What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-19 compared with 2024-08-16 · 841 added, 597 removed, 1066 unchanged (57% of the section changed)

Financial Statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

CURRENT ASSETS

6 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

1 unchanged sentence

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

September 30,

LONG TERM LIABILITIES

8 unchanged sentences

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

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

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

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)

44,300 and 41,500 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively (liquidation preference of $ 44,300,000 and $ 41,500,000 at September 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)

323,835 shares and 425,197 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively (liquidation preference of $ 8,096,000 and $ 10,630,000 as of September 30, 2024 and December 31, 2023, respectively)

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

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

38,846,318 and 4,483,459 shares issued and outstanding at September 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 June 30, 2024 and December 31, 2023

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

Additional paid-in capital

8 unchanged sentences

( 30,571,000 )

TOTAL AULT ALLIANCE STOCKHOLDERS’ EQUITY

TOTAL HYPERSCALE DATA STOCKHOLDERS’ EQUITY

Non-controlling interest

5 unchanged sentences

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

2 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Revenue, digital assets mining

For the Nine Months Ended

September 30,

Revenue, crypto assets mining

Revenue, hotel and real estate operations

1 unchanged sentence

Revenue, lending and trading activities

( 9,763,000 )

Total revenue

Cost of revenue, products

Cost of revenue, digital assets mining

Cost of revenue, crypto assets mining

Cost of revenue, hotel and real estate operations

8 unchanged sentences

Impairment of goodwill and intangible assets

Impairment of mined digital assets

Impairment of mined crypto assets

Total operating expenses

13 unchanged sentences

(Loss) gain on extinguishment of debt

Loss from investment in unconsolidated entity

( 1,546,000 )

( 1,700,000 )

Impairment of equity securities

Loss from investment in unconsolidated entity

( 1,958,000 )

Impairment of equity securities

( 6,266,000 )

3 unchanged sentences

Change in fair value of warrant liability

(Loss) gain on the sale of fixed assets

( 1,754,000 )

Total other income (expense), net

Gain (loss) on the sale of fixed assets

Total other expense, net

( 7,208,000 )

8 unchanged sentences

Income tax provision (benefit)

Net loss from continuing operations

( 31,855,000 )

2 unchanged sentences

( 135,146,000 )

Net (income) loss attributable to non-controlling interest

Net loss attributable to Ault Alliance, Inc.

Net gain (loss) from discontinued operations

( 1,359,000 )

2 unchanged sentences

( 28,082,000 )

Preferred dividends

( 58,228,000 )

( 139,804,000 )

Net loss available to common stockholders

Net loss attributable to non-controlling interest

Net loss attributable to Hyperscale Data, Inc.

( 25,549,000 )

2 unchanged sentences

( 131,100,000 )

Basic net loss per common share

Preferred dividends

( 1,326,000 )

( 3,894,000 )

Diluted net loss per common share

Net loss available to common stockholders

$ ( 26,875,000 )

$ ( 22,183,000 )

$ ( 59,653,000 )

$ ( 132,063,000 )

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

Continuing operations

$ ( 1,201.94 )

Discontinued operations

Net loss per common share

$ ( 1,245.88 )

Weighted average basic and diluted common shares outstanding

14 unchanged sentences

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2024

Preferred Stock

Class A Common Stock

Three Months Ended September 30, 2024

A Common Stock

Comprehensive

Stockholders’

BALANCES, April 1, 2024

BALANCES, July 1, 2024

$ 660,036,000

2 unchanged sentences

$ ( 440,000 )

$ ( 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

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.

Issuance of Class A common stock for conversion

Distribution to Circle 8 Crane Services, LLC

(“Circle 8”) non-controlling

Net loss attributable to Hyperscale Data, Inc.

( 25,549,000 )

6 unchanged sentences

Foreign currency translation adjustments

Net income attributable to non-controlling interest

Net loss attributable to non-controlling interest

( 2,861,000 )

BALANCES, June 30, 2024

Deconsolidation of subsidiary

BALANCES, September 30, 2024

$ 661,606,000

5 unchanged sentences

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

Three Months Ended June 30, 2023

Preferred Stock

Class A Common Stock

Three Months Ended September 30, 2023

A Common Stock

Comprehensive

Stockholders’

BALANCES, April 1, 2023

$ 575,074,000

$ ( 378,633,000 )

BALANCES, July 1, 2023

$ 573,388,000

1 unchanged sentence

$ ( 1,450,000 )

Preferred stock issued for cash

Preferred stock offering costs

$ ( 29,919,000 )

3 unchanged sentences

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 )

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

( 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.

Net loss attributable to Hyperscale Data, Inc.

( 21,771,000 )

7 unchanged sentences

Distribution of securities of TurnOnGreen, Inc.

(“TurnOnGreen”) to Ault Alliance Class A common

stockholders ($88.07 per share)

( 5,200,000 )

(“TurnOnGreen”)

to Hyperscale Data Class A common stockholders ($36.00 per share)

( 5,500,000 )

BALANCES, June 30, 2023

BALANCES, September 30, 2023

$ 589,291,000

5 unchanged sentences

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2024

Preferred Stock

Class A Common Stock

Nine Months Ended September 30, 2024

A Common Stock

Comprehensive

7 unchanged sentences

Fair value of warrants issued in connection with

Series C preferred stock, related party

Series C preferred stock,

related party

Stock-based compensation

1 unchanged sentence

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

Issuance of Class A common stock for conversion of

Increase in ownership interest of subsidiary

1 unchanged sentence

Distribution to Circle 8 non-controlling interest

Conversion of ROI convertible note

Net loss attributable to Ault Alliance, Inc.

Conversion of RiskOn International, Inc.

Net loss attributable to Hyperscale Data, Inc.

