000 )

( 81,923,000 )

Other income (expense):

3 unchanged sentences

( 15,927,000 )

( 12,306,000 )

( 29,657,000 )

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

Gain (loss) on extinguishment of debt

(Loss) gain on extinguishment of debt

Loss from investment in unconsolidated entity

( 1,291,000 )

( 1,958,000 )

Impairment of equity securities

( 6,266,000 )

( 9,555,000 )

Provision for loan losses, related party

( 3,068,000 )

Gain on the sale of fixed assets

Change in fair value of warrant liability

(Loss) gain on the sale of fixed assets

( 1,754,000 )

Total other income (expense), net

( 12,830,000 )

Income (loss) before income taxes

( 12,379,000 )

Income tax benefit

Net income (loss) from continuing operations

( 3,532,000 )

Net loss from discontinued operations

( 30,053,000 )

Loss before income taxes

( 39,755,000 )

Net income (loss)

( 62,884,000 )

( 29,838,000 )

( 111,976,000 )

Income tax provision (benefit)

( 39,779,000 )

( 64,252,000 )

( 29,818,000 )

( 113,081,000 )

Net (income) loss attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

( 33,927,000 )

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

( 60,683,000 )

( 30,210,000 )

( 109,329,000 )

Preferred dividends

( 1,308,000 )

Net income (loss) available to common stockholders

( 2,568,000 )

Basic net income (loss) per common share:

Continuing operations

Discontinued operations

Basic net income (loss) per common share

Net loss available to common stockholders

$ ( 35,235,000 )

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

$ ( 61,004,000 )

$ ( 32,778,000 )

$ ( 109,879,000 )

Basic net loss per common share

$ ( 1,244.98 )

$ ( 2,289.15 )

Diluted net loss per common share

$ ( 1,244.98 )

$ ( 2,289.15 )

Weighted average basic and diluted common shares outstanding

Comprehensive loss

Net loss available to common stockholders

$ ( 35,235,000 )

$ ( 61,004,000 )

$ ( 32,778,000 )

$ ( 109,879,000 )

Foreign currency translation adjustment

Other comprehensive income

Total comprehensive income (loss)

Other comprehensive loss

Total comprehensive loss

$ ( 35,671,000 )

$ ( 61,524,000 )

$ ( 33,178,000 )

$ ( 110,229,000 )

The accompanying notes are an integral part of

4 unchanged sentences

IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Preferred Stock

2 unchanged sentences

Stockholders’

BALANCES, April 1, 2024

$ 656,587,000

$ ( 565,035,000 )

$ ( 2,061,000 )

$ ( 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 Class A common stock for conversion of debt

Remeasurement of Ault Disruptive subsidiary temporary equity

Increase in ownership interest of subsidiary

Sale of subsidiary stock to non-controlling interests

Distribution to Circle 8 Crane Services, LLC (“Circle 8”)

non-controlling interest

Net loss attributable to Ault Alliance, Inc.

( 33,927,000 )

Series A preferred dividends ($0.71 per share)

Series C preferred dividends ($23.63 per share)

( 1,040,000 )

Series D preferred dividends ($0.81 per share)

Foreign currency translation adjustments

Net income attributable to non-controlling interest

( 5,852,000 )

BALANCES, June 30, 2024

$ 660,036,000

$ ( 600,282,000 )

$ ( 2,497,000 )

$ ( 440,000 )

$ ( 30,571,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2023

Preferred Stock

Class A Common Stock

Comprehensive

Stockholders’

BALANCES, April 1, 2023

$ 575,074,000

$ ( 378,633,000 )

$ ( 931,000 )

$ ( 29,432,000 )

$ 190,343,000

Preferred stock issued for cash

Preferred stock offering costs

( 3,388,000 )

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

Remeasurement of Ault Disruptive subsidiary temporary

( 4,736,000 )

Increase in ownership interest of subsidiary

( 1,223,000 )

( 1,221,000 )

Sale of subsidiary stock to non-controlling interests

Distribution to Circle 8 non-controlling interest

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

Net loss attributable to Ault Alliance, Inc.

( 60,683,000 )

Series A preferred dividends ($0.63 per share)

Series D preferred dividends ($0.81 per share)

Foreign currency translation adjustments

Net loss attributable to non-controlling interest

( 3,569,000 )

Distribution of securities of TurnOnGreen, Inc.

(“TurnOnGreen”) to Ault Alliance Class A common

stockholders ($88.07 per share)

( 5,200,000 )

BALANCES, June 30, 2023

$ 573,388,000

$ ( 444,371,000 )

$ ( 1,450,000 )

$ ( 29,919,000 )

$ 121,501,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES

IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2024

Preferred Stock

Class A Common Stock

Comprehensive

Stockholders’

BALANCES, January 1, 2024

4 unchanged sentences

Issuance of Series C preferred stock, related party

Fair value of warrants issued in connection with 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 Class A common stock for cash

Financing cost in connection with sales of Class A common stock

Financing cost in connection with sales of Class A

Issuance of Class A common stock for conversion of debt

Remeasurement of Ault Disruptive subsidiary temporary

Increase in ownership interest of subsidiary

Sale of subsidiary stock to non-controlling interests

Distribution to Circle 8 Crane

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

Conversion of RiskOn International, Inc.

(“ROI”) convertible note

Distribution to Circle 8 non-controlling interest

Conversion of ROI convertible note

Net loss attributable to Ault Alliance, Inc.