( 55,759,000 )

6 unchanged sentences

Foreign currency translation adjustments

Net income attributable to non-controlling interest

Distribution of securities of TurnOnGreen to Ault

Alliance Class A common stockholders ($2.02 per share)

Net loss attributable to non-controlling interest

( 2,469,000 )

Distribution of ROI investment in White River to

ROI stockholders

( 2,469,000 )

Distribution of securities of TurnOnGreen to

Hyperscale Data Class A common

($2.02 per share)

( 4,900,000 )

BALANCES, June 30, 2024

Distribution of ROI investment in White River

River”) to ROI shareholders

( 19,210,000 )

Deconsolidation of subsidiary

BALANCES, September 30, 2024

$ 661,606,000

1 unchanged sentence

$ ( 1,222,000 )

$ ( 483,000 )

$ ( 30,571,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

1 unchanged sentence

IN STOCKHOLDERS’ EQUITY

Six Months Ended June 30, 2023

Preferred Stock

Class A Common Stock

Nine Months Ended September 30, 2023

A Common Stock

Comprehensive

7 unchanged sentences

Issuance of Class A common stock for restricted stock awards

Preferred stock issued for cash

Series D preferred stock issued for cash

Preferred stock offering costs

3 unchanged sentences

Issuance of Class A common stock for cash

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

Financing cost in connection with sales of Class A common stock

Issuance of Class A common stock for conversion of preferred stock

Class A common stock issued in connection with issuance of notes payable

Remeasurement of Ault Disruptive subsidiary temporary equity

( 5,945,000 )

7 unchanged sentences

Purchase of treasury stock - Ault Alpha

Net loss attributable to Ault Alliance, Inc.

( 1,306,000 )

Net loss attributable to Hyperscale Data, Inc.

( 131,100,000 )

Series A preferred dividends ($1.25 per share)

1 unchanged sentence

Foreign currency translation adjustments

Net loss attributable to non-controlling interest

( 1,001,000 )

Distribution of securities of TurnOnGreen to Ault Alliance

Class A common stockholders ($88.07 per share)

Net loss attributable to non-controlling interest

( 10,420,000 )

BALANCES, June 30, 2023

Distribution of securities of TurnOnGreen to Hyperscale Data Class

A common stockholders ($50.50 per share)

( 10,700,000 )

BALANCES, September 30, 2023

$ 589,291,000

2 unchanged sentences

$ ( 30,540,000 )

$ 119,059,000

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from operating activities:

1 unchanged sentence

$ ( 139,804,000 )

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

Net loss from discontinued operations

( 4,658,000 )

Net loss from continuing operations

( 57,449,000 )

( 135,146,000 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

7 unchanged sentences

Impairment of equity securities

Impairment of digital assets

Realized gain on the sale of digital assets

Change in fair value of digital assets

Revenue, digital assets mining

Impairment of crypto assets

Realized gain on the sale of crypto assets

Change in fair value of crypto assets

Revenue, crypto assets mining

( 19,563,000 )

2 unchanged sentences

( 7,463,000 )

( 33,140,000 )

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

( 17,900,000 )

Unrealized losses (gains) on marketable securities

Unrealized gains on marketable securities

( 2,554,000 )

Realized losses on non-marketable equity securities

Unrealized losses on investments in common stock, related parties

6 unchanged sentences

( 2,655,000 )

(Gain) loss on extinguishment of debt

Gain on extinguishment of debt

Proceeds from the sale of crypto assets

( 1,194,000 )

Changes in operating assets and liabilities:

Proceeds from the sale of digital assets

Marketable equity securities

1 unchanged sentence

( 4,792,000 )

( 1,554,000 )

Prepaid expenses and other current assets

( 3,026,000 )

Accounts payable and accrued expenses

( 4,023,000 )

Accounts payable and accrued expenses

Lease liabilities

1 unchanged sentence

( 1,595,000 )

Net cash (used in) provided by operating activities

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

( 3,857,000 )

Net cash used in operating activities from discontinued operations

( 6,366,000 )

( 4,734,000 )

Net cash used in operating activities

( 10,223,000 )

( 2,158,000 )

Cash flows from investing activities:

2 unchanged sentences

( 14,607,000 )

Acquisition of non-controlling interests

( 1,584,000 )

Investments in loans receivable

2 unchanged sentences

Proceeds from the sale of fixed assets

Investment in notes receivable, related party

( 3,413,000 )

( 2,361,000 )

Net cash used in investing activities from continuing operations

( 8,047,000 )

( 25,053,000 )

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

( 3,799,000 )

Net cash used in investing activities

1 unchanged sentence

( 22,869,000 )

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

AULT ALLIANCE, INC.

HYPERSCALE DATA, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash flows from financing activities:

18 unchanged sentences

Purchase of treasury stock

( 1,306,000 )

Proceeds from sales of convertible notes

1 unchanged sentence

( 1,280,000 )

Net cash provided by financing activities from continuing operations

Net cash provided by financing activities from discontinued operations

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents and restricted cash

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

( 1,565,000 )

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

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

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:

Settlement of accounts payable with digital assets

Settlement of interest payable with digital assets

Settlement of notes payable with digital assets

Settlement of accounts payable with crypto assets

Settlement of interest payable with crypto assets

Settlement of note payable with crypto assets

Conversion of convertible notes payable into shares of Class A common stock

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

4 unchanged sentences

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

Dividend of ROI investment in White River to ROI shareholders

2 unchanged sentences

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

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 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;

(f/k/a Ault Alliance, Inc.), a Delaware corporation (“Hyperscale Data” or the “Company”) is a diversified

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

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 and hotel operations.

In addition, the Company extends credit to select entrepreneurial businesses

through a licensed lending subsidiary.

Company has the following reportable segments:

· Energy and Infrastructure (“Energy”) – crane operations

and oil exploration;

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

· 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 industry;

· TurnOnGreen – electric vehicle electrification

infrastructure and commercial electronics solutions;

· ROI – immersive metaverse platform, media,

and digital learning;

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

services for the emerging artificial intelligence ecosystems and other industries;

· 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.

(“AGREE”) – hotel operations and other commercial

real estate holdings.

Company had a change to its reportable segments due to the discontinued operations of its majority

owned subsidiary, Gresham Worldwide, Inc.

See Note 4 below.

September 10, 2024, the Company changed its name from Ault Alliance, Inc.

to Hyperscale Data, Inc.

and its Class A common stock ticker

symbol was changed to “GPUS.” The name change did not affect the rights of security holders of the Company.

LIQUIDITY AND FINANCIAL

As of September 30, 2024, the

Company had cash and cash equivalents of $ 7.2 million (excluding restricted cash of $ 8.3 million), negative working capital of $ 151.5 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

9 unchanged sentences

Management expects that the

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.

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.