( 30,210,000 )

Series A preferred dividends ($1.28 per share)

Series C preferred dividends ($47.17 per share)

( 2,032,000 )

Series D preferred dividends ($1.62 per share)

1 unchanged sentence

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)

Distribution of securities of 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

Distribution of ROI investment in White River to

ROI stockholders

( 19,210,000 )

BALANCES, March 31, 2024

BALANCES, June 30, 2024

$ 660,036,000

2 unchanged sentences

$ ( 440,000 )

$ ( 30,571,000 )

The accompanying notes are an integral part of

4 unchanged sentences

IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Preferred Stock

Class A Common

Class A Common Stock

Comprehensive

6 unchanged sentences

$ 223,988,000

Issuance of Class A common stock for

restricted stock awards

Issuance of Class A common stock for restricted stock awards

Preferred stock issued for cash

4 unchanged sentences

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

Increase in ownership interest

of subsidiary

Financing cost in connection with sales of common stock

Issuance of Class A common stock for conversion of preferred

stock liabilities

Remeasurement of Ault Disruptive subsidiary temporary

( 5,415,000 )

Increase in ownership interest of subsidiary

( 1,245,000 )

( 1,232,000 )

Non-controlling position at ROI subsidiary acquired

Purchase of treasury stock - Ault Alpha, LP

Sale of subsidiary stock to non-controlling interests

Distribution to Circle 8 non-controlling interest

Purchase of treasury stock - Ault Alpha

Net loss attributable to Ault Alliance, Inc.

( 109,329,000 )

4 unchanged sentences

Net loss attributable to non-controlling interest

BALANCES, March 31, 2023

( 3,752,000 )

Distribution of securities of TurnOnGreen to Ault Alliance

Class A common stockholders ($88.07 per share)

( 5,200,000 )

BALANCES, June 30, 2023

$ 573,388,000

$ ( 444,371,000 )

$ ( 1,450,000 )

$ ( 29,919,000 )

$ 121,501,000

The accompanying notes are an integral part of

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from operating activities:

Net income (loss)

$ ( 29,818,000 )

Net loss from discontinued operations

$ ( 113,081,000 )

( 3,223,000 )

Net income (loss) from continuing operations

( 45,606,000 )

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

operating activities:

Adjustments to reconcile net 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

Stock-based compensation

1 unchanged sentence

( 2,761,000 )

Impairment of property and equipment

Impairment of equity securities

1 unchanged sentence

Realized gain on the sale of digital assets

Change in fair value of digital assets

Revenue, digital assets mining

2 unchanged sentences

Realized gains on sale of marketable securities

( 2,946,000 )

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

Unrealized gains on marketable securities

( 17,900,000 )

Unrealized losses (gains) on marketable securities

( 3,367,000 )

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

Unrealized losses on investments in common stock, related parties

Income from cash held in trust

( 2,533,000 )

Loss from investment in unconsolidated entity

Provision for loan losses

Provision for loan losses, related party

(Gain) loss on extinguishment of debt

Change in the fair value of warrant liability

( 3,217,000 )

(Gain) loss on extinguishment of debt

( 1,196,000 )

3 unchanged sentences

Accounts receivable

( 2,374,000 )

Prepaid expenses and other current assets

Accounts payable and accrued expenses

( 2,078,000 )

Accounts payable and accrued expenses

( 1,002,000 )

Lease liabilities

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

( 1,414,000 )

Net cash used in operating activities from discontinued operations

( 1,532,000 )

( 2,646,000 )

Net cash (used in) provided by operating activities

3 unchanged sentences

( 3,897,000 )

( 11,346,000 )

Investments in loans receivable

Investments in non-marketable equity securities

Proceeds from the sale of fixed assets

Net cash used in investing activities from continuing operations

( 10,544,000 )

Net cash used in investing activities from discontinued operations

Proceeds from the sale of fixed assets

( 1,310,000 )

7 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash flows from financing activities:

4 unchanged sentences

( 3,431,000 )

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

Proceeds from sales of Series C preferred stock and warrants, related party

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

14 unchanged sentences

( 1,230,000 )

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 (used in) financing activities

( 8,097,000 )

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

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

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

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

( 2,144,000 )

( 2,601,000 )

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

Supplemental disclosures of cash flow information:

Cash paid during the period for interest - continuing operations

Cash paid during the period for interest - discontinued operations

Non-cash investing and financing activities:

1 unchanged sentence

Settlement of interest payable with digital assets

Settlement of note payable with digital assets

Settlement of notes payable with digital assets

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

6 unchanged sentences

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

$ 120,064,000

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

3 unchanged sentences

DESCRIPTION OF BUSINESS

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

Ault 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 a metaverse platform, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma,

hotel operations and textiles.

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

The Company has the following

reportable segments:

· Energy and Infrastructure (“Energy”)

– crane operations, advanced textiles processing and oil exploration;

· Technology and Finance (“Fintech”)

– commercial lending, activist investing, and stock trading;

· Sentinum, Inc.

(“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;

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

· Ault Disruptive – a special purpose acquisition company.

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.

(“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 industry;

· TurnOnGreen – electric vehicle electrification

infrastructure and commercial electronics solutions;

· ROI – immersive metaverse platform, media,

and digital learning;

· Ault Global Real Estate Equities, Inc.

– hotel operations and other commercial real estate holdings;

· Ault Disruptive – a special purpose acquisition

LIQUIDITY AND FINANCIAL CONDITION

As of June 30, 2024, the Company

had cash and cash equivalents of $ 9.6 million, negative working capital of $ 162.4 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.

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

9 unchanged sentences

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

Company’s existing cash and cash equivalents, accounts receivable and marketable securities as of June 30, 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.

6 unchanged sentences

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

and Regulation S-X and do not include all the information and disclosures required by generally accepted accounting principles in the

United States of America (“GAAP”).

The Company has made estimates and judgments affecting the amounts reported in the Company’s

condensed consolidated financial statements and the accompanying notes.

The actual results experienced by the Company may differ materially

from the Company’s estimates.

The condensed consolidated financial information is unaudited but reflects all normal adjustments

that are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented.

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

Annual Report on Form 10-K for the year ended December 31, 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.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING

The accompanying unaudited

condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Regulation S-X and

do not include all the information and disclosures required by generally accepted accounting principles in the United States of America

The Company has made estimates and judgments affecting the amounts reported in the Company’s condensed consolidated

financial statements and the accompanying notes.

The actual results experienced by the Company may differ materially from the Company’s

The condensed consolidated financial information is unaudited but reflects all normal adjustments that are, in the opinion

of management, necessary to provide a fair statement of results for the interim periods presented.

These condensed consolidated

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

Form 10-K for the year ended December 31, 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 and six months ended June

30, 2024, are not necessarily indicative of the results to be expected for the full year ending December 31, 2024.