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

Company’s existing cash and cash equivalents, accounts receivable and marketable securities as of September 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

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 crypto 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

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/A for the year ended December 31, 2023 (the “2023 Annual Report”) as amended, filed with the Securities

and Exchange Commission (the “SEC”) on September 24, 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.

of the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year

ending December 31, 2024.

Period Revision - Statement of Cash Flows

the nine months ended September 30, 2024, the Company disclosed the borrowings of lines of credit and repayments of lines of credit as

separate line items within notes payable activity of the financing activities section of the consolidated statement of cash flows.

Company has corrected these line items for the nine months ended September 30, 2023 for comparability purposes.

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.

Revenue Recognition Crypto Assets 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.

a crypto assets 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

27 unchanged sentences

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:

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

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

19 unchanged sentences

on the date of contract inception.

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

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

Company’s principal market for Bitcoin.

4 unchanged sentences

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

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

Revenue Recognition

Hotel Operations

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

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

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.

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 functions.

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.

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

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 Issued Accounting Standards

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

including the discontinued operations presentation of GIGA financial results.

These reclassifications had no effect on previously reported

results of operations.

Issued Accounting Standards

On December 14, 2023, the

19 unchanged sentences

The Company is currently evaluating the impact of adopting the

In March 2024, the FASB issued

2024-01 Compensation - Stock Compensation (Topic 718):

Scope Application of Profits Interest and Similar Awards (“ASU

ASU 2024-01 improves clarity and operability without changing the guidance.

ASU 2024-01 is effective on a prospective

basis, with the option for retrospective application, for annual periods beginning after December 15, 2024 and early adoption is permitted.

The Company does not expect the adoption of ASU 2024-01 to have a material impact on its consolidated financial statements.

DECONSOLIDATION OF SUBSIDIARY AND DISCONTINUED

Presentation of GIGA as Discontinued Operations

August 14, 2024, GIGA, filed

a petition for reorganization under Chapter 11 of the bankruptcy laws.

The filing placed GIGA under the control of the bankruptcy court,

which oversees its reorganization and restructuring process.

The Company assessed the inherent uncertainties associated with the outcome

of the Chapter 11 reorganization process and the anticipated duration thereof, and concluded that it was appropriate to deconsolidate

GIGA and its subsidiaries effective on the petition date.

The Company recognized a gain on deconsolidation of GIGA of $ 2.0 million included in net gain (loss) from discontinued operations.

In connection with the Chapter

11 reorganization process , the Company concluded that the operations of GIGA met the criteria for discontinued operations as this

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 GIGA as discontinued operations in the accompanying consolidated

financial statements and notes for all periods presented.

The following table presents

the assets and liabilities of GIGA operations:

Schedule of presents

the assets and liabilities

September 30,

Cash and cash equivalents

Restricted cash

Accounts receivable

Prepaid expenses and other current assets

Intangible assets, net

Property and equipment, net - current

Right-of-use assets

Total assets discontinued operations

Accounts payable and accrued expenses

Operating lease liability

Notes payable

Convertible notes payable

Liabilities discontinued operations

Net assets of discontinued operations

Net assets of discontinued

operations excludes $ 14.0 million of intercompany notes payable to Hyperscale Data and Ault lending as of December 31, 2024.

The following table presents

the results of GIGA operations:

Schedule of operations

For the Three Months Ended

For the Nine Months Ended

September 30,

Revenue, products

Cost of revenue, products

Operating expenses

Research and development

Selling and marketing

General and administrative

Total operating expenses

Loss from operations

( 1,261,000 )

( 4,293,000 )

( 5,620,000 )

Other income (expense):

Interest and other income

Interest expense

( 1,662,000 )

Change in fair value of warrant liability

( 1,061,000 )

Total other income (expense), net

( 1,213,000 )

Loss before income taxes

( 1,716,000 )

( 4,361,000 )

( 6,385,000 )

Income tax benefit

( 1,716,000 )

( 4,346,000 )

( 6,374,000 )

Net loss attributable to non-controlling interest

Net income (loss) available to common stockholders

$ ( 1,359,000 )

$ ( 2,792,000 )

$ ( 4,658,000 )

The net gain (loss) from discontinued

operations for the three and nine months ended September 30, 2024 on the condensed consolidated statement of operations and comprehensive

loss includes the gain on deconsolidation as follows:

Schedule of gain on deconsolidation

For the Three

September 30, 2024

GIGA net income (loss)

$ ( 2,792,000 )

Gain on deconsolidation

Net gain (loss) from discontinued operations

$ ( 779,000 )

The cash flow activity related

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

Schedule of statement of cash flows

For the Nine Months Ended September 30,

Cash flows from operating activities:

$ ( 4,346,000 )

$ ( 6,374,000 )

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

Depreciation and amortization

Amortization of right-of-use assets

Amortization of intangibles

Stock-based compensation

Changes in operating assets and liabilities:

Accounts receivable

( 1,638,000 )

Prepaid expenses and other current assets

( 1,516,000 )

Lease liabilities

Accounts payable and accrued expenses

Net cash used in operating activities

( 6,366,000 )

( 4,734,000 )

Cash flows from investing activities:

Purchase of property and equipment

Cash decrease upon deconsolidation

( 3,550,000 )

Net cash used in investing activities

( 3,799,000 )

Cash flows from financing activities:

Proceeds from notes payable

Cash contributions from parent

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents and restricted cash

( 4,301,000 )

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

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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.

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 values.

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 nine months ended September 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 June 30, 2024 and 2023.