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 2023 Annual Report.

Revenue Recognition Digital Asset Mining

The Company has entered into

a digital asset mining pool by executing a contract with a mining pool operator to provide hash calculation services to the mining pool.

The Company’s customer, as defined in Accounting Standards Codification (“ASC”) 606-10-20, is the mining pool operator

with which the Company has agreed to the terms of service and user service agreement.

The Company supplies hash calculation services,

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 performance obligation is the provision of hash calculation services to the

pool operator and this performance obligation is an output of the Company’s ordinary activities for which it decides when to provide

services under the contract.

The Company’s enforceable

right to compensation begins only when, and lasts as long as, the Company provides hash calculation services 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 hash calculation

The contract with the pool operator provides both parties the unilateral enforceable right to terminate the contract at any

time without penalty.

The customer termination option results in a contract that continuously renews throughout the day and therefore

has a duration of less than 24 hours.

The implied renewal option is not a material right because there are no upfront or incremental fees

in the initial contract and the terms, conditions, and compensation amount for the renewal options are at the then market rates.

such hash calculation services 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 earned.

Fees fluctuate and historically have been approximately

0.3% per reward earned, on average.

The Company participated in

mining pools that used the full pay-per-share (“FPPS”) payout method for the six months ended June 30, 2024.

The Company is

entitled to compensation once it begins to perform hash calculations for the pool operator in accordance with the operator’s specifications

over a 24-hour period beginning midnight UTC and ending 23:59:59 UTC on a daily basis.

The non-cash consideration that the Company is

entitled to for providing hash calculations to the pool operator under the FPPS payout method is made up of block rewards and transaction

fees less pool operator fees determined as follows:

· The non-cash consideration in the form of a block reward is based on the total blocks expected to be generated

on the Bitcoin network for the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC in accordance with the following formula:

the daily hash calculations that the Company provided to the pool operator as a percent of the Bitcoin network’s implied hash calculations

as determined by the network difficulty, multiplied by the total Bitcoin network block rewards expected to be generated for the same daily

· The non-cash consideration in the form of transaction fees paid by transaction requestors is based on

the share of standard transaction fees over the daily 24-hour period beginning midnight UTC and ending 23:59:59 UTC.

The pool operator

calculates the standard transaction fee during the 24-hour period using a rolling 144 block moving average of actual transaction fees.

· The block reward and transaction fees earned by the Company are reduced by mining pool fees charged by

the operator for operating the pool based on a rate schedule per the mining pool contract.

The mining pool fee is only incurred to the

extent the Company performs hash calculations and generates revenue in accordance with the pool operator’s payout formula during

the same 24-hour period beginning midnight UTC daily.

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.

The Company is able

to calculate the payout based on the contractual formula, non-cash revenue is estimated and recognized based on the fair value of Bitcoin

on the date of contract inception.

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

Company’s principal market for Bitcoin.

The Company recognizes non-cash consideration on the same day that control of the contracted

service is transferred to the pool operator, which is the same day as the contract inception.

There is no significant financing

component in these transactions.

Expenses associated with running

the digital assets mining business, such as equipment depreciation and electricity costs, are recorded as a component of cost of revenues.

Revenue Recognition Hotel Operations

The primary sources of revenue

include room and food and beverage revenue from the Company’s hotels.

Rooms revenue represents revenue

from the occupancy of the Company’s hotel rooms, which is driven by the occupancy and average daily rate charged.

Rooms revenue

includes revenue from guest no-shows, daily use, and early/late departure fees.

The contracts for room stays with customers are generally

short in duration and revenues are recognized as services are provided over the course of the hotel stay at the daily transaction price

agreed to under the contract.

Food and beverage revenue

consists of revenue from the restaurants and lounges, in room dining and mini bars, and banquet/catering revenue from group and social

Payment of the transaction price is due immediately when the customer purchases the goods and services.

Therefore, revenue

is recognized at a point in time when the physical possession has transferred to the customer.

Reclassifications

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

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

Issued Accounting Standards

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 Issued Accounting Standards

On December 14, 2023, the

19 unchanged sentences

The Company is currently evaluating the impact of adopting the

ASSETS HELD FOR SALE AND DISCONTINUED 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

Cash and cash equivalents

Restricted cash

Accounts receivable

Property and equipment, net - current

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Accounts payable and accrued expenses

Notes payable, current

Total current liabilities

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 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

Revenue, hotel and real estate operations

Cost of revenue, hotel operations

General and administrative

Total operating expenses

Loss from operations

( 1,555,000 )

Interest expense

( 1,583,000 )

( 1,668,000 )

Net loss from discontinued operations

$ ( 1,801,000 )

$ ( 3,223,000 )

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

1 unchanged sentence

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.

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

met the held for sale criteria and were required to be reclassified as held and used at the lower of adjusted carrying value or the fair

value at the date of the not to sell.

For presentation

purposes, the assets and liabilities previously held for sale as of December 31, 2023, were reclassified in the December 31, 2023

balance sheet in the accompanying financial statements back to their original asset and liability groups at their previous carrying

In connection with this change in plan of sale, the Company recorded a loss on impairment of property and equipment related

to the real estate assets of AGREE of $ 8.0

million during the three months ended June 30, 2024.

The fair values of property and equipment related to the real estate

assets of AGREE were based on a discounted cash flow income approach for the hotel properties and a comparable sales market approach for

the vacant land assets.

REVENUE DISAGGREGATION

The following tables summarize

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

disaggregated customer contract revenues and the source of the revenue for the three months ended June 30, 2024 and 2023.

Revenues from

2 unchanged sentences

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):

revenues consisted of the following for the three months ended June 30, 2024 (excludes Ault Disruptive, as that segment has no revenue):

Schedule of disaggregated revenues

4 unchanged sentences

Revenue, lending and trading activities (North America)

( 9,763,000 )

Total revenue

$ ( 9,763,000 )

Major Goods or Services

4 unchanged sentences

Digital assets mining

Hotel and real estate operations

Revenue from contracts with customers

Revenue, lending and trading activities

( 9,763,000 )

Total revenue

$ ( 9,763,000 )

Timing of Revenue Recognition

3 unchanged sentences

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.

revenues consisted of the following for the six months ended June 30, 2024 (excludes Ault Disruptive, as that segment has no revenue):

Primary Geographical Markets

3 unchanged sentences

Revenue, lending and trading activities (North America)

( 4,939,000 )

Total revenue

6 unchanged sentences

Digital assets mining

Karaoke machines and related consumer goods

Hotel and real estate operations

Revenue from contracts with customers

Revenue, lending and trading activities

( 4,939,000 )

Total revenue

4 unchanged sentences

Revenue from contracts with customers

The Company’s disaggregated

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

Primary Geographical Markets

North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities (North America)

Total revenue

Major Goods or Services

RF/microwave filters

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Hotel and real estate operations

Karaoke machines and related consumer goods

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred over time

Revenue from contracts with customers

The Company’s disaggregated

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

Primary Geographical Markets

North America

Middle East and other

Revenue from contracts with customers

Revenue, lending and trading activities (North America)

Total revenue

Major Goods or Services

RF/microwave filters

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Hotel and real estate operations

Karaoke machines and related consumer goods

Revenue from contracts with customers

Revenue, lending and trading activities

Total revenue

Timing of Revenue Recognition

Goods transferred at a point in time

Services transferred over time

Revenue from contracts with customers

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

the fair value hierarchy:

The following table sets forth

the Company’s financial instruments that were measured at fair value on a recurring basis by level within the fair value hierarchy:

Fair value, assets measured on recurring basis

Fair Value Measurement at March 31, 2024

Investment in common stock of Alzamend

Fair Value Measurement at June 30, 2024

Investment in common stock of Alzamend Neuro, Inc.

(“Alzamend”) – a related party

1 unchanged sentence

Cash and marketable securities held in trust account

Digital assets

Total assets measured at fair value

17 unchanged sentences

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:

The changes in Level 3 fair value hierarchy during

the three and six months ended June 30, 2024 and 2023 were as follows:

Schedule of changes in fair value hierarchy

3 unchanged sentences

Level 3 Balance

Three months ended March 31, 2024

at End of Period

Six months ended June 30, 2024

Warrant and embedded conversion feature liabilities

2 unchanged sentences

( 4,275,000 )

Three months ended March 31, 2023

Six months ended June 30, 2023

Warrant and embedded conversion feature liabilities

2 unchanged sentences

Convertible promissory notes

Level 3 Balance

at Beginning of

and/or out of

Level 3 Balance

at End of Period

Three months ended June 30, 2024

Warrant and embedded conversion feature liabilities

Convertible promissory notes

( 2,200,000 )

Three months ended June 30, 2023

Warrant and embedded conversion feature liabilities

$ ( 1,911,000 )

Series E, F and G preferred stock liabilities

Convertible promissory notes

EQUITY INVESTMENTS FOR WHICH MEASUREMENT ALTERNATIVE HAS BEEN SELECTED

of June 30, 2024 and December 31, 2023, the Company held equity investments in other securities valued at $ 13.8 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 June 30, 2024 and 2023, totaling $ 6.3 million and $ 11.6 million, respectively.

Approximately $ 6.3 million of

the impairment charge for the three and six months ended June 30, 2024 was reflected in other income (expense) on the condensed consolidated

statement of operations and comprehensive loss.

Approximately $ 9.6 million of the impairment charge for the three months ended June 30,

2023 was reflected in other income (expense) and $2.0 million of the impairment charge related to Fintech lending operations and was recorded

against revenue from lending and trading activities on the condensed consolidated statement of operations and comprehensive loss.

MARKETABLE EQUITY SECURITIES

Marketable equity securities

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

with readily determinable market prices consisted of the following as of June 30, 2024 and December 31, 2023:

Schedule of marketable securities

Marketable equity securities at March 31, 2024

Marketable equity securities at June 30, 2024

Gross unrealized

11 unchanged sentences

The following table presents

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

revenue from mined digital assets for the three and six months ended June 30, 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

For the Six Months Ended

Revenue from mined digital assets at Sentinum owned and operated facilities

Revenue from Sentinum digital 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

the activities of the digital assets (included in prepaid expenses and other current assets) for the six months ended June 30, 2024 and

Schedule of activities of the digital assets

Digital Assets

Balance at January 1, 2024

Additions of mined digital assets

Payments to vendors

Sale of digital assets

( 15,534,000 )

Payments to vendors with digital assets

Payment of notes payable with digital assets

2 unchanged sentences

Unrealized gain on digital assets

Balance at March 31, 2024

Balance at June 30, 2024

Digital Assets

Balance at January 1, 2023

Additions of mined digital assets

Payments to vendors

Sale of digital assets

( 15,040,000 )

Payments to vendors with digital assets

Impairment of mined digital assets

Realized gain on sale of digital assets

Balance at March 31, 2023

Balance at June 30, 2023

PROPERTY AND EQUIPMENT, NET

At March 31, 2024 and December

At June 30, 2024 and December

31, 2023, property and equipment consisted of:

Schedule of property and equipment

March 31, 2024

June 30, 2024

December 31, 2023

Building, land and improvements

$ 101,524,000

Digital assets mining equipment

11 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Depreciation expense

INTANGIBLE ASSETS, NET

At March 31, 2024 and December 31, 2023,

At June 30, 2024 and December 31, 2023,

intangible assets consisted of:

Schedule of intangible asset

March 31, 2024

June 30, 2024

December 31, 2023

15 unchanged sentences

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

Schedule of indefinite-lived intangible assets

Summary of amortization expense:

Schedule of amortization expense

For the Three Months Ended

For the Six Months Ended

Amortization expense

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.

As of June 30, 2024, intangible

assets subject to amortization have an average remaining useful life of 7.5 years.