Revenues from

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

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

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

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

The Company’s disaggregated

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

revenues consisted of the following for the three months ended September 30, 2024:

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

Radio frequency/microwave filters

Power supply units and systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Revenue from mined crypto assets at Sentinum owned and operated facilities

Revenue from Sentinum crypto mining equipment hosted at third-party facilities

Hotel and real estate operations

1 unchanged sentence

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 six months ended June 30, 2024 (excludes Ault Disruptive, as that segment has no revenue):

revenues consisted of the following for the nine months ended September 30, 2024:

Primary Geographical Markets

4 unchanged sentences

Total revenue

$ ( 664,000 )

Major Goods or Services

Radio frequency/microwave filters

Power supply units and systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Revenue from mined crypto assets at Sentinum owned and operated facilities

Revenue from Sentinum crypto mining equipment hosted at third-party facilities

Hotel and real estate operations

2 unchanged sentences

Total revenue

$ ( 664,000 )

Timing of Revenue Recognition

3 unchanged sentences

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):

revenues consisted of the following for the three months ended September 30, 2023:

Primary Geographical Markets

4 unchanged sentences

Total revenue

$ ( 249,000 )

Major Goods or Services

RF/microwave filters

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Revenue from mined crypto assets at Sentinum owned and operated facilities

Revenue from Sentinum crypto mining equipment hosted at third-party facilities

Hotel and real estate operations

3 unchanged sentences

Total revenue

$ ( 249,000 )

Timing of Revenue Recognition

3 unchanged sentences

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):

revenues consisted of the following for the nine months ended September 30, 2023:

Primary Geographical Markets

4 unchanged sentences

Total revenue

$ 104,238,000

Major Goods or Services

RF/microwave filters

Power supply units & systems

Healthcare diagnostic systems

Defense systems

Digital assets mining

Revenue from mined crypto assets at Sentinum owned and operated facilities

Revenue from Sentinum crypto mining equipment hosted at third-party facilities

Hotel and real estate operations

3 unchanged sentences

Total revenue

$ 104,238,000

Timing of Revenue Recognition

3 unchanged sentences

FAIR VALUE OF FINANCIAL

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:

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 June 30, 2024

Fair Value Measurement at September 30, 2024

Investment in common stock of Alzamend Neuro, Inc.

1 unchanged sentence

Investments in marketable equity securities

Cash and marketable securities held in trust account

Digital assets

Crypto assets

Total assets measured at fair value

Warrant and embedded conversion feature liabilities

Convertible promissory notes

Total liabilities measured at fair value

Fair Value Measurement at December 31, 2023

Investment in common stock of Alzamend

Investment in common stock of Alzamend – a related party

Investments in marketable equity securities

2 unchanged sentences

Warrant and embedded conversion feature liabilities

Convertible promissory notes

Total liabilities measured at fair value

6 unchanged sentences

and liquidity risks.

The changes in Level 3 fair value hierarchy during

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

The changes in Level 3 fair

value hierarchy during the three and nine months ended September 30, 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

at End of Period

Six months ended June 30, 2024

Warrant and embedded conversion feature liabilities

Level 3 Balance at

End of Period

Nine months ended September 30, 2024

Warrant liabilities

Embedded conversion feature liabilities

$ ( 910,000 )

Convertible promissory notes

Nine months ended September 30, 2023

Warrant liabilities

$ ( 4,981,000 )

Six months ended June 30, 2023

Warrant and embedded conversion feature liabilities

Embedded conversion feature liabilities

$ ( 3,439,000 )

Series E, F and G preferred stock liabilities

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

Level 3 Balance at

End of Period

Three months ended September 30, 2024

Warrant liabilities

$ ( 570,000 )

Three months ended June 30, 2023

Warrant and embedded conversion feature liabilities

Embedded conversion feature liabilities

$ ( 155,000 )

Series E, F and G preferred stock liabilities

Convertible promissory notes

Three months ended September 30, 2023

Warrant liabilities

$ ( 2,446,000 )

Embedded conversion feature liabilities

$ ( 2,348,000 )

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,

of September 30, 2024 and December 31, 2023, the Company held equity investments in other securities valued at $ 5.3 million and $ 21.8 million,

respectively, that were valued using a measurement alternative.

2 unchanged sentences

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

for the nine months ended September 30, 2024 and 2023, totaling $ 6.3 million and $ 11.6 million, respectively.

Approximately $ 6.3 million

of the impairment charge for the nine months ended September 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.

Approximately $ 9.6 million of the impairment charge for the nine months ended September

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 June 30, 2024 and December 31, 2023:

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

Schedule of marketable securities

Marketable equity securities at June 30, 2024

Marketable equity securities at September 30, 2024

Gross unrealized

9 unchanged sentences

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

DIGITAL ASSETS

CRYPTO ASSETS

The following table presents

revenue from mined digital assets for the three and six months ended June 30, 2024 and 2023:

Schedule of revenue from digital assets

revenue from mined crypto assets for the three and nine months ended September 30, 2024 and 2023:

Schedule of revenue from crypto assets

For the Three Months Ended

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

For the Nine Months Ended

September 30,

Revenue from mined crypto assets at Sentinum owned and operated facilities

Revenue from Sentinum crypto mining equipment hosted at third-party facilities

Revenue, crypto assets mining

The following table presents

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

the activities of the crypto assets (included in prepaid expenses and other current assets) for the nine months ended September 30, 2024

Schedule of activities of the crypto assets

For the Nine Months Ended

September 30,

Balance at January 1

Additions of mined digital assets

Sale of digital assets

Additions of mined crypto assets

Sale of crypto assets

( 20,038,000 )

Payments to vendors with digital assets

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 June 30, 2024

Digital Assets

Balance at January 1, 2023

Additions of mined digital assets

Sale of digital assets

( 21,330,000 )

Payments to vendors with digital assets

Impairment of mined digital assets

Realized gain on sale of digital assets

Balance at June 30, 2023

Payments to vendors with crypto assets

Payment of notes payable with crypto assets

Payment of interest payable with crypto assets

Realized gain on sale of crypto assets

Unrealized gain on crypto assets

Impairment of mined crypto assets

Balance at September 30

PROPERTY AND EQUIPMENT, NET

At June 30, 2024 and December

31, 2023, property and equipment consisted of:

At September 30, 2024 and

December 31, 2023, property and equipment consisted of:

Schedule of property and equipment

June 30, 2024

September 30, 2024

December 31, 2023

1 unchanged sentence

$ 100,184,000

Digital assets mining equipment

Crypto assets mining equipment

Crane rental equipment

10 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Depreciation expense

Impairment of Property and Equipment

During the three months ended September 30, 2024, due to increases

in the Bitcoin mining difficulty level, which compounded the continued impact of the Bitcoin halving event, we concluded that indicated

that an impairment triggering event had occurred.

Testing performed indicated the estimated fair value of the Company’s miners to

be less than their net carrying value as of September 30, 2024, and an impairment charge of $ 10.5 million was recognized, decreasing the

net carrying value of the Company’s crypto assets mining equipment to their estimated fair value.

The Company valued the miners

using an income approach utilizing a discounted cash flow and a discount rate of 20%.

The Company estimated the cash flow from the miners

over a two-year period assuming a utilization rate of 98%, a mining difficulty level of 101.6 trillion, a Bitcoin price of $ 76,000 and

a power cost of $0.055 per kilowatt-hour.

The estimated fair value of the Company’s miners is classified in Level 3 of the fair

value hierarchy with no observable inputs using a discounted cash flow methodology.

In addition, the Company has

recorded $ 1.2 million and $ 9.2 million in impairment charges related to real estate assets of AGREE during the three and nine months ended

September 30, 2024, respectively.

INTANGIBLE ASSETS, NET

At June 30, 2024 and December 31, 2023,

At September 30, 2024 and December 31,

2023, intangible assets consisted of:

Schedule of intangible asset

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Customer list

Domain name and other intangible assets

Accumulated amortization

( 2,079,000 )

( 1,910,000 )

Total definite-lived intangible assets

Indefinite lived intangible assets:

Trade name and trademark

Indefinite life

Total intangible assets, net

Certain of the Company’s

5 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Amortization expense

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.

of September 30, 2024, intangible assets subject to amortization have an average remaining useful life of 6.9 years.

The following

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

Schedule of estimated amortization expense

2024 (remainder)

The following table summarizes

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

Schedule of goodwill

Balance as of January 1, 2024

Effect of exchange rate changes

Balance as of June 30, 2024

INVESTMENTS – RELATED PARTIES

Investments in Alzamend and

Ault & Company, Inc.

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

Investment in Promissory Notes, Related

Parties – Ault & Company

Investments in Alzamend, Ault & Company, Inc.

Company”) and GIGA at September 30, 2024 and December 31, 2023, were comprised of the following:

Investment in Promissory Notes, Related Parties – Ault &

Company and GIGA (Recorded in “Investment in Promissory Notes and Other, Related Party” on the Condensed Consolidated Balance

Schedule of investment

September 30,

Promissory note, related party

December 31, 2024

10% Senior Secured Convertible Promissory Note - GIGA

December 31, 2024

12% Senior Secured Subordinated Convertible Promissory Note - GIGA

December 31, 2024

12% Senior Secured Subordinated Convertible Promissory Note - GIGA

June 30, 2025

Debtor in possession Loan Agreement - GIGA

October 28, 2024

Accrued interest receivable GIGA

Accrued interest receivable Ault & Company

Other - Alzamend

Allowance for credit losses

( 5,668,000 )

Total investment in promissory notes and other, related parties

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Interest income, related party

At each reporting date, the

Company applies its judgment to evaluate the collectability of the note receivable and makes a provision based on the assessed amount

of expected credit loss.

This judgment is based on parameters such as interest rates, market conditions and creditworthiness of the creditor.

The Company determined that

the collectability of certain notes receivables is doubtful based on information available.

Upon the deconsolidation of

the GIGA, the Company established an allowance for credit losses of $2.6 million related to notes receivable from GIGA included in net gain (loss) from discontinued operations.

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.

the promissory note from Ault & Company recorded in provision for loan losses, related party, 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

Preferred Stock, Warrants and Common Stock, Related Parties – Alzamend (Recorded in “Investments in Common Stock and Equity

Securities, Related Party” on the Condensed Consolidated Balance Sheets)

Schedule of investment in common stock

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

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

Gross unrealized losses

2 unchanged sentences

Alzamend series B convertible preferred stock, warrants

$ ( 24,566,000 )

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

2 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 June 30, 2024 and 2023:

The following tables summarize

the changes in the Company’s investments in Alzamend common stock during the three and nine months ended September 30, 2024 and

Schedule of investment in warrants and common stock

For the Three Months Ended June 30,

Balance at April 1

For the Three Months Ended September 30,

Balance at July 1

Investment in common stock of Alzamend

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,

Unrealized loss in common stock of Alzamend

( 3,124,000 )

Balance at September 30

For the Nine Months Ended September 30,

Balance at January 1

Investment in common stock of Alzamend

Unrealized gain (loss) in common stock of Alzamend

Balance at June 30

Unrealized loss in common stock of Alzamend

( 3,752,000 )

Balance at September 30

Ault Lending, LLC (“Ault Lending”)

1 unchanged sentence

Schedule of investment in warrants and preferred stock

September 30,

Investment in Alzamend preferred stock

6 unchanged sentences

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

There have been additional

closings subsequent to January 2024.

The Company has elected to

5 unchanged sentences

Equity Investments in Unconsolidated Entity

– The Singing Machine Company, Inc.

– Algorhythm Holdings, Inc.

(f/k/a The Singing Machine Company) (“SMC”)

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 June 30, 2024:

balance sheet, during the nine months ended September 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

1 unchanged sentence

( 1,957,000 )

Ending balance - June 30, 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

$ ( 6,154,000 )

$ ( 8,441,000 )

$ ( 6,119,000 )

$ ( 8,486,000 )

Summarized Balance Sheet Information

Schedule of summarized balance sheet information

Current assets

Non-current assets

Current liabilities

Non-current liabilities

Ending balance - September 30, 2024

There was no activity in the

investment in the unconsolidated entity account during the three months ended September 30, 2024, prior to the transition from the equity

method of accounting on September 5, 2024, as described below.

Consequently, the beginning balance, activity, and ending balance for this

period were all zero.

On September 5, 2024, three

of the Company’s employees resigned from the board of directors of SMC.

As a result of the resignations, and as the Company owned

less than 20% of SMC at the time, the Company no longer had the ability to exert significant influence over the operating and financial

policies of SMC.

The Company discontinued the equity method of accounting for the investment in SMC on September 5, 2024.

the Company changed its accounting for SMC to an investment in marketable equity securities and recognized the investment at fair value,

with a gain of $1.3 million recognized as revenue from lending and trading activities in the condensed consolidated statement of operations

and comprehensive loss.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Other current liabilities at June 30,

Other current liabilities at September

30, 2024 and December 31, 2023 consisted of:

Schedule of other current liabilities

September 30,

Accounts payable

Accrued payroll and payroll taxes

Financial instrument liabilities

Warrant liabilities

Interest payable

Accrued legal

Accrued lender profit participation rights

Other accrued expenses

2 unchanged sentences

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

of 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

8 unchanged sentences

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

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.