The following table presents estimated amortization

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

Schedule of estimated amortization expense

1 unchanged sentence

The following table summarizes

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

the changes in the Company’s goodwill for the six months ended June 30, 2024:

Schedule of goodwill

1 unchanged sentence

Effect of exchange rate changes

Balance as of March 31, 2024

Balance as of June 30, 2024

INVESTMENTS – RELATED PARTIES

1 unchanged sentence

Ault & Company, Inc.

(“Ault & Company”) at March 31, 2024 and December 31, 2023, were comprised of the following:

(“Ault & Company”) at June 30, 2024 and December 31, 2023, were comprised of the following:

Investment in Promissory Notes, Related

9 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Interest income, related party

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

During the three months ended

March 31, 2024, 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 Alzamend Series B Convertible

Preferred Stock, Warrants and Common Stock, Related Parties – Alzamend

Schedule of investment in common stock

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

Investments in common stock, related parties at June 30, 2024

Gross unrealized losses

1 unchanged sentence

$ ( 24,393,000 )

Alzamend series B convertible preferred stock, warrants

Investments in common stock, related parties at December 31, 2023

3 unchanged sentences

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:

the changes in the Company’s investments in Alzamend common stock during the three months ended June 30, 2024 and 2023:

Schedule of investment in warrants and common stock

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Balance at April 1

Investment in common stock of Alzamend

Unrealized gain (loss) in common stock of Alzamend

Balance at June 30

The following table summarizes

the changes in the Company’s investments in Alzamend common stock during the six months ended June 30, 2024 and 2023:

For the Six Months Ended June 30,

Balance at January 1

1 unchanged sentence

Unrealized gain (loss) in common stock of Alzamend

( 1,598,000 )

Balance at March 31

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

B Convertible Preferred Stock and Warrants

Balance at June 30

Ault Lending, LLC (“Ault Lending”)

Investment in Alzamend Series B Convertible Preferred Stock and Warrants

Schedule of investment in warrants and preferred stock

1 unchanged sentence

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.

In connection with a securities

purchase agreement entered into with Alzamend in January 2024, the Company purchased 2,100 shares of Alzamend Series B Convertible Preferred

Stock and warrants to purchase 2.1 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 $2.1 million.

The Agreement provides that

7 unchanged sentences

Equity Investments in Unconsolidated Entity

– The Singing Machine Company, Inc.

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

balance sheet, during the three months ended June 30, 2024:

Schedule of equity investments in unconsolidated entity – SMC

Rollforward investment in unconsolidated entity

Beginning balance - April 1, 2024

Loss from investment in unconsolidated entity

( 1,290,000 )

Ending balance - June 30, 2024

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 six months ended June 30, 2024:

Rollforward investment in unconsolidated entity

Beginning balance - January 1, 2024

Loss from investment in unconsolidated entity

Ending balance - March 31, 2024

( 1,957,000 )

Ending balance - June 30, 2024

The following table provides

8 unchanged sentences

$ ( 8,441,000 )

$ ( 6,119,000 )

$ ( 8,486,000 )

Summarized Balance Sheet Information

5 unchanged sentences

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at March 31,

Other current liabilities at June 30,

2024 and December 31, 2023 consisted of:

5 unchanged sentences

Accrued legal

Contract liabilities

Accrued lender profit participation rights

Other accrued expenses

5 unchanged sentences

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

TRANSFERS OF WHITE RIVER COMMON STOCK

In January of 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

4 unchanged sentences

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

During the six months ended

June 30, 2024, ROI transferred 12.0 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, shares of ROI’s investment in White River’s Series A Convertible Preferred Stock

were converted into shares of White River common stock, resulting in 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.

On February 14, 2024, ROI

transferred 2.5 million shares of White River common stock with a carryover basis of $0.5 million and a fair value of $7.5 million on

the date of transfer to Ault Lending.

REDEEMABLE NONCONTROLLING INTERESTS IN

2 unchanged sentences

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

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

of June 30, 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

During the six months ended June 30, 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 three months ended March 31,

the changes in the Company’s redeemable noncontrolling interests in equity of subsidiaries during the three months ended June 30,

2024 and 2023:

Redeemable noncontrolling interests in equity of subsidiary liability

For the Three Months Ended

Redeemable noncontrolling interests in equity of subsidiaries as of April 1

$ 118,672,000

Redemption of ADRT common stock

( 120,064,000 )

Remeasurement of carrying value to redemption value

Redeemable noncontrolling interests in equity of subsidiaries as of June 30

The following table summarizes

the changes in the Company’s redeemable noncontrolling interests in equity of subsidiaries during the six months ended June 30,

2024 and 2023:

For the Six Months Ended

Redeemable noncontrolling interests in equity of subsidiaries as of January 1

$ 117,993,000

Redemption of ADRT common stock

( 1,463,000 )

( 120,064,000 )

Remeasurement of carrying value to redemption value

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

Redeemable noncontrolling interests in equity of subsidiaries as of June 30

NOTES PAYABLE

Notes payable at March 31,

Notes payable at June 30,

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

Schedule of notes payable

Interest rate

June 30, 2024

December 31, 2023

AGREE secured construction loans

January 1, 2025

Circle 8 revolving credit facility

1 unchanged sentence

December 16, 2025

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

16% promissory note (in default)

Ault & Company and Milton C.

July 15, 2024

Circle 8 equipment financing notes

Circle 8 equipment with a book value of $4.5 million

April 15, 2024 through November 15, 2026

September 15, 2025 through June 15, 2027

15% term notes

September 30, 2024

15% promissory notes

December 4, 2024

8% demand loans

2 unchanged sentences

Sentinum note payable

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

ROI promissory note (in default)

April 30, 2024

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

Other ($0.9 million in default)

Total notes payable

$ 106,839,000

Unamortized debt discounts

Total notes payable, net

$ 106,091,000

current portion

3 unchanged sentences

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

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 million.

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

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

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

million, increase the interest rate to 18 % and extend the maturity date to April 30, 2024 .

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 .

2024, the Company entered into note agreements totaling $ 3.5 million with an institutional investor bearing interest of 15 % .

notes were issued at a discount, with net proceeds to the Company of $ 3.1 million.

The term notes were amended to extend the maturity

dates to September 30, 2024 .