During the nine months ended

September 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

6 unchanged sentences

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

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 six months ended June 30, 2024, shares of Ault Disruptive common stock were redeemed for an aggregate

redemption amount of $ 1.4 million.

Redemption of Shares

On September 27, 2024, Ault

Disruptive announced that it will redeem all of its outstanding shares of common stock which occurred as of the close of business on October

11, 2024, because Ault Disruptive would not consummate an initial business combination within the time period required by its Amended

and Restated Certificate of Incorporation, as amended.

During the nine months ended September 30, 2024, shares of Ault Disruptive common

stock were redeemed for an aggregate redemption amount of $ 1.5 million.

On October 11, 2024, all remaining

shares of Ault Disruptive common stock were redeemed for a redemption amount of $ 0.8 million.

The following table summarizes

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

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

30, 2024 and 2023:

1 unchanged sentence

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 )

September 30,

Redeemable noncontrolling interests in equity of subsidiaries as of July 1

Remeasurement of carrying value to redemption value

Redeemable noncontrolling interests in equity of subsidiaries as of June 30

Redeemable noncontrolling interests in equity of subsidiaries as of September 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,

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

30, 2024 and 2023:

For the Six Months Ended

For the Nine Months Ended

September 30,

Redeemable noncontrolling interests in equity of subsidiaries as of January 1

$ 117,993,000

Redemption of ADRT common stock

Redemption of Ault Disruptive common stock

( 1,463,000 )

1 unchanged sentence

Remeasurement of carrying value to redemption value

Redeemable noncontrolling interests in equity of subsidiaries as of June 30

Redeemable noncontrolling interests in equity of subsidiaries as of September 30

Merger Agreement

June 23, 2024, Ault Disruptive entered into a Merger Agreement with GIGA, intending for GIGA to become a majority owned subsidiary and

for Ault Disruptive to be renamed Gresham Worldwide, Inc., trading under the ticker “GWWI” on the NYSE American.

due to GIGA’s bankruptcy filing, the merger agreement was subsequently terminated.

August 14, 2024, GIGA filed a petition for reorganization under Chapter 11 of the bankruptcy laws.

NOTES PAYABLE

Notes payable at June 30,

Notes payable at September

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

Schedule of notes payable

Interest rate

June 30, 2024

December 31, 2023

September 30,

AGREE secured construction loans

5 unchanged sentences

Ault & Company and Milton C.

(default rate of 24.0%)

July 15, 2024

2 unchanged sentences

September 15, 2025 through June 15, 2027

15% term notes

September 30, 2024

15% promissory notes

December 4, 2024

15% term notes (in default as of November 1, 2024)

(default rate of 22.99%)

October 31, 2024

8% demand loans

Short-term bank credit facilities

Renews monthly

Sentinum note payable

ROI promissory note (in default)

rate of 18.0%)

April 30, 2024

9 unchanged sentences

Notes payable – long-term portion

OID Only Term Note

2024, the Company entered into a term note agreement with institutional investors for the sale of up to $ 2.6 million in term notes, of

which the principal amount of $ 1.8 million was immediately funded.

A term note was issued at a discount, with net proceeds to the

Company of $ 1.5 million.

The term note does not accrue any interest.

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

term note is guaranteed by Mr.

The term note maturity was extended to October 16, 2024 , and an extension fee of $ 0.2 million accrues

monthly until the term note is paid in full.

The term note is included in “Other” in the table above.

ROI 15% Term Note

9 unchanged sentences

15% Term Notes

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 .

Between April

29, 2024 and August 29, 2024, the Company entered into note agreements totaling $ 5.7 million with an institutional investor bearing interest

The term notes were issued at a discount, with net proceeds to the Company of $ 5.1 million.

The term notes were amended to

extend the maturity dates to October 31, 2024 .

The note is default as of November 1, 2024.

$20 Million Credit Agreement

3 unchanged sentences

time under the Credit Agreement.

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

exclusive of $ 0.4 million original issue discount.

As of September 30, 2024, $ 2.0 million has been advanced, exclusive of a $ 0.4 million original issue

discount (“OID”).

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

6 unchanged sentences

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.

Advances under the Credit Agreement will include the addition of an OID 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

1 unchanged sentence

Ault, the Executive Chairman of the Company.

Circle 8 revolving credit facility

16, 2024, Circle 8 was in default related to reporting requirements under the terms of their revolving credit facility.

Circle 8 was able

to obtain a waiver on November 19, 2024 to cure the event of default.

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 June 30, 2024 were:

as of September 30, 2024 were:

Schedule of maturities

4 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Contractual interest expense

4 unchanged sentences

Notes payable, related party

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

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

Schedule of notes payable, related party

Interest rate

June 30, 2024

December 31, 2023

Notes from officers – Ault Alliance

September 30,

Notes from officers – Hyperscale Data

Notes from officers - TurnOnGreen

1 unchanged sentence

Ault & Company advances

Advances from officers - GIGA

Other related party advances

Total notes payable

Summary of interest expense,

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

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

For the Nine Months Ended

September 30,

Interest expense, related party

CONVERTIBLE NOTES

Convertible notes payable at June 30, 2024 and

December 31, 2023, were comprised of the following:

Convertible notes payable at September 30, 2024

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

Schedule of convertible notes payable

1 unchanged sentence

Interest rate

June 30, 2024

September 30, 2024

December 31, 2023

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

Convertible promissory note –OID only - in default

90% of 5-day VWAP

September 28, 2024

10% OID convertible promissory note – in default as of October 20, 2024

October 19, 2024

Avalanche International Corp.

2 unchanged sentences

August 22, 2025

GIGA senior secured convertible notes - in default (1)

$ 0.25 (GIGA stock)

October 11, 2024

ROI senior secured convertible note - in default (1)

11 unchanged sentences

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

6% Convertible Promissory

OID Convertible Promissory Note

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 included an OID of $0.5 million.

The Note accrues interest at the rate of 15 % .

The Note matured

on October 19, 2024 and is in default as of October 20, 2024.

The Note is convertible into shares of Class A common stock at a conversion

price of $ 0.17 per share.

During the three and nine

months ended September 30, 2024, the Investor converted $ 0.7 million of the Note into 3.0 million shares of Class A common stock that

had a fair value of $ 0.9 million at the time of conversion and the Company recognized a $ 0.2 million loss on extinguishment of debt.