$20 Million Credit Agreement

2024 the Company entered into a Loan Agreement (the “Credit Agreement”) with two institutional investors (collectively, the

The Credit Agreement provides for an unsecured, non-revolving credit facility with an aggregate draw limit of $ 20.0

However, the Company is restricted to having no more than $ 2.0 million in principal amount of outstanding advances at any given

time under the Credit Agreement.

As of June 30, 2024, $ 2.0 million has been advanced,

exclusive of $ 0.4 million original issue discount.

under the Credit Agreement will be evidenced by a promissory note.

The Lender made an Advance to the Company of $1.5 million on the execution

The advances are due December 4, 2024 , provided, however, that if on such date, the Company has executed an equity line of credit

agreement relating to the sale of shares of the Company’s 13.00% Series D Cumulative Redeemable Perpetual Preferred Stock, has an

effective registration statement relating thereto and is not currently in default under such agreement, then the maturity date shall be

automatically extended until June 4, 2025.

The Lender is not obligated to make any further Advances under the Credit Agreement after the

maturity date.

Advances under the Credit Agreement will include the addition of an original issuance discount of 20 % to the amount of

each Advance and all Advances will bear interest at the rate of 15.0 % per annum and may be repaid at any time without penalty or premium.

The obligations

of the Company under the Credit Agreement are secured by a guaranty provided by Milton C.

Ault, the Executive Chairman of the Company.

Notes Payable Maturities

1 unchanged sentence

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:

as of June 30, 2024 were:

Schedule of maturities

2024 (remainder)

$ 106,839,000

Interest Expense

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

Contractual interest expense

4 unchanged sentences

Notes payable, related party

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

at June 30, 2024 and December 31, 2023, were comprised of the following:

Schedule of notes payable, related party

Interest rate

March 31, 2024

June 30, 2024

December 31, 2023

Notes from officers – Ault Alliance

5 unchanged sentences

Total notes payable

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

Summary of interest expense,

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

Schedule of interest expense, related party

For the Three Months Ended

For the Six Months Ended

Interest expense, related party

CONVERTIBLE NOTES

Convertible notes payable at March 31, 2024 and

Convertible notes payable at June 30, 2024 and

December 31, 2023, were comprised of the following:

2 unchanged sentences

Interest rate

March 31, 2024

December 31, 2023

Convertible promissory notes

June 30, 2024

December 31, 2023

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

2 unchanged sentences

Avalanche International Corp.

(“AVLP”) convertible promissory notes,

(“AVLP”) convertible promissory notes, principal

$ 0.35 (AVLP stock)

3 unchanged sentences

October 11, 2024

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

ROI senior secured convertible note - in default (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 Promissory Notes

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

(1) See Arena litigation discussed in Note 22 below.

6% Convertible Promissory

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

1 unchanged sentence

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.

The convertible promissory notes were converted into shares of Class A common

stock in May 2024 at a conversion price of $ 0.35 per share and the Company recognized a $ 0.7 million loss on extinguishment

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

During the six months ended

June 30, 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.

1 unchanged sentence

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

option, as of March 31, 2024 were:

option, as of June 30, 2024 were:

Schedule of contractual maturities

inputs associated with the embedded conversion options include:

Significant inputs associated

with the embedded conversion options include:

Schedule of weighted average assumptions

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Activity related to the embedded

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

conversion option derivative liabilities for the six months ended June 30, 2024 was as follows:

Schedule of derivative liabilities

1 unchanged sentence

Change in fair value

Ending balance as of March 31, 2024

Ending balance as of June 30, 2024

COMMITMENTS AND CONTINGENCIES

17 unchanged sentences

being and the estimated amount of a loss related to such matters.

Arena Litigation

Arena Investors, LP (ROI Litigation)

On May 30, 2024, Arena Investors,

LP (“Arena”), in its capacity as collateral agent for five noteholders, filed a filed a Complaint (the “ROI Complaint”)

in the Supreme Court of the State of New York, County of New York against the Company and ROI, in action captioned Arena Investors,

Ault Alliance, Inc.

and RiskOn International, Inc.

The ROI Complaint asserts

a cause of action for breach of contract against the Company based on a Guaranty, dated April 27, 2023, and entered into, amongst others,

the Company and Arena, and seeks damages in the amount of in excess of $ 3.75 million, plus interest, attorneys’ fees, costs, expenses,

and disbursements.

The ROI Complaint also asserts

a cause of action for breach of contract against ROI based on an alleged breach of that certain Security Agreement, dated April 27, 2023,

and entered into among ROI and Arena.

In connection with this cause of action, Arena seeks, among other things, costs and expenses from

the Company and ROI.

On July 31, 2024, the Company

and ROI filed a motion to dismiss seeking to partially dismiss the ROI Complaint, as against the Company, and to dismiss the Compliant,

in its entirety, as against ROI.

The deadline for Arena to

file its opposition to the motion to dismiss is September 27, 2024.

Based on the Company’s

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

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

Notwithstanding, the Company has recorded the

unpaid portion of the notes.

An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition

and results of operations.

Arena Investors, LP (Gresham Litigation)

On June 6, 2024, Arena, in

its capacity as collateral agent for Arena and Walleye Opportunities Master Fund Ltd.

(“Walleye”), filed a Complaint (the

“Complaint”) in the Supreme Court of the State of New York, County of New York against the Company and GIGA, in action captioned

Arena Investors, LP v.

Gresham Worldwide, Inc.

f/k/a Giga-Tronics Incorporated and Ault Alliance, Inc.

On July 8, 2024, Arena filed

an Amended Complaint (the “Amended Complaint”) in the above-referenced action.

The Amended Complaint asserts a cause

of action against the Company for declaratory and injunctive relief seeking an injunction enjoining the Company, and its agent, affiliates,

servants, and employees from taking actions in breach of that certain Subordination Agreement, dated January 9, 2023, and entered into

among Walleye, Arena, and the Company.

The Amended Complaint also

asserts causes of action for breach of contract against GIGA based on two discrete convertible promissory notes (the “Notes”)

that GIGA entered into with each of Arena and Walleye, as well as a claim for breach duty of good faith and fair dealing, against GIGA,

and seeks, among other things, monetary damages in excess of $ 4.2 million, with interest thereon, attorneys’ fees, costs, and disbursements.

The Amended Complaint further asserts another cause of action against GIGA for breach of contract seeking declaratory and injunctive relief

based on alleged inspection rights contained in a Security Agreement, dated January 9, 2023 (the “Security Agreement”), and

entered into between the Walleye, Arena, and GIGA, which seeks the issuance of an injunction related to such alleged inspection rights,

plus the costs and out-of-pocket expenses associated with the enforcement of same.

On July 12, 2024, the Court

granted injunctive relief to Arena and ordered GIGA to comply with the inspection rights provision of the Security Agreement by July 17,

On July 19, 2024, Arena voluntarily

discontinued its cause of action for breach duty of good faith and fair dealing claim against GIGA.

On July 29, 2024, the Company

and GIGA filed a motion to dismiss, strike, and for sanctions (the “Motion”), in response to the Amended Complaint, on the

grounds that, amongst other things, the underlying Notes are criminally usurious under New York.

The deadline for Arena to

file its opposition to the Motion is September 19, 2024.

Based on the Company’s

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

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

Notwithstanding, the Company has recorded the

unpaid portion of the Notes.

An unfavorable outcome may have a material adverse effect on the Company’s business, financial condition

and results of operations.

Other Litigation Matters

With respect to the Company’s

4 unchanged sentences

to significant uncertainties.

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.

The Company had accrued

loss contingencies related to litigation matters of $ 2.5

million and $ 2.3

million as of June 30, 2024 and December 31, 2023, respectively.

STOCKHOLDERS’ EQUITY

12 unchanged sentences

Common ATM Offering

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.

During the three and six months

ended June 30, 2024, the Company sold an aggregate of 0 and 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 $ 0 and $ 14.6 million, respectively.

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 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 )

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 )

Diluted net income (loss) per share from:

Continuing operations

Discontinued operations

Diluted net income (loss) per share

$ ( 1,039.89 )

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:

During the three and six months

ended June 30, 2024, the Company sold to Ault & Company an aggregate of 500 and 2,500 shares of Series C Preferred Stock and Warrants

to purchase 0.1 million and 0.7 million shares of Class A common stock, for a total purchase price of $ 0.5 million and $ 2.5 million, respectively.

ELOC Purchase Agreement

On June 20, 2024, the Company

entered into a purchase agreement (the “ELOC Purchase Agreement”) with Orion Equity Partners, LLC (“Orion”), which

provides that, upon the terms and subject to the conditions and limitations set forth therein, the Company has the right to direct Orion

to purchase up to an aggregate of $ 25.0 million of shares of the Company’s 13.00 % Series D Cumulative Redeemable Perpetual Preferred

Stock, par value $ 0.001 per share (the “Preferred Shares”) over the 36 -month term of the ELOC Purchase Agreement at a purchase

price equal to 91% of the average closing stock price during the seven consecutive trading days immediately preceding a given purchase

Under the ELOC Purchase Agreement, after the satisfaction of certain commencement conditions, including, without limitation, the

effectiveness of a resale registration statement registering the Preferred Shares for sale (the “Registration Statement”).

In consideration for Orion’s

execution of the ELOC Purchase Agreement, the Company is required to issue to Orion, as a commitment fee, a number of Preferred Shares

having an aggregate dollar value equal to $0.5 million (“Commitment Fee Shares”), payable in five, equal tranches on each

of (i) one business day of the effectiveness of the Registration Statement (the “Initial Issuance”) and (ii) the two, four,

six and eight month anniversaries of the Initial Issuance.

The ELOC Purchase Agreement

may be terminated by the Company at any time after commencement, at its discretion, provided that at the time of termination, the Company

does not have any outstanding amounts owed to the Lenders, who are affiliates of Orion, pursuant to the Credit Agreement.

The Company calculates its

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

The Company’s

effective tax rate (“ETR”) from continuing operations was 0.1 % and 2.2 % for the three months ended June 30, 2024 and 2023,

respectively, and ( 0.1 % ) and 1.0 % for the six months ended June 30, 2024 and 2023, respectively.

The Company recorded an income tax provision of $ 24,000 and $ 1.4 million for the three months ended June 30, 2024 and 2023,

respectively, and an income tax benefit of ($ 20,000 ) and an income tax provision of $ 1.1 million for the six months ended June 30, 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 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 June 30, 2024 and 2023:

Schedule of net loss per share

Convertible preferred stock

Convertible notes

Stock options

1 unchanged sentence

The Company had the following

reportable segments as of March 31, 2024 and 2023;

reportable segments as of June 30, 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:

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

Six months ended June 30,

Schedule of operating segments

Revenue, digital assets mining

Revenue, lending and trading activities

Revenue, hotel and real estate operations

Revenue, crane operations

Revenue, lending and trading activities

Total revenues

$ ( 664,000 )

Depreciation and amortization expense

Impairment of property and equipment

(Loss) income from operations

4 unchanged sentences

$ ( 664,000 )

$ ( 7,014,000 )

$ ( 9,632,000 )

$ ( 26,306,000 )

Interest expense

5 unchanged sentences

$ ( 2,543,000 )

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

$ ( 3,679,000 )

Segment information for the

three months ended March 31, 2023:

$ ( 12,306,000 )

Capital expenditures for the six months ended June 30, 2024

Segment identifiable assets as of June 30, 2024

$ 264,863,000

Three months ended June

Revenue, digital assets mining

Revenue, commercial real estate leases

Revenue, hotel and real estate operations

Revenue, crane operations

5 unchanged sentences

Depreciation and amortization expense

Impairment of mined digital assets

Impairment of property and equipment

(Loss) income from operations

9 unchanged sentences

Interest expense

Capital expenditures for the three months ended March 31, 2023

Identifiable assets as of March 31, 2023

$ ( 142,000 )

Assets of discontinued operations

Total identifiable assets as of March 31, 2023

$ ( 960,000 )

$ ( 944,000 )

$ ( 942,000 )

$ ( 2,282,000 )