Convertible Promissory Notes

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

5 unchanged sentences

Convertible Notes

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.

During the nine months ended

September 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.

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 June 30, 2024 were:

option, as of September 30, 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

June 30, 2024

September 30, 2024

December 31, 2023

3 unchanged sentences

Activity related to the embedded

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

conversion option derivative liabilities for the nine months ended September 30, 2024 was as follows:

Schedule of derivative liabilities

1 unchanged sentence

Change in fair value

Ending balance as of June 30, 2024

Ending balance as of September 30, 2024

COMMITMENTS AND CONTINGENCIES

36 unchanged sentences

in its entirety, as against ROI.

The deadline for Arena to

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

The Motion has been fully

briefed and is currently pending before the Court.

Based on the Company’s

34 unchanged sentences

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.

On August 14, 2024, GIGA filed a petition

for reorganization under Chapter 11 of the bankruptcy laws.

On November 12, 2024, GIGA removed the state

court action to the United States District Court for the Southern District of New York.

Based on the Company’s

12 unchanged sentences

to significant uncertainties.

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.

The Company had accrued loss

contingencies related to litigation matters of $ 2.4 million and $ 2.3 million as of September 30, 2024 and December 31, 2023, respectively.

STOCKHOLDERS’ EQUITY

12 unchanged sentences

Common ATM Offering

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.

the three and nine months ended September 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 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.

During the three and nine

months ended September 30, 2024, the Company sold to Ault & Company an aggregate of 300 and 2,800 shares of Series C Preferred Stock

and Warrants to purchase 0.1 million and 0.8 million shares of Class A common stock, for a total purchase price of $ 0.3 million and $ 2.8

million, respectively.

Amendment to Loan and Guarantee Agreement

September 17, 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 regarding the Company’s obligations to fund the restricted cash

Segregated Account.

The Company agreed to deposit

in the Segregated Account:

(i) $0.4 million monthly commencing on September 30, 2024 and ending on February 28, 2025;

and (ii) $0.5

million monthly commencing on March 31, 2025 and ending on the earlier of the term loan maturity date, prepayment of the term loan in

full or the date on which the balance of the Segregated Account exceeds 110% of the outstanding balance of the term loan.

As of September

30, 2024, the Company had deposited $ 6.5 million in the Segregated Account.

In October 2024, the Company deposited an additional $ 0.4

million in the Segregated Account.

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.

entered into a purchase agreement, as amended on November 1, 2024 (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 $ 37.5 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 date.

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

The ELOC Purchase Agreement

1 unchanged sentence

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.

There have been no purchases

under the ELOC Purchase Agreement.

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

The Company’s effective tax rate (“ETR”) from continuing operations was 0.1 % and 2.0 %

for the three months ended September 30, 2024 and 2023, respectively, and ( 0.21 % )

and 0.4 % for the nine

months ended September 30, 2024 and 2023, respectively.

The Company recorded an income tax provision of $ 67,000 and

$ 0.1 million for the three months

ended September 30, 2024 and 2023, respectively, and an income tax provision of $ 47,000 and

an income tax provision of $ 0.5

million for the nine months ended September 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

5 unchanged sentences

Anti-dilutive securities, which are convertible into or exercisable

for the Company’s common stock, consisted of the following at June 30, 2024 and 2023:

for the Company’s common stock, consisted of the following at September 30, 2024 and 2023:

Schedule of net loss per share

September 30,

Convertible preferred stock

3 unchanged sentences

The Company had the following

reportable segments as of June 30, 2024 and 2023;

reportable segments as of September 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 and six months ended June

Six months ended June 30,

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

Revenue, digital assets mining

Nine Months Ended

September 30, 2024

Revenue, crypto assets mining

Revenue, hotel and real estate operations

2 unchanged sentences

Total revenues

$ ( 664,000 )

Depreciation and amortization expense

7 unchanged sentences

$ ( 47,869,000 )

$ ( 9,632,000 )

$ ( 26,306,000 )

Interest expense

5 unchanged sentences

$ ( 18,825,000 )

$ ( 3,679,000 )

$ ( 12,306,000 )

Capital expenditures for the six months ended June 30, 2024

Segment identifiable assets as of June 30, 2024

Capital expenditures for the nine months ended September 30, 2024

Segment identifiable assets as of September 30, 2024

$ 231,198,000

Three months ended June

Revenue, digital assets mining

Three Months Ended September 30, 2024

Revenue, crypto assets mining

Revenue, hotel and real estate operations

1 unchanged sentence

Revenue, lending and trading activities

( 9,763,000 )

Total revenues

$ ( 9,763,000 )

Depreciation and amortization expense

7 unchanged sentences

$ ( 24,595,000 )

$ ( 3,352,000 )

$ ( 4,485,000 )

$ ( 26,925,000 )

Interest expense

3 unchanged sentences

$ ( 7,766,000 )

$ ( 2,282,000 )

$ ( 5,383,000 )

Capital expenditures for the three months ended June 30, 2024

Capital expenditures for the three months ended September 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

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

Nine Months Ended

September 30, 2023

Revenue, product

Revenue, crypto assets mining

Revenue, hotel and real estate operations

Revenue, lending and trading activities

Revenue, crane operations

Revenue, hotel operations

Total revenues

Depreciation and amortization

Income (loss) from operations

$ 104,238,000

Depreciation and amortization expense

(Loss) income from operations

$ ( 4,067,000 )

7 unchanged sentences

$ ( 97,155,000 )

expenditures for the six months ended June 30, 2023

Identifiable assets as of December 31,

Capital expenditures for the nine months ended September 30, 2023

Segment identifiable assets as of December 31, 2023

$ 280,397,000

Three Months Ended

June 30, 2023

Revenue, digital assets mining

Three Months Ended September 30, 2023

Revenue, product

Revenue, crypto assets mining

Revenue, commercial real estate leases

1 unchanged sentence

Revenue, crane operations

Revenue, hotel operations

Total revenues

Depreciation and amortization

Income (loss) from operations

$ ( 249,000 )

$ ( 1,589,000 )

Depreciation and amortization expense

(Loss) income from operations

$ ( 1,498,000 )

5 unchanged sentences

$ ( 20,350,000 )

Capital expenditures for the three months

ended June 30, 2023

Capital expenditures for the three months ended September 30, 2023

CONCENTRATIONS OF CREDIT AND REVENUE RISK

6 unchanged sentences

Accounts Receivable

For the Three Months Ended

For the Six Months Ended

September 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

* less than 10%

SUBSEQUENT EVENTS

Additional Closing of Series

Additional Closings 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 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.