$ ( 5,383,000 )

Capital expenditures for the three months ended June 30, 2024

The following data presents

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

Six Months Ended

June 30, 2023

Revenue, digital assets mining

Revenue, commercial real estate leases

Revenue, lending and trading activities

Revenue, crane operations

Revenue, hotel operations

Total revenues

Depreciation and amortization

Income (loss) from operations

$ ( 5,117,000 )

$ ( 2,569,000 )

$ ( 1,702,000 )

$ ( 1,399,000 )

$ ( 838,000 )

$ ( 4,779,000 )

$ ( 32,721,000 )

$ ( 20,275,000 )

$ ( 14,653,000 )

$ ( 81,923,000 )

expenditures for the six months ended June 30, 2023

Identifiable assets as of December 31,

$ 293,102,000

Three Months Ended

June 30, 2023

Revenue, digital assets mining

Revenue, commercial real estate leases

Revenue, lending and trading activities

Revenue, crane operations

Revenue, hotel operations

Total revenues

Depreciation and amortization

Income (loss) from operations

$ ( 2,445,000 )

$ ( 1,589,000 )

$ ( 1,227,000 )

$ ( 455,000 )

$ ( 2,528,000 )

$ ( 34,691,000 )

$ ( 12,219,000 )

$ ( 4,622,000 )

$ ( 50,505,000 )

Capital expenditures for the three months

ended June 30, 2023

CONCENTRATIONS OF CREDIT AND REVENUE RISK

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.

Significant customers are

those that represent more than 10% of the Company’s total revenue or accounts receivable balances for the periods and as of each

balance sheet date presented.

For each significant customer, revenue as a percentage of total revenue and gross accounts receivable as

a percentage of total gross accounts receivable as of the periods presented were as follows:

Schedule of gross accounts receivable

Accounts Receivable

For the Three Months Ended

For the Six Months Ended

less than 10%

SUBSEQUENT EVENTS

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.

Additional Closing of Series

C Preferred Stock, Related Party

2, 2024, the Company sold to Ault & Company 300 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 $ 0.3 million.

On July 2, 2024, the Company

entered into a term note agreement with institutional investors of up to $2.6 million, of which the principal amount of $ 1.8

million was immediately funded.

The term note was issued at a discount, with net proceeds to the Company of $ 1.5

The term note does not accrue any interest.

The term note was scheduled to mature on August 2, 2024.

The term note is guaranteed by Mr.

The term note maturity was extended to September 16, 2024, and an extension fee of $0.2 million accrues monthly until the term note is

paid in full.

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.

On July 25, 2024, the

loan and guarantee agreement, dated as of December 14, 2023, as amended, pursuant to which the Company has guaranteed financial

obligations of Ault & Company borrowings, was amended to extend the deadline, from July 22, 2024 to July 31, 2024, by which date

the Company was required to have the $ 7.4

minimum balance in the restricted cash account and required that the Company deposit $ 600,000 in the Segregated account on July 25, 2024.

On August 16, 2024, the Company

agreed to deposit, by no later than September 1, 2024, an additional $ 1.5 million into the Segregated Account as well as make a modification

payment to the institutional lenders in the amount of $0.3 million by no later than September 15, 2024.

As a result of the foregoing amendments,

the Company is required to deposit additional incremental amounts such that at or prior to the nine-month anniversary, the one-year anniversary

and the two-year anniversary of December 14, 2023, the Company shall have deposited the required funds such that the balance in the Segregated

Account shall not be less than $15.0 million, $20.0 million and $27.5 million, respectively.

Convertible Promissory Note

On July 18, 2024 the Company

entered into a note purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Investor”)

pursuant to which the Investor purchased from the Company, on July 19, 2024, in a registered direct offering, a $ 5.4 million 10 % OID Convertible

Promissory Note (the “Note”).

The Note was sold to the Investor for a purchase price of $ 4.9 million, which includes an original

issue discount of $ 0.5 million.

The Note accrues interest at the rate of 15%.

The Note will mature on October 19, 2024 .

The Note is convertible

into shares of Series A common stock at a conversion price of $ 0.22 per share (the “Conversion Price”), subject to adjustment.

If, on September 2, 2024 (the “Adjustment Date”), the closing bid price of the Series A common stock is lower than the Conversion

Price, then the Conversion Price shall be reduced to eighty-five percent (85%) of the closing bid price of the Series A common stock on

the Adjustment Date.

However, if, after the issuance date and prior to the date on which the Company obtains stockholder approval of the

Note (the “Stockholder Approval”), the holder of the Note has converted a portion of the outstanding amount under the Note

into Series A common stock in an aggregate amount equal to 19.99% of the total shares of Series A common stock issued and outstanding

as of the execution date of the Purchase Agreement, in accordance with the rules and regulations of the NYSE, then the Adjustment Date

shall be extended by such number of days between such date and the date on which the Company obtains Stockholder Approval.

Merger Agreement

June 23, 2024, Ault Disruptive entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified

from time to time, the “Merger Agreement”) by and among Ault Disruptive, ADRT Merger Sub, Inc., a Delaware corporation and

a direct, wholly owned subsidiary of Ault Disruptive (“Merger Sub”), and Gresham Worldwide, Inc., a California corporation

The transactions contemplated by the Merger Agreement are referred to herein as the “Business Combination.”

to the Merger Agreement and subject to the terms and conditions set forth therein, the Merger Sub was intended to merge with and into

GIGA (the “Merger”), with GIGA being the surviving corporation and thereby becoming a wholly owned subsidiary of Ault Disruptive.

Upon the Closing of the Business Combination (the “Effective Time”), it was expected that Ault Disruptive would be renamed

Gresham Worldwide, Inc., and thereafter remain listed on the NYSE American under a new ticker symbol, “GWWI.”

on August 14, 2024, GIGA filed a petition for reorganization under Chapter XI of the bankruptcy laws.

Consequently, Ault Disruptive was

required to terminate the Merger Agreement, which it did on August 15, 2024.

Ault Disruptive does not presently intend to enter

into a new agreement and plan of merger with a third party.

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