In October and November 2024, the Company sold to Ault & Company

an aggregate of 2,230 shares of Series C Preferred Stock and Warrants to purchase 0.7 million shares of Class A common stock, for a total

purchase price of $2.2 million.

Agreement to Sell

Petersburg Property

October 2, 2024, Third Avenue Apartments LLC, a wholly owned indirect subsidiary of the Company, entered into a contract of sale with

a third-party purchaser and agreed to sell its real estate property in St.

Petersburg, Florida for $ 13.2 million.

The closing of the sale

of the property is expected to occur on or before December 31, 2024.

The Company is obligated to pay $ 11 million of the purchase price

into the segregated account for the benefit of its senior secured lenders.

Based on the expected sale price of the St.

Petersburg property,

the Company recorded an impairment charge of $ 1.3 million during the three and nine months ended September 30, 2024 in the condensed

consolidated statement of operations and comprehensive loss.

10.00% Series E Cumulative Redeemable

Perpetual Preferred Stock (the “Series E Preferred Stock”)

On November 11, 2024 the

Company filed a Certificate of Designation, Rights and Preferences (the “Certificate of Designation”) with the Secretary

of State of the State of Delaware to establish the preferences, voting powers, limitations as to dividends or other distributions, qualifications,

terms and conditions of redemption and other terms and conditions of the Company’s Series E Preferred Stock.

The following is a

summary description of those terms and the general effect of the issuance of the shares of Series E Preferred Stock on the Company’s

other classes of registered securities.

The Series E Preferred Stock

will, as to dividend rights and rights as to the distribution of assets upon the Company’s liquidation, dissolution or winding-up,

(1) senior to all classes or series of Common Stock and to all other equity securities issued by the Company other than equity securities

referred to in clauses (2) and (3);

(2) on parity with any future class or series of the Company’s equity securities expressly designated

as ranking on parity with the Series E Preferred Stock, (3) junior to the Company’s Series A Cumulative Redeemable Perpetual Preferred

Stock and its Series C Convertible Preferred Stock;

and all equity securities issued by the Company expressly designated as ranking senior

to the Series E Preferred Stock;

and (4) junior to all the Company’s existing and future indebtedness.

To the extent the shares

of Series E Preferred Stock are issued, the Company will pay cumulative cash dividends on the Series E Preferred Stock when, as and if

declared by its board of directors (or a duly authorized committee of its board of directors), only out of funds legally available for

payment of dividends.

Dividends on the Series E Preferred Stock will accrue on the stated amount of $25.00 per share of the Series E Preferred

Stock at a rate per annum equal to 10.00% (equivalent to $3.00 per year), payable monthly in arrears.

The Series E Preferred Stock

is redeemable by the Company.

Holders of shares of the Series E Preferred Stock generally will have no voting rights, except as required

by law and as provided in the Certificate of Designation.

Voting rights for holders of the Series E Preferred Stock exist primarily with

respect to material and adverse changes in the terms of the Series E Preferred Stock and the creation of additional classes or series

of preferred stock that rank senior to the Series E Preferred Stock.

Further, unless the Company

has received the approval of two-thirds of the votes entitled to be cast by the holders of Series E Preferred Stock, the Company will

not effect any consummation of a binding share exchange or reclassification of the Series E Preferred Stock or a merger or consolidation

of the Company with another entity, unless (a) the shares of Series E Preferred Stock remain outstanding or, in the case of a merger or

consolidation with respect to which the Company is not the surviving entity, the shares of Series E Preferred Stock are converted into

or exchanged for preference securities, or (b) such shares remain outstanding or such preference securities are not materially less favorable

than the Series E Preferred Stock immediately prior to such consummation.

Reverse Stock Split

At the June 28, 2024 annual

meeting of stockholders, voted upon and approved Proposal 5, an amendment to the Company’s Certificate of Incorporation to effect

a Reverse Split with a ratio of not less than one-for-two and not more than one-for-thirty-five at any time prior to June 27, 2025, with

the exact ratio to be set at a whole number within this range as determined by the Company’s board of directors in its sole discretion.

On October 24, 2024, the

board of directors authorized a special committee of the board to determine the ratio of the reverse split.

On November 8, 2024, the special

committee approved a one-for-thirty-five reverse split of the Class A common stock that will be effective in the State of Delaware on

Friday, November 22, 2024.

The Company anticipates that beginning with the opening of trading on Monday, November 25, 2024, the Company’s

Class A common stock will trade on the NYSE American on a split-adjusted basis.

Special Dividend of Class B Common Stock

On November 15, 2024, the Company announced

that it plans to issue a special one-time dividend (the “Distribution”) of 5.0 million shares

of its Class B Common Stock (the “Class B Common Stock”) to all holders of its Class A Common Stock (the “Class A Common

Stock”) and the Series C Convertible Preferred Stock on an as-converted basis.

The record date for the

Distribution is November 29, 2024.

Stockholders who own the Company’s Class A Common Stock at the close of trading on that date

will be eligible to receive the shares of Class B Common Stock.

Further, the Company has set a payment date of December 16, 2024, subject

to adjustment.

On the record date, the Company anticipates there will be approximately 1.1 million shares of Class A Common Stock and

approximately 5.9 million Class A Common Stock equivalents, based on the current conversion price of the Company’s Series C Convertible

Preferred Stock, issued and outstanding (collectively, the “Eligible Capital Stock”), for an aggregate of approximately 7.0

million shares of Eligible Capital Stock.

Consequently, the number of shares of Class B Common Stock issuable is approximately 0.71 for

each share of Eligible Capital Stock.

The foregoing figures reflect the implementation of the one-for-thirty-five reserve stock split

that will be effectuated on November 25, 2024.

The Class B Common Stock

is identical to the currently outstanding Class A Common Stock, with the exception that each share thereof carries ten times the voting

power of a share of Class A Common Stock.

The Class B Common Stock is convertible at any time after the payment date into Class A Common

Stock on a one-for-one basis.

